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                                 EXHIBIT 4.01

                                 NETOPIA, INC.
                            1996 STOCK OPTION PLAN
                            ----------------------
                           (Restated April 13, 2000)

                                  ARTICLE ONE
                              GENERAL PROVISIONS
                              ------------------

I.   PURPOSE OF THE PLAN

          This 1996 Stock Option Plan is intended to promote the interests of
Netopia, Inc., a Delaware corporation, by providing eligible persons with the
opportunity to acquire a proprietary interest, or otherwise increase their
proprietary interest, in the Corporation as an incentive for them to remain in
the service of the Corporation.

          Capitalized terms shall have the meanings assigned to such terms in
the attached Appendix.

II.  STRUCTURE OF THE PLAN

     A.   The Plan shall be divided into two separate equity programs:

               (i)  the Discretionary Option Grant Program under which eligible
     persons may, at the discretion of the Plan Administrator, be granted
     options to purchase shares of Common Stock, and

               (ii) the Automatic Option Grant Program under which Eligible
     Directors shall automatically receive option grants at periodic intervals
     to purchase shares of Common Stock.

     B.   The provisions of Articles One and Four shall apply to all equity
programs under the Plan and shall accordingly govern the interests of all
persons under the Plan.

III. ADMINISTRATION OF THE PLAN

     A.   The Primary Committee shall have sole and exclusive authority to
administer the Discretionary Option Grant Program with respect to Section 16
Insiders.

     B.   Administration of the Discretionary Option Grant Program with respect
to all persons eligible to participate in that program may, at the Board's
discretion, be vested in the Primary Committee or a Secondary Committee, or the
Board may retain the power to administer those programs with respect to all such
persons. The members of the Secondary Committee may be Board members who are
Employees eligible to receive discretionary option grants under the Plan or any
stock option, stock appreciation, stock bonus or other stock plan of the
Corporation (or any Parent or Subsidiary).
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     C.   Members of the Primary Committee or any Secondary Committee shall
serve for such period of time as the Board may determine and shall be subject to
removal by the Board at any time. The Board may also at any time terminate the
functions of any Secondary Committee and reassume all powers and authority
previously delegated to such committee.

     D.   The Plan Administrator shall, within the scope of its administrative
functions under the Plan, have full power and authority to establish such rules
and regulations as it may deem appropriate for proper administration of the
Discretionary Option Grant Program and to make such determinations under, and
issue such interpretations of, the provisions of such program and any
outstanding options thereunder as it may deem necessary or advisable.  Decisions
of the Plan Administrator within the scope of its administrative functions under
the Plan shall be final and binding on all parties who have an interest in the
Discretionary Option Grant Program under its jurisdiction or any option
thereunder.

     E.   Service on the Primary Committee or the Secondary Committee shall
constitute service as a Board member, and members of each such committee shall
accordingly be entitled to full indemnification and reimbursement as Board
members for their service on such committee. No member of the Primary Committee
or the Secondary Committee shall be liable for any act or omission made in good
faith with respect to the Plan or any option grants made under the Plan.

     F.   Administration of the Automatic Option Grant Program shall be self-
executing in accordance with the terms of that program, however, the Plan
Administrator (other than the Secondary Committee) may exercise any
discretionary functions with respect to option grants made thereunder.

IV.  ELIGIBILITY

     A.   The persons eligible to participate in the Discretionary Option Grant
Program are as follows:

               (i)   Employees,

               (ii)  non-employee members of the Board or of the board of
     directors of any Parent or Subsidiary, and

               (iii) consultants and other independent advisors who provide
     services to the Corporation (or any Subsidiary).

     B.   The Plan Administrator shall, within the scope of its administrative
jurisdiction under the Plan, have full authority (subject to the provisions of
the Plan) to determine, with respect to the option grants under the
Discretionary Option Grant Program, which eligible persons are to receive option
grants, the time or times when such option grants are to be made, the number of
shares to be covered by each such grant, the status of the granted option as
either an Incentive Option or a Non-Statutory Option, the time or times at which
each option is to become exercisable and the vesting schedule (if any)
applicable to the option shares and the maximum term for which the option is to
remain outstanding.

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     C.   The individuals eligible to receive option grants under the Automatic
Option Grant Program shall be those individuals who are serving as non-employee
Board members on the Automatic Option Grant Program Effective Date or who are
first elected or appointed as non-employee Board members after such date,
whether through appointment by the Board or election by the Corporation's
stockholders. A non-employee Board member who has previously been in the employ
of the Corporation (or any Parent or Subsidiary) shall not be eligible to
receive an initial option grant under the Automatic Option Grant Program on the
Automatic Option Grant Program Effective Date or at the time he or she first
becomes a non-employee Board member, but shall be eligible for annual option
grants at each Annual Meeting of Stockholders following the Board member's
cessation of employment.

V.   STOCK SUBJECT TO THE PLAN

     A.   The stock issuable under the Plan shall be shares of authorized but
unissued or reacquired Common Stock, including shares repurchased by the
Corporation on the open market. The maximum number of shares of Common Stock
which may be issued over the term of the Plan shall initially not exceed
6,680,301 shares.

     B.   The number of shares of Common Stock available for issuance under the
Plan shall automatically increase on January 1, 2001, by an amount equal to five
percent (5%) of the shares of Common Stock outstanding on December 31, 2000; but
in no event shall any such increase exceed 1,200,000 shares.

     C.   No one person participating in the Plan may receive options for more
than 750,000 shares of Common Stock over the period beginning on the Plan
Effective Date and ending on June 30, 1999. No one person participating in the
Plan may receive options for more than 750,000 shares of Common Stock over the
period beginning on July 1, 1999 and ending on June 30, 2002.

