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                                                                   EXHIBIT 10.32

                               REMEDY CORPORATION
                  1995 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
                           (AS AMENDED MARCH 24, 1998)
      (REFLECTS STOCK SPLITS AND ANNUAL INCREASES THROUGH JANUARY 1, 2001)


         I.       PURPOSE OF THE PLAN

                  This 1995 Non-Employee Directors Stock Option Plan (the
"Plan") is intended to promote the interests of Remedy Corporation, a Delaware
corporation (the "Corporation"), by providing the non-employee members of the
Board of Directors with the opportunity to acquire a proprietary interest, or
otherwise increase their proprietary interest, in the Corporation as an
incentive for them to remain in the service of the Corporation.


         II.      DEFINITIONS

                  For purposes of the Plan, the following definitions shall be
in effect:

                  ANNUAL MEETING: the annual meeting of the Corporation's
stockholders.

                  BOARD: the Corporation's Board of Directors.

                  CODE: the Internal Revenue Code of 1986, as amended.

                  COMMON STOCK: shares of the Corporation's common stock.

                  CHANGE IN CONTROL: a change in ownership or control of the
Corporation effected through either of the following transactions:

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

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

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                  CORPORATE TRANSACTION: either of the following
stockholder-approved transactions to which the Corporation is a party:

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

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

                  EFFECTIVE DATE: the date on which the Underwriting Agreement
is executed and the initial public offering price of the Common Stock is
established.

                  FAIR MARKET VALUE: the Fair Market Value per share of Common
Stock determined in accordance with the following provisions:

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

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

                           c.       For purposes of option grants made on the
         date of execution of the Underwriting Agreement, the Fair Market Value
         shall be deemed to be equal to the price per share at which the Common
         Stock is sold in the initial public offering pursuant to the
         Underwriting Agreement.

                  HOSTILE TAKE-OVER: a change in ownership of the Corporation
effected through the following transaction:

                           a.       the acquisition, directly or indirectly, by
         any person or related group of persons (other than the Corporation or a
         person that directly or indirectly controls, is controlled by, or is
         under common control with, the Corporation) of beneficial ownership
         (within the meaning of Rule 13d-3 of the 1934 Act) of securities
         possessing more than fifty percent (50%) of the total combined voting


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         power of the Corporation's outstanding securities pursuant to a tender
         or exchange offer made directly to the Corporation's stockholders which
         the Board does not recommend such stockholders to accept, AND

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

                  1934 ACT: the Securities Exchange Act of 1934, as amended.

                  OPTIONEE: any person to whom an option is granted under the
Plan.

                  PERMANENT DISABILITY OR PERMANENTLY DISABLED: the inability of
the Optionee to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment expected to result in death
or to be of continuous duration of twelve (12) months or more.

                  SECTION 16 INSIDER: an officer or director of the Corporation
subject to the short-swing profit liabilities of Section 16 of the 1934 Act.

                  STOCK EXCHANGE: either the American Stock Exchange or the New
York Stock Exchange.

                  TAKE-OVER PRICE: the GREATER of (a) the Fair Market Value per
share of Common Stock on the date the option is surrendered to the Corporation
in connection with a Hostile Take-Over or (b) the highest reported price per
share of Common Stock paid by the tender offeror in effecting such Hostile
Take-Over.

                  UNDERWRITING AGREEMENT: the agreement between the Corporation
and the underwriter or underwriters managing the initial public offering of the
Common Stock.

         III.     ADMINISTRATION OF THE PLAN

                  The terms and conditions of each automatic option grant
(including the timing and pricing of the option grant) shall be determined by
the express terms and conditions of the Plan, and neither the Board nor any
committee of the Board shall exercise any discretionary functions with respect
to option grants made pursuant to the Plan.

         IV.      STOCK SUBJECT TO THE PLAN

                  A.       Shares of Common Stock shall be available for
issuance under the Plan and shall be drawn from either the Corporation's
authorized but unissued shares of Common Stock or from reacquired shares of
Common Stock, including shares repurchased by the Corporation on the open
market. The number of shares of Common Stock reserved for issuance over the term
of the Plan shall be fixed at 525,000 shares, as adjusted to reflect stock
splits effected on March 1996 and October 1996 and the automatic increases on
January 1, 1996 through 2001.


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                  B.       The number of shares of Common Stock available for
issuance under the Plan shall automatically increase on the first trading day of
each calendar year during the term of the Plan, beginning with the 2002 calendar
year, by an additional 37,500 shares.

                  C.       Should one or more outstanding options under this
Plan expire or terminate for any reason prior to exercise in full, then the
shares subject to the portion of each option not so exercised shall be available
for subsequent option grant under the Plan. Shares subject to any option or
portion thereof surrendered in accordance with Article VII and all share
issuances under the Plan, whether or not the shares are subsequently repurchased
by the Corporation pursuant to its repurchase rights under the Plan, shall
reduce on a share-for-share basis the number of shares of Common Stock available
for subsequent option grant under the Plan. In addition, should the exercise
price of an outstanding option under the Plan be paid with shares of Common
Stock, then the number of shares of Common Stock available for issuance under
the Plan shall be reduced by the gross number of shares for which the option is
exercised, and not by the net number of shares of Common Stock actually issued
to the holder of such option.

