Document:

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                                                                    Exhibit 10.6

                                REPLAYTV, INC.

                       2000 DIRECTORS' STOCK OPTION PLAN
                       ---------------------------------

     1.   Purposes of the Plan.  The purposes of this Directors' Stock Option
          --------------------
Plan are to attract and retain the best available personnel for service as
Directors of the Company, to provide additional incentive to the Outside
Directors of the Company to serve as Directors, and to encourage their continued
service on the Board.

          All options granted hereunder shall be nonstatutory stock options.

     2.   Definitions.  As used herein, the following definitions shall apply:
          -----------

          (a) "Board" means the Board of Directors of the Company.
               -----

          (b) "Change of Control" means a sale of all or substantially all of
               -----------------
the Company's assets, or any merger or consolidation of the Company with or into
another corporation other than a merger or consolidation in which the holders of
more than 50% of the shares of capital stock of the Company outstanding
immediately prior to such transaction continue to hold (either by the voting
securities remaining outstanding or by their being converted into voting
securities of the surviving entity) more than 50% of the total voting power
represented by the voting securities of the Company, or such surviving entity,
outstanding immediately after such transaction.

          (c) "Code" means the Internal Revenue Code of 1986, as amended.
               ----

          (d) "Common Stock" means the Common Stock of the Company.
               ------------

          (e) "Company" means ReplayTV, Inc., a Delaware corporation.
               -------

          (f) "Continuous Status as a Director" means the absence of any
               -------------------------------
interruption or termination of service as a Director.

          (g) "Corporate Transaction" means a dissolution or liquidation of the
               ---------------------
Company, a sale of all or substantially all of the Company's assets, or a
merger, consolidation or other capital reorganization of the Company with or
into another corporation.

          (h) "Director" means a member of the Board.
               --------

          (i) "Employee" means any person, including any officer or Director,
               --------
employed by the Company or any Parent or Subsidiary of the Company.  The payment
of a director's fee by the Company shall not be sufficient in and of itself to
constitute "employment" by the Company.

          (j) "Exchange Act" means the Securities Exchange Act of 1934, as
               ------------
amended.
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          (k) "Option" means a stock option granted pursuant to the Plan.  All
               ------
options shall be nonstatutory stock options (i.e., options that are not intended
to qualify as incentive stock options under Section 422 of the Code).

          (l) "Optioned Stock" means the Common Stock subject to an Option.
               --------------

          (m) "Optionee" means an Outside Director who receives an Option.
               --------

          (n) "Outside Director" means a Director who is not an Employee.
               ----------------

          (o) "Parent" means a "parent corporation," whether now or hereafter
               ------
existing, as defined in Section 424(e) of the Code.

          (p) "Plan" means this 2000 Directors' Stock Option Plan.
               ----

          (q) "Share" means a share of the Common Stock, as adjusted in
               -----
accordance with Section 11 of the Plan.

          (r) "Subsidiary" means a "subsidiary corporation," whether now or
               ----------
hereafter existing, as defined in Section 424(f) of the Code.

     3.   Stock Subject to the Plan.  Subject to the provisions of Section 11 of
          -------------------------
the Plan, the number of Shares that are available to be sold under the Plan is
300,000 Shares of Common Stock.  As of January 1 of each year beginning in 2001
and ending in 2009, the aggregate number of Shares available to be sold under
the Plan shall automatically be increased by the number of Shares necessary to
cause the number of Shares then available for sale to be restored to 300,000
Shares.  Notwithstanding the above, the maximum aggregate number of Shares that
may be sold over the term of the Plan shall be 3,000,000.  The Shares may be
authorized, but unissued, or reacquired Common Stock.

     If an Option should expire or become unexercisable for any reason without
having been exercised in full, the unpurchased Shares that were subject thereto
shall, unless the Plan has been terminated, become available for future grant
under the Plan.  In addition, any Shares of Common Stock that are retained by
the Company upon exercise of an Option in order to satisfy the exercise price
for such Option, or any withholding taxes due with respect to such exercise,
shall be treated as not issued and shall continue to be available under the
Plan.  If Shares that were acquired upon exercise of an Option are subsequently
repurchased by the Company, such Shares shall not in any event be returned to
the Plan and shall not become available for future grant under the Plan.

     4.   Administration of and Grants of Options under the Plan.
          ------------------------------------------------------

          (a) Administrator.  Except as otherwise required herein, the Plan
              -------------
shall be administered by the Board.

                                      -2-
<PAGE>

          (b) Procedure for Grants.  All grants of Options hereunder shall be
              --------------------
automatic and nondiscretionary and shall be made strictly in accordance with the
following provisions:

              (i)   No person shall have any discretion to select which Outside
Directors shall be granted Options or to determine the number of Shares to be
covered by Options granted to Outside Directors.

              (ii)  Each Outside Director who becomes an Outside Director after
the effective date of this Plan shall be automatically granted an Option to
purchase 50,000 Shares (the "First Option") on the date on which such person
                             ------------
first becomes an Outside Director, whether through election by the stockholders
of the Company or appointment by the Board to fill a vacancy.

              (iii) Each Outside Director shall thereafter be automatically
granted an Option to purchase 15,000 Shares (a "Annual Option") on the date of
                                                -------------
each Annual Meeting of the Company's stockholders immediately following which
such Outside Director is serving on the Board, provided that, on such date, he
or she shall have served on the Board for at least six (6) months prior to the
date of such Annual Meeting.