     D.   Shares of Common Stock subject to outstanding options shall be
available for subsequent issuance under the Plan to the extent (i) the options
(including any options incorporated from the Predecessor Plan) expire or
terminate for any reason prior to exercise in full or (ii) the options are
canceled in accordance with the cancellation-regrant provisions of Article Two.
All shares issued under the Plan (including shares issued upon exercise of
options incorporated from the Predecessor Plan), whether or not those shares are
subsequently repurchased by the Corporation pursuant to its repurchase rights
under the Plan, shall reduce on a share-for-share basis the number of shares of
Common Stock available for subsequent issuance under the Plan. In addition,
should the exercise price of an option under the Plan (including any option
incorporated from the Predecessor Plan) be paid with shares of Common Stock or
should shares of Common Stock otherwise issuable under the Plan be withheld by
the Corporation in satisfaction of the withholding taxes incurred in connection
with the exercise of an option under the Plan, then the number of shares of
Common Stock available for issuance under the Plan shall be reduced by the gross
number of shares for which the option is exercised, and not by the net number of
shares of Common Stock issued to the holder of such option.

     E.   Should any change be made to the Common Stock by reason of any stock
split, stock dividend, recapitalization, combination of shares, exchange of
shares or other change

                                       3
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affecting the outstanding Common Stock as a class without the Corporation's
receipt of consideration, appropriate adjustments shall be made to (i) the
maximum number and/or class of securities issuable under the Plan, (ii) the
number and/or class of securities for which any one person may be granted
options per calendar year or over the term of the Plan, (iii) the number and/or
class of securities for which automatic option grants are to be subsequently
made per Eligible Director under the Automatic Option Grant Program and (iv) the
number and/or class of securities and the exercise price per share in effect
under each outstanding option (including any option incorporated from the
Predecessor Plan) in order to prevent the dilution or enlargement of benefits
thereunder. The adjustments determined by the Plan Administrator shall be final,
binding and conclusive.

                                       4
<PAGE>

                                  ARTICLE TWO
                      DISCRETIONARY OPTION GRANT PROGRAM
                      ----------------------------------

I.   OPTION TERMS

          Each option shall be evidenced by one or more documents in the form
approved by the Plan Administrator; provided, however, that each such document
                                    --------
shall comply with the terms specified below.  Each document evidencing an
Incentive Option shall, in addition, be subject to the provisions of the Plan
applicable to such options.

     A.   Exercise Price.
          --------------

          1.  The exercise price per share shall be fixed by the Plan
Administrator but shall not be less than eighty-five percent (85%) of the Fair
Market Value per share of Common Stock on the option grant date.

          2.  The exercise price shall become immediately due upon exercise of
the option and shall, subject to the provisions of Section I of Article Four and
the documents evidencing the option, be payable in one or more of the forms
specified below:

                    (i)   cash or check made payable to the Corporation,

                    (ii)  shares of Common Stock held for the requisite period
     necessary to avoid a charge to the Corporation's earnings for financial
     reporting purposes and valued at Fair Market Value on the Exercise Date, or

                    (iii) to the extent the option is exercised for vested
     shares, through a special sale and remittance procedure pursuant to which
     the Optionee shall concurrently provide irrevocable written instructions to
     (a) a Corporation-designated brokerage firm to effect the immediate sale of
     the purchased shares and remit to the Corporation, out of the sale proceeds
     available on the settlement date, sufficient funds to cover the aggregate
     exercise price payable for the purchased shares plus all applicable
     Federal, state and local income and employment taxes required to be
     withheld by the Corporation by reason of such exercise and (b) the
     Corporation to deliver the certificates for the purchased shares directly
     to such brokerage firm in order to complete the sale.

          Except to the extent such sale and remittance procedure is utilized,
payment of the exercise price for the purchased shares must be made on the
Exercise Date.

     B.   Exercise and Term of Options.  Each option shall be exercisable at
          ----------------------------
such time or times, during such period and for such number of shares as shall be
determined by the Plan Administrator and set forth in the documents evidencing
the option.  However, no option shall have a term in excess of ten (10) years
measured from the option grant date.

     C.   Effect of Termination of Service.
          --------------------------------

          1.   The following provisions shall govern the exercise of any options
held by the Optionee at the time of cessation of Service or death:

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               (i)   Any option outstanding at the time of the Optionee's
     cessation of Service for any reason shall remain exercisable for such
     period of time thereafter as shall be determined by the Plan Administrator
     and set forth in the documents evidencing the option, but no such option
     shall be exercisable after the expiration of the option term.

               (ii)  Any option exercisable in whole or in part by the Optionee
     at the time of death may be subsequently exercised by the personal
     representative of the Optionee's estate or by the person or persons to whom
     the option is transferred pursuant to the Optionee's will or in accordance
     with the laws of descent and distribution. If an optionee ceases Service by
     reason of death when the Optionee has been in the Corporation's Service for
     less than two years, then all of the Optionee's outstanding options under
     the Plan shall become exercisable for an additional number of option shares
     as if the Optionee had been in Service two additional years. If an Optionee
     ceases Service by reason of death when the Optionee has been in the
     Corporation's Service for two years or more, then all of the Optionee's
     outstanding options under the Plan shall become fully exercisable.

               (iii) Except as otherwise provided in clause (ii) above, during
     the applicable post-Service exercise period, the option may not be
     exercised in the aggregate for more than the number of vested shares for
     which the option is exercisable on the date of the Optionee's cessation of
     Service. Upon the expiration of the applicable exercise period or (if
     earlier) upon the expiration of the option term, the option shall terminate
     and cease to be outstanding for any vested shares for which the option has
     not been exercised. However, the option shall, immediately upon the
     Optionee's cessation of Service, terminate and cease to be outstanding to
     the extent it is not exercisable for vested shares on the date of such
     cessation of Service.

