Document:

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                                                                   Exhibit 10.30

                                  PAETEC CORP.
                NONQUALIFIED STOCK OPTION AGREEMENT FOR DIRECTOR

     PaeTec Corp., a Delaware corporation (the "Company"), hereby grants an
option to purchase shares of its Class A Common Stock, $.01 par value, (the
"Stock") to the optionee named below.  The terms and conditions of the option
are set forth in this cover sheet and in the attachment.

Grant Date:  January 13, 2000

Name of Optionee:  James A. Kofalt

Number of Shares Covered by Option:  10,000

Option Price per Share:  $5.00

Vesting Start Date: September 10, 1999

     By signing this cover sheet, you agree to all of the terms and conditions
described in the attached Agreement.

Optionee:              /s/ James A. Kofalt
            ------------------------------------------
                          (Signature)

Company:              /s/ Richard Ottalagana
            ------------------------------------------
                          (Signature)

            Title:      EVP & Treasurer
                    ----------------------------------

Attachment
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     This is not a stock certificate or a negotiable instrument.
<PAGE>

                                 PAETEC CORP.
               NONQUALIFIED STOCK OPTION AGREEMENT FOR DIRECTOR

Nonqualified Stock Option  This option is not intended to be an incentive stock
                           option under Section 422 of the Internal Revenue Code
                           and will be interpreted accordingly.

Definition of Service      For purpose of this Agreement, "Service" means
                           service as a director of the Company or an affiliate
                           of the Company. Whether a termination of Service
                           shall have occurred for purposes of the Agreement
                           shall be determined by the Board, which determination
                           shall be final, binding and conclusive.

Vesting                    This option is only exercisable before it expires and
                           then only with respect to the vested portion of the
                           option. Subject to the preceding sentence, you may
                           exercise this option, in whole or in part, to
                           purchase a whole number of vested shares not less
                           than 100 shares, unless the number of shares
                           purchased is the total number available for purchase
                           under the option, by following the procedures set
                           forth below.

                           Your right to purchase shares of Stock under this
                           option vests as to 100% of the total number of shares
                           covered by this option, as shown on the cover sheet,
                           on the one-year anniversary of the Vesting Start
                           Date, provided that you have been in Service
                           continuously during the one-year period from the
                           Vesting Start Date through the one-year anniversary
                           of the Vesting Start Date.

                           No additional shares of Stock will vest after your
                           Service has terminated for any reason.

Term                       Your option will expire in any event at the close of
                           business at Company headquarters on the day before
                           the 10th anniversary of the Grant Date, as shown on
                           the cover sheet. Your option will expire earlier if
                           your Service terminates, as described below.

Death                      If your Service terminates because of your death,
                           then your option will expire at the close of business
                           at Company headquarters on the date twelve (12)
                           months after the date of death. During that twelve
                           month period, your estate or heirs may exercise the
                           vested portion of your option.

Leaves of Absence          For purposes of this option, your Service does not
                           terminate when you go on a bona fide leave of
                           absence. The Company determines, in its sole
                           discretion, which leaves count for this purpose, and
                           when your Service terminates for all purposes under
                           this Agreement.
<PAGE>

Notice of Exercise         When you wish to exercise this option, you must
                           notify the Company by filing the proper "Notice of
                           Exercise" form at the address given on the form. Your
                           notice must specify how many shares you wish to
                           purchase (in a parcel of at least 100 shares
                           generally). Your notice must also specify how your
                           shares of Stock should be registered (in your name
                           only or in your and your spouse's names as joint
                           tenants with right of survivorship). The notice will
                           be effective when it is received by the Company.

                           If someone else wants to exercise this option after
                           your death, that person must prove to the Company's
                           satisfaction that he or she is entitled to do so.

Form of Payment            When you submit your notice of exercise, you must
                           include payment of the option price for the shares
                           you are purchasing. Payment may be made in one (or a
                           combination) of the following forms:

                           .  Cash, your personal check, a cashier's check, a
                           money order or another cash equivalent acceptable to
                           the Company.

                           .  Shares of Stock which have already been owned by
                           you for more than six months and which are
                           surrendered to the Company. The value of the shares,
                           determined as of the effective date of the option
                           exercise, will be applied to the option price.

                           .   To the extent a public market for the Stock
                           exists as determined by the Company, by delivery (on
                           a form prescribed by the Company) of an irrevocable
                           direction to a licensed securities broker acceptable
                           to the Company to sell Stock and to deliver all or
                           part of the sale proceeds to the Company in payment
                           of the aggregate option price and any withholding
                           taxes.

Transfer of Option         During your lifetime, only you (or, in the event of
                           your legal incapacity or incompetency, your guardian
                           or legal representative) may exercise the option. You
                           cannot transfer or assign this option. For instance,
                           you may not sell this option or use it as security
                           for a loan. If you attempt to do any of these things,
                           this option will immediately become invalid. You may,
                           however, dispose of this option in your will or it
                           may be transferred upon your death by the laws of
                           descent and distribution.