             (iv)   Notwithstanding the provisions of subsections (ii) and (iii)
hereof, in the event that a grant would cause the number of Shares subject to
outstanding Options plus the number of Shares previously purchased upon exercise
of Options to exceed the Pool, then each such automatic grant shall be for that
number of Shares determined by dividing the total number of Shares remaining
available for grant by the number of Outside Directors receiving an Option on
the automatic grant date.  Any further grants shall then be deferred until such
time, if any, as additional Shares become available for grant under the Plan
through action of the stockholders to increase the number of Shares which may be
issued under the Plan or through cancellation or expiration of Options
previously granted hereunder.

              (v)   Notwithstanding the provisions of subsections (ii) and (iii)
hereof, any grant of an Option made before the Company has obtained stockholder
approval of the Plan in accordance with Section 17 hereof shall be conditioned
upon obtaining such stockholder approval of the Plan in accordance with Section
17 hereof.

              (vi)  The terms of each First Option granted hereunder shall be as
follows:

                    (1) the First Option shall be exercisable only while the
Outside Director remains a Director of the Company, except as set forth in
Section 9 below;

                    (2) the exercise price per Share shall be 100% of the fair
market value per Share on the date of grant of the First Option, determined in
accordance with Section 8 hereof; and

                                      -3-
<PAGE>

                    (3) the First Option shall become vested and exercisable in
installments as to one-third of the Shares subject to the First Option on each
of the first, second and third anniversaries of the date of grant of the Option.

              (vii) The terms of each Annual Option granted hereunder shall be
as follows:

                    (1) the Annual Option shall be exercisable only while the
Outside Director remains a Director of the Company, except as set forth in
Section 9 below;

                    (2) the exercise price per Share shall be 100% of the fair
market value per Share on the date of grant of the Annual Option, determined in
accordance with Section 8 hereof; and

                    (3) the Annual Option shall become vested and exercisable as
to 100% of the Shares subject to the Annual Option on the first anniversary of
the date of grant of the Option.

          (c) Powers of the Board.  Subject to the provisions and restrictions
              -------------------
of the Plan, the Board shall have the authority, in its discretion:  (i) to
determine, upon review of relevant information and in accordance with Section
8(b) of the Plan, the fair market value of the Common Stock; (ii) to determine
the exercise price per Share of Options to be granted, which exercise price
shall be determined in accordance with Section 8 of the Plan; (iii) to interpret
the Plan; (iv) to prescribe, amend and rescind rules and regulations relating to
the Plan; (v) to authorize any person to execute on behalf of the Company any
instrument required to effectuate the grant of an Option previously granted
hereunder; and (vi) to make all other determinations deemed necessary or
advisable for the administration of the Plan.

          (d) Effect of Board's Decision.  All decisions, determinations and
              --------------------------
interpretations of the Board shall be final and binding on all Optionees and any
other holders of any Options granted under the Plan.

          (e) Suspension or Termination of Option.  If the Chief Executive
              -----------------------------------
Officer or his or her designee reasonably believes that an Optionee has
committed an act of misconduct, such officer may suspend the Optionee's right to
exercise any option pending a determination by the Board (excluding the Outside
Director accused of such misconduct).  If the Board (excluding the Outside
Director accused of such misconduct) determines an Optionee has committed an act
of embezzlement, fraud, dishonesty, nonpayment of an obligation owed to the
Company, breach of fiduciary duty or deliberate disregard of the Company rules
resulting in loss, damage or injury to the Company, or if an Optionee makes an
unauthorized disclosure of any Company trade secret or confidential information,
engages in any conduct constituting unfair competition, induces any Company
customer to breach a contract with the Company or induces any principal for whom
the Company acts as agent to terminate such agency relationship, neither the
Optionee nor his or her estate shall be entitled to exercise any Option
whatsoever.  In making such determination, the Board of Directors (excluding the
Outside Director accused of such

                                      -4-
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misconduct) shall act fairly and shall give the Optionee an opportunity to
appear and present evidence on Optionee's behalf at a hearing before the Board
or a committee of the Board.

     5.   Eligibility.  Options may be granted only to Outside Directors.  All
          -----------
Options shall be automatically granted in accordance with the terms set forth in
Section 4(b) above.  An Outside Director who has been granted an Option may, if
he or she is otherwise eligible, be granted an additional Option or Options in
accordance with such provisions.

          The Plan shall not confer upon any Optionee any right with respect to
continuation of service as a Director or nomination to serve as a Director, nor
shall it interfere in any way with any rights which the Director or the Company
may have to terminate his or her directorship at any time.

     6.   Term of Plan; Effective Date.  The Plan shall become effective on the
          ----------------------------
effectiveness of the registration statement under the Securities Act of 1933, as
amended, relating to the Company's initial public offering of securities.  It
shall continue in effect for a term of ten (10) years unless sooner terminated
under Section 13 of the Plan.

     7.   Term of Options.  The term of each Option shall be ten (10) years from
          ---------------
the date of grant thereof unless an Option terminates sooner pursuant to Section
9 below.

     8.   Exercise Price and Consideration.
          --------------------------------

          (a) Exercise Price.  The per Share exercise price for the Shares to be
              --------------
issued pursuant to exercise of an Option shall be 100% of the fair market value
per Share on the date of grant of the Option.