                  D.       Should any change be made to the Common Stock
issuable under the Plan by reason of any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class without the Corporation's
receipt of consideration, then appropriate adjustments shall be made to (i) the
maximum number and/or class of securities issuable under the Plan, (ii) the
number and/or class of securities by which the share reserve is to increase
automatically each calendar year, (iii) the number and/or class of securities
for which automatic option grants are to be subsequently made to each
newly-elected or continuing non-employee Board member under the Plan, and (iv)
the number and/or class of securities and price per share in effect under each
option outstanding under the Plan. The adjustments to the outstanding options
shall be made by the Board in a manner which shall preclude the enlargement or
dilution of rights and benefits under such options and shall be final, binding
and conclusive.


         V.       ELIGIBILITY

                  A.       ELIGIBLE OPTIONEES. The individuals eligible to
receive automatic option grants pursuant to the provisions of this Plan shall be
limited to (i) those individuals serving as non-employee Board members on the
Effective Date and who have not otherwise previously received a stock option
grant from the Corporation, (ii) those individuals who are first elected or
appointed as non-employee Board members after the Effective Date, whether
through appointment by the Board or election by the Corporation's stockholders,
and (iii) those individuals who are re-elected as non-employee Board members at
one or more Annual Meetings held after the Effective Date. A non-employee Board
member shall not be eligible to receive the initial automatic option grant under
clause (i) or clause (ii) if such individual has previously been in the employ
of the Corporation (or any parent or subsidiary). However, a non-employee Board
member shall be eligible to receive one or more clause (iii) option grants,
whether or not he or she has previously been in the employ of the Corporation
(or any parent or subsidiary). Each


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non-employee Board member eligible to participate in the Plan pursuant to the
foregoing criteria is hereby designated an Eligible Director.

                  B.       LIMITATION. Except for the grants to be made pursuant
to this Plan, non-employee Board members shall not be eligible to receive any
stock options, stock appreciation rights, direct stock issuances or other stock
awards under this Plan or any other stock plan of the Corporation or any parent
or subsidiary.


         VI.      TERMS AND CONDITIONS OF AUTOMATIC OPTION GRANTS

                  A.       GRANT DATE. Option grants shall be made on the dates
specified below:

                  -        Each individual who first becomes an Eligible
         Director on or after the 1998 Annual Meeting, whether through election
         by the Corporation's stockholders or appointment by the Board, shall
         automatically be granted, at the time of such initial election or
         appointment, a non-statutory option to purchase 20,000 shares of Common
         Stock.

                  -        On the date of each Annual Meeting, beginning with
         the 1998 Annual Meeting, each Eligible Director who serves on the Board
         at the time of that Annual Meeting, whether or not standing for
         re-election, shall automatically be granted a non-statutory option to
         purchase an additional 10,000 shares of Common Stock.

                  -        On the date of each Annual Meeting, beginning with
         the 1998 Annual Meeting, each Eligible Director who serves on a
         Committee of the Board, at the time of that Annual Meeting, whether or
         not standing for re-election, shall automatically be granted a
         non-statutory option to purchase an additional 5,000 shares of Common
         Stock.

                  There shall be no limit on the number of such annual
10,000-share option grants any one Eligible Director may receive over his or her
period of continued Board service, but no director may receive options to
purchase more than 10,000 shares each year for serving on Committees of the
Board.

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

                  C.       PAYMENT.

                  The exercise price shall become immediately due upon exercise
of the option and shall be payable in one of the alternative forms specified
below:

                           (i)      full payment in cash or check made payable
         to the Corporation's order; or


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                           (ii)     full payment in shares of Common Stock held
         for the requisite period necessary to avoid a charge to the
         Corporation's earnings for financial-reporting purposes and valued at
         Fair Market Value on the Exercise Date (as such term is defined below);
         or

                           (iii)    full payment in a combination of shares of
         Common Stock held for the requisite period necessary to avoid a charge
         to the Corporation's earnings for financial-reporting purposes and
         valued at Fair Market Value on the Exercise Date and cash or check
         payable to the Corporation's order; or

                           (iv)     to the extent the option is exercised for
         vested shares, full payment through a broker-dealer sale and remittance
         procedure pursuant to which the non-employee Board member (i) shall
         provide irrevocable written instructions to a Corporation-designated
         brokerage firm to effect the immediate sale of the purchased shares and
         remit to the Corporation, out of the sale proceeds available on the
         settlement date, sufficient funds to cover the aggregate exercise price
         payable for the purchased shares and (ii) shall concurrently provide
         written directives to the Corporation to deliver the certificates for
         the purchased shares directly to such brokerage firm in order to
         complete the sale transaction.

                  For purposes of this Section VI.C, the Exercise Date shall be
the date on which written notice of the option exercise is delivered to the
Corporation. Except to the extent the sale and remittance procedure specified
above is utilized in connection with the exercise of the option for vested
shares, payment of the exercise price for the purchased shares must accompany
the exercise notice. However, if the option is exercised for any unvested
shares, then the Optionee must also execute and deliver to the Corporation a
stock purchase agreement for those unvested shares which provides the
Corporation with the right to repurchase, at the exercise price paid per share,
any unvested shares held by the Optionee at the time of his or her cessation of
Board service and which precludes the sale, transfer or other disposition of any
shares purchased under the option, to the extent those shares are at the time
subject to the Corporation's repurchase right.

