<PAGE>   1
                                                                   EXHIBIT 10.16

                           LOAN MODIFICATION AGREEMENT

        This Loan Modification Agreement is entered into as of June 21, 1996, by
and between Remedy Corp. ("Borrower") whose address is 1505 Salado Drive,
Mountain View, CA 94043, and Silicon Valley Bank ("Lender") whose address is
3003 Tasman Drive, Santa Clara, CA 95054.

1. DESCRIPTION OF EXISTING INDEBTEDNESS: Among other indebtedness which may be
owing by Borrower to Lender, Borrower is indebted to Lender pursuant to, among
other documents, a Promissory Note, dated January 4, 1993, in the original
principal amount of Five Hundred Thousand and 00/100 Dollars ($500,000.00) (the
"Note"). The Note has been modified pursuant to Loan Modification Agreements,
dated June 4, 1993, June 4, 1994, August 3, 1994, pursuant to which, among other
things, the principal amount was increased to Three Million and 00/100 Dollars
($3,000,000.00), and June 5, 1995, pursuant to which, among other things, the
principal amount of the Note was increased to Five Million and 00/100 Dollars
($5,000,000.00). The Note, together with other promissory notes from Borrower to
Lender, is governed by the terms of a Business Loan Agreement, dated January 4,
1993, between Borrower and Lender, as such agreement may be amended from time to
time (the "Loan Agreement").

Hereinafter, all indebtedness owing by Borrower to Lender shall be referred to
as the "Indebtedness".

2. DESCRIPTION OF COLLATERAL: In connection with the repayment of the
Indebtedness, Borrower has agreed with Lender, among other things, not to sell,
transfer, assign, mortgage, pledge, lease, grant a security interest in, or
encumber any of Borrower's inventory, equipment, accounts, chattel paper,
contract rights, general intangibles, instruments, documents, fixtures and
deposit accounts without Lender's prior written consent, which consent shall
not be unreasonably withheld.

Hereinafter, all documents evidencing or securing the Indebtedness shall be
referred to as the "Existing Loan Documents".

3.      DESCRIPTION OF CHANGE IN TERMS.

        A.     Modifications to Note.

               1.    Payable in one payment of all outstanding principal plus
                     all accrued unpaid interest on June 15, 1997 (the "Maturity
                     Date"). In addition, Borrower will pay regular monthly
                     payments of all accrued unpaid interest due as of each
                     payment date, beginning July 15, 1996, and all subsequent
                     interest payments are due on the same day of each month
                     thereafter.

               2.    The principal amount of the Note is hereby increased to Ten
                     Million and 00/100 Dollars ($10,000,000.00).

               3.    The interest rate to be applied to the unpaid principal
                     balance of the Note is currently equal to Lender's current
                     Index (the "Prime Interest Rate"). Notwithstanding the
                     foregoing, at Borrower's option, Borrower may elect either
                     the Prime Interest Rate or the LIBOR Rate plus 2.50%, as
                     described in Exhibit "A" attached hereto.

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<PAGE>   2


        B.     Modification(s) to Loan Agreement

               1.     The paragraph entitled "Financial Covenants" is hereby
                      amended, in its entirety, to read as follows:

                      Borrower shall maintain, on a quarterly basis, beginning
                      with the quarter ending June 30, 1996, a minimum Quick
                      Ratio less deferred revenue of 2.00 to 1.00; and a maximum
                      total debt minus subordinated debt and deferred revenue to
                      tangible net worth plus subordinated debt ratio of 1.00 to
                      1.00. Furthermore, Borrower shall maintain profitability
                      on a quarterly basis.

                      For the purposes of calculation, deferred revenue shall
                      be excluded for liabilities. Quick Ratio is defined as
                      Cash plus cash equivalents plus short term investments
                      divided by current liabilities minus deferred revenue.