          (b) Fair Market Value.  The fair market value as of any date shall be
              -----------------
determined by the Board; provided however that in the event the Common Stock is
traded on the Nasdaq National Market or listed on a stock exchange, the fair
market value per Share shall be the closing sales price on such system or
exchange on the date of grant of the Option (or, in the event that the Common
Stock is not traded on such date, on the immediately preceding trading date), as
reported in The Wall Street Journal, or if there is a public market for the
            -----------------------
Common Stock but the Common Stock is not traded on the Nasdaq National Market or
listed on a stock exchange, the fair market value per Share shall be the mean of
the bid and asked prices of the Common Stock in the over-the-counter market on
the date of grant, as reported in The Wall Street Journal (or, if not so
                                  ------------------------
reported, as otherwise reported by the National Association of Securities
Dealers Automated Quotation ("Nasdaq") System).

          (c) Form of Consideration.  The consideration to be paid for the
              ---------------------
Shares to be issued upon exercise of an Option shall consist entirely of cash,
check, other Shares of Common Stock having a fair market value on the date of
surrender equal to the aggregate exercise price of the Shares as to which the
Option shall be exercised (which, if acquired from the Company, shall have been
held more than six months), delivery of a properly executed exercise notice
together with such other documentation as the Administrator and the broker, if
applicable, shall require to effect exercise of the Option and prompt delivery
to the Company of the sale or loan proceeds

                                      -5-
<PAGE>

required to pay the exercise price, or any combination of such methods of
payment and/or any other consideration or method of payment as shall be
permitted under applicable corporate law.

     9.   Exercise of Option.
          ------------------

          (a) Procedure for Exercise; Rights as a Stockholder.  Any Option
              -----------------------------------------------
granted hereunder shall be exercisable at such times as are set forth in Section
4(b) above; provided however that no Options shall be exercisable prior to
stockholder approval of the Plan in accordance with Section 17 below has been
obtained.

              An Option may not be exercised for a fraction of a Share.

              An Option shall be deemed to be exercised when written notice of
such exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may consist of any consideration and method of payment
allowable under Section 8(c) of the Plan. Until the issuance (as evidenced by
the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company) of the stock certificate evidencing such Shares,
no right to vote or receive dividends or any other rights as a stockholder shall
exist with respect to the Optioned Stock, notwithstanding the exercise of the
Option. A share certificate for the number of Shares so acquired shall be issued
to the Optionee as soon as practicable after exercise of the Option. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in
Section 11 of the Plan.

              Exercise of an Option in any manner shall result in a decrease in
the number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.

          (b) Termination of Continuous Status as a Director.  If an Outside
              ----------------------------------------------
Director ceases to serve as a Director, he or she may, but only within ninety
(90) days after the date he or she ceases to be a Director of the Company,
exercise his or her Option to the extent that he or she was entitled to exercise
it at the date of such termination.  Notwithstanding the foregoing, in no event
may the Option be exercised after its term set forth in Section 7 has expired.
To the extent that such Outside Director was not entitled to exercise an Option
at the date of such termination, or does not exercise such Option (to the extent
he or she was entitled to exercise) within the time specified above, the Option
shall terminate and the Shares underlying the unexercised portion of the Option
shall revert to the Plan.

          (c) Disability of Optionee.  Notwithstanding Section 9(b) above, in
              ----------------------
the event a Director is unable to continue his or her service as a Director with
the Company as a result of his or her total and permanent disability (as defined
in Section 22(e)(3) of the Code), he or she may, but only within twelve (12)
months from the date of such termination, exercise his or her Option to the
extent he or she was entitled to exercise it at the date of such termination.
Notwithstanding the foregoing, in no event may the Option be exercised after its
term set forth in Section 7 has expired.  To the extent that he or she was not
entitled to exercise the Option at the

                                      -6-
<PAGE>

date of termination, or if he or she does not exercise such Option (to the
extent he or she was entitled to exercise) within the time specified above, the
Option shall terminate and the Shares underlying the unexercised portion of the
Option shall revert to the Plan.

          (d) Death of Optionee.  In the event of the death of an Optionee (i)
              -----------------
during the term of the Option who is, at the time of his or her death, a
Director of the Company and who shall have been in Continuous Status as a
Director since the date of grant of the Option, or (ii) three (3) months after
the termination of Continuous Status as a Director, the Option may be exercised,
at any time within twelve (12) months following the date of death, by the
Optionee's estate or by a person who acquired the right to exercise the Option
by bequest or inheritance, but only to the extent of the right to exercise that
had accrued at the date of death or the date of termination, as applicable.
Notwithstanding the foregoing, in no event may the Option be exercised after its
term set forth in Section 7 has expired. To the extent that an Optionee was not
entitled to exercise the Option at the date of death or termination or if he or
she does not exercise such Option (to the extent he or she was entitled to
exercise) within the time specified above, the Option shall terminate and the
Shares underlying the unexercised portion of the Option shall revert to the
Plan.

     10.  Nontransferability of Options.  The Option may not be sold, pledged,
          -----------------------------
assigned, hypothecated, transferred or disposed of in any manner other than (a)
by will or by the laws of descent or distribution; (b) pursuant to a qualified
domestic relations order (as defined by the Code or the rules thereunder); (c)
by gift to the Optionee's Family; or (d) by gift or in exchange for an interest
in such entity to (i) a trust in which Optionee and/or Optionee's Family have
more than fifty percent of the beneficial interest, (ii) a foundation in which
Optionee and/or Optionee's Family control the management of assets, or (iii) any
other entity in which Optionee and/or Optionee's Family own more than fifty
percent of the voting interests.  For purposes of this Section 10, Optionee's
"Family" shall include any 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,
including adoptive relationships, and any person sharing the employee's
household (other than a tenant or employee).  The designation of a beneficiary
by an Optionee does not constitute a transfer.  An Option may be exercised
during the lifetime of an Optionee only by the Optionee or a transferee
permitted by this Section.