                  D.       EXERCISABILITY/VESTING. Each automatic grant shall be
immediately exercisable for any or all of the option shares. Any shares
purchased under the option shall be subject to repurchase by the Corporation, at
the exercise price paid per share, upon the Optionee's cessation of Board
service prior to vesting in those shares in a series of 48 successive equal
monthly installments as such individual continues in Board service from the
grant date of that option.

                  Vesting of the option shares shall be subject to acceleration
as provided in Section VI.G and Article VII. In no event, however, shall any
additional option shares vest after the Optionee's cessation of Board service.

                  E.       OPTION TERM. Each automatic grant under the Plan
shall have a maximum term of ten (10) years measured from the automatic grant
date.


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                  F.       NON-TRANSFERABILITY. During the lifetime of the
Optionee, each automatic option grant, together with the limited stock
appreciation right pertaining to such option, shall be exercisable only by the
Optionee and shall not be assignable or transferable by the Optionee other than
a transfer of the option effected by will or by the laws of descent and
distribution following Optionee's death.

                  G.       EFFECT OF TERMINATION OF BOARD SERVICE.

                           1.       Should the Optionee cease to serve as a
Board member for any reason (other than death or Permanent Disability) while
holding one or more automatic option grants under the Plan, then such individual
shall have a six (6)-month period following the date of such cessation of Board
service in which to exercise each such option for any or all of the option
shares in which the Optionee is vested at the time of his or her cessation of
Board service. Each such option shall immediately terminate and cease to be
outstanding, at the time of such cessation of Board service, with respect to any
option shares in which the Optionee is not otherwise at that time vested.

                           2.       Should the Optionee die within six (6)
months after cessation of Board service, then any automatic option grant held by
the Optionee at the time of death may subsequently be exercised, for any or all
of the option shares in which the Optionee is vested at the time of his or her
cessation of Board service (less any option shares subsequently purchased by the
Optionee prior to death), by the personal representative of the Optionee's
estate or by the person or persons to whom the option is transferred pursuant to
the Optionee's will or in accordance with the laws of descent and distribution.
The right to exercise each such option shall lapse upon the expiration of the
twelve (12)-month period measured from the date of the Optionee's death.

                           3.       Should the Optionee die or become
Permanently Disabled while serving as a Board member, then any automatic option
grant held by the Optionee at the time of his or her death or Permanent
Disability may subsequently be exercised for any or all of the option shares in
which the Optionee is vested at that time plus an additional number of option
shares equal to the number of option shares (if any) in which the Optionee would
have vested had he or she continued in Board service until the next Annual
Meeting. The Optionee (or the personal representative of the Optionee's estate
or the person or persons to whom the option is transferred upon the Optionee's
death) shall have the right to exercise the option for such number of option
shares at any time prior to the expiration of the twelve (12)-month period
measured from the date of the Optionee's death or Permanent Disability.

                           4.       In no event shall any automatic grant under
this Plan remain exercisable after the expiration date of the maximum ten
(10)-year option term. Upon the expiration of the applicable post-service
exercise period under subparagraphs 1 through 3 above or (if earlier) upon the
expiration of the maximum ten (10)-year option term, the automatic grant shall
terminate and cease to be outstanding for any option shares in which the
Optionee was vested at the time of his or her cessation of Board service but for
which such option was not otherwise exercised.


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                  H.       STOCKHOLDER RIGHTS. The holder of an automatic option
grant shall have none of the rights of a stockholder with respect to any shares
subject to such option until such individual shall have exercised the option and
paid the exercise price for the purchased shares.

                  I.       REMAINING TERMS. The remaining terms and conditions
of each automatic option grant shall be as set forth in the form Stock Option
Agreement attached as Exhibit A.


         VII.     SPECIAL ACCELERATION EVENTS

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

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

                  C.       Upon the occurrence of a Hostile Take-Over, the
Optionee shall have a thirty (30)-day period in which to surrender to the
Corporation each automatic option grant held by him or her for a period of at
least six (6) months. The Optionee shall in return be entitled to a cash
distribution from the Corporation in an amount equal to the excess of (i) the
Take-Over Price of the shares of Common Stock at the time subject to the
surrendered option (whether or not the Optionee is otherwise at the time vested
in those shares) over (ii) the aggregate exercise price payable for such shares.
Such cash distribution shall be paid within five (5) days following the
surrender of the option to the Corporation. No approval or consent of the Board
shall be required in connection with such option surrender and cash
distribution.

                  D.       The shares of Common Stock subject to each option
surrendered in connection with the Hostile Take-Over shall NOT be available for
subsequent option grant under this Plan.

                  E.       The automatic option grants outstanding under the
Plan shall in no way affect the right of the Corporation to adjust, reclassify,
reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets.


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         VIII.    AMENDMENT OF THE PLAN AND AWARDS

                  The Board has complete and exclusive power and authority to
amend or modify the Plan (or any component thereof) in any or all respects
whatsoever. However, no such amendment or modification shall adversely affect
rights and obligations with respect to options at the time outstanding under the
Plan, unless the affected Optionees consent to such amendment. Stockholder
approval shall be obtained to the extent required by applicable law.