               (iv)  Should the Optionee's Service be terminated for Misconduct,
     then all outstanding options held by the Optionee shall terminate
     immediately and cease to be outstanding.

               (v)   In the event of a Corporate Transaction, the provisions of
     Section III of this Article Two shall govern the period for which the
     outstanding options are to remain exercisable following the Optionee's
     cessation of Service and shall supersede any provisions to the contrary in
     this section.

          2.   The Plan Administrator shall have the discretion, exercisable
either at the time an option is granted or at any time while the option remains
outstanding, to:

               (i)   extend the period of time for which the option is to remain
     exercisable following the Optionee's cessation of Service from the period
     otherwise in effect for that option to such greater period of time as the
     Plan Administrator shall deem appropriate, but in no event beyond the
     expiration of the option term, and/or

               (ii)  permit the option to be exercised, during the applicable
     post-Service exercise period, not only with respect to the number of vested
     shares of

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<PAGE>

     Common Stock for which such option is exercisable at the time of the
     Optionee's cessation of Service but also with respect to one or more
     additional installments in which the Optionee would have vested under the
     option had the Optionee continued in Service.

     D.   Stockholder Rights.  The holder of an option shall have no stockholder
          ------------------
rights with respect to the shares subject to the option until such person shall
have exercised the option, paid the exercise price and become a holder of record
of the purchased shares.

     E.   Repurchase Rights.  The Plan Administrator shall have the discretion
          -----------------
to grant options which are exercisable for unvested shares of Common Stock.
Should the Optionee cease Service while holding such unvested shares, the
Corporation shall have the right to repurchase, at the exercise price paid per
share, any or all of those unvested shares. The terms upon which such repurchase
right shall be exercisable (including the period and procedure for exercise and
the appropriate vesting schedule for the purchased shares) shall be established
by the Plan Administrator and set forth in the document evidencing such
repurchase right.

     F.   Limited Transferability of Options.  During the lifetime of the
          ----------------------------------
Optionee, the option shall be exercisable only by the Optionee and shall not be
assignable or transferable other than by will or by the laws of descent and
distribution following the Optionee's death. However, a Non-Statutory Option may
be assigned (i) to a member of the immediate family of the optionee or to a
trust established for the benefit of one or more members of the immediate family
of the optionee, provided that the assignment shall not be effective until
written notice of the assignment is received by the Plan Administrator, or (ii)
in accordance with terms approved in advance by the Plan Administrator. The
terms applicable to the assigned option (or portion thereof) shall be the same
as those in effect for the option immediately prior to such assignment and shall
be set forth in such documents issued to the assignee as the Plan Administrator
may deem appropriate.

II.  INCENTIVE OPTIONS

          The terms specified below shall be applicable to all Incentive
Options.  Except as modified by the provisions of this Section II, all the
provisions of Articles One, Two and Four shall be applicable to Incentive
Options. Options which are specifically designated as Non-Statutory Options when
issued under the Plan shall not be subject to the terms of this Section II.
                            ---

     A.   Eligibility.  Incentive Options may only be granted to Employees.
          -----------

     B.   Exercise Price.  The exercise price per share shall not be less than
          --------------
one hundred percent (100%) of the Fair Market Value per share of Common Stock on
the option grant date.

     C.   Dollar Limitation.  The aggregate Fair Market Value of the shares of
          -----------------
Common Stock (determined as of the respective date or dates of grant) for which
one or more options granted to any Employee under the Plan (or any other option
plan of the Corporation or any Parent or Subsidiary) may for the first time
become exercisable as Incentive Options during any one (1) calendar year shall
not exceed the sum of $100,000. To the extent the Employee holds two (2) or more
such options which become exercisable for the first time in the same calendar

                                       7
<PAGE>

year, the foregoing limitation on the exercisability of such options as
Incentive Options shall be applied on the basis of the order in which such
options are granted.

     D.   10% Stockholder.  If any Employee to whom an Incentive Option is
          ---------------
granted is a 10% Stockholder, then the exercise price per share shall not be
less than one hundred ten percent (110%) of the Fair Market Value per share of
Common Stock on the option grant date, and the option term shall not exceed five
(5) years measured from the option grant date.

III. CORPORATE TRANSACTION/CHANGE IN CONTROL

     A.  In the event of any Corporate Transaction, each outstanding option
shall automatically accelerate so that each such option shall, immediately prior
to the effective date of the Corporate Transaction, become fully exercisable for
all of the shares of Common Stock at the time subject to such option and may be
exercised for any or all of those shares as fully-vested shares of Common Stock.
However, an outstanding option shall not so accelerate if and to the extent: (i)
such option is, in connection with the Corporate Transaction, either to be
assumed by the successor corporation (or parent thereof) or to be replaced with
a comparable option to purchase shares of the capital stock of the successor
corporation (or parent thereof), (ii) such option is to be replaced with a cash
incentive program of the successor corporation which preserves the spread
existing on the unvested option shares at the time of the Corporate Transaction
and provides for subsequent payout in accordance with the same vesting schedule
applicable to such option or (iii) the acceleration of such option is subject to
other limitations imposed by the Plan Administrator at the time of the option
grant. The determination of option comparability under clause (i) above shall be
made by the Plan Administrator, and its determination shall be final, binding
and conclusive.

