Exhibit
10.31














October
9, 2009




Charles
Altomare


[                          ]


[                          ]








Re:           Separation
Agreement




Dear
Chuck:




This
letter sets forth the substance of the separation agreement (the “Agreement”)
that Chordiant Software, Inc. (the “Company”) is offering to you to aid in your
employment transition.




1.  Separation.  Your
last day of work with the Company and your employment termination date will be
October 9, 2009 (the “Separation Date”).




2.  Accrued Salary.  On
the Separation Date, the Company will pay you all accrued salary earned through
the Separation Date, subject to standard payroll deductions and
withholdings.  You are entitled to this payment regardless of whether
or not you sign this Agreement.




3.  Severance
Benefits.  If you sign this Agreement and allow the release
contained herein to become effective, then the Company will provide you with the
following severance benefits:




a.  Severance
Payments.The Company will make severance payments to you in
the form of continuation of your base salary in effect on the Separation Date
for a period of six (6) months following the Separation Date (“the Severance
Payments”).  The Severance Payments will be made on the Company’s
ordinary payroll dates, and will be subject to standard payroll deductions and
withholdings.  The Severance Payments will commence on the first
regular payday following the Effective Date, as defined in paragraph 12
below.  On the first payroll payday following the Effective Date, the
Company will pay you, in a lump sum, the salary continuation payments that you
would have received on or prior to such date but for the delay in the
effectiveness of the release, with the balance of the cash severance being paid
as scheduled.




b.  Health
Insurance.  To the extent provided by the federal COBRA law or,
if applicable, state insurance laws, and by the Company’s current group health
insurance policies, you will be eligible to continue your group health insurance
benefits at your own expense.  Later, you may be able to convert to an
individual policy through the provider of the Company’s health insurance, if you
wish.  If you timely elect continued coverage under COBRA, the
Company, as part of this Agreement and as an additional severance benefit, will
pay your COBRA premiums for six (6) months following the Separation Date (“COBRA
Premiums”).




4.  Equity.You were granted
certain equity interests in the Company’s common stock.  Under the
terms of the governing documents, vesting of those equity interests will cease
as of the Separation Date, and your rights to exercise your vested equity
interests will be as set forth in the governing plan documents.




5.  Other Compensation or
Benefits.  You acknowledge that, except as expressly provided
in this Agreement, you will not receive any additional compensation, severance
or benefits after the Separation Date.




6.  Expense
Reimbursements.  You agree that, within ten (10) days of the
Separation Date, you will submit your final documented expense reimbursement
statement reflecting all business expenses you incurred through the Separation
Date, if any, for which you seek reimbursement.  The Company will
reimburse you for these expenses pursuant to its regular business
practice.




7.  Return of Company
Property.  By the Separation Date, you agree to return to the
Company all Company documents (and all copies thereof) and other Company
property that you have had in your possession at any time, including, but not
limited to, Company files, notes, drawings, records, business plans and
forecasts, financial information, specifications, computer-recorded information,
tangible property (including, but not limited to, computers, blackberry devices
and cell phones), credit cards, entry cards, identification badges and keys; and
any materials of any kind that contain or embody any proprietary or confidential
information of the Company (and all reproductions thereof).




8.  Proprietary Information
Obligations.  Both during and after your employment you
acknowledge your continuing obligations under your Employee Proprietary
Information and Inventions Agreement, a copy of which is attached hereto as
Exhibit A.




9.  Nondisparagement.  You
agree not to disparage the Company or the Company’s officers, directors,
employees, shareholders, parents, subsidiaries, affiliates, and agents, in any
manner likely to be harmful to them or their business, business reputation or
personal reputation; provided
that you may respond accurately and fully to any question, inquiry or
request for information when required by legal process.




10.  Release of
Claims.  In exchange for the severance benefits set forth in
paragraph 3 and other consideration provided to you by this Agreement that you
are not otherwise entitled to receive, you hereby generally and completely
release the Company and its current and former directors, officers, employees,
shareholders, partners, agents, attorneys, predecessors, successors, parent and
subsidiary entities, insurers, affiliates, and assigns from any and all claims,
liabilities and obligations, both known and unknown, that arise out of or are in
any way related to events, acts, conduct, or omissions occurring prior to your
signing this Agreement.  This general release includes, but is not
limited to:  (1) all claims arising out of or in any way related
to your employment with the Company, or the termination of that employment;
(2) all claims related to your compensation or benefits from the Company,
including salary, bonuses, commissions, vacation pay, expense reimbursements,
severance pay, fringe benefits, stock, stock options, or any other ownership
interests in the Company; (3) all claims for breach of contract, wrongful
termination, and breach of the implied covenant of good faith and fair dealing;
(4) all tort claims, including claims for fraud, defamation, emotional
distress, and discharge in violation of public policy; and (5) all federal,
state, and local statutory claims, including claims for discrimination,
harassment, retaliation, attorneys’ fees, or other claims arising under the
federal Civil Rights Act of 1964 (as amended), the federal Americans with
Disabilities Act of 1990, the federal Age Discrimination in Employment Act of
1967 (as amended) (“ADEA”), and the California Fair Employment and Housing Act
(as amended).




11.  Exceptions.  You are
not releasing any claim that cannot be waived under applicable state or federal
law.  You are not releasing any rights that you have to be indemnified
(including any right to reimbursement of expenses) arising under applicable law,
the certificate of incorporation or by-laws (or similar constituent documents of
the Company), any indemnification agreement between you and the Company, or any
directors’ and officers’ liability insurance policy of the
Company.  Nothing in this Agreement shall prevent you from filing,
cooperating with, or participating in any proceeding before the Equal Employment
Opportunity Commission, the Department of Labor, or the California Department of
Fair Employment and Housing, except that you acknowledge and agree that you
shall not recover any monetary benefits in connection with any such claim,
charge or proceeding with regard to any claim released
herein.  Nothing in this Agreement shall prevent you from challenging
the validity of the release in a legal or administrative
proceeding.




12.  ADEA Waiver.  You
acknowledge that you are knowingly and voluntarily waiving and releasing any
rights you may have under the ADEA (“ADEA Waiver”).  You also
acknowledge that the consideration given for the ADEA Waiver is in addition to
anything of value to which you were already entitled.  You further
acknowledge that you have been advised by this writing, as required by the ADEA,
that:  (a) your ADEA Waiver does not apply to any rights or claims
that arise after the date you sign this Agreement; (b) you should consult with
an attorney prior to signing this Agreement; (c) you have twenty-one (21)
days to consider this Agreement (although you may choose to voluntarily sign it
sooner); (d) you have seven (7) days following the date you sign this
Agreement to revoke it, with such revocation to be effective only if you deliver
written notice of revocation to the Company within the seven (7)-day period; and
(e) the ADEA Waiver will not be effective until the date upon which the
revocation period has expired unexercised, which will be the eighth day after
you sign this Agreement (“Effective Date”).  Nevertheless, your
general release of claims, except for the ADEA Waiver, is effective immediately,
and not revocable.




13.  Section 1542
Waiver.  YOU UNDERSTAND THAT THIS AGREEMENT INCLUDES A RELEASE
OF ALL KNOWN AND UNKNOWN CLAIMS.  In giving the release herein, which
includes claims which may be unknown to you at present, you acknowledge that you
have read and understand Section 1542 of the California Civil Code, which reads
as follows:




A
general release does not extend to claims which the creditor does not know or
suspect to exist in his or her favor at the time of executing the release, which
if known by him or her must have materially affected his or her settlement with
the debtor.




You
hereby expressly waive and relinquish all rights and benefits under that section
and any law of any other jurisdiction of similar effect with respect to your
release of any unknown or unsuspected claims herein.




14.  Representations. You
hereby represent that you have been paid all compensation owed and for all hours
worked, have received all the leave and leave benefits and protections for which
you are eligible, pursuant to the Family and Medical Leave Act or otherwise, and
have not suffered any on-the-job injury for which you have not already filed a
claim.




15.  General.  This
Agreement including Exhibit A, constitutes the complete, final and exclusive
embodiment of the entire agreement between you and the Company with regard to
this subject matter.  It is entered into without reliance on any
promise or representation, written or oral, other than those expressly contained
herein, and it supersedes any other such promises, warranties or
representations.  This Agreement may not be modified or amended except
in a writing signed by both you and a duly authorized officer of the
Company.  This Agreement will bind the heirs, personal
representatives, successors and assigns of both you and the Company, and inure
to the benefit of both you and the Company, their heirs, successors and
assigns.  If any provision of this Agreement is determined to be
invalid or unenforceable, in whole or in part, this determination will not
affect any other provision of this Agreement and the provision in question will
be modified by the court so as to be rendered enforceable to the fullest extent
permitted by law, consistent with the intent of the parties.  This
Agreement will be deemed to have been entered into and will be construed and
enforced in accordance with the laws of the State of California as applied to
contracts made and to be performed entirely within California.




If
this Agreement is acceptable to you, please sign below and return the original
to me.




I
wish you good luck in your future endeavors.




Sincerely,









Chordiant
Software, Inc.




By:
/s/ Jack
Landers


Jack Landers


Vice President, Human
Resources








Agreed:




/s/ Charles
Altomare


Charles
Altomare







10-12-09


Date














Exhibit
A




Employee
Proprietary Information and Inventions Agreement