         IX.      EFFECTIVE DATE AND TERM OF PLAN

                  A.       The Plan became effective immediately upon adoption
by the Board on the Effective Date. The Plan was amended on March 24, 1998 (A)
to decrease the number of shares of Common Stock to be awarded to new
non-employee directors from 30,000 to 20,000 shares, (B) to increase the annual
grants from 7,500 to 10,000 shares, (C) to provide for an option grant of 5,000
shares to each non-employee director serving on a Board committee (up to a
maximum of 10,000 shares each year for committee assignments), and (D) to modify
the vesting schedule such that all such options vest in 48 equal monthly
installments, subject to the approval of the stockholders at the 1998 Annual
Meeting. The 1998 amendment was approved by the Corporation's stockholders at
the 1998 Annual Meeting.

                  B.       The Plan shall terminate upon the EARLIER of (i)
January 16, 2005 or (ii) the date on which all shares available for issuance
under the Plan shall have been issued or cancelled pursuant to the exercise or
surrender of the options granted under the Plan. If the date of termination is
determined under clause (i) above, then all option grants and unvested stock
issuances outstanding on such date shall thereafter continue to have force and
effect in accordance with the provisions of the agreements evidencing those
option grants or stock issuances.


         X.       USE OF PROCEEDS

                  Any cash proceeds received by the Corporation from the sale of
shares pursuant to option grants or share issuances under the Plan shall be used
for general corporate purposes.


         XI.      REGULATORY APPROVALS

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

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


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applicable listing requirements of the Nasdaq National Market or any Stock
Exchange on which the Common Stock is then listed for trading.


         XII.     NO IMPAIRMENT OF RIGHTS

                  Neither the action of the Corporation in establishing the Plan
nor any provision of the Plan shall be construed or interpreted so as to affect
adversely or otherwise impair the right of the Corporation or the stockholders
to remove any individual from the Board at any time in accordance with the
provisions of applicable law.


         XIII.    MISCELLANEOUS PROVISIONS

                  A.       The right to acquire Common Stock or other assets
under the Plan may not be assigned, encumbered or otherwise transferred by any
Optionee.

                  B.       The provisions of the Plan relating to the exercise
of options and the vesting of shares shall be governed by the laws of the State
of California, as such laws are applied to contracts entered into and performed
in such State.

                  C.       The provisions of the Plan shall inure to the benefit
of, and be binding upon, the Corporation and its successors or assigns, whether
by Corporate Transaction or otherwise, and the Optionees, the legal
representatives of their respective estates, their respective heirs or legatees
and their permitted assignees.


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                                                          NON-EMPLOYEE DIRECTORS

                               REMEDY CORPORATION

                             STOCK OPTION AGREEMENT


RECITALS

                  A.       Remedy Corporation (the "Corporation") has approved
and implemented the 1995 Non-Employee Directors Stock Option Plan (the "Plan")
pursuant to which eligible non-employee members of the Corporation's Board of
Directors (the "Board") will automatically receive special option grants at
periodic intervals over their period of Board service in order to provide such
individuals with a meaningful incentive to continue to serve as a member of the
Board.

                  B.       Optionee is an eligible non-employee Board member,
and this Agreement is executed pursuant to, and is intended to carry out the
purposes of, the Plan in connection with the automatic grant of a stock option
to purchase shares of the Corporation's common stock ("Common Stock") under the
Plan.

                  C.       The granted option is intended to be a non-statutory
option which does NOT meet the requirements of Section 422 of the Internal
Revenue Code.

                  NOW, THEREFORE, it is hereby agreed as follows:

                  1.       GRANT OF OPTION. Subject to and upon the terms and
conditions set forth in this Agreement, there is hereby granted to Optionee, as
of the date of grant (the "Grant Date") specified in the accompanying Notice of
Grant of Automatic Stock Option (the "Grant Notice"), a stock option to purchase
up to that number of shares of Common Stock (the "Option Shares") as is
specified in the Grant Notice. The Option Shares shall be purchasable from time
to time during the option term at the price per share (the "Exercise Price")
specified in the Grant Notice.

                  2.       OPTION TERM. This option shall have a maximum term
of ten (10) years measured from the Grant Date and shall expire at the close
of business on the Expiration Date specified in the Grant Notice, unless
sooner terminated under Paragraph 5, 7 or 8.

                  3.       LIMITED TRANSFERABILITY. This option, together with
the special stock appreciation right provided under Paragraph 8.B, shall be
neither transferable nor assignable by Optionee, other than a transfer of this
option effected by will or by the laws of descent and distribution following
Optionee's death, and may be exercised, during Optionee's lifetime, only by
Optionee.

                  4.       EXERCISABILITY/VESTING.

                           A.       This option shall be immediately exercisable
for any or all of the Option Shares, whether or not the Option Shares are vested
in accordance with the Vesting

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Schedule set forth in Paragraph 4.B, and shall remain so exercisable until the
expiration or sooner termination of the option term.