     11.  Adjustments Upon Changes in Capitalization; Corporate Transactions.
          ------------------------------------------------------------------

          (a) Adjustment.  Subject to any required action by the stockholders of
              ----------
the Company, the number of shares of Common Stock covered by each outstanding
Option, the number of Shares of Common Stock set forth in Sections 4(b)(ii) and
(iii) above, and the number of Shares of Common Stock which have been authorized
for issuance under the Plan but as to which no Options have yet been granted or
which have been returned to the Plan upon cancellation or expiration of an
Option, as well as the price per Share of Common Stock covered by each such
outstanding Option, shall be proportionately adjusted for any increase or
decrease in the number of issued Shares of Common Stock resulting from a stock
split, reverse stock split, stock dividend, combination or reclassification of
the Common Stock (including any such change

                                      -7-
<PAGE>

in the number of Shares of Common Stock effected in connection with a change in
domicile of the Company) or any other increase or decrease in the number of
issued Shares of Common Stock effected without receipt of consideration by the
Company; provided however that conversion of any convertible securities of the
Company shall not be deemed to have been "effected without receipt of
consideration." Such adjustment shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive. Except as expressly
provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to an Option.

          (b) Corporate Transactions.  In the event of a Corporate Transaction,
              ----------------------
each outstanding Option shall be assumed or an equivalent option shall be
substituted by the successor corporation or a Parent or Subsidiary of such
successor corporation, unless the successor corporation does not agree to assume
the outstanding Options or to substitute equivalent options, in which case the
Options shall terminate upon the consummation of the transaction; provided
however that in the event of any transaction that qualifies as a Change of
Control and notwithstanding whether or not outstanding Options are assumed,
substituted for or terminated in connection with the transaction, the vesting of
each outstanding Option shall accelerate in full such that each Optionee shall
have the right to exercise his or her Option as to all of the Optioned Stock,
including Shares as to which the Option would not otherwise be exercisable,
immediately prior to consummation of the transaction.

          For purposes of this Section 11(b), an Option shall be considered
assumed, without limitation, if, at the time of issuance of the stock or other
consideration upon such Corporate Transaction, each Optionee would be entitled
to receive upon exercise of an Option the same number and kind of shares of
stock or the same amount of property, cash or securities as the Optionee would
have been entitled to receive upon the occurrence of such transaction if the
Optionee had been, immediately prior to such transaction, the holder of the
number of Shares of Common Stock covered by the Option at such time (after
giving effect to any adjustments in the number of Shares covered by the Option
as provided for in this Section 11); provided however that if such consideration
received in the transaction was not solely common stock of the successor
corporation or its Parent, the Administrator may, with the consent of the
successor corporation, provide for the consideration to be received upon
exercise of the Option to be solely common stock of the successor corporation or
its Parent equal to the Fair Market Value of the per Share consideration
received by holders of Common Stock in the transaction.

          (c) Certain Distributions.  In the event of any distribution to the
              ---------------------
Company's stockholders of securities of any other entity or other assets (other
than dividends payable in cash or stock of the Company) without receipt of
consideration by the Company, the Administrator may, in its discretion,
appropriately adjust the price per Share of Common Stock covered by each
outstanding Option to reflect the effect of such distribution.

     12.  Time of Granting Options.  The date of grant of an Option shall, for
          ------------------------
all purposes, be the date determined in accordance with Section 4(b) hereof.
Notice of the

                                      -8-
<PAGE>

determination shall be given to each Outside Director to whom an Option is so
granted within a reasonable time after the date of such grant.

     13.  Amendment and Termination of the Plan.
          -------------------------------------

          (a) Amendment and Termination.  The Board may amend or terminate the
              -------------------------
Plan from time to time in such respects as the Board may deem advisable;
provided that, to the extent necessary and desirable to comply with Rule 16b-3
under the Exchange Act (or any other applicable law or regulation), the Company
shall obtain approval of the stockholders of the Company to Plan amendments to
the extent and in the manner required by such law or regulation.

          (b) Effect of Amendment or Termination.  Any such amendment or
              ----------------------------------
termination of the Plan that would impair the rights of any Optionee shall not
affect Options already granted to such Optionee and such Options shall remain in
full force and effect as if this Plan had not been amended or terminated, unless
mutually agreed otherwise between the Optionee and the Board, which agreement
must be in writing and signed by the Optionee and the Company.

     14.  Conditions Upon Issuance of Shares.  Notwithstanding any other
          ----------------------------------
provision of the Plan or any agreement entered into by the Company pursuant to
the Plan, the Company shall not be obligated, and shall have no liability for
failure, to issue or deliver any Shares under the Plan unless such issuance or
delivery would comply with the legal requirements relating to the administration
of stock option plans under applicable U.S. state corporate laws, U.S. federal
and applicable state securities laws, the Code, any stock exchange or Nasdaq
rules or regulations to which the Company may be subject and the applicable laws
of any other country or jurisdiction where Options are granted under the Plan,
as such laws, rules, regulations and requirements shall be in place from time to
time (the "Applicable Laws").  Such compliance shall be determined by the
           ---------------
Company in consultation with its legal counsel.

          As a condition to the exercise of an Option, the Company may require
the person exercising such Option to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by law.