     B.  All outstanding repurchase rights shall also terminate automatically,
and the shares of Common Stock subject to those terminated rights shall
immediately vest in full, in the event of any Corporate Transaction, except to
the extent: (i) those repurchase rights are to be assigned to the successor
corporation (or parent thereof) in connection with such Corporate Transaction or
(ii) such accelerated vesting is precluded by other limitations imposed by the
Plan Administrator at the time the repurchase right is issued.

     C.  The Plan Administrator shall have the discretion, exercisable either at
the time the option is granted or at any time while the option remains
outstanding, to provide for the automatic acceleration of one or more
outstanding options (and the automatic termination of one or more outstanding
repurchase rights with the immediate vesting of the shares of Common Stock
subject to those rights) upon the occurrence of a Corporate Transaction, whether
or not those options are to be assumed or replaced (or those repurchase rights
are to be assigned) in the Corporate Transaction.

     D.  Immediately following the consummation of the Corporate Transaction,
all outstanding options shall terminate and cease to be outstanding, except to
the extent assumed by the successor corporation (or parent thereof).

     E.  Each option which is assumed in connection with a Corporate Transaction
shall be appropriately adjusted, immediately after such Corporate Transaction,
to apply to the number

                                       8
<PAGE>

and class of securities which would have been issuable to the Optionee in
consummation of such Corporate Transaction had the option been exercised
immediately prior to such Corporate Transaction. Appropriate adjustments shall
also be made to (i) the number and class of securities available for issuance
under the Plan on both an aggregate and per Optionee basis following the
consummation of such Corporate Transaction and (ii) the exercise price payable
per share under each outstanding option, provided the aggregate exercise price
                                         --------
payable for such securities shall remain the same.

     F.   The Plan Administrator shall have the discretion, exercisable either
at the time the option is granted or at any time while the option remains
outstanding, to (i) provide for the automatic acceleration of one or more
outstanding options (and the automatic termination of one or more outstanding
repurchase rights with the immediate vesting of the shares of Common Stock
subject to those rights) upon the occurrence of a Change in Control or (ii)
condition any such option acceleration (and the termination of any outstanding
repurchase rights) upon the subsequent termination of the Optionee's Service
within a specified period following the effective date of such Change in Control
for reasons other than the Optionee's unsatisfactory job performance. Any
options accelerated in connection with a Change in Control shall remain fully
exercisable until the expiration or sooner termination of the option term.

     G.   The portion of any Incentive Option accelerated in connection with a
Corporate Transaction or Change in Control shall remain exercisable as an
Incentive Option only to the extent the applicable $100,000 limitation is not
exceeded.  To the extent such dollar limitation is exceeded, the accelerated
portion of such option shall be exercisable as a Non-Statutory Option under the
Federal tax laws.

     H.   The grant of options under the Discretionary Option Grant Program
shall in no way affect the right of the Corporation to adjust, reclassify,
reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets.

IV.  CANCELLATION AND REGRANT OF OPTIONS

          The Plan Administrator shall have the authority to effect, at any time
and from time to time, with the consent of the affected option holders, the
cancellation of any or all outstanding options under the Discretionary Option
Grant Program (including outstanding options incorporated from the Predecessor
Plan) and to grant in substitution new options covering the same or different
number of shares of Common Stock but with an exercise price per share based on
the Fair Market Value per share of Common Stock on the new option grant date.

V.   STOCK APPRECIATION RIGHTS

     A.   The Plan Administrator shall have full power and authority to grant to
selected Optionees tandem stock appreciation rights.

     B.   The following terms shall govern the grant and exercise of tandem
stock appreciation rights:

                                       9
<PAGE>

               (i)   One or more Optionees may be granted the right, exercisable
     upon such terms as the Plan Administrator may establish, to elect between
     the exercise of the underlying option for shares of Common Stock and the
     surrender of that option in exchange for a distribution from the
     Corporation in an amount equal to the excess of (A) the Fair Market Value
     (on the option surrender date) of the number of shares in which the
     Optionee is at the time vested under the surrendered option (or surrendered
     portion thereof) over (B) the aggregate exercise price payable for such
     shares.

               (ii)  No such option surrender shall be effective unless it is
     approved by the Plan Administrator. If the surrender is so approved, then
     the distribution to which the Optionee shall be entitled may be made in
     shares of Common Stock valued at Fair Market Value on the option surrender
     date, in cash, or partly in shares and partly in cash, as the Plan
     Administrator shall in its sole discretion deem appropriate.

               (iii) If the surrender of an option is rejected by the Plan
     Administrator, then the Optionee shall retain whatever rights the Optionee
     had under the surrendered option (or surrendered portion thereof) on the
     option surrender date and may exercise such rights at any time prior to the
     later of (A) five (5) business days after the receipt of the rejection
     -----
     notice or (B) the last day on which the option is otherwise exercisable in
     accordance with the terms of the documents evidencing such option, but in
     no event may such rights be exercised more than ten (10) years after the
     option grant date.

                                       10
<PAGE>

                                 ARTICLE THREE
                        AUTOMATIC OPTION GRANT PROGRAM
                        ------------------------------

I.   OPTION TERMS

     A.   Grant Dates.  Each Eligible Director who is a non-employee Board
          -----------
member on the Automatic Option Grant Program Effective Date and each Eligible
Director who is first elected or appointed as a non-employee Board member after
such date shall automatically be granted, on the Automatic Option Grant Program
Effective Date or on the date of such initial election or appointment (as the
case may be), a Non-Statutory Option to purchase 25,000 shares of Common Stock.
Each Eligible Director who is serving as a non-employee Board member on the date
of Annual Stockholders Meeting shall be granted on the date of such meeting a
Non-Statutory Option to purchase 6,000 shares of Common Stock. A non-employee
Board member shall not be granted an annual option if he or she received an
initial option in that same calendar year.