                           B.       Optionee shall vest in the Option Shares in
48 equal monthly installments over his or her period of Board service measured
from the Grant Date. Vesting in the Option Shares may be accelerated pursuant to
the provisions of Paragraphs 5, 7 and 8. In no event, however, shall any
additional Option Shares vest following Optionee's cessation of service as a
Board member.

                  5.       CESSATION OF BOARD SERVICE. Should Optionee's service
as a Board member cease while this option remains outstanding, then the option
term specified in Paragraph 2 shall terminate (and this option shall cease to be
outstanding) prior to the Expiration Date in accordance with the following
provisions:

                  o        Should Optionee cease to serve as a Board member for
         any reason (other than death or permanent disability) while holding
         this option, then the period for exercising this option shall be
         reduced to a six (6)-month period commencing with the date of such
         cessation of Board service, but in no event shall this option be
         exercisable at any time after the Expiration Date. During such limited
         period of exercisability, this option may not be exercised for more
         than the number of Option Shares (if any) in which Optionee is vested
         on the date Optionee ceases service as a Board member. Upon the EARLIER
         of (i) the expiration of such six (6)-month period or (ii) the
         specified Expiration Date, the option shall terminate and cease to be
         exercisable with respect to any vested Option Shares for which the
         option has not been exercised.

                  o        Should Optionee die during the six (6)-month period
         following his or her cessation of Board service, then the personal
         representative of Optionee's estate or the person or persons to whom
         the option is transferred pursuant to Optionee's will or in accordance
         with the laws of descent and distribution shall have the right to
         exercise this option for any or all of the Option Shares in which
         Optionee is vested at the time of Optionee's cessation of Board service
         (less any Option Shares purchased by Optionee after such cessation of
         Board service but prior to death). Such right of exercise shall
         terminate, and this option shall accordingly cease to be exercisable
         for such vested Option Shares, upon the earlier of (i) the expiration
         of the twelve (12)-month period measured from the date of Optionee's
         death or (ii) the specified Expiration Date of the option term.

                  o        Should Optionee die or become permanently disabled
         while serving as a Board member, then this option may subsequently be
         exercised for any or all of the Option Shares in which Optionee is
         vested at the time of his or her death or permanent disability plus an
         additional number of Option Shares equal to the number of Option Shares
         (if any) in which Optionee would have vested had he or she continued in
         Board service until the next Annual Stockholders Meeting (the "Annual
         Meeting"). Optionee (or the personal representative of Optionee's
         estate or the person or persons to whom the option is transferred upon
         Optionee's death) shall


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         have the right to exercise the option for such number of Option Shares
         at any time prior to the earlier of (i) the expiration of the twelve
         (12)-month period measured from the date of Optionee's death or
         permanent disability or (ii) the specified Expiration Date of the
         option term.

                  o        Upon Optionee's cessation of Board service for any
         reason, this option shall immediately terminate and cease to be
         outstanding with respect to any and all Option Shares in which Optionee
         is not otherwise at that time vested in accordance with the normal
         Vesting Schedule set forth in the Grant Notice or the special vesting
         acceleration provisions of this Paragraph 5 or Paragraph 7 or 8 below.

                  o        For purposes of this Agreement, Optionee shall be
         deemed to be PERMANENTLY DISABLED if Optionee is unable to engage in
         any substantial gainful activity by reason of any medically
         determinable physical or mental impairment which can be expected to
         result in death or which has lasted or can be expected to last for a
         continuous period of twelve (12) months or more.

                  6.       ADJUSTMENT IN OPTION SHARES.

                           A.       Should any change be made to the Common
Stock issuable under the Plan by reason of any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares or other change
affecting such Common Stock as a class without the Corporation's receipt of
consideration, then the number and class of securities purchasable under this
option and the Exercise Price payable per share shall be appropriately adjusted
to prevent the dilution or enlargement of Optionee's rights hereunder; PROVIDED,
however, the aggregate Exercise Price shall remain the same.

                           B.       Should this option be assumed in connection
with any Corporate Transaction under Paragraph 7, then this option shall be
appropriately adjusted to apply and pertain to the number and class of
securities which would have been issued to Optionee in the consummation of such
Corporate Transaction had the option been exercised immediately prior to such
Corporate Transaction. Appropriate adjustments shall also be made to the
Exercise Price payable per share, PROVIDED the aggregate Exercise Price payable
hereunder shall remain the same.

                  7.       CORPORATE TRANSACTION. In the event of either of the
following stockholder-approved transactions to which the Corporation is a party
(a "Corporate Transaction"):

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

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


                                       3
<Page>

all Option Shares at the time subject to this option but not otherwise vested
shall automatically vest so that this option shall, immediately prior to the
specified effective date for the Corporate Transaction, become fully exercisable
for all of the Option Shares at the time subject to this option and may be
exercised for all or any portion of such shares as fully-vested shares of Common
Stock. Immediately following the consummation of the Corporate Transaction, this
option shall terminate and cease to be outstanding, except to the extent assumed
by the successor corporation or its parent company.