     15.  Reservation of Shares.  The Company, during the term of this Plan,
          ---------------------
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

     16.  Option Agreement.  Options shall be evidenced by written option
          ----------------
agreements in such form as the Board shall approve.

     17.  Stockholder Approval.  If required by the Applicable Laws, continuance
          --------------------
of the Plan shall be subject to approval by the stockholders of the Company.
Such stockholder approval shall be obtained in the manner and to the degree
required under the Applicable Laws.

                                      -9-
<PAGE>

                                REPLAYTV, INC.

                       2000 DIRECTORS' STOCK OPTION PLAN

                         NOTICE OF STOCK OPTION GRANT
                         ----------------------------

((Optionee))

     You have been granted an option to purchase Common Stock of ReplayTV, Inc.
(the "Company") as follows:
      -------

     Date of Grant                  ((GrantDate))

     Vesting Commencement Date      ((VestingStartDate))

     Exercise Price per Share       ((ExercisePrice))

     Total Number of Shares Granted ((SharesGranted))

     Total Exercise Price           ((TotalExercisePrice))

     Expiration Date                ((ExpirDate))

     Vesting Schedule               This Option shall vest and become
                                    exercisable according to the following
                                    schedule: [for First Options: one-third of
                                    the Shares subject to the Option shall vest
                                    and become exercisable on each of the first,
                                    second and third anniversaries of the date
                                    of grant of the Option]; [for Annual
                                    Options: 100% of the Shares subject to the
                                    Option shall vest and become exercisable on
                                    the first anniversary of the date of grant
                                    of the Option.]

     Termination Period             This Option may be exercised for 90 days
                                    after termination of Optionee's Continuous
                                    Status as a Director, or such longer period
                                    as may be applicable upon death or
                                    Disability of Optionee as provided in the
                                    Plan, but in no event later than the
                                    Expiration Date as provided above.
<PAGE>

     By your signature and the signature of the Company's representative below,
you and the Company agree that this option is granted under and governed by the
terms and conditions of the 2000 Directors' Stock Option Plan and the
Nonstatutory Stock Option Agreement, all of which are attached and made a part
of this document.

     In addition, you agree and acknowledge that your rights to any Shares
underlying the Option will be earned only as you provide services to the Company
over time and that the grant of the Option is not as consideration for services
you rendered to the Company prior to your Vesting Commencement Date.

OPTIONEE:                                    REPLAYTV, INC.

____________________________                 By:_______________________
((Optionee))
                                             Title:____________________

                                      -2-
<PAGE>

                                REPLAYTV, INC.

                      NONSTATUTORY STOCK OPTION AGREEMENT
                      -----------------------------------

     1.   Grant of Option.  The Board of Directors of the Company hereby grants
          ---------------
to the Optionee named in the Notice of Stock Option Grant (the "Optionee")
                                                                --------
attached to this Agreement an option (the "Option") to purchase a number of
                                           ------
Shares, as set forth in the Notice of Stock Option Grant, at the exercise price
per share set forth in the Notice of Stock Option Grant (the "Exercise Price"'),
                                                              --------------
subject to the terms and conditions of the 2000 Directors' Stock Option Plan
(the "Plan"), which is incorporated herein by reference. Capitalized terms not
      ----
defined herein shall have the meanings ascribed to such terms in the Plan.  In
the event of a conflict between the terms and conditions of the Plan and the
terms and conditions of this Nonstatutory Stock Option Agreement, the terms and
conditions of the Plan shall prevail.

     2.   Exercise of Option.
          ------------------

          (a) Right to Exercise.  This Option is exercisable during its term in
              -----------------
accordance with the Vesting Schedule set out in the Notice of Stock Option Grant
and the applicable provisions of the Plan and this Nonstatutory Stock Option
Agreement.  In the event of Optionee's death, disability or other termination of
Optionee's service as a Director, the exercisability of the Option is governed
by the applicable provisions of the Plan and this Nonstatutory Stock Option
Agreement.

          (b) Method of Exercise.  This Option is exercisable by delivery of an
              ------------------
exercise notice, in the form attached as Exhibit A (the "Exercise Notice"),
                                         ---------       ---------------
which shall state the election to exercise the Option, the number of Shares in
respect of which the Option is being exercised (the "Exercised Shares"), and
                                                     ----------------
such other representations and agreements as may be required by the Company
pursuant to the provisions of the Plan.  The Exercise Notice shall be signed by
the Optionee and shall be delivered in person or by certified mail to the
Secretary of the Company.  The Exercise Notice shall be accompanied by payment
of the aggregate Exercise Price as to all Exercised Shares.  This Option shall
be deemed to be exercised upon receipt by the Company of such fully executed
Exercise Notice accompanied by such aggregate Exercise Price.

          No Shares shall be issued pursuant to the exercise of this Option
unless such issuance and exercise complies with all relevant provisions of law
and the requirements of any stock exchange or quotation service upon which the
Shares are then listed.  Assuming such compliance, for income tax purposes the
Exercised Shares shall be considered transferred to the Optionee on the date the
Option is exercised with respect to such Exercised Shares.

     3.   Method of Payment. Payment of the aggregate Exercise Price shall be by
          -----------------
any of the following, or a combination thereof, at the election of the Optionee:

          (a)  cash;

          (b)  check;
<PAGE>

          (c) delivery of a properly executed exercise notice together with such
other documentation as the Administrator and the broker, if applicable, shall
require to effect an exercise of the Option and delivery to the Company of the
sale or loan proceeds required to pay the exercise price; or

          (d) surrender of other Shares which (i) in the case of Shares acquired
upon exercise of an option, have been owned by the Optionee for more than six
(6) months on the date of surrender, and (ii) have a Fair Market Value on the
date of surrender equal to the aggregate Exercise Price of the Exercised Shares.