     B.   Exercise Price.
          --------------

          1.  The exercise price per share shall be equal to one hundred percent
(100%) of the Fair Market Value per share of Common Stock on the option grant
date.

          2.  The exercise price shall be payable in one or more of the
alternative forms authorized under the Discretionary Option Grant Program.
Except to the extent the sale and remittance procedure specified thereunder is
utilized, payment of the exercise price for the purchased shares must be made on
the Exercise Date.

     C.   Option Term.  Each option shall have a term of ten (10) years
          -----------
measured from the option grant date.

     D.   Exercise and Vesting of Options.  Each initial option granted after
          -------------------------------
January 13, 2000 shall become exercisable in a series of four (4) annual
installments over the Optionee's period of continued service as a Board member,
with the first such installment to become exercisable upon the Optionee's
completion of one (1) year of Board service measured from the option grant date.
Each annual option shall become exercisable in full upon the Optionee's
completion of one (1) year of Board service measured from the option grant date.

     E.   Effect of Termination of Board Service.  The following provisions
          --------------------------------------
shall govern the exercise of any options held by the Optionee at the time the
Optionee ceases to serve as a Board member:

               (i)  The Optionee (or, in the event of Optionee's death, the
     personal representative of the Optionee's estate or the person or persons
     to whom the option is transferred pursuant to the Optionee's will or in
     accordance with the laws of descent and distribution) shall have a twelve
     (12)-month period following the date of such cessation of Board service in
     which to exercise each such option.

                                       11
<PAGE>

               (ii)  During the twelve (12)-month exercise period, the option
     may not be exercised in the aggregate for more than the number of vested
     shares of Common Stock for which the option is exercisable at the time of
     the Optionee's cessation of Board service.

               (iii) Should the Optionee cease to serve as a Board member by
     reason of death or Permanent Disability, then all shares at the time
     subject to the option shall immediately vest and become exercisable so that
     such option may, during the twelve (12)-month exercise period following
     such cessation of Board service, be exercised for all or any portion of
     such shares as fully-vested shares of Common Stock.

               (iv)  In no event shall the option remain exercisable after the
     expiration of the option term. Upon the expiration of the twelve (12)-month
     exercise period or (if earlier) upon the expiration of the option term, the
     option shall terminate and cease to be outstanding for any vested shares
     for which the option has not been exercised. However, the option shall,
     immediately upon the Optionee's cessation of Board service, terminate and
     cease to be outstanding to the extent it is not exercisable for vested
     shares on the date of such cessation of Board service.

II.  CORPORATE TRANSACTION/CHANGE IN CONTROL/HOSTILE TAKE-OVER

     A.   In the event of any Corporate Transaction, the shares of Common Stock
at the time subject to each outstanding option but not otherwise vested shall
automatically become exercisable in full so that each such automatic option
shall, immediately prior to the effective date of the Corporate Transaction,
become fully exercisable for all of the shares of Common Stock at the time
subject to such option and may be exercised for all or any portion of such
shares as fully-vested shares of Common Stock. Immediately following the
consummation of the Corporate Transaction, each automatic option grant shall
terminate and cease to be outstanding, except to the extent assumed by the
successor corporation (or parent thereof).

     B.   In connection with any Change in Control, the shares of Common Stock
at the time subject to each outstanding option but not otherwise vested shall
automatically become exercisable in full so that each such option shall,
immediately prior to the effective date of the Change in Control, become fully
exercisable for all of the shares of Common Stock at the time subject to such
option and may be exercised for all or any portion of such shares as fully-
vested shares of Common Stock. Each such option shall remain exercisable for
such fully-vested option shares until the expiration or sooner termination of
the option term or the surrender of the option in connection with a Hostile
Take-Over.

     C.   Upon the occurrence of a Hostile Take-Over, each automatic option
granted before December 31, 1996 and held by the Optionee for a period of at
least six (6) months shall be automatically canceled. The Optionee shall in
return be entitled to a cash distribution from the Corporation in an amount
equal to the excess of (i) the Take-Over Price of the shares of Common Stock at
the time subject to the canceled option (whether or not the Optionee is
otherwise at the time vested in those shares) over (ii) the aggregate exercise
price payable for such shares. Such cash distribution shall be paid within five
(5) days following the cancellation

                                       12
<PAGE>

of the option by the Corporation. No approval or consent of the Board shall be
required in connection with such option cancellation and cash distribution.

     D.   The grant of options under the Automatic Option Grant Program shall in
no way affect the right of the Corporation to adjust, reclassify, reorganize or
otherwise change its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.

III. REMAINING TERMS

          The remaining terms of each option granted under the Automatic Option
Grant Program shall be the same as the terms in effect for option grants made
under the Discretionary Option Grant Program.

                                       13
<PAGE>

                                 ARTICLE FOUR
                                 MISCELLANEOUS
                                 -------------

I.   FINANCING

     A.   The Plan Administrator may permit any Optionee to pay the option
exercise price under the Plan by delivering a promissory note payable in one or
more installments. The terms of any such promissory note (including the interest
rate and the terms of repayment) shall be established by the Plan Administrator
in its sole discretion. Promissory notes may be authorized with or without
security or collateral. In all events, the maximum credit available to the
Optionee may not exceed the sum of (i) the aggregate option exercise price
payable for the purchased shares plus (ii) any Federal, state and local income
and employment tax liability incurred by the Optionee in connection with the
option exercise.

     B.   The Plan Administrator may, in its discretion, determine that one or
more such promissory notes shall be subject to forgiveness by the Corporation in
whole or in part upon such terms as the Plan Administrator may deem appropriate.