                           Regardless of any marital property settlement
                           agreement, the Company is not obligated to honor a
                           notice of exercise from your spouse, nor is the
                           Company obligated to recognize your spouse's interest
                           in your option in any other way.

Retention Rights           Neither your option nor this Agreement give you the
                           right to be
<PAGE>

                           retained by the Company (or any affiliate of the
                           Company) in any capacity. The Company (and any
                           affiliate of the Company) reserve the right to
                           terminate your Service at any time and for any
                           reason.

Shareholder Rights         You, or your estate or heirs, have no rights as a
                           shareholder of the Company until a certificate for
                           your option's shares has been issued. No adjustments
                           are made for dividends or other rights if the
                           applicable record date occurs before your stock
                           certificate is issued, except as described in this
                           Agreement in the Section entitled "Adjustments."

Adjustments                In the event of a stock split, a stock dividend or a
                           similar change in the Stock, the number of shares
                           covered by this option and the option price per share
                           may be adjusted (and rounded down to the nearest
                           whole number) by the Board as it determines in its
                           sole and absolute discretion. Your option shall be
                           subject to the terms of the agreement of merger,
                           liquidation or reorganization in the event the
                           Company is subject to such corporate activity, which
                           agreement may provide for an earlier expiration of
                           your option.

Applicable Law             This Agreement will be interpreted and enforced under
                           the laws of the State of Delaware, other than any
                           conflicts or choice of law rule or principle that
                           might otherwise refer construction or interpretation
                           of this Agreement to the substantive law of another
                           jurisdiction.

Agreement                  This Agreement constitutes the entire understanding
                           between you and the Company regarding this option.
                           Any prior agreements, commitments or negotiations
                           concerning this option are superseded.

       By signing the cover sheet of this Agreement, you agree to all of the
       terms and conditions described above.<PAGE>

                                 NETOPIA, INC.

                           2000 STOCK INCENTIVE PLAN

                          As Adopted October 18, 2000

     1.   PURPOSE. The purpose of this Plan is to provide incentives to attract,
          -------
retain and motivate eligible persons whose present and potential contributions
are important to the success of the Company and its Subsidiaries, by offering
them an opportunity to participate in the Company's future performance through
awards of Options and Restricted Stock. Capitalized terms not defined in the
text are defined in Section 22 if they are not otherwise defined in other
sections of this Plan.

     2.   SHARES SUBJECT TO THE PLAN.
          --------------------------

          2.1  Number of Shares Available. Subject to Sections 2.2 and 17, the
               --------------------------
total number of Shares reserved and available for grant and issuance pursuant to
this Plan will be 1,000,000 Shares. Subject to Sections 2.2 and 17, Shares that
are subject to: (a) issuance upon exercise of an Option but cease to be subject
to such Option for any reason other than exercise of such Award and (b) an Award
granted hereunder but are forfeited or are repurchased by the Company at the
original issue price because the Shares are Unvested Shares at the time of the
Participant's Termination, will again be available for grant and issuance in
connection with future Awards under this Plan. At all times the Company shall
reserve and keep available a sufficient number of Shares as shall be required to
satisfy the requirements of all outstanding Awards granted under this Plan.

          2.2  Adjustment of Shares. If the number of outstanding shares is
               --------------------
changed by a stock dividend, recapitalization, stock split, reverse stock split,
subdivision, combination, reclassification or similar change in the capital
structure of the Company without consideration, then (a) the number of Shares
reserved for issuance under this Plan, (b) the Exercise Prices of and number of
Shares subject to outstanding Options, and (c) the number of Shares subject to
other outstanding Awards, will be proportionately adjusted, subject to any
required action by the Board or the stockholders of the Company and compliance
with applicable securities laws; provided, that fractions of a Share will not be
                                 --------
issued but will either be paid in cash at the Fair Market Value of such fraction
of a Share or will be rounded up to the nearest whole Share, as determined by
the Committee; and provided, further, that the Exercise Price of any Award may
not be decreased to below the par value of the Shares.

     3.   ELIGIBILITY. Awards may be granted to employees, officers, directors,
          -----------
consultants, independent contractors and advisors of the Company or any
Subsidiary of the Company; provided such consultants, independent contractors
                           --------
and advisors render bona fide services not in connection with the offer and sale
of securities in a capital-raising transaction. A person may be granted more
than one Award under this Plan. Awards granted to officers and directors may not
exceed in the aggregate forty percent (40%) of all Shares that are reserved for
grant under this Plan. Awards granted as Restricted Stock to officers and
directors may not exceed in the aggregate forty percent (40%) of all Shares that
are granted as Restricted Stock.