               2.    Notwithstanding anything to the contrary contained in the
                     paragraph entitled "Loans, Acquisitions and Guaranties",
                     Borrower may enter into mergers or acquisitions, provided,
                     however, such amounts involved to do so, shall not exceed
                     fifteen percent (15%) of Borrower's cash, cash equivalent
                     and short term investment balance, as determined by
                     Borrower's financial statements and verification of cash
                     accounts. Any amounts that exceed the aforementioned 15%
                     will require Lender's written consent prior to such merger
                     or acquisition.

4. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever
necessary to reflect the above-described changes.

5. NO DEFENSES OF BORROWER. Borrower (and each Guarantor and Pledgor) signing
below, agree that, as of this date, it has no defenses against the obligations
to pay any amounts under the Indebtedness.

6. CONTINUING VALIDITY. Borrower (and each Guarantor and Pledgor) signing below
understand and agree that in modifying the existing Indebtedness, Lender is
relying upon Borrower's representations, warranties, and agreements, as set
forth in the Existing Loan Documents. Except as expressly modified pursuant to
this Loan Modification Agreement the terms of the Existing Loan Documents remain
unchanged and in full force and effect. Lender's agreement to modifications to
the existing Indebtedness pursuant to this Loan Modification Agreement in no way
shall obligate Lender to make any future modifications to the Indebtedness.
Nothing in this Loan Modification Agreement shall constitute a satisfaction of
the Indebtedness. It is the intention of Lender and Borrower to retain as liable
parties all makers and endorsers of Existing Loan Documents, unless the party is
expressly released by Lender in writing. No maker, endorser, or guarantor will
be released by virtue of this Loan Modification Agreement. The terms of this
Paragraph apply not only to this Loan Modification Agreement, but also to all
subsequent loan modification agreements.


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<PAGE>   3

This Loan Modification Agreement is executed as of the date first written above.

BORROWER:                                   LENDER:

REMEDY CORP.                                SILICON VALLEY BANK

By: /s/ GEORGE DE URIOSTE                   By: /s/ [SIG]
   -------------------------------             -------------------------------
Name: George de Urioste                     Name: Waterson
     -----------------------------               -----------------------------
Title: Vice President of Finance            Title: SVP
      ----------------------------                ----------------------------



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<PAGE>   4

                                   EXHIBIT "A"
                    SUPPLEMENT TO LOAN MODIFICATION AGREEMENT

        This supplement to Loan Modification Agreement (this "Agreement") is a
supplement to the Loan Modification Agreement (the "Loan Modification
Agreement") dated June 21, 1996 between Silicon Valley Bank and Remedy Corp.
("Borrower") and forms a part of and is incorporated into the Loan Modification
Agreement.

        1 .    Definitions.

        "Advance" or "Advances" mean Advances made by Lender on Borrower's
behalf pursuant to that certain Promissory Note originally dated January 4,
1993, as amended.

        "Business Day" means a day of the year (a) that is not a Saturday,
Sunday or other day on which banks in the State of California or the City of
London are authorized or required to close and (b) on which dealings are carried
on in the interbank market in which Lender customarily participates.

        "Interest Period" means for each LIBOR Rate Advance, a period of
approximately one, two or three months as the Borrower may elect, provided that
the last day of an Interest Period for a LIBOR Rate advance shall be determined
in accordance with the practices of the LIBOR interbank market as from time to
time in effect, provided, further, in all cases such period shall expire not
later than the applicable Maturity Date.

        "Interest Rate" shall mean as to: (a) Prime Rate Advances, a rate per
annum equal to the Prime Rate or (b) LIBOR Rate Advances, a rate of 2.500% per
annum in excess of the LIBOR Rate (based on the LIBOR Rate applicable for the
Interest Period selected by the Borrower).

        "LIBOR Base Rate" means, for any Interest Period for a LIBOR Rate
Advance, the rate of interest per annum determined by Lender to be the per annum
rate of interest as which deposits in United States Dollars are offered to
Lender in the London interbank market in which Lender customarily participates
at 11:00 A.M. (local time in such interbank market) TWO (2) BUSINESS DAYS before
the first day of such Interest Period for a period approximately equal to such
Interest Period and in an amount approximately equal to the amount of such
Advance.

