PIVOTAL CORP
<DOCUMENT>
<TYPE>EX-10.31
<SEQUENCE>14
<FILENAME>ex10_31.txt
<TEXT>


                                                                   EXHIBIT 10.31



August 22, 2001


Mr. Bo Manning


Dear Bo:

I am very pleased to offer you employment  with our team at Pivotal  Corporation
("Pivotal").  The  following  are  the  terms  of  your  employment,  as we have
discussed:

1.   Your position at Pivotal will be Chief Executive Officer and President. You
     will report to the Board of Directors.  Your responsibilities shall include
     the overall  operations of Pivotal,  including  developing and implementing
     objectives  and  strategies  to expand the business of Pivotal and increase
     the  shareholder  value.  You may be assigned  other duties by the Board of
     Directors. In addition, you will be a member of the Board of Directors.

2.   Your annual salary will be $350,000.00 (US), payable  semi-monthly and less
     applicable statutory deductions. Your salary will be reviewed in accordance
     with the policies established by the Pivotal Compensation Committee and any
     salary  increase  granted will be effective upon your  anniversary  date of
     employment.

     In year two,  you will be entitled  to an  increase  in your annual  salary
     consistent with other increases  granted by the  Compensation  Committee to
     other members of the executive  staff.  In no event will your annual salary
     be decreased in year two.

3.   Your employment will commence on or about September 1, 2001 and will be for
     an  indefinite  term  subject to the  provisions  listed  below  concerning
     termination of employment.

4.   You will be entitled to earn incentive  compensation  of  $300,000.00  (US)
     annually  based on the  achievement  of  previously  agreed  objectives  as
     determined  by  the  Board  of  Directors.  For  the  first  year  of  your
     employment,   the  incentive  compensation  of  $300,000.00  (US)  will  be
     guaranteed and will be paid in equal quarterly  instalments.  The incentive
     will be pro-rated for partial quarters.

     In the second year of employment, a draw against the incentive compensation
     will be paid in equal quarterly  instalments  commencing with the first day
     of the second year of employment.  The amount of this draw will be based on
     an estimated  after  Canadian  tax amount.  The draw shall be repaid by you
     from the following sources in priority:

          (i)  Incentive compensation actually earned;

          (ii) 100% of capital gains earned by you from sales of the  Employer's
               stock; and
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     In the event of the termination of your employment  without cause, you will
     be entitled to receive any  incentive  compensation  earned to the date you
     are give notice of termination.

5.   As a  condition  of your  employment,  you  agree in  advance  to  relocate
     yourself  and  your  family  by  January  1,  2002 to the  general  area of
     Pivotal's  headquarters  in  Vancouver,   British  Columbia.  Pivotal  will
     reimburse you to maximum amount of $150,000.00  (US) on account of expenses
     incurred by you in relocating.  These expenses can include the movement and
     storage of family and household  goods,  legal fees relating to the sale of
     your family home, real estate commission  payable on account of the sale of
     your  family  home,  the  B.C.   property  purchase  tax,  up  to  30  days
     accommodation  to effect  the move,  reasonable  expenses  incurred  by you
     and/or  your  spouse in  locating a new  residence  and other  expenses  as
     pre-approved by the Chairman. It is understood and agreed that the payments
     referred  to may render  you liable for the  payment of taxes in the United
     States and/or Canada,  and in such event you will be compensated net of all
     taxes.  In the event  that you  voluntarily  resign  your  employment  with
     Pivotal within one year of the date of your  employment,  you are obligated
     to reimburse Pivotal for the amount of the relocation costs paid by Pivotal
     on your behalf.

6.   In addition, Pivotal will pay for reasonable accommodation for you near the
     company's  headquarters  up to the  earlier  of the  date of your  family's
     relocation to Vancouver or December 31, 2001. Pivotal will reimburse travel
     expenses to visit your current  family home on weekends until you move your
     family, or December 31, 2001, whichever comes first.