     4.   ADMINISTRATION.
          --------------

          4.1  Committee Authority. This Plan will be administered by the
               -------------------
Committee or by the Board acting as the Committee. Subject to the general
purposes, terms and conditions of this Plan, and to the direction of the Board,
the Committee will have full power to implement and carry out this Plan. Without
limitation, the Committee will have the authority to:

               (a)  construe and interpret this Plan, any Award Agreement and
any other agreement or document executed pursuant to this Plan;

               (b)  prescribe, amend and rescind rules and regulations relating
to this Plan or any Award;

                                      -1-
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               (c)  select persons to receive Awards;

               (d)  determine the form and terms of Awards;

               (e)  determine the number of Shares subject to Awards;

               (f)  determine whether Awards will be granted singly, in
combination with, in tandem with, in replacement of, or as alternatives to,
other Awards under this Plan or any other incentive or compensation plan of the
Company or any Parent or Subsidiary of the Company;

               (g)  grant waivers of Plan or Award conditions;

               (h)  determine the vesting, exercisability and payment of Awards;

               (i)  correct any defect, supply any omission or reconcile any
inconsistency in this Plan, any Award or any Award Agreement;

               (j)  determine whether an Award has been earned; and

               (k)  make all other determinations necessary or advisable for the
administration of this Plan.

          4.2  Committee Discretion. Any determination made by the Committee
               --------------------
with respect to any Award will be made in its sole discretion at the time of
grant of the Award or, unless in contravention of any express term of this Plan
or Award, at any later time, and such determination will be final and binding on
the Company and on all persons having an interest in any Award under this Plan.
The Committee may delegate to one or more officers of the Company the authority
to grant an Award under this Plan to Participants who are not officers.

     5.   OPTIONS. Only nonqualified stock options that do not qualify as
          -------
incentive stock options within the meaning of Section 422(b) of the Code may be
granted under this Plan. The Committee may grant Options to eligible persons and
will determine (i) the number of Shares subject to the Option, (ii) the Exercise
Price of the Option, (iii) the period during which the Option may be exercised,
and (iv) all other terms and conditions of the Option, subject to the following:

          5.1  Form of Option Grant. Each Option granted under this Plan will be
               --------------------
evidenced by a Stock Option Agreement. The Stock Option Agreement will be in
such form and contain such provisions (which need not be the same for each
Participant) as the Committee may from time to time approve, and which will
comply with and be subject to the terms and conditions of this Plan.

          5.2  Date of Grant. The date of grant of an Option will be the date on
               -------------
which the Committee makes the determination to grant the Option, unless a later
date is otherwise specified by the Committee. The Stock Option Agreement and a
copy of this Plan will be delivered to the Participant within a reasonable time
after the Option is granted.

          5.3  Exercise Period and Expiration Date. Options will be exercisable
               -----------------------------------
within the times or upon the occurrence of events determined by the Committee as
set forth in the Stock Option Agreement governing such Option; provided,
                                                               --------
however, that no Option will be exercisable after the expiration of ten (10)
-------
years from the date the Option is granted. The Committee also may provide for
Options to become exercisable at one time or from time to time, periodically or
otherwise, in such number of Shares or percentage of Shares as the Committee
determines.

          5.4  Exercise Price. The Exercise Price of an Option will be
               --------------
determined by the Committee when the Option is granted and may be not less than
the par value of the Shares on the date of grant. Payment for the Shares
purchased must be made in accordance with Section 7 of this Plan.

                                      -2-
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          5.5  Method of Exercise. Options may be exercised only by delivery to
               ------------------
the Company of a written stock option exercise agreement (the "Exercise
Agreement") in a form approved by the Committee (which need not be the same for
each Participant), stating the number of Shares being purchased, the
restrictions imposed on the Shares purchased under such Exercise Agreement, if
any, and such representations and agreements regarding Participant's investment
intent and access to information and other matters, if any, as may be required
or desirable by the Company to comply with applicable securities laws, together
with payment in full of the Exercise Price for the number of Shares being
purchased.

          5.6  Termination. Notwithstanding the exercise periods set forth in
               -----------
the Stock Option Agreement, exercise of an Option will always be subject to the
following:

               (a)  If the Participant is Terminated for any reason except death
or Permanent Disability, then the Participant may exercise such Participant's
Options only to the extent that such Options would have been exercisable upon
the Termination Date no later than three (3) months after the Termination Date
(or such shorter or longer time period not exceeding five (5) years as may be
determined by the Committee, but in any event, no later than the expiration date
of the Options).

               (b)  If the Participant is Terminated because of Participant's
death, then Participant's Options may be exercised (i) in full if Participant
had been in the Company's or a Subsidiary's service for more than two (2) years
prior to the Termination Date, or (ii) if Participant had been in the Company's
or a Subsidiary's service for less than two (2) years prior to the Termination
Date only to the extent that such Options would have been exercisable by
Participant had Participant remained continuously in the Company's or a
Subsidiary's service for a period two (2) years after the Termination Date and
must be exercised by Participant (or Participant's legal representative or
authorized assignee) no later than twelve (12) months after the Termination Date
(or such shorter or longer time period not exceeding five (5) years as may be
determined by the Committee) but in any event no later than the expiration date
of the Options).

               (c)  If the Participant is Terminated because of Participant's
Permanent Disability, then the Participant may exercise such Participant's
Options only to the extent that such Options would have been exercisable upon
the Termination Date no later than twelve (12) months after the Termination Date
(or such shorter or longer time period not exceeding five (5) years as may be
determined by the Committee, but in any event, no later than the expiration date
of the Options).

               (d)  Notwithstanding the provisions in paragraph 5.6(a) above, if
a Participant is terminated for Cause, neither the Participant, the
Participant's estate nor such other person who may then hold the Option shall be
entitled to exercise any Option with respect to any Shares whatsoever, after
termination of service, whether or not after termination of service the
Participant may receive payment from the Company or any Parent or Subsidiary of
the Company for vacation pay, for services rendered prior to termination, for
services rendered for the day on which termination occurs, for salary in lieu of
notice, or for any other benefits. In making such determination, the Board shall
give the Participant an opportunity to present to the Board evidence on his
behalf. For the purpose of this paragraph, termination of service shall be
deemed to occur on the date when the Company dispatches notice or advice to the
Participant that his service is terminated.

          5.7  Limitations on Exercise. The Committee may specify a reasonable
               -----------------------
minimum number of Shares that may be purchased on any exercise of an Option,
provided that the minimum number will not prevent a Participant from exercising
the Option for the full number of Shares for which it is then exercisable.

          5.8  Modification, Extension or Renewal. The Committee may modify,
               ----------------------------------
extend or renew outstanding Options and authorize the grant of new Options in
substitution therefor, provided that any such action may not, without the
written consent of a Participant, impair any of such Participant's rights under
any Option previously granted. The Committee may reduce the Exercise Price of
outstanding Options without the consent of Participants affected by a written
notice to them; provided, however, that the Exercise Price may not be reduced
                --------  -------
below the minimum Exercise Price that would be permitted under Section 5.4 of
this Plan for Options granted on

                                      -3-
<PAGE>

the date the action is taken to reduce the Exercise Price; and provided,
further, that the Exercise Price shall not be reduced below the par value of the
Shares.

     6.   RESTRICTED STOCK. A Restricted Stock Award is an offer by the Company
          ----------------
to sell to an eligible person Shares that are subject to restrictions. The
Committee will determine to whom an offer will be made, the number of Shares the
person may purchase, the price to be paid (the "Purchase Price"), the
restrictions to which the Shares will be subject, and all other terms and
conditions of the Restricted Stock Award, subject to the following:

          6.1  Form of Restricted Stock Award. All purchases under a Restricted
               ------------------------------
Stock Award made pursuant to this Plan will be evidenced by an Award Agreement
("Restricted Stock Purchase Agreement") that will be in such form (which need
not be the same for each Participant) as the Committee will from time to time
approve, and will comply with and be subject to the terms and conditions of this
Plan. The offer of Restricted Stock will be accepted by the Participant's
execution and delivery of the Restricted Stock Purchase Agreement and full
payment for the Shares to the Company within thirty (30) days from the date the
Restricted Stock Purchase Agreement is delivered to the person. If such person
does not execute and deliver the Restricted Stock Purchase Agreement along with
full payment for the Shares to the Company within thirty (30) days, then the
offer will terminate, unless otherwise determined by the Committee.

          6.2  Purchase Price. The Purchase Price of Shares sold pursuant to a
               --------------
Restricted Stock Award will be determined by the Committee on the date the
Restricted Stock Award is granted and may be not less than the par value of the
Shares on the date of grant. Payment of the Purchase Price may be made in
accordance with Section 7 of this Plan.

          6.3  Terms of Restricted Stock Awards. Restricted Stock Awards shall
               --------------------------------
be subject to such restrictions as the Committee may impose. These restrictions
may be based upon completion of a specified number of years of service with the
Company or upon completion of the performance goals as set out in advance in the
Participant's individual Restricted Stock Purchase Agreement. Restricted Stock
Awards may vary from Participant to Participant and between groups of
Participants. Prior to the payment of any Restricted Stock Award, the Committee
shall determine the extent to which such Restricted Stock Award has been earned.

          6.4  Termination During Performance Period. If a Participant is
               -------------------------------------
Terminated during a performance period for any reason, then such Participant
will be entitled to payment (whether in Shares, cash or otherwise) with respect
to the Restricted Stock Award only to the extent earned as of the date of
Termination in accordance with the Restricted Stock Purchase Agreement, unless
the Committee will determine otherwise.