        "LIBOR Rate" shall mean, for any Interest Period for a LIBOR Rate
Advances, a rate per annum (rounded upwards, if necessary, to the nearest 1/16
of 1%) equal to (i) the LIBOR Base Rate for such Interest Period divided by (ii)
1 minus the Reserve Requirement for such Interest Period.

        "LIBOR Rate Advance" means any Advances made or a portion thereof on
which interest is payable based on the LIBOR Rate in accordance with the terms
hereof.

        "Prime Rate" means the variable rate of interest per annum, most
recently announced by Lender as its "prime rate," whether or not such announced
rate is the lowest rate available from Lender. The interest rate applicable to
the Prime Rate Advances shall change on each date there is a change in the Prime
Rate.

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<PAGE>   5

        "Prime Rate Advances" means any Advance made or a portion thereof on
which interest is payable based on the Prime Rate in accordance with the terms
hereof.

        "Regulatory Change" means, with respect to Lender, any change on or
after the date of this Agreement in United States federal, state or foreign laws
or regulations, including Regulation D, or the adoption or making on or after
such date of any interpretations, directives or requests applying to a class of
lenders including Lender of or under any United States federal or state, or any
foreign, laws or regulations (whether or not having the force of law) by any
court or governmental or monetary authority charged with the interpretation or
administration thereof.

        "Reserve Requirement" means, for any Interest Period, the average
maximum rate at which reserves (including any marginal, supplemental or
emergency reserves) are required to be maintained during such Interest Period
under Regulation D against "Eurocurrency liabilities" (as such term is used in
Regulation D) by member banks of the Federal Reserve System. Without limiting
the effect of the foregoing, the Reserve Requirement shall reflect any other
reserves required to be maintained by Lender by reason of any Regulatory Change
against (i) any category of liabilities which includes deposits by reference to
which the LIBOR Rate is to be determined as provided in the definition of "LIBOR
Base Rate" or (ii) any category of extensions of credit or other assets which
include Advances.

        2. Requests for Advances: Confirmation of Initial Advance. Each LIBOR
Rate Advance shall be made upon the irrevocable written request of Borrower
RECEIVED BY LENDER NOT LATER THAN 11:00 A.M. (SANTA CLARA, CALIFORNIA TIME) ON
THE BUSINESS DAY THREE (3) BUSINESS DAYS PRIOR TO THE DATE SUCH ADVANCE IS TO BE
MADE. Each such notice shall specify the date such Advance is to be made, which
day shall be a Business Day; the amount of such Advance, the Interest Period for
such Advance, and comply with such other requirements as Lender determines are
reasonable or desirable in connection therewith.

        Each written request for a LIBOR Rate Advance shall be in the form of
an Advance Request as set forth on Exhibit A, which shall be duly executed by
the Borrower.

        EACH PRIME RATE ADVANCE SHALL BE MADE UPON THE IRREVOCABLE WRITTEN
REQUEST OF BORROWER RECEIVED BY LENDER NOT LATER THAN 11:00 A.M. (SANTA CLARA,
CALIFORNIA TIME) ON THE BUSINESS DAY ONE (1) BUSINESS DAY PRIOR TO THE DATE SUCH
ADVANCE IS TO BE MADE. Each such notice shall specify the date such Advance is
to be made, which day shall be a Business Day and the amount of such Advance,
and comply with such other requirements as Lender determines are reasonable or
desirable in connection therewith.