                  8.       CHANGE IN CONTROL/HOSTILE TAKE-OVER.

                           A.       All Option Shares subject to this option at
the time of a Change in Control (as defined below) but not otherwise vested
shall automatically vest so that this option shall, immediately prior to the
effective date of such Change in Control, become fully exercisable for all of
the Option Shares at the time subject to this option and may be exercised for
all or any portion of such shares as fully-vested shares of Common Stock. This
option shall remain exercisable for such fully-vested Option Shares until the
EARLIEST to occur of (i) the specified Expiration Date of the option term, (ii)
the sooner termination of this option in accordance with Paragraph 5 or 7 or
(iii) the surrender of this option under Paragraph 8.B.

                           B.       Provided this option has been outstanding
for at least six (6) months prior to the occurrence of a Hostile Take-Over (as
defined below), Optionee shall have an unconditional right (exercisable during
the thirty (30)-day period immediately following the consummation of such
Hostile Take-Over) to surrender this option to the Corporation in exchange for a
cash distribution from the Corporation in an amount equal to the excess of (i)
the Take-Over Price (as defined below) of the Option Shares at the time subject
to the surrendered option (whether or not those Option Shares are otherwise at
the time vested) over (ii) the aggregate Exercise Price payable for such shares.

                  To exercise this limited stock appreciation right, Optionee
must, during the applicable thirty (30)-day exercise period, provide the
Corporation with written notice of the option surrender in which there is
specified the number of Option Shares as to which the option is being
surrendered. Such notice must be accompanied by the return of Optionee's copy of
this Agreement, together with any written amendments to such Agreement. The cash
distribution shall be paid to Optionee within five (5) days following such
delivery date, and no approval or consent of the Board shall be required in
connection with such option surrender and cash distribution. Upon receipt of
such cash distribution, this option shall be cancelled with respect to the
shares subject to the surrendered option (or the surrendered portion), and
Optionee shall cease to have any further right to acquire those Option Shares
under this Agreement. The option shall, however, remain outstanding for the
balance of the Option Shares (if any) in accordance with the terms and
provisions of this Agreement, and the Corporation shall accordingly issue a new
stock option agreement (substantially in the same form of this Agreement) for
those remaining Option Shares.

                  This limited stock appreciation right shall in all events
terminate upon the expiration or sooner termination of the option term and may
not be assigned or transferred by Optionee.


                                       4
<Page>

                           C.       For purposes of this Agreement, the
following definitions shall be in effect:

                  A CHANGE IN CONTROL shall be deemed to occur in the event:

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

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

                  A HOSTILE TAKE-OVER shall be deemed to occur in the event (i)
any person or related group of persons (other than the Corporation or a person
that directly or indirectly controls, is controlled by, or is under common
control with, the Corporation) directly or indirectly acquires beneficial
ownership (within the meaning of Rule 13d-3 of the 1934 Act) of securities
possessing more than fifty percent (50%) of the total combined voting power of
the Corporation's outstanding securities pursuant to a tender or exchange offer
made directly to the Corporation's stockholders which the Board does not
recommend such stockholders to accept, AND more than fifty percent (50%) of the
securities so acquired in such tender or exchange offer are accepted from
holders other than the officers and directors of the Corporation subject to the
short-swing profit restrictions of Section 16 of the 1934 Act.

                  The TAKE-OVER PRICE per share shall be deemed to be equal to
the GREATER of (a) the Fair Market Value per share of Common Stock on the date
the option is surrendered to the Corporation in connection with a Hostile
Take-Over, as determined in accordance with the valuation provisions of
Paragraph 9.B, or (b) the highest reported price per share of Common Stock paid
by the tender offeror in effecting such Hostile Take-Over.

                  9.       MANNER OF EXERCISING OPTION.

                           A.       In order to exercise this option for all or
any part of the Option Shares for which the option is at the time exercisable,
Optionee (or in the case of exercise after Optionee's death, Optionee's
executor, administrator, heir or legatee, as the case may be) must take the
following actions:


                                       5
<Page>

                           (i)      To the extent the option is exercised for
vested Option Shares, the Secretary of the Corporation shall be provided with
written notice of the option exercise (the "Exercise Notice"), in substantially
the form of Exhibit I attached hereto, in which there is specified the number of
vested Option Shares which are to be purchased under the exercised option. To
the extent the option is exercised for one or more unvested Option Shares,
Optionee (or other person exercising the option) shall deliver to the Secretary
of the Corporation a stock purchase agreement (in form and substance
satisfactory to the Corporation) which grants the Corporation the right to
repurchase, at the Exercise Price, any and all unvested Option Shares held by
Optionee at the time of his or her cessation of Board service and which
precludes the sale, transfer or other disposition of any purchased Option Shares
while they remain subject to such repurchase right ("the Purchase Agreement").

                           (ii)     The aggregate Exercise Price for the
purchased shares shall be paid in one of the following alternative forms:

                  o        full payment in cash or check made payable to the
         Corporation's order; or

                  o        full payment in shares of Common Stock held by
         Optionee for the requisite period necessary to avoid a charge to the
         Corporation's earnings for financial reporting purposes and valued at
         Fair Market Value on the Exercise Date; or

                  o        full payment in a combination of shares of Common
         Stock held for the requisite period necessary to avoid a charge to the
         Corporation's earnings for financial reporting purposes and valued at
         Fair Market Value on the Exercise Date and cash or check made payable
         to the Corporation's order; or

                  o        to the extent the option is exercised for vested
         Option Shares, full payment effected through a broker-dealer sale and
         remittance procedure pursuant to which Optionee shall provide
         irrevocable written instructions (A) to a Corporation-designated
         brokerage firm to effect the immediate sale of the vested shares
         purchased under the option and remit to the Corporation, out of the
         sale proceeds available on the settlement date, sufficient funds to
         cover the aggregate Exercise Price payable for those shares and (B) to
         the Corporation to deliver the certificates for the purchased shares
         directly to such brokerage firm in order to complete the sale.