     7.   PAYMENT FOR SHARE PURCHASES.
          ---------------------------

          7.1  Payment. Payment for Shares purchased on exercise of an Award may
               -------
be made in cash (by check) or, where expressly approved for the Participant by
the Committee and where permitted by law:

               (a)  by surrender of shares that either: (1) have been owned by
Participant for more than six (6) months and have been paid for within the
meaning of SEC Rule 144 (and, if such shares were purchased from the Company by
use of a promissory note, such note has been fully paid with respect to such
shares); or (2) were obtained by Participant in the public market;

               (b)  by tender of a full recourse promissory note having such
terms as may be approved by the Committee and bearing interest at a rate
sufficient to avoid imputation of income under Sections 483 and 1274 of the
Code; provided, however, that a Participant who is not an employee of the
      --------  -------
Company may not purchase Shares with a promissory note unless the note is
adequately secured by collateral other than the Shares; and provided, further,
that the portion of the Exercise Price equal to the par value of the Shares must
be paid in cash;

                                      -4-
<PAGE>

               (c)  provided that a public market for the Company's stock
exists:

                    (1)  through a "same day sale" commitment from the
Participant and a broker-dealer selected by the Company that is a member of the
National Association of Securities Dealers (an "NASD Dealer") whereby the
Participant irrevocably elects to exercise the Option and to sell a portion of
the Shares so purchased to pay for the Exercise Price, and whereby the NASD
Dealer irrevocably commits upon receipt of such Shares to forward the Exercise
Price directly to the Company; or

                    (2)  through a "margin" commitment from the Participant and
a NASD Dealer whereby the Participant irrevocably elects to exercise the Option
and to pledge the Shares so purchased to the NASD Dealer in a margin account as
security for a loan from the NASD Dealer in the amount of the Exercise Price,
and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to
forward the Exercise Price directly to the Company; or

               (d)  by any combination of the foregoing.

          7.2  Loan Guarantees. The Committee may help the Participant pay for
               ---------------
Shares purchased under this Plan by authorizing a guarantee by the Company of a
third-party loan to the Participant.

     8.   WITHHOLDING TAXES.
          -----------------

          8.1  Withholding Generally. Whenever Shares are to be issued on
               ---------------------
exercise of Awards granted under this Plan, the Company may require the
Participant to remit to the Company an amount sufficient to satisfy federal,
state and local withholding tax requirements prior to the delivery of any
certificate or certificates for such Shares. If a payment in satisfaction of an
Award is to be made in cash, such payment will be net of an amount sufficient to
satisfy federal, state, and local withholding tax requirements.

          8.2  Stock Withholding.  When, under applicable tax laws, a
               -----------------
Participant incurs tax liability in connection with the exercise or vesting of
any Award that is subject to tax withholding and the Participant is obligated to
pay the Company the amount required to be withheld, the Committee may in its
sole discretion allow the Participant to satisfy the minimum withholding tax
obligation by electing to have the Company withhold from the Shares to be issued
that number of Shares having a Fair Market Value equal to the minimum amount
required to be withheld, determined on the date that the amount of tax to be
withheld is to be determined. All elections by a Participant to have Shares
withheld for this purpose will be made in accordance with the requirements
established by the Committee and be in writing in a form acceptable to the
Committee.

     9.   PRIVILEGES OF STOCK OWNERSHIP
          -----------------------------

          9.1  Voting and Dividends. No Participant will have any of the rights
               --------------------
of a stockholder with respect to any Shares until the Shares are issued to the
Participant. After Shares are issued to the Participant, the Participant will be
a stockholder and have all the rights of a stockholder with respect to such
Shares, including the right to vote and receive all dividends or other
distributions made or paid with respect to such Shares; provided, however, that
if such Shares are Restricted Stock, any new, additional or different securities
the Participant may become entitled to receive with respect to the Shares by
virtue of a stock dividend, stock split or any other change in the corporate or
capital structure of the Company will be subject to the same restrictions as the
Restricted Stock; provided, further that the Participant will have no right to
retain such dividends or distributions with respect to Shares that are
repurchased at the Participant's original Exercise Price pursuant to Section 11.

          9.2  Financial Statements. The Company will provide financial
               --------------------
statements to each Participant prior to such Participant's purchase of Shares
under this Plan, and to each Participant annually during the period such
Participant has Awards outstanding; provided, however, that the Company will not
                                    --------  -------
be required to provide such financial statements to Participants whose services
in connection with the Company assure them access to equivalent information.

                                      -5-
<PAGE>

     10.  TRANSFERABILITY.
          ---------------

          10.1 Except as otherwise provided in this Section 10, Awards granted
under this Plan, and any interest therein, will not be transferable or
assignable by Participant, and may not be made subject to execution, attachment
or similar process, otherwise than by will or by the laws of descent and
distribution or as determined by the Committee and set forth in the Award
Agreement.