        3. Conversion/Continuation of Advances.

        (a) Borrower may from time to time submit in writing a request that
Prime Rate Advances be converted to LIBOR Rate Advances or that any existing
LIBOR Rate Advances continue for an additional Interest Period. Such request
shall specify the amount of the Prime Rate Advances which will constitute LIBOR
Rate Advances (subject to the limits set forth below) and the Interest Period to
be applicable to such LIBOR Rate Advances. Each written request for a conversion
to a LIBOR Rate Advance or a

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<PAGE>   6

continuation of a LIBOR Rate Advance shall be substantially in the form set
forth on Exhibit B, which shall be duly executed by the Borrower. Subject to the
terms and conditions contained herein, THREE (3) BUSINESS DAYS AFTER LENDER'S
RECEIPT OF SUCH A REQUEST FROM BORROWER, such Prime Rate Advances shall be
converted to LIBOR Rate Advances or such LIBOR Rate Advances shall continue, as
the case may be provided that:

        (i) no Event of Default or event which with notice or passage of time or
both would constitute an Event of Default exists;

        (ii) no party hereto shall have sent any notice of termination of this
Agreement;

        (iii) Borrower shall have complied with such customary procedures as
Lender has established from time to time for Borrower's requests for LIBOR Rate
Advances;

        (iv) the amount of a LIBOR Rate Advance shall be $500,000.00 or such
greater amount which is an integral multiple of $50,000; and

        (v) Lender shall have determined that the Interest Period or LIBOR Rate
is available to Lender which can be readily determined as of the date of the
request for such LIBOR Rate Advance.

        Any request by Borrower to convert Prime Rate Advances to LIBOR Rate
Advances or continue any existing LIBOR Rate Advances shall be irrevocable.
Notwithstanding anything to the contrary contained herein, Lender shall not be
required to purchase United States Dollar deposits in the London interbank
market or other applicable LIBOR Rate market to fund any LIBOR Rate Advances,
but the provisions hereof shall be deemed to apply as if Lender had purchased
such deposits to fund the LIBOR Rate Advances.

               (b) Any LIBOR Rate Advances shall automatically convert to Prime
Rate Advances upon the last day of the applicable Interest Period, UNLESS LENDER
HAS RECEIVED AND APPROVED A COMPLETE AND PROPER REQUEST TO CONTINUE SUCH LIBOR
RATE ADVANCE AT LEAST THREE (3) BUSINESS DAYS PRIOR TO SUCH LAST DAY in
accordance with the terms hereof. Any LIBOR Rate Advances shall, at Lender's
option, convert to Prime Rate Advances in the event that (i) an Event of
Default, or event which with the notice or passage of time or both would
constitute an Event of Default, shall exist, (ii) this Agreement shall
terminate, or (iii) the aggregate principal amount of the Prime Rate Advances
which have previously been converted to LIBOR Rate Advances, or the aggregate
principal amount of existing LIBOR Rate Advances continued, as the case may be,
at the beginning of an Interest Period shall at any time during such Interest
Period exceeds either (A) the aggregate principal amount of the NOTE then
outstanding or (B) the Advances then available to Borrower hereunder. Borrower
agrees to pay to Lender, upon demand by Lender (or Lender may, at its option,
charge Borrower's Deposit account) any amounts required to compensate Lender for
any loss (including loss of anticipated profits), cost or expense incurred by
such person, as a result of the conversion of LIBOR Rate Advances to Prime Rate
Advances pursuant to any of the foregoing.


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<PAGE>   7

        (c) On ALL ADVANCES, INTEREST SHALL BE PAYABLE BY BORROWER TO LENDER
MONTHLY IN ARREARS NOT LATER THAN THE FIRST (1ST) DAY OF EACH CALENDAR MONTH AT
THE APPLICABLE INTEREST RATE.

        4. Additional Requirements/Provisions Regarding LIBOR Rate Advances;
Etc.

        (a) IF FOR ANY REASON (INCLUDING VOLUNTARY OR MANDATORY PREPAYMENT OR
ACCELERATION), LENDER RECEIVES ALL OR PART OF THE PRINCIPAL AMOUNT OF A LIBOR
RATE ADVANCE PRIOR TO THE LAST DAY OF THE INTEREST PERIOD FOR SUCH ADVANCE,
BORROWER SHALL IMMEDIATELY NOTIFY BORROWER'S ACCOUNT OFFICER AT SILICON VALLEY
BANK AND, ON DEMAND BY LENDER, PAY LENDER THE AMOUNT (if any) by which (i) the
additional interest which would have been payable on the amount so received had
it not been received until the last day of such Interest Period exceeds (ii) the
interest which would have been recoverable by Lender by placing the amount so
received on deposit in the certificate of deposit markets or the offshore
currency interbank markets, as the case may be, for a period starting on the
date on which it was so received and ending on the last day of such Interest
Period at the interest rate determined by Lender in its reasonable discretion.
Lender's determination as to such amount shall be conclusive absent manifest
error.