                           (iii)    Appropriate documentation evidencing the
right to exercise this option shall be furnished the Corporation if the person
or persons exercising the option is other than Optionee.

                           B.       For purposes of Subparagraph 9.A above and
for all other valuation purposes under this Agreement, the Fair Market Value per
share of Common Stock on any relevant date shall be determined in accordance
with the following provisions:


                                       6
<Page>

                  o        If the Common Stock is not at the time listed or
         admitted to trading on any national securities exchange but is traded
         on the Nasdaq National Market, the Fair Market Value shall be the
         closing selling price per share on the date in question, as such price
         is reported by the National Association of Securities Dealers on the
         Nasdaq National Market or any successor system. If there is no reported
         closing selling price for the Common Stock on the date in question,
         then the closing selling price on the last preceding date for which
         such quotation exists shall be determinative of Fair Market Value.

                  o        If the Common Stock is at the time listed or admitted
         to trading on any national securities exchange, then the Fair Market
         Value shall be the closing selling price per share on the date in
         question on the exchange serving as the primary market for the Common
         Stock, as such price is officially quoted in the composite tape of
         transactions on such exchange. If there is no reported sale of Common
         Stock on such exchange on the date in question, then the Fair Market
         Value shall be the closing selling price on the exchange on the last
         preceding date for which such quotation exists.

                           C.       The Exercise Date shall be the date on which
the Exercise Notice is delivered to the Secretary of the Corporation, together
with the appropriate Purchase Agreement for any unvested shares acquired under
the option. Except to the extent the sale and remittance procedure specified
above is utilized in connection with the exercise of the option for vested
shares, payment of the Exercise Price for the purchased shares must accompany
such notice.

                           D.       As soon as practical after the Exercise
Date, the Corporation shall issue to or on behalf of Optionee (or other person
or persons exercising this option) a certificate or certificates representing
the purchased Option Shares. To the extent any such Option Shares are unvested,
the certificates for those Option Shares shall be endorsed with an appropriate
legend evidencing the Corporation's repurchase rights and may be held in escrow
with the Corporation until such shares vest.

                           E.       In no event may this option be exercised for
any fractional share.

                  10.      STOCKHOLDER RIGHTS. The holder of this option shall
not have any of the rights of a stockholder with respect to the Option Shares
until such individual shall have exercised this option and paid the Exercise
Price for the purchased shares.

                  11.      NO IMPAIRMENT OF RIGHTS. This Agreement shall not in
any way affect the right of the Corporation to adjust, reclassify, reorganize or
otherwise make changes in its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets. Nor shall this Agreement in any way be construed or
interpreted so as to affect adversely or otherwise impair the right of the
Corporation or the stockholders to remove Optionee from the Board at any time in
accordance with the provisions of applicable law.


                                       7
<Page>

                  12.      COMPLIANCE WITH LAWS AND REGULATIONS. The exercise of
this option and the issuance of the Option Shares upon such exercise shall be
subject to compliance by the Corporation and Optionee with all applicable
requirements of law relating thereto and with all applicable regulations of any
securities exchange on which shares of the Common Stock may be listed for
trading at the time of such exercise and issuance.

                  13.      SUCCESSORS AND ASSIGNS. Except to the extent
otherwise provided in Paragraph 3 or 7, the provisions of this Agreement shall
inure to the benefit of, and be binding upon, the successors, administrators,
heirs, legal representatives and assigns of Optionee and the Corporation's
successors and assigns.

                  14.      DISCHARGE OF LIABILITY. The inability of the
Corporation to obtain approval from any regulatory body having authority deemed
by the Corporation to be necessary to the lawful issuance and sale of any Common
Stock pursuant to this option shall relieve the Corporation of any liability
with respect to the non-issuance or sale of the Common Stock as to which such
approval shall not have been obtained. However, the Corporation shall use its
best efforts to obtain all such applicable approvals.

                  15.      NOTICES. Any notice required to be given or delivered
to the Corporation under the terms of this Agreement shall be in writing and
addressed to the Corporation at its principal corporate offices. Any notice
required to be given or delivered to Optionee shall be in writing and addressed
to Optionee at the address indicated below Optionee's signature line on the
Grant Notice. All notices shall be deemed effective upon personal delivery or
upon deposit in the U.S. mail, postage prepaid and properly addressed to the
party to be notified.

                  16.      CONSTRUCTION/GOVERNING LAW. This Agreement and the
option evidenced hereby are made and granted pursuant to the Plan and are in all
respects limited by and subject to the express terms and provisions of the Plan.
The interpretation, performance, and enforcement of this Agreement shall be
governed by the laws of the State of California without resort to that State's
conflict-of-laws rules.