          10.2 Unless otherwise restricted by the Committee, an Option shall be
exercisable: (i) during the Participant's lifetime only by (A) the Participant,
(B) the Participant's guardian or legal representative, (C) a Family Member of
the Participant who has acquired the Option by "permitted transfer;" and (ii)
after Participant's death, by the legal representative of the Participant's
heirs or legatees. "Permitted transfer" means, as authorized by this Plan and
the Committee in an Option, any transfer effected by the Participant during the
Participant's lifetime of an interest in such Option but only such transfers
which are by gift or domestic relations order. A permitted transfer does not
include any transfer for value and neither of the following are transfers for
value: (a) a transfer of under a domestic relations order in settlement of
marital property rights or (b) a transfer to an entity in which more than fifty
percent of the voting interests are owned by Family Members or the Participant
in exchange for an interest in that entity.

          10.3 Unless otherwise restricted by the Committee, a Restricted Stock
may be transferred during the Participant's lifetime, only to (A) the
Participant, or (B) the Participant's guardian or legal representative.

     11.  RESTRICTIONS ON SHARES. At the discretion of the Committee, the
          ----------------------
Company may reserve to itself and/or its assignee(s) in the Award Agreement a
right to repurchase at the Participant's Exercise Price a portion of or all
Unvested Shares held by a Participant following such Participant's Termination
at any time within ninety (90) days after the later of Participant's Termination
Date and the date Participant purchases Shares under this Plan, for cash and/or
cancellation of purchase money indebtedness, at the Participant's Exercise Price
or Purchase Price, as the case may be.

     12.  CERTIFICATES. All certificates for Shares or other securities
delivered under this Plan will be subject to such stock transfer orders, legends
and other restrictions as the Committee may deem necessary or advisable,
including restrictions under any applicable federal, state or foreign securities
law, or any rules, regulations and other requirements of the SEC or any stock
exchange or automated quotation system upon which the Shares may be listed or
quoted.

     13.  ESCROW; PLEDGE OF SHARES. To enforce any restrictions on a
          ------------------------
Participant's Shares, the Committee may require the Participant to deposit all
certificates representing the Shares, together with stock powers or other
instruments of transfer approved by the Committee, appropriately endorsed in
blank, with the Company or an agent designated by the Company to hold in escrow
until such restrictions have lapsed or terminated, and the Committee may cause a
legend or legends referencing such restrictions to be placed on the
certificates. Any Participant who is permitted to execute a promissory note as
partial or full consideration for the purchase of Shares under this Plan will be
required to pledge and deposit with the Company all or part of the Shares so
purchased as collateral to secure the payment of Participant's obligation to the
Company under the promissory note; provided, however, that the Committee may
                                   --------  -------
require or accept other or additional forms of collateral to secure the payment
of such obligation and, in any event, the Company will have full recourse
against the Participant under the promissory note notwithstanding any pledge of
the Participant's Shares or other collateral. In connection with any pledge of
the Shares, Participant will be required to execute and deliver a written pledge
agreement in such form as the Committee will from time to time approve. The
Shares purchased with the promissory note may be released from the pledge on a
pro rata basis as the promissory note is paid.

     14.  EXCHANGE AND BUYOUT OF AWARDS. The Committee may, at any time or from
          -----------------------------
time to time, authorize the Company, with the consent of the respective
Participants, to issue new Awards in exchange for the surrender and cancellation
of any or all outstanding Awards. The Committee may at any time buy from a

                                      -6-
<PAGE>

Participant an Award previously granted with payment in cash, Shares (including
Restricted Stock) or other consideration, based on such terms and conditions as
the Committee and the Participant may agree.

     15.  SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An Award will not be
          ----------------------------------------------
effective unless such Award is in compliance with all applicable federal and
state securities laws, rules and regulations of any governmental body, and the
requirements of any stock exchange or automated quotation system upon which the
Shares may then be listed or quoted, as they are in effect on the date of grant
of the Award and also on the date of exercise or other issuance. Notwithstanding
any other provision in this Plan, the Company will have no obligation to issue
or deliver certificates for Shares under this Plan prior to: (a) obtaining any
approvals from governmental agencies that the Company determines are necessary
or advisable; and/or (b) completion of any registration or other qualification
of such Shares under any state or federal law or ruling of any governmental body
that the Company determines to be necessary or advisable. The Company will be
under no obligation to register the Shares with the SEC or to effect compliance
with the registration, qualification or listing requirements of any state
securities laws, stock exchange or automated quotation system, and the Company
will have no liability for any inability or failure to do so.

     16.  NO OBLIGATION TO EMPLOY. Nothing in this Plan or any Award granted
          -----------------------
under this Plan will confer or be deemed to confer on any Participant any right
to continue in the employ of, or to continue any other relationship with, the
Company or any Parent or Subsidiary of the Company or limit in any way the right
of the Company or any Parent or Subsidiary of the Company to terminate
Participant's employment or other relationship at any time, with or without
cause.