        (b) Borrower shall pay to Lender, upon demand by Lender, from time to
time such amounts as Lender may determine to be necessary to compensate it for
any costs incurred by Lender that Lender determines are attributable to its
making or maintaining of any amount receivable by Lender hereunder in respect of
any Advances relating thereto (such increases in costs and reductions in amounts
receivable being herein called "Additional Costs"), in each case resulting from
any Regulatory Change which:

              (i)   changes the basis of taxation of any amounts payable to
Lender under this Agreement in respect of any Advances (other than changes which
affect taxes measured by or imposed on the overall net income of Lender by the
jurisdiction in which such Lender has its principal office); or

              (ii)  imposes or modifies any reserve, special deposit or similar
requirements relating to any extensions of credit or other assets of, or any
deposits with or other liabilities of Lender (including any Advances or any
deposits referred to in the definition of "LIBOR Base Rate"); or

              (iii) imposes any other condition affecting this Agreement (or any
of such extensions of credit or liabilities).

Lender will notify Borrower of any event occurring after the date of this
Agreement which will entitle Lender to compensation pursuant to this section as
promptly as practicable after it obtains knowledge thereof and determines to
request such compensation. Lender will furnish Borrower with a statement setting
forth the basis and amount of each request by Lender for compensation under this
Section 4. Determinations and allocations by Lender for purposes of this Section
4 of the affect of any Regulatory Change on its costs of maintaining its
obligations to make Advances or of making or maintaining Advances or on amounts
receivable by it in respect of Advances, and of the additional amounts required
to compensate Lender in respect of any Additional Costs, shall be conclusive
absent manifest error.

                                       4

<PAGE>   8

        (c) Borrower shall pay to Lender, upon the request of Lender, such
amount or amounts as shall be sufficient (in the sole good faith opinion of such
Lender) to compensate it for any loss, costs or expense incurred by it as a
result of any failure by Borrower to borrow an Advance on the date for such
borrowing specified in the relevant notice of borrowing hereunder.

        (d) If Lender shall determine that the adoption or implementation of any
applicable law, rule, regulation or treaty regarding capital adequacy, or any
change therein, or any change in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by Lender (or its
applicable lending office) with any respect or directive regarding capital
adequacy (whether or not having the force of law) of any such authority, central
bank or comparable agency, has or would have the effect of reducing the rate of
return on capital of Lender or any person or entity controlling Lender (a
"Parent") as a consequence of its obligations hereunder to a level below that
which Lender (or its Parent) could have achieved but for such adoption, change
or compliance (taking into consideration its policies with respect to capital
adequacy) by an amount deemed by Lender to be material, then from time to time,
within 15 days after demand by Lender, Borrower shall pay to Lender such
additional amount or amounts as will compensate Lender for such reduction. A
statement of Lender claiming compensation under this Section and setting forth
the additional amount or amounts to be paid to it hereunder shall be conclusive
absent manifest error.

        (e) If at any time Lender, in its sole and absolute discretion,
determines that: (i) the amount of the LIBOR Rate Advances for periods equal to
the corresponding Interest Periods are not available to Lender in the offshore
currency interbank markets, or (ii) the LIBOR Rate does not accurately reflect
the cost to Lender of lending the LIBOR Rate Advance, then Lender shall promptly
give notice thereof to Borrower, and upon the giving of such notice Lender's
obligation to make the LIBOR Rate Advances shall terminate, unless Lender and
the Borrower agree in writing to a different interest rate Advances shall
terminate, unless Lender and the Borrower agree in writing to a different
interest rate applicable to LIBOR Rate Advances. If it shall become unlawful for
Lender to continue to fund or maintain any Advances, or to perform its
obligations hereunder, upon demand by Lender, Borrower shall prepay the Advances
in full with accrued interest thereon and all other amounts payable by Borrower
hereunder (including, without limitation, any amount payable in connection with
such prepayment pursuant to Section 4(a)).