                                       8
<Page>

                                    EXHIBIT I

                              NOTICE OF EXERCISE OF
                           NON-STATUTORY STOCK OPTION



                  I hereby notify Remedy Corporation (the "Corporation") that I
elect to purchase ___________ shares of Common Stock of the Corporation (the
"Purchased Shares") pursuant to that certain option (the "Option") granted to me
on _________________, to purchase up to __________ shares of the Corporation's
Common Stock at an exercise price of $________ per share (the "Exercise Price").

                  Concurrently with the delivery of this Exercise Notice to the
Secretary of the Corporation, I shall hereby pay to the Corporation the Exercise
Price for the Purchased Shares in accordance with the provisions of my agreement
with the Corporation evidencing the Option and shall deliver whatever additional
documents may be required by such agreement as a condition for exercise.
Alternatively, I may utilize the special broker/dealer sale and remittance
procedure specified in my agreement to effect payment of the Exercise Price for
any Purchased Shares in which I am vested at the time of exercise.



--------------------------                    ----------------------------------
Date                                            Optionee

                             Address:         ----------------------------------

                                              ----------------------------------

Print name in exact manner
it is to appear on the
stock certificate:                            ----------------------------------


Address to which certificate
is to be sent, if different
from address above:                           ----------------------------------


                                              ----------------------------------


Social Security Number:                       ----------------------------------




                                      E-1
<Page>

                               REMEDY CORPORATION

                                 NOTICE OF GRANT
                                       OF
                             AUTOMATIC STOCK OPTION



                  Notice is hereby given of the following stock option (the
"Option") to purchase shares of the common stock of Remedy Corporation (the
"Corporation") which has been granted pursuant to the Corporation's 1995
Non-Employee Directors Stock Option Plan (the "Plan"):

                  OPTIONEE:

                  GRANT DATE:

                  TYPE OF OPTION:                    Non-Statutory Stock Option

                  EXERCISE PRICE:                    $_______ per share

                  NUMBER OF OPTION SHARES:           2,500 shares

                  EXPIRATION DATE:

                  EXERCISE SCHEDULE: The Option is immediately exercisable for
                  all of the Option Shares.

                  VESTING SCHEDULE: The Option Shares shall be unvested and
                  subject to repurchase by the Corporation, at the Exercise
                  Price paid per share, upon Optionee's cessation of service as
                  a member of the Corporation's Board of Directors (the
                  "Board"). Optionee shall acquire a vested interest in all the
                  Option Shares, and the Corporation's repurchase right shall
                  lapse in its entirety, on the date immediately prior to the
                  fourth Annual Stockholders Meeting following the Grant Date of
                  this Option, provided Optionee continues to serve on the Board
                  through that vesting date. However, the vesting of the Option
                  Shares shall be subject to acceleration in accordance with the
                  terms of the attached Stock Option Agreement.

                  Optionee understands and agrees that the Option is granted
subject to and in accordance with the express terms and conditions of the Plan.
Optionee further agrees to be bound by the terms and conditions of the Plan and
the terms and conditions of the Option as set forth in the Stock Option
Agreement attached hereto as EXHIBIT A.

                  Optionee hereby acknowledges receipt of a copy of the official
Plan Summary and Prospectus attached hereto as EXHIBIT B. A copy of the Plan is
available upon request made to the Corporate Secretary at the Corporate Offices
at 1965 Landings Drive, Mountain View, CA 94043.


<Page>

                  REPURCHASE RIGHT. OPTIONEE HEREBY AGREES THAT ALL UNVESTED
OPTION SHARES ACQUIRED UPON THE EXERCISE OF THE OPTION SHALL NOT BE TRANSFERABLE
AND SHALL BE SUBJECT TO REPURCHASE BY THE CORPORATION AND ITS ASSIGNS, AT THE
EXERCISE PRICE PAID PER SHARE, UPON OPTIONEE'S TERMINATION OF SERVICE WITH THE
CORPORATION. THE TERMS AND CONDITIONS OF SUCH REPURCHASE RIGHT SHALL BE SET
FORTH IN A STOCK PURCHASE AGREEMENT, IN FORM AND SUBSTANCE SATISFACTORY TO THE
CORPORATION, EXECUTED BY OPTIONEE AT THE TIME OF THE OPTION EXERCISE.

                  No provision of this Notice of Grant or the attached Stock
Option Agreement shall in any way be construed or interpreted so as to affect
adversely or otherwise impair the right of the Corporation or the stockholders
to remove Optionee from the Board at any time in accordance with the provisions
of applicable law.



DATED:   ______________________,  199___



                                 REMEDY CORPORATION


                                 By:
                                        ----------------------------------------

                                 Title:
                                        ----------------------------------------



                                 -----------------------------------------------
                                 OPTIONEE


                                 Address:
                                          --------------------------------------

                                          --------------------------------------



ATTACHMENTS:
EXHIBIT A:  STOCK OPTION AGREEMENT
EXHIBIT B:  PLAN SUMMARY AND PROSPECTUS


                                       2
<Page>


                                    EXHIBIT A

                             STOCK OPTION AGREEMENT







<Page>



                                    EXHIBIT B

                           PLAN SUMMARY AND PROSPECTUS