II.  TAX WITHHOLDING

     A.   The Corporation's obligation to deliver shares of Common Stock upon
the exercise of options or stock appreciation rights under the Plan shall be
subject to the satisfaction of all applicable Federal, state and local income
and employment tax withholding requirements.

     B.   The Plan Administrator may, in its discretion, provide any or all
holders of Non-Statutory Options under the Plan (other than the options granted
under the Automatic Option Grant Program) with the right to use shares of Common
Stock in satisfaction of all or part of the Taxes incurred by such holders in
connection with the exercise of their options. Such right may be provided to any
such holder in either or both of the following formats:

               (i)  Stock Withholding:  The election to have the Corporation
                    -----------------
     withhold, from the shares of Common Stock otherwise issuable upon the
     exercise of such Non-Statutory Option, a portion of those shares with an
     aggregate Fair Market Value equal to the percentage of the Taxes (not to
     exceed one hundred percent (100%)) designated by the holder.

               (ii) Stock Delivery:  The election to deliver to the
                    --------------
     Corporation, at the time the Non-Statutory Option is exercised, one or more
     shares of Common Stock previously acquired by such holder (other than in
     connection with the option exercise triggering the Taxes) with an aggregate
     Fair Market Value equal to the percentage of the Taxes (not to exceed one
     hundred percent (100%)) designated by the holder.

III. EFFECTIVE DATE AND TERM OF THE PLAN

     A.   The Discretionary Option Grant Program shall become effective on the
Plan Effective Date and options may be granted under the Discretionary Option
Grant Program from

                                       14
<PAGE>

and after the Plan Effective Date. The Automatic Option Grant Program shall
become effective on the Automatic Option Grant Program Effective Date and the
initial option grants under the Automatic Option Grant Program shall be made to
the Eligible Directors at that time. On December 31, 1996, the Plan was amended
to increase the number of shares issuable thereunder by 1,000,000 shares, to
provide for automatic annual increases to the Plan share reserve in 1998 and
1999, to extend eligibility to the non-employee directors under the
Discretionary Option Grant Program, and to make certain other amendments and to
delete provisions no longer required by Section 16 of the 1934 Act as a result
of the SEC's revision of Rule 16b-3. The 1996 amendment and restatement was
approved by the stockholders at the 1997 Annual Meeting of Stockholders. The
Plan was further amended on October 29, 1997 to increase the share reserve by
500,000 shares and to amend the Code Section 162(m) limitation of Article Two,
Section V.C. The 1997 amendment and restatement was approved by the stockholders
at the 1998 Annual Meeting of Stockholders. On October 27, 1998, the Plan was
amended to increase the number of shares issuable thereunder by 500,000 shares,
to provide for accelerated vesting on death, and to provide for automatic annual
increases to the Plan share reserve in 2000 and 2001. The 1998 amendment and
restatement was approved by the stockholders at the 1999 Annual Meeting of
Stockholders. The Plan was further amended on January 13, 2000 to increase the
share reserve by 500,000 shares, and to modify the vesting schedule for initial
options granted under the Automatic Grant Program and to provide for an annual
grant to non-employee directors. The 2000 amendment and restatement was approved
by the stockholders at the 2000 Annual Meeting of Stockholders. The Plan was
further amended on April 13, 2000 to change certain terms applicable in the
event of any Corporate Transaction.

     B.   The Plan shall serve as the successor to the Predecessor Plan, and no
further option grants shall be made under the Predecessor Plan after the Plan
Effective Date.  All options outstanding under the Predecessor Plan as of such
date shall, immediately upon approval of the Plan by the Corporation's
stockholders, be incorporated into the Plan and treated as outstanding options
under the Plan.  However, each outstanding option so incorporated shall continue
to be governed solely by the terms of the documents evidencing such option, and
no provision of the Plan shall be deemed to affect or otherwise modify the
rights or obligations of the holders of such incorporated options with respect
to their acquisition of shares of Common Stock.

     C.   The option/vesting acceleration provisions of Article Two relating to
Corporate Transactions and Changes in Control may, in the Plan Administrator's
discretion, be extended to one or more options incorporated from the Predecessor
Plan which do not otherwise provide for such acceleration.

     D.   The Plan shall terminate upon the earliest of (i) April 15, 2006,
                                            --------
(ii) the date on which all shares available for issuance under the Plan shall
have been issued pursuant to the exercise of the options under the Plan or (iii)
the termination of all outstanding options in connection with a Corporate
Transaction. Upon such Plan termination, all options outstanding on such date
shall thereafter continue to have force and effect in accordance with the
provisions of the documents evidencing such options.

                                       15
<PAGE>

IV.  AMENDMENT OF THE PLAN

     A.   The Board shall have complete and exclusive power and authority to
amend or modify the Plan in any or all respects. However, no such amendment or
modification shall adversely affect the rights and obligations with respect to
options or stock appreciation rights at the time outstanding under the Plan
unless the Optionee consents to such amendment or modification. Notwithstanding
the foregoing clause, the Plan Administrator may amend an outstanding option to
reduce the number of option shares previously granted to an optionee provided
the reduction applies solely to unvested shares or shares which have not yet
become exercisable as of the date of the amendment. In addition, the Board shall
not, without the approval of the Corporation's stockholders, (i) materially
increase the maximum number of shares issuable under the Plan, the number of
shares for which options may be granted under the Automatic Option Grant Program
or the maximum number of shares for which any one person may be granted options
in the aggregate over the term of the Plan, except for permissible adjustments
in the event of certain changes in the Corporation's capitalization or (ii)
materially modify the eligibility requirements for Plan participation.