     4.   Non-Transferability of Option.  This Option may not be sold, pledged,
          -----------------------------
assigned, hypothecated, transferred or disposed of in any manner other than (a)
by will or by the laws of descent or distribution; (b) pursuant to a qualified
domestic relations order (as defined by the Code or the rules thereunder); (c)
by gift to the Optionee's Family (as defined in Section 10 of the Plan); or (d)
by gift or in exchange for an interest in such entity to (i) a trust in which
Optionee and/or Optionee's Family have more than fifty percent of the beneficial
interest, (ii) a foundation in which Optionee and/or Optionee's Family control
the management of assets, or (iii) any other entity in which Optionee and/or
Optionee's Family own more than fifty percent of the voting interests.  An
Option may be exercised during the lifetime of an Optionee only by the Optionee
or a transferee permitted by this Section.  The terms of the Plan and this
Nonstatutory Stock Option Agreement shall be binding upon the executors,
administrators, heirs, successors, assigns and transferees of the Optionee.

     5.   Term of Option.  This Option may be exercised only within the term set
          --------------
out in the Notice of Stock Option Grant, and may be exercised during such term
only in accordance with the Plan and the terms of this Nonstatutory Stock Option
Agreement.

     6.   Tax Consequences.  Set forth below is a brief summary of certain
          ----------------
federal and California tax consequences relating to this Option under the law in
effect as of the date of grant.  THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE
TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.  OPTIONEE SHOULD CONSULT HIS OR
HER OWN TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.

          (a) Exercising the Option.  Since this Option does not qualify as an
              ---------------------
incentive stock option under Section 422 of the Code, the Optionee may incur
regular federal and California income tax liability upon exercise.  The Optionee
will be treated as having received compensation income (taxable at ordinary
income tax rates) equal to the excess, if any, of the fair market value of the
Exercised Shares on the date of exercise over their aggregate Exercise Price.

          (b) Disposition of Shares.  If the Optionee holds the Option Shares
              ---------------------
for more than one year, gain realized on disposition of the Shares will be
treated as long-term capital gain for federal and California income tax
purposes.  Long-term capital gain will be taxed for federal income tax and
alternative minimum tax purposes at a maximum rate of 20% if the Shares are held
more than one year after exercise.

                                      -2-
<PAGE>

     By your signature and the signature of the Company's representative below,
you and the Company agree that this Option is granted under and governed by the
terms and conditions of the Plan and this Nonstatutory Stock Option Agreement.
Optionee has reviewed the Plan and this Nonstatutory Stock Option Agreement in
their entirety, has had an opportunity to obtain the advice of counsel prior to
executing this Nonstatutory Stock Option Agreement and fully understands all
provisions of the Plan and Nonstatutory Stock Option Agreement.  Optionee hereby
agrees to accept as binding, conclusive and final all decisions or
interpretations of the Administrator upon any questions relating to the Plan and
Nonstatutory Stock Option Agreement.

                                    REPLAYTV, INC.

_____________________________       By:_______________________________
((Optionee))
                                    Title:____________________________

                               CONSENT OF SPOUSE
                               -----------------

     The undersigned spouse of Optionee has read and hereby approves the terms
and conditions of the Plan and this Nonstatutory Stock Option Agreement.  In
consideration of the Company's granting his or her spouse the right to purchase
Shares as set forth in the Plan and this Nonstatutory Stock  Option Agreement,
the undersigned hereby agrees to be irrevocably bound by the terms and
conditions of the Plan and this Nonstatutory Stock Option Agreement and further
agrees that any community property interest shall be similarly bound.  The
undersigned hereby appoints the undersigned's spouse as attorney-in-fact for the
undersigned with respect to any amendment or exercise of rights under the Plan
or this Nonstatutory Stock Option Agreement.

                                    __________________________________
                                    Spouse of Optionee

                                      -3-
<PAGE>

                                   EXHIBIT A
                                   ---------

                              NOTICE OF EXERCISE
                              ------------------

To:       ReplayTV, Inc.

Attn:     Stock Option Administrator

Subject:  Notice of Intention to Exercise Stock Option
          --------------------------------------------

     This is official notice that the undersigned ("Optionee") intends to
                                                    --------
exercise Optionee's option to purchase __________ shares of ReplayTV, Inc.
Common Stock, under and pursuant to the Company's 2000 Directors' Stock Option
Plan and the Nonstatutory Stock Option Agreement dated _______________, as
follows:

     Grant Number:                       _________________________________

     Date of Purchase:                   _________________________________

     Number of Shares:                   _________________________________

     Purchase Price:                     _________________________________

     Method of Payment of
     Purchase Price:                     _________________________________

     Social Security No.:                _________________________________

     The shares should be issued as follows:

          Name:    _________________________________

          Address: _________________________________

                   _________________________________

                   _________________________________

          Signed:  _________________________________

          Date:    _________________________________<PAGE>

                                                                    EXHIBIT 10.7

August 20, 1999

Mr. Kim LeMasters
3455 Wonder View Place
Los Angeles, CA  90068

Dear Kim,

I speak for the entire Board in saying how much we have valued the meetings and
conversation we've had with you over the last few weeks.  It is clear that your
experience, judgement, and leadership would be of enormous benefit to Replay
Networks.  Recognizing that you have other opportunities available to you, we
wish to act decisively to attract your talents to our Company.