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<PAGE>   9

                                    EXHIBIT A

                                 ADVANCE REQUEST


        The undersigned hereby certifies as follows:

        I, _______________, am the duly elected and acting __________________ of
Remedy Corp. ("Borrower").

        This certificate is delivered pursuant to Section 2 of that certain
Supplement to Loan Modification Agreement together with the Loan Agreement by
and between Borrower and Silicon Valley Bank ("Lender) (the "Loan Agreement").
The terms used in this Advance Request which are defined in the Existing Loan
Documents have the same meaning herein as described to them therein.

        Borrower hereby requests on __________, 19____ an Advance as follows:

        (a) The date on which the Advance is to be made is ___________, 19___.

        (b) The amount of the Advance is to be ___________ ($____________), for
an Interest Period of __________ (one, two or three months please specify).

        All representations and warranties of Borrower stated in the Advance
Agreement are true, correct and complete in all material respects as of the date
of this request for an Advance; provided, however, that those representations
and warranties expressly referring to another date shall be true, correct and
complete in all material respects as of such date.

        IN WITNESS WHEREOF, this Advance Request is executed by the undersigned
as of this ________ day of ___________, 19__.

                                        REMEDY CORP.

                                        By:
                                           -------------------------------------
                                        Title:
                                              ----------------------------------

FOR INTERNAL LENDER USE ONLY

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
  LIBOR Pricing Date     LIBOR Rate    LIBOR Rate Variance        Maturity Date
  ------------------     ----------    -------------------        -------------
<S>                      <C>           <C>                        <C>
                                              2.5%
--------------------------------------------------------------------------------
</TABLE>

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<PAGE>   10

                                    EXHIBIT B
                 LIBOR RATE CONVERSION/CONTINUATION CERTIFICATE

        The undersigned hereby certifies as follows:

        I, ___________, am the duly elected and acting _______________ of Remedy
Corp. ("Borrower").

      This certificate is delivered pursuant to Section 2 of that certain
Supplement to Loan Modification Agreement together with the Loan Agreement and
Promissory Note by and between Borrower and Silicon Valley Bank ("Lender") (the
"Existing Loan Documents"). The terms used in this LIBOR Rate Change/Extension
Certificate which are defined in the Existing Loan Documents have the same
meaning herein as ascribed to them therein.

        Borrower hereby requests on _________________, 19__

        (a)   ____(i) A rate conversion of an existing Prime Rate Advance from a
        Prime Rate Advance to a LIBOR Rate Advance; or

              ____(ii) A continuation of an existing LIBOR Rate Advance as a
LIBOR Rate Advance;

                            [Check (i) or (ii) above]

        (b) The date on which the Advance is to be made is ______________,
19___.

        (c) The amount of the Advance is to be _________________ ($___________),
for an Interest Period of __________ (one, two or three months, please specify).

        All representations and warranties of Borrower stated in the Advance
Agreement are true, correct and complete in all material respects as of the date
of this request for an Advance; provided, however, that those representations
and warranties expressly referring to another date shall be true, correct and
complete in all material respects as of such date.

        IN WITNESS WHEREOF, this LIBOR Rate Conversion/Continuation Certificate
is executed by the undersigned as of this ___________ day of ___________, 19___.

                                        REMEDY CORP.

                                        By:
                                           -------------------------------------
                                        Title:
                                              ----------------------------------

FOR INTERNAL LENDER USE ONLY

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
  LIBOR Pricing Date     LIBOR Rate    LIBOR Rate Variance        Maturity Date
  ------------------     ----------    -------------------        -------------
<S>                      <C>           <C>                        <C>
                                              2.5%
--------------------------------------------------------------------------------
</TABLE>


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