     B.   Options to purchase shares of Common Stock may be granted under the
Discretionary Option Grant Program that are in excess of the number of shares
then available for issuance under the Plan, provided any excess shares actually
issued under those programs are held in escrow until there is obtained
stockholder approval of an amendment sufficiently increasing the number of
shares of Common Stock available for issuance under the Plan.  If such
stockholder approval is not obtained within twelve (12) months after the date
the first such excess issuances are made, then (i) any unexercised options
granted on the basis of such excess shares shall terminate and cease to be
outstanding and (ii) the Corporation shall promptly refund to the Optionees the
exercise price paid for any excess shares issued under the Plan and held in
escrow, together with interest (at the applicable Short Term Federal Rate) for
the period the shares were held in escrow, and such shares shall thereupon be
automatically canceled and cease to be outstanding.

V.   USE OF PROCEEDS

          Any cash proceeds received by the Corporation from the sale of shares
of Common Stock under the Plan shall be used for general corporate purposes.

VI.  REGULATORY APPROVALS

     A.   The implementation of the Plan, the granting of any option or stock
appreciation right under the Plan and the issuance of any shares of Common Stock
upon the exercise of any option or stock appreciation right shall be subject to
the Corporation's procurement of all approvals and permits required by
regulatory authorities having jurisdiction over the Plan, the options and stock
appreciation rights granted under it and the shares of Common Stock issued
pursuant to it.

     B.   No shares of Common Stock or other assets shall be issued or delivered
under the Plan unless and until there shall have been compliance with all
applicable requirements of Federal and state securities laws, including the
filing and effectiveness of the Form S-8

                                       16
<PAGE>

registration statement for the shares of Common Stock issuable under the Plan,
and all applicable listing requirements of any stock exchange (or the Nasdaq
National Market, if applicable) on which Common Stock is then listed for
trading.

VII. NO EMPLOYMENT/SERVICE RIGHTS

          Nothing in the Plan shall confer upon the Optionee any right to
continue in Service for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Corporation (or any Parent or
Subsidiary employing or retaining such person) or of the Optionee, which rights
are hereby expressly reserved by each, to terminate such person's Service at any
time for any reason, with or without cause.

                                       17
<PAGE>

                                   APPENDIX
                                   --------

          The following definitions shall be in effect under the Plan:

     A.   Automatic Option Grant Program shall mean the automatic option grant
          ------------------------------
program in effect under the Plan.

     B.   Automatic Option Grant Program Effective Date shall mean the Section
          ---------------------------------------------
12(g) Registration Date.

     C.   Board shall mean the Corporation's Board of Directors.
          -----

     D.   Change in Control shall mean a change in ownership or control of the
          -----------------
Corporation effected through either of the following transactions:

                    (i)  the acquisition, directly or indirectly, by any person
     or related group of persons (other than the Corporation or a person that
     directly or indirectly controls, is controlled by, or is under common
     control with, the Corporation), of beneficial ownership (within the meaning
     of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty
     percent (50%) of the total combined voting power of the Corporation's
     outstanding securities pursuant to a tender or exchange offer made directly
     to the Corporation's stockholders which the Board does not recommend such
     stockholders to accept, or

                    (ii) a change in the composition of the Board over a period
     of thirty-six (36) consecutive months or less such that a majority of the
     Board members ceases, by reason of one or more contested elections for
     Board membership, to be comprised of individuals who either (A) have been
     Board members continuously since the beginning of such period or (B) have
     been elected or nominated for election as Board members during such period
     by at least a majority of the Board members described in clause (A) who
     were still in office at the time the Board approved such election or
     nomination.

     E.   Code shall mean the Internal Revenue Code of 1986, as amended.
          ----

     F.   Common Stock shall mean the Corporation's common stock.
          ------------

     G.   Corporate Transaction shall mean either of the following stockholder-
          ---------------------
approved transactions to which the Corporation is a party:

                    (i)  a merger or consolidation in which securities
     possessing more than fifty percent (50%) of the total combined voting power
     of the Corporation's outstanding securities are transferred to a person or
     persons different from the persons holding those securities immediately
     prior to such transaction; or

                    (ii) the sale, transfer or other disposition of all or
     substantially all of the Corporation's assets in complete liquidation or
     dissolution of the Corporation.

                                      A-1
<PAGE>

     H.   Corporation shall mean Netopia, Inc., a Delaware corporation.
          -----------

     I.   Discretionary Option Grant Program shall mean the discretionary option
          ----------------------------------
grant program in effect under the Plan.

     J.   Eligible Director shall mean a non-employee Board member eligible to
          -----------------
participate in the Automatic Option Grant Program in accordance with the
eligibility provisions of Article One.

     K.   Employee shall mean an individual who is in the employ of the
          --------
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.

     L.   Exercise Date shall mean the date on which the Corporation shall have
          -------------
received written notice of the option exercise.

     M.   Fair Market Value per share of Common Stock on any relevant date shall
          -----------------
be determined in accordance with the following provisions:

                    (i)    If the Common Stock is at the time traded on the
     Nasdaq National Market, then the Fair Market Value shall be the closing
     price per share of Common Stock on the date in question, as such price is
     reported by the National Association of Securities Dealers on the Nasdaq
     National Market or any successor system. If there is no closing price for
     the Common Stock on the date in question, then the Fair Market Value shall
     be the closing price on the last preceding date for which such quotation
     exists.

                    (ii)   If the Common Stock is at the time listed on any
     Stock Exchange, then the Fair Market Value shall be the closing selling
     price per share of Common Stock on the date in question on the Stock
     Exchange determined by the Plan Administrator to be the primary market for
     the Common Stock, as such price is officially quoted in the composite tape
     of transactions on such exchange. If there is no closing selling price for
     the Common Stock on the date in question, then the Fair Market Value shall
     be the closing selling price on the last preceding date for which such
     quotation exists.