7.   You will be  entitled  to four  weeks  paid  vacation  per annum  with your
     vacation  to be  taken  at a time or times  mutually  agreeable  to you and
     Pivotal. You are also entitled to Statutory Holidays.

8.   As a  condition  of  employment,  you are  required to  participate  in the
     Pivotal employee benefits plan.  Details of this plan are available for you
     to review. In summary, under this plan you are required to pay the premiums
     for Long Term  Disability,  whereas Pivotal pays the total premium for MSP,
     Extended Health, Dental and Life Insurance. Your entitlement to participate
     in the plan shall be subject to the  approval  by the carrier of such plans
     and subject to you taking the necessary steps to ensure that you, and where
     applicable  your  eligible  dependants,  are properly  registered.  For the
     insured  benefits,  Pivotal  is only  required  to pay its  portion  of the
     premiums and has no further obligation.

9.   As a condition of your employment, you are required to sign an Agreement of
     Confidentiality/Non-Competition/Non-Solicitation  and acknowledge  that the
     intellectual  property,  which  results from your  employment,  is owned by
     Pivotal. In addition, should your employment with Pivotal terminate for any
     reason,  the Agreement  prohibits you from  interfering with the employees,
     customers  or  business  of  Pivotal  for a period  of time  following  the
     cessation of your employment. A copy of this Agreement is attached for your
     review and signature.

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10.  Subject to approval by Pivotal's Board of Directors, you will be granted an
     option to purchase  1,000,000  voting  common  shares of Pivotal at a price
     equivalent  to the closing  price on NASDAQ on the date set by the Board of
     Directors.  The options will vest over a period of four years  according to
     the following schedule: 12.5% after the first six months of employment with
     the   remainder   vesting   on  an   equal   quarterly   basis   thereafter
     (6.25%/quarter).

     This vesting period shall be adjusted on the following basis:

          (a)  In the event of  termination  of employment  without cause within
               the first twelve  months of  employment,  25% of the options vest
               immediately  upon  notification  of termination and the remainder
               shall be cancelled;

          (b)  In the  event  that  substantially  all the  shares  or assets of
               Pivotal are  acquired by a third party as a result of a corporate
               acquisition and, as a result of such acquisition, or within a six
               month  period  following  the  acquisition,  your  employment  is
               terminated  without cause,  50% of the options  outstanding as of
               the  date  of the  acquisition  shall  vest  immediately  and the
               remainder shall be cancelled.  It is agreed that this termination
               provision  shall  not  apply  if there  is no  reduction  in your
               aggregate  compensation  and you are  offered  a senior  position
               operating a business unit in  substantially  the same business as
               Pivotal  located  within  North  America  equal to or larger than
               Pivotal's business as of the date of acquisition.

          (c)  In the event of termination of employment  with just cause or for
               death or incapacity, all options not vested shall be cancelled.

          (d)  Additional    granting   of   options   is   discretionary    and
               performance-based.  Your  eligibility  for additional  options is
               reviewed annually based on sustained high performance.

11.  Your  employment  with Pivotal may be  terminated  in one of the  following
     ways:

          (a)  You may terminate your employment with Pivotal by giving not less
               than 90 days'  written  notice  of  termination  to  Pivotal.  In
               Pivotal's  sole  discretion,  if it  receives  written  notice of
               termination   from  you,  it  may   immediately   terminate  your
               employment  without any notice or  compensation in lieu of notice
               and it will have no further  obligations  to you with  respect to
               the   termination   of  your

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<PAGE>

               employment,    including,   without   limitation,   any   further
               compensation, severance pay or damages.