On behalf of the Board of Directors, I am pleased to offer you the position of
Chairman of the Board and Chief Executive Officer of Replay Networks.
Accordingly, the terms of our offer are specified as follows:

TITLE & RESPONSIBILITIES

Your title will be Chairman of the Board and Chief Executive Officer.  You will
have responsibility for the direction and organization of the Company, all
budget matters, and the supervision of, the assignment of work to, and the
hiring and firing of all employees, contractors and consultants of the Company.
This offer is for a full time position located at offices of the Company, except
as travel to other locations may be necessary to fulfill your responsibilities.

Assuming your acceptance, the Board members, at their next meeting, will vote in
their capacity as directors, in such a manner so as to elect you as Chairman of
the Board.  Upon your election, the Board will task you with forming a
Nominating Committee whose function shall be to identify individuals of proven
business experience who might be willing to join the Board.  The Company will
continue to nominate you for election as a Board member at each Annual Meeting
of Shareholders so long as you serve as Chief Executive Officer.

In your capacity as CEO, you will report to the Board of Directors of the
Company.
<PAGE>

Mr. Kim LeMasters
August 20, 1999
Page 2

COMPENSATION

Your initial base salary will be $30,000 per month, subject to increase in good
faith by the Board of Directors, payable in accordance with the Company's
customary payroll practice.  The Company will reimburse you for all reasonable
expenses incurred by you and related to the performance of your corporate
duties, including all reasonable travel and related expenses, up to $50,000 per
year.

You will also be eligible to participate in the Company's incentive bonus
program.  Within 60 days after you commence employment, the Board of Directors
acting through its Compensation Committee will develop jointly with you the
goals and objectives connected with the incentive bonus award.  Based on the
approval of the Board and the achievement of both the Company and individual
performance goals, you will be eligible to receive an annual bonus of up to 50%
($180,000 currently) of your base salary.

Upon acceptance of this offer and after satisfaction of the terms herein
incumbent upon you, the Board of Directors will vote to grant you an option to
purchase 2,500,000 shares of the Company's Common Stock representing 6% of the
fully diluted capital stock of the company, including presently reserved shares
under all option plans.  The vesting of this stock award will begin with the
date of your commencement of full time employment pursuant to this letter
agreement.

Options become exercisable according to a 48 month exercise schedule which calls
for the initial vesting of 12-1/2% (312,500 shares) of the total after the first
6 months of continuous service, and thereafter an additional 52,083 shares per
month will become exercisable, at the close of each month of employment, over
the remainder of the exercise term.  The strike price for these options will be
$4.00 per share, which is the current fair market price of the Company Common
Stock, provided that you commence your employment with the Company on or before
September 13, 1999.

The option will be an incentive stock option to the maximum allowed by the tax
code and will be subject to the terms of the Company's Stock Option Plan and the
Stock Option Agreement between you and the Company.  Accordingly, the Board will
allow you to elect which portion of the shares you obtain in the form of:  1)
immediate purchase under Section 83(b) of the Internal Revenue Code, subject to
re-purchase; 2) Incentive Stock Option; 3) Non-Qualified Options.  Corporate
counsel at Venture Law Group will be available to assist you in evaluating the
tax benefits of these different stock and option programs.  The grant of the
option will be subject to your execution of a mutually acceptable option
agreement.

In connection with the exercise of your option, the Company will provide a loan
of up to $1,000,000.  This loan will be evidenced by a full recourse promissory
note, which will be secured by the shares purchased and will provide for
interest at the minimum
<PAGE>

Mr. Kim LeMasters
August 20, 1999
Page 3

Applicable Federal Rate, compounded annually. The term of this Note shall be
five years, and any interest accrued will be due at such time as the principal
is due.

Further, and predicated upon your acceptance, the Board members, at their next
meeting, will vote in their capacity as directors, and also with respect to the
shares of stock for which they exercise voting control, in such a manner so as
to permit you to purchase up to 100,000 shares of Series E Preferred at the same
price ($7.50 per share), and on the same terms, as any other investor in the
Series E Preferred securities.

For the purpose of this agreement a "Change of Control Transaction" is defined
as either:  1) the Company's merger or consolidation with another entity, or a
series of related transactions, as a result of which the shareholders of the
Company immediately prior to the transaction own less than 50% of the voting
power of the entity surviving such transaction; or 2) the sale of all or
substantially all of the Company's assets, business or capital stock, with the
exception that an Initial Public Offering (IPO) shall not be deemed a Change of
Control Transaction.  Upon the closing of such a Change of Control Transaction,
any time after 18 months from your commencement of full time employment, 75% of
any unvested options which you then hold will become immediately vested.  Should
such a transaction occur within the first 18 months of your tenure, then your
unvested options will be accelerated in their vesting schedule by one year; that
is, the monthly vesting rate shall continue at 52,083 shares per month and the
most distant options shall be accelerated.  Further, if, following a Change of
Control Transaction, the Company terminates your employment without cause (as
defined below) or you terminate your employment for "just cause" (as defined
below), the Company will continue to pay your salary and continue your benefits
for 12 months and accelerate the vesting of your options by an additional 12
months, as described below.  If, due to the benefits provided under this letter
agreement, you are subject to any excise tax due to characterization of any
amount payable hereunder as excess parachute payments pursuant to Sections 280G
and 4999 of the Internal Revenue Code, Replay will pay the excise taxes
otherwise payable by you under Section 4999 (but not any income or excise taxes
on such payment of taxes by Replay on your behalf) with respect to any amounts
payable to you under this Agreement, up to a maximum of $1,500,000.