                    (iii)  For purposes of option grants made on the date the
     Underwriting Agreement is executed and the initial public offering price of
     the Common Stock is established, the Fair Market Value shall be deemed to
     be equal to the established initial offering price per share. For purposes
     of option grants made prior to such date, the Fair Market Value shall be
     determined by the Plan Administrator after taking into account such factors
     as the Plan Administrator shall deem appropriate.

     N.   Hostile Take-Over shall mean a change in ownership of the Corporation
          -----------------
effected through the following transaction:

                    (i)    The Acquisition, directly or indirectly, by any
     person or related group of persons (other than the Corporation or a person
     that directly or indirectly

                                      A-2
<PAGE>

     controls, is controlled by, or is under common control with, the
     Corporation) of beneficial ownership (within the meaning of Rule 13d-3 of
     the 1934 Act) of securities possessing more than fifty percent (50%) of the
     total combined voting power of the Corporation's outstanding securities
     pursuant to a tender or exchange offer made directly to the Corporation's
     stockholders which the Board does not recommend such stockholders to
     accept, and
             ---

                    (ii)   more than fifty percent (50%) of the securities so
     acquired are accepted from persons other than Section 16 Insiders.

     O.   Incentive Option shall mean an option which satisfies the requirements
          ----------------
of Code Section 422.

     P.   Misconduct shall mean the commission of any act of fraud, embezzlement
          ----------
or dishonesty by the Optionee, any unauthorized use or disclosure by such person
of confidential information or trade secrets of the Corporation (or any Parent
or Subsidiary), or any other intentional misconduct by such person adversely
affecting the business or affairs of the Corporation (or any Parent or
Subsidiary) in a material manner. The foregoing definition shall not be deemed
to be inclusive of all the acts or omissions which the Corporation (or any
Parent or Subsidiary) may consider as grounds for the dismissal or discharge of
any Optionee or other person in the Service of the Corporation (or any Parent or
Subsidiary).

     Q.   1934 Act shall mean the Securities Exchange Act of 1934, as amended.
          --------

     R.   Non-Statutory Option shall mean an option not intended to satisfy the
          --------------------
requirements of Code Section 422.

     S.   Optionee shall mean any person to whom an option is granted under the
          --------
Discretionary Option Grant or Automatic Option Grant Program.

     T.   Parent shall mean any corporation (other than the Corporation) in an
          ------
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.

     U.   Permanent Disability or Permanently Disabled shall mean the inability
          --------------------------------------------
of the Optionee to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment expected to result in death
or to be of continuous duration of twelve (12) months or more.

     V.   Plan shall mean the Corporation's 1996 Stock Option Plan, as set forth
          ----
in this document.

     W.   Plan Administrator shall mean the particular entity, whether the
          ------------------
Primary Committee, the Board or the Secondary Committee, which is authorized to
administer the Discretionary Option Grant Program with respect to one or more
classes of eligible persons, to

                                      A-3
<PAGE>

the extent such entity is carrying out its administrative functions under those
programs with respect to the persons under its jurisdiction.

     X.   Plan Effective Date shall mean the Section 12(g) Registration Date.
          -------------------

     Y.   Predecessor Plan shall mean the Corporation's existing 1987 Restated
          ----------------
Stock Option Plan.

     Z.   Primary Committee shall mean the committee of two (2) or more non-
          -----------------
employee Board members appointed by the Board to administer the Discretionary
Option Grant Program with respect to Section 16 Insiders.

     AA.  Secondary Committee shall mean a committee of one (1) or more Board
          -------------------
members appointed by the Primary Committee to administer the Discretionary
Option Grant Program with respect to eligible persons other than Section 16
Insiders.

     BB.  Section 16 Insider shall mean an officer or director of the
          ------------------
Corporation subject to the short-swing profit liabilities of Section 16 of the
1934 Act.

     CC.  Section 12(g) Registration Date shall mean the first date on which the
          -------------------------------
Common Stock is registered under Section 12(g) of the 1934 Act.

     DD.  Service shall mean the provision of services to the Corporation (or
          -------
any Parent or Subsidiary) by a person in the capacity of an Employee, a non-
employee member of the board of directors or a consultant or independent
advisor, except to the extent otherwise specifically provided in the documents
evidencing the option grant.

     EE.  Stock Exchange shall mean either the American Stock Exchange or the
          --------------
New York Stock Exchange.

     FF.  Subsidiary shall mean any corporation (other than the Corporation) in
          ----------
an unbroken chain of corporations beginning with the Corporation, provided each
corporation (other than the last corporation) in the unbroken chain owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.

     GG.  Take-Over Price shall mean the greater of (i) the Fair Market Value
          ---------------                -------
per share of Common Stock on the date the option is surrendered to the
Corporation in connection with a Hostile Take-Over or (ii) the highest reported
price per share of Common Stock paid by the tender offeror in effecting such
Hostile Take-Over. However, if the surrendered option is an Incentive Option,
the Take-Over Price shall not exceed the clause (i) price per share.

     HH.  Taxes shall mean the Federal, state and local income and employment
          -----
tax liabilities incurred by the holder of Non-Statutory Options or unvested
shares of Common Stock in connection with the exercise of those options or the
vesting of those shares.

                                      A-4
<PAGE>

     II.  Ten Percent Stockholder shall mean the owner of stock (as determined
          -----------------------
under Code Section 424(d)) possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Corporation (or any Parent
or Subsidiary).

     JJ.  Underwriting Agreement shall mean the agreement between the
          ----------------------
Corporation and the underwriter or underwriters managing the initial public
offering of the Common Stock.

                                      A-5