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                                                                   EXHIBIT 10.32

                                     RETIX

                       1996 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:
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          (a)  "Board" shall mean the Board of Directors of the Company.
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          (b)  "Code" shall mean the Internal Revenue Code of 1986, as amended.
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          (c)  "Common Stock" shall mean the Common Stock of the Company.
                ------------                                             

          (d)  "Company" shall mean Retix, a California corporation.
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          (e)  "Continuous Status as a Director" shall mean the absence of any
                -------------------------------                               
interruption or termination of service as a Director.

          (f)  "Director" shall mean a member of the Board.
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          (g)  "Employee" shall mean any person, including any officer or
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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.

          (h)  "Exchange Act" shall mean the Securities Exchange Act of 1934, as
                ------------                                                    
amended.

          (i)  "Option" shall mean a stock option granted pursuant to the Plan.
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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).

          (j)  "Optioned Stock" shall mean the Common Stock subject to an 
                --------------  
Option.

          (k)  "Optionee" shall mean an Outside Director who receives an Option.
                --------                                                        

          (l)  "Outside Director" shall mean a Director who is not an Employee.
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          (m)  "Parent" shall mean a "parent corporation," whether now or
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hereafter existing, as defined in Section 424(e) of the Code.

          (n)  "Plan" shall mean this 1996 Directors' Stock Option Plan.
                ----                                                    

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

          (p)  "Subsidiary" shall mean 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 maximum aggregate number of Shares which may be optioned and sold
under the Plan is 360,000 Shares (the "Pool") of Common Stock.  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 which were subject
thereto shall, unless the Plan shall have been terminated, become available for
future grant under the Plan.  If Shares which 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.
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          (a)  ADMINISTRATOR.  Except as otherwise required herein, the Plan
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shall be administered by the Board.

          (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 shall be automatically granted an Option
to purchase Shares (the "First Option") as follows: (A) with respect to persons
                      ------------                                           
who are Outside Directors on the effective date of this Plan, as determined in
accordance with Section 6 hereof, 40,000 shares on such effective date, and (B)
with respect to any other person, 40,000 shares on the date on which such person
first becomes an Outside Director.

          (iii)  After the First Option has been granted to an Outside Director,
such Outside Director shall thereafter be automatically granted an Option to
purchase 10,000 Shares (a "Subsequent Option") on January 1 of each year,
                           -----------------                             
provided that, on such date, he or she shall have served on the Board as an
Outside Director for at least six (6) months.

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          (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
such date 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 shareholders to increase the number
of Shares which may be issued under the Plan or through cancellation or
expiration of Options previously granted hereunder.

          (v) 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
hereof;

               (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)  the First Option shall become exercisable in installments
cumulatively as to 25% of the Shares subject to the First Option on each of the
first, second, third and fourth anniversaries of the date of grant of the
Option.

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

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

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

               (3)  the Subsequent Option shall become exercisable as to one
hundred percent (100%) of the Shares subject to the Subsequent Option on the
fourth anniversary of the date of grant of the Subsequent 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(a) 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.

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          (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 President or his or
               -----------------------------------                             
her designee reasonably believes that an Optionee has committed an act of
misconduct, the President may suspend the Optionee's right to exercise any
option pending a determination by the Board of Directors (excluding the Outside
Director accused of such misconduct).  If the Board of Directors (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 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) hereof.  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 upon 
          ----------------------------   
its adoption by the Board. 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.

     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 shall be determined by
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the Board; provided, however, that where there is a public market for the Common
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Stock, the fair market value per Share shall be the mean of the bid and asked
prices of the Common Stock in the 

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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 
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Association of Securities Dealers Automated Quotation ("Nasdaq") System) or, 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 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.
                              ----------------------- 

          (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 said
Option shall be exercised (which, if acquired from the Company, shall have been
held for at least six months), 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 SHAREHOLDER.  Any Option
               -----------------------------------------------             
granted hereunder shall be exercisable at such times as are set forth in Section
4(b) hereof.