     17.  CORPORATE TRANSACTIONS.
          ----------------------

          17.1  Assumption or Replacement of Awards by Successor. In the event
                -----------------------------------------------
of (a) a dissolution or liquidation of the Company, (b) a merger or
consolidation in which the Company is not the surviving corporation (other than
a merger or consolidation with a wholly-owned subsidiary, a reincorporation of
the Company in a different jurisdiction, or other transaction in which there is
no substantial change in the stockholders of the Company or their relative stock
holdings and the Awards granted under this Plan are assumed, converted or
replaced by the successor corporation, which assumption will be binding on all
Participants), (c) a merger in which the Company is the surviving corporation
but after which the stockholders of the Company immediately prior to such merger
(other than any stockholder that merges, or which owns or controls another
corporation that merges, with the Company in such merger) cease to own their
shares or other equity interest in the Company, (d) the sale of substantially
all of the assets of the Company, or (e) the acquisition, sale, or transfer of
more than 50% of the outstanding shares of the Company by tender offer or
similar transaction, any or all outstanding Awards may be assumed, converted or
replaced by the successor corporation (if any), which assumption, conversion or
replacement will be binding on all Participants. In the alternative, the
successor corporation may substitute equivalent Awards or provide substantially
similar consideration to Participants as was provided to stockholders (after
taking into account the existing provisions of the Awards). The successor
corporation may also issue, in place of outstanding Shares of the Company held
by the Participant, substantially similar shares or other property subject to
repurchase restrictions no less favorable to the Participant. In the event such
successor corporation (if any) refuses to assume or substitute Awards, as
provided above, pursuant to a transaction described in this Subsection 17.1,
such Awards will expire on such transaction at such time and on such conditions
as the Committee will determine; provided, however, that the Committee may, in
                                 --------  -------
its sole discretion, provide that the vesting of any or all Awards granted
pursuant to this Plan will accelerate. If the Committee exercises such
discretion with respect to Options, such Options will become exercisable in full
prior to the consummation of such event at such time and on such conditions as
the Committee determines, and if such Options are not exercised prior to the
consummation of the corporate transaction, they shall terminate at such time as
determined by the Committee.

          17.2  Other Treatment of Awards. Subject to any greater rights granted
                -------------------------
to Participants under the foregoing provisions of this Section 17, in the event
of the occurrence of any transaction described in Section 17.1, any outstanding
Awards will be treated as provided in the applicable agreement or plan of
merger, consolidation, dissolution, liquidation, or sale of assets.

                                      -7-
<PAGE>

          17.3  Assumption of Awards by the Company. The Company, from time to
                -----------------------------------
time, also may substitute or assume outstanding awards granted by another
company, whether in connection with an acquisition of such other company or
otherwise, by either; (a) granting an Award under this Plan in substitution of
such other company's award; or (b) assuming such award as if it had been granted
under this Plan if the terms of such assumed award could be applied to an Award
granted under this Plan. Such substitution or assumption will be permissible if
the holder of the substituted or assumed award would have been eligible to be
granted an Award under this Plan if the other company had applied the rules of
this Plan to such grant. In the event the Company assumes an award granted by
another company, the terms and conditions of such award will remain unchanged
(except that the exercise price and the number and nature of Shares issuable
-------
upon exercise of any such option will be adjusted appropriately pursuant to
Section 424(a) of the Code). In the event the Company elects to grant a new
Option rather than assuming an existing option, such new Option may be granted
with a similarly adjusted Exercise Price.

     18.  ADOPTION. This Plan will become effective on the date that it is
          --------
adopted by the Board (the "Effective Date").

     19.  TERM OF PLAN/GOVERNING LAW. Unless earlier terminated as provided
          --------------------------
herein, this Plan will terminate ten (10) years from the Effective Date. This
Plan and all agreements thereunder shall be governed by and construed in
accordance with the laws of the State of California.

     20.  AMENDMENT OR TERMINATION OF PLAN. The Board may at any time terminate
          --------------------------------
or amend this Plan in any respect, including without limitation amendment of any
form of Award Agreement or instrument to be executed pursuant to this Plan.

     21.  NONEXCLUSIVITY OF THE PLAN. Neither the adoption of this Plan by the
          --------------------------
Board, nor any provision of this Plan will be construed as creating any
limitations on the power of the Board to adopt such additional compensation
arrangements as it may deem desirable, including, without limitation, the
granting of stock option and bonuses otherwise than under this Plan, and such
arrangements may be either generally applicable or applicable only in specific
cases.

     22.  DEFINITIONS. As used in this Plan, the following terms will have the
          -----------
following meanings:

          "Award" means any award under this Plan, including any Option or
Restricted Stock.