OTHER TERMS

Subject to fulfillment of any conditions imposed by this letter agreement, you
will commence the executive position with Replay Networks not later than Monday,
September 13, 1999.  It is our understanding that you will be available to
participate in meetings of the Company's Board of Directors immediately.

You will not render commercial or professional services of any nature to any
person or organization, whether or not for compensation, without the prior
written consent of the Company's Board of Directors.  And you will not directly
or indirectly engage or
<PAGE>

Mr. Kim LeMasters
August 20, 1999
Page 4

participate in any business that is competitive in any manner with the business
of the Company. However, the Company acknowledges that you already serve on the
board of both public and private companies and those existing commitments do not
represent a conflict of interest with Replay Networks.

Because of Federal regulations adopted in the Immigration Reform and Control Act
of 1986, you will need to present documentary evidence of your identity and
eligibility for employment in the United States.  Such documentation must be
provided to the Company within 3 business days of your date of hire.

As an employee of Replay Networks, you will have access to certain Company
confidential information and you may, during the course of your employment,
develop certain information or inventions which will be the property of the
Company.  To protect the interest of the Company, you will need to sign the
Company's standard "Employee Inventions and Confidentiality Agreement" as a
condition of your employment.

The Company will provide you with their standard benefits package, which
includes medical, dental, vision, life and long term disability.  You will be
entitled to three (3) weeks paid vacation in any one (1) calendar year with the
understanding that such vacation benefits, if unused, shall not accumulate.

While we look forward to a long and profitable relationship, should you decide
to accept our offer, the employment relationship is for no specified period and
can be terminated by either of us for any reason, with or without cause, at any
time, and without further obligation or liability.  Further, your participation
in any stock option or benefit program is not to be regarded as assuring you of
continuing employment for any particular period of time.

Should the Board terminate you, other than for Cause, the Company will continue
to pay your salary and continue your benefits for 12 months from the date of
such an event; and accelerate the vesting of your options by an additional 12
months (625,000 shares), over and above any options which would have vested by
that time.  For purposes of this letter agreement, the term "cause" shall mean:
1) willful and repeated failure to comply with the lawful written directions of
the Board of Directors, which failure, if capable of cure, has not been cured
within 30 days of written notice from the Board of Directors; 2) gross
negligence or willful misconduct in the performance of duties to the Company,
which, if capable of cure, has not been cured within 30 days of written notice
from the Board of Directors; 3) commission of any act of fraud with respect to
the Company; or 4) conviction of a felony or a crime causing material harm to
the standing and reputation of the Company, in each case as determined in good
faith by the Board of Directors
<PAGE>

Mr. Kim LeMasters
August 20, 1999
Page 5

You shall have the right, on written notice to the Company, to terminate your
employment if you resign for "just cause," which shall mean a resignation as a
direct result of: (a) a material breach of the Company of its obligations under
this Agreement, provided that if such breach is capable of remedy, a written
notice of such breach shall be provided to the Company within 30 days of such
breach, an opportunity to cure such breach shall be afforded the Company and, in
such event, just cause shall exist if the Company shall fail to cure such breach
with a reasonable period of time after notice but not to exceed 30 days; (b) any
material decrease of your duties or authority or any change in your reporting
relationship, provided, however, that your continuing as Chief Executive Officer
of a business unit, division or subsidiary or Chief Executive Officer of the
Company or a company into which the Company is merged in a Change of Control
Transaction or otherwise acquiring assets or stock of the Company in connection
with a Change of Control Transaction, or a parent of such a company, shall not
in and of itself constitute a material decrease of your duties or authority or a
change in your reporting relationship, absent some other material decrease of
your duties or authority; (c) a material decrease in the benefits provided
pursuant to this Agreement; (d) the relocation of the place of your employment
to a location outside California; or (e) failure of any successor to assume this
Agreement.  In the event of your termination of your employment pursuant to just
cause, the Company shall pay your salary and continue your benefits for 12
months from the date of such an event, and accelerate vesting of your options by
an additional 12 months (625,000 shares) over any options that would have vested
by that time.

This offer will expire at 12:00 p.m. on Wednesday, August 25, 1999.  However, in
the interim, should you desire access to Company information or documents, or
require more time to make your decision, please let me know.

To indicate your acceptance of the Company's offer, please sign and date this
letter in the space provided below and return it to me.  A duplicate original is
enclosed for your records.  This letter agreement sets forth the terms of your
employment with Replay Networks, and supersedes any prior representations or
agreements, whether written or oral.  This letter agreement may not be modified
or amended except by a written agreement, signed by an officer of the Company
and by you.
<PAGE>

Mr. Kim LeMasters
August 20, 1999
Page 6

Kim, we are enormously excited about the possibility of you joining Replay
Networks.  We look forward with high expectations to working with you.  I am
confident you will make a great Chief Executive.

Sincerely,

ON BEHALF OF THE BOARD OF DIRECTORS OF REPLAY NETWORKS, INC.

William R. Hearst III, Director

/s/ William R. Hearst III

                                       Agreed and Accepted 8/27/1999

                                       /s/ Kim LeMasters
                                     -------------------------------------------
                                     Kim LeMasters

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