               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 shareholder 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 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

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exercise such Option (which he or she was entitled to exercise) within the time
specified herein, the Option shall terminate.

          (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 six (6) months
(or such other period of time not exceeding twelve (12) months as is determined
by the Board) 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 date of termination, or
if he or she does not exercise such Option (which he or she was entitled to
exercise) within the time specified herein, the Option shall terminate.

          (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, the Option may be
exercised, at any time within six (6) 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
would have accrued had the Optionee continued living and remained in Continuous
Status as Director for six (6) months (or such lesser period of time as is
determined by the Board) after the date of death. Notwithstanding the foregoing,
in no event may the Option be exercised after its term set forth in Section 7
has expired.

          (ii) Within (3) months after the termination of Continuous Status as a
Director, the Option may be exercised, at any time within six (6) 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 termination.
Notwithstanding the foregoing, in no event may the option be exercised after its
term set forth in Section 7 has expired.

     10.  NONTRANSFERABILITY OF OPTIONS.  The Option may not be sold, pledged,
          -----------------------------                                       
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution or pursuant to a qualified
domestic relations order (as defined by the Code or the rules thereunder).  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 shareholders 
               ----------   
of the Company, the number of shares of Common Stock covered by each outstanding
Option, 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 

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cancellation or expiration of an Option, and the number of shares of Common
Stock to be granted under the provisions set forth in Section 4 of the Plan, 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, 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 
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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 (i) a dissolution or
               ----------------------                                       
liquidation of the Company, (ii) a sale of all or substantially all of the
Company's assets, (iii) a merger or consolidation in which the Company is not
the surviving corporation, or (iv) any other capital reorganization in which
more than fifty percent (50%) of the shares of the Company entitled to vote are
exchanged, the Company shall give to the Eligible Director, at the time of
adoption of the plan for liquidation, dissolution, sale, merger, consolidation
or reorganization, either a reasonable time thereafter within which to exercise
the Option, including Shares as to which the Option would not be otherwise
exercisable, prior to the effectiveness of such liquidation, dissolution, sale,
merger, consolidation or reorganization, at the end of which time the Option
shall terminate, or the right to exercise the Option, including Shares as to
which the Option would not be otherwise exercisable (or receive a substitute
option with comparable terms), as to an equivalent number of shares of stock of
the corporation succeeding the Company or acquiring its business by reason of
such liquidation, dissolution, sale, merger, consolidation or reorganization.

     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 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 shareholders of the Company to Plan amendments to
the extent and in the manner required by such law or regulation.
Notwithstanding the foregoing, the provisions set forth in Section 4 of this
Plan (and any other Sections of this Plan that affect the formula award terms
required to be specified in this Plan by Rule 16b-3) shall not be amended more
than once every six months, other than to comport with changes in the Code, the
Employee Retirement Income Security Act of 1974, as amended, or the rules
thereunder.

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<PAGE>
 
          (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.  Shares shall not be issued
               ----------------------------------                             
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, state securities laws, and the requirements of any stock exchange
upon which the Shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance. 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 any of the aforementioned
relevant provisions of 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.  Inability of the
Company to obtain authority from any regulatory body having jurisdiction, which
authority is deemed by the Company's counsel to be necessary to the lawful
issuance and sale of any Shares hereunder, shall relieve the Company of any
liability in respect of the failure to issue or sell such Shares as to which
such requisite authority shall not have been obtained.

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

          17.  SHAREHOLDER APPROVAL.  To the extent permitted by Rule 16b-3 of 
               --------------------   
the Exchange Act (or any successor provision thereto) and in order to obtain the
benefits provided by such rule, the Company may, but shall not be required to,
obtain shareholder approval for Option grants made hereunder.  To the extent the
Company obtains such shareholder approval, it shall be deemed to apply with
respect to Option grants made on or after the date of such approval.

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