          "Award Agreement" means, with respect to each Award, the signed
written agreement between the Company and the Participant setting forth the
terms and conditions of the Award.

          "Board" means the Board of Directors of the Company.

          "Cause" means the commission of an act of theft, embezzlement, fraud,
dishonesty or a breach of fiduciary duty to the Company or a Parent or
Subsidiary of the Company.

          "Code" means the Internal Revenue Code of 1986, as amended.

          "Committee" means the Compensation Committee of the Board.

          "Company" means Netopia, Inc. or any successor corporation.

          "Exercise Price" means the price at which a holder of an Option may
purchase the Shares issuable upon exercise of the Option.

          "Fair Market Value" means, as of any date, the value of a share of the
Company's Common Stock determined as follows:

                                      -8-
<PAGE>

               (a)  if such Common Stock is then quoted on the Nasdaq National
                    Market, its closing price on the Nasdaq National Market on
                    the date of determination as reported in The Wall Street
                                                             ---------------
                    Journal;
                    -------

               (b)  if such Common Stock is publicly traded and is then listed
                    on a national securities exchange, its closing price on the
                    date of determination on the principal national securities
                    exchange on which the Common Stock is listed or admitted to
                    trading as reported in The Wall Street Journal; or
                                           -----------------------

               (c)  if such Common Stock is publicly traded but is not quoted on
                    the Nasdaq National Market nor listed or admitted to trading
                    on a national securities exchange, the average of the
                    closing bid and asked prices on the date of determination as
                    reported in The Wall Street Journal;
                                -----------------------

               (d)  if none of the foregoing is applicable, by the Committee in
                    good faith.

          "Family Member" includes any of the following:

               (a)  child, stepchild, grandchild, parent, stepparent,
                    grandparent, spouse, former spouse, sibling, niece, nephew,
                    mother-in-law, father-in-law, son-in-law, daughter-in-law,
                    brother-in-law, or sister-in-law of the Participant,
                    including any such person with such relationship to the
                    Participant by adoption;

               (b)  any person (other than a tenant or employee) sharing the
                    Participant's household;

               (c)  a trust in which the persons in (a) and (b) have more than
                    fifty percent of the beneficial interest;

               (d)  a foundation in which the persons in (a) and (b) or the
                    Participant control the management of assets; or

               (e)  any other entity in which the persons in (a) and (b) or the
                    Participant own more than fifty percent of the voting
                    interest.

          "Option" means an award of an option to purchase Shares pursuant to
Section 5.

          "Parent" means any corporation (other than the Company) in an unbroken
chain of corporations ending with the Company if each of such corporations other
than the Company owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain.

          "Participant" means a person who receives an Award under this Plan.

          "Permanent Disability" means the inability of Participant to engage in
any substantial gainful activity by reason of any medically determinable
physical or mental impairment which is expected to result in death or has lasted
or can be expected to last for a continuous period of twelve (12) months or
more.

          "Plan" means this Netopia, Inc. 2000 Stock Incentive Plan, as amended
from time to time.

          "Restricted Stock Award" means an award of Shares pursuant to Section
6.

          "SEC" means the Securities and Exchange Commission.

          "Securities Act" means the Securities Act of 1933, as amended.

                                      -9-
<PAGE>

          "Shares" means shares of the Company's Common Stock reserved for
issuance under this Plan, as adjusted pursuant to Sections 2 and 17, and any
successor security.

          "Stock Option Agreement" means, with respect to each Option, the
signed written agreement between the Company and the Participant setting forth
the terms and conditions of the Option.

          "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.

          "Termination" or "Terminated" means, for purposes of this Plan with
respect to a Participant, that the Participant has for any reason ceased to
provide services as an employee, officer, consultant, independent contractor, or
advisor to the Company or a Parent or Subsidiary of the Company. An employee
will not be deemed to have ceased to provide services in the case of (i) sick
leave, (ii) military leave, or (iii) any other leave of absence approved by the
Committee, provided, that such leave is for a period of not more than 90 days,
unless reemployment upon the expiration of such leave is guaranteed by contract
or statute or unless provided otherwise pursuant to formal policy adopted from
time to time by the Company and issued and promulgated to employees in writing.
In the case of any employee on an approved leave of absence, the Committee may
make such provisions respecting suspension of vesting of the Award while on
leave from the employ of the Company or a Parent or Subsidiary of the Company as
it may deem appropriate, except that in no event may an Award be exercised after
the expiration of the term set forth in the Award Agreement. The Committee will
have sole discretion to determine whether a Participant has ceased to provide
services and the effective date on which the Participant ceased to provide
services (the "Termination Date").

          "Unvested Shares" means "Unvested Shares" as defined in the Award
Agreement.

          "Vested Shares" means "Vested Shares" as defined in the Award
Agreement.

                                      -10-

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