          (b)  Pivotal  may  terminate  your  employment  by  giving  notice  or
               compensation  in lieu of notice in the amount  equivalent  to one
               year's  base  salary  payable  semi-monthly  and less  applicable
               statutory deductions over twelve months (the "Severance Period").
               If such  termination of your  employment  occurs within the first
               year of employment,  you will be entitled to a further payment of
               $300,000 paid on the same basis as above.  Pivotal shall continue
               to provide all medical,  healthcare  and other  benefits that are
               permitted during the Severance Period.  The amount payable to you
               shall be the maximum  compensation  to which you are  entitled in
               lieu of  reasonable  notice  and  Pivotal  shall  have no further
               obligations  to you  with  respect  to the  termination  of  your
               employment,  including, without limitation, further severance pay
               or damages.  Upon  termination  without  cause,  you will have no
               rights to any other unvested  benefits or compensation  except as
               specifically  provided  herein.  Your receipt of payments will be
               subject to you  signing a Release of Claims in a form  acceptable
               to Pivotal. It is agreed that the notice or pay in lieu of notice
               provisions  of  11(b)  apply  in  the  event  of  a  constructive
               dismissal as that term is defined by Canadian Courts.

          (c)  Your employment may be  automatically  terminated upon your death
               or  permanent  incapacity  which  shall be deemed to occur if you
               suffer any illness or injury that  prevents  you from  performing
               your usual employment  duties for a period of six (6) consecutive
               months.  In the event of death or permanent  incapacity,  Pivotal
               shall be under no  obligation  to provide  you or your  estate or
               personal  representative with notice of termination or payment in
               lieu of notice or any other form of severance pay or damages.

          (d)  Notwithstanding  any other provision,  Pivotal may terminate your
               employment with it at any time for just cause,  without notice or
               pay  in  lieu  of  notice  or any  other  form  of  compensation,
               severance pay or damages.

12.  Upon the termination of your employment with Pivotal, you shall immediately
     resign any directorship or office held in Pivotal or any parent, subsidiary
     or  affiliated  company of Pivotal and you shall not be entitled to receive
     any  written  notice  of  termination  or  payment  in lieu of notice or to
     receive any severance pay,  damages or  compensation  for

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<PAGE>


     loss of office or otherwise by reason of this  resignation or resignations.
     You shall also  immediately  relinquish  all shares or stock and all equity
     interests which may be held by you as a nominee for or on behalf of Pivotal
     or any parent, subsidiary or affiliated company of Pivotal.

13.  Upon  termination of your employment with Pivotal,  you shall repay Pivotal
     any amounts owed to Pivotal as a result of advances or loans.

14.  In the event you cannot legally work in Canada due to criminal convictions,
     previous  immigration  violations or material  misstatements to immigration
     officials,  your employment  shall  immediately  terminate and Pivotal will
     have no further  obligations to you with respect to the termination of your
     employment,  including, without limitation, the payment of severance pay or
     damages.

15.  You will be eligible to be covered under the director and officer insurance
     program maintained by Pivotal. In addition, Pivotal agrees to indemnify you
     and  your  heirs,  executors,  administrators  and  legal  representatives,
     against all costs,  charges  and  expenses,  reasonably  incurred by you in
     respect of any civil,  criminal or  administrative  action or proceeding to
     which you are made a party by reason of being or having  been a director or
     officer of Pivotal,  if you acted honestly and in good faith with a view to
     the  best  interests  of  Pivotal  and,  in  the  case  of  a  criminal  or
     administrative action or proceeding that is enforced by a monetary penalty,
     you had reasonable  grounds for believing that your conduct was lawful.  To
     the  extent  that  the   approval  of  the  court  is  required   for  such
     indemnification,  Pivotal shall make such  application  and use  reasonable
     efforts to obtain such approval.

16.  You  acknowledge  that it has been  recommended  to you by Pivotal that you
     obtain  independent  legal  advice  before  executing  this  offer  and  by
     executing  this offer you represent that you did obtain  independent  legal
     advice.

Please    sign    the    attached     copy    of    this    letter    and    the
Confidentiality/Non-Competition/Non-Solicitation   Agreement  to  indicate  your
agreement, and return the signed copies to us.

We look  forward  to you  joining  us in our  quest to build a major  technology
solutions   company.   We  look  forward  to  a  long  and  mutually   rewarding
relationship.

Yours very truly,


Norm Francis
Chairman of the Board

I agree with and accept the above terms and conditions of employment.


------------------------                    -----------------------
BO MANNING                                  DATE



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