Exhibit 10.12

[LETTERHEAD OF ORACLE CORPORATION]

July 9, 2004

Mr. Harry L. You

Oracle is pleased to offer you the position of Executive Vice President and
Chief Financial Officer reporting directly to Larry Ellison. In this position,
you will be a member of Oracle’s Executive Committee and will be appointed to
the Board of Directors of Oracle Japan. Although not a member of Oracle’s Board
of Directors, you will attend all Board and Audit Committee meetings.

The following global functions will report to you: controllership (includes a
number of financial and administrative functions), treasury, taxation, investor
relations, real estate, manufacturing and distribution, customer leasing and
human resources. While Oracle’s internal audit group reports directly to the
Audit Committee, it will report indirectly to you, and you will have
administrative oversight of it. As the Chief Financial Officer, you will enter
into an Indemnity Agreement for Executive Officers in a form that has been
provided to you, and you will be covered by Oracle’s Directors and Officers
liability insurance.

Your annual base salary will be $800,000, paid semi-monthly. You will receive a
one-time $1,000,000 sign-on bonus within six weeks following your start date.
For fiscal year 2005 and for fiscal year 2006, you will have a discretionary
bonus target of 100% of your base salary. A discretionary bonus is typically
paid within ten weeks of the close of a fiscal year based upon annual targets
set at the start of each fiscal year. Even if you do not meet all annual targets
for the payment of the discretionary bonus, you will be paid an $800,000 cash
lump sum bonus within ten weeks following the close of Oracle’s 2005 fiscal
year, provided you are employed by Oracle at the end of the 2005 fiscal year,
and an $800,000 cash lump sum bonus within ten weeks following the close of
Oracle’s 2006 fiscal year, provided you are employed by Oracle at the end of the
2006 fiscal year. In Oracle’s fiscal year 2007 and following, so long as you
remain employed, you will participate in Oracle’s Executive Bonus Plan. You will
accrue paid vacation at the rate of 18 days per year, subject to the terms of
Oracle’s vacation policy.

After you join Oracle, you will receive an option to purchase 2,000,000 shares
of common stock with terms that are as favorable as terms provided in Oracle’s
standard form agreement under the 2000 Long-Term Equity Incentive Plan (the
“Plan”) applicable to senior executives as of July 7, 2004. The option will be
priced based upon Oracle’s stock price at the close of the market on the first
Thursday after your start date. The grant date of the option will be the first
Thursday after your start date. Provided you remain employed by Oracle, you will
receive an additional stock option grant (or the equivalent, if Oracle shifts
away from options to other equity compensation) of 800,000 shares prior to
July 31, 2005. The options will be “non-qualified,” which generally means that
you will have taxable income at the time of exercise. All options will be issued
under a written agreement and will be subject to compliance with all applicable
securities regulations. As long as you remain continuously employed by Oracle,
you will be eligible to exercise your right to purchase one quarter of the
option shares per year, subject to the terms of your written option agreement.
You will be considered for additional equity and/or option grants in subsequent
fiscal years. You should consult your personal tax advisor if you have questions
regarding a stock option grant.

Oracle will pay all reasonable, documented relocation expenses in connection
with your move from Dallas to California, including a gross-up for applicable
taxes. Additionally we will pay moving expenses not to exceed $10,000 in
connection with your moving personal items to California from New Jersey. We
will also offer to purchase your current home in Dallas based on the price set
by a mutually agreed upon appraisal firm.

 

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If you are involuntarily terminated from Oracle, other than for gross misconduct
(“Cause”), or if you resign for Good Reason (as defined below), before the
second anniversary of your start date, you will execute a full release of claims
(other than your right to enforce your Indemnification Agreement) (the
“Release”) and, in exchange, receive as severance a cash lump sum payment that
is equal to two years’ base salary and bonus ($3,200,000), as well as partial
acceleration of the vesting of your initial 2,000,000 share option grant such
that 50% of that grant is vested. If, at the time of such termination or
resignation before the second anniversary of your start date, you have been
employed past the first anniversary of your start date, we will partially
accelerate the vesting of the aforementioned 800,000 share stock option grant
such that 25% of that grant is vested. Should you be terminated from Oracle or
resign for Good Reason before the second anniversary of your start date, you
shall not be entitled to any pro rata bonus payment. After the second
anniversary of your start date, if you are involuntarily terminated, other than
for Cause, or if you resign for Good Reason, you will execute a Release and, in
exchange, receive a cash lump sum severance payment of one year’s base salary
and no option vesting acceleration, provided, however, if such termination
occurs on or after a Change of Control (as defined in the Plan), you will
receive a cash lump sum severance payment of at least one year’s base salary
plus such other payments and benefits you and Oracle negotiate in good faith.
Good Reason for purposes of this letter agreement shall mean the occurrence,
without your consent, of any of the following circumstances: (i) any material
adverse change in your title or a material diminution in your responsibility for
oversight of the finance department (ii) a relocation of Oracle’s executive
offices to a location more than 35 miles from its current location or your
relocation away from Oracle’s executive offices; (iii) any material breach by
Oracle of this letter agreement; or (iv) failure of any successor to Oracle
(whether direct or indirect and whether by merger, acquisition, consolidation or
otherwise) to assume the obligations of Oracle under this letter agreement.
Severance shall be paid without duty to mitigate and without offset for other
amounts earned. Upon termination of employment, you shall receive all amounts
and benefits that have been earned and accrued through the date of termination
under any applicable plan or arrangement maintained by Oracle, which shall be
payable or provided subject to, and in accordance with, the terms of the
applicable plan or arrangement (including, without limitation, applicable
benefits under Oracle’s life insurance and disability plans).

If you become entitled to payments and/or benefits provided by this letter or
any other amounts in the “nature of compensation” as a result of such change in
ownership or effective control of Oracle (a “Payment”) and such Payment would be
subject to the excise tax imposed by Section 4999 of the Internal Revenue Code
or any interest or penalties are incurred by you with respect to such excise tax
(such excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the “Excise Tax”), then you shall be entitled to
receive an additional payment (a “Gross-Up Payment”) in an amount such that
after payment by you of all taxes (including any interest or penalties imposed
with respect to such taxes), including, without limitation, any income taxes
(and any interest and penalties imposed with respect thereto) and the Excise Tax
imposed upon the Gross-Up Payment, you retain an amount equal to the Payments.

Oracle acknowledges that you have a four month notice period with Accenture.
Should Accenture decide to enforce the notice period, and should Accenture not
be required to and refuse to compensate you during the notice period, Oracle
agrees that it will pay you your annual base salary, as set forth in this
letter, for the notice period. However, your start date for purposes of the
one-time sign-on bonus, the initial option grant (and the exercise price for
such grant) shall not be established until the notice period expires and you
begin continuously to provide services to Oracle under this letter agreement.
Additionally, your bonus for fiscal year 2005 shall be adjusted pro rata so that
the bonus is paid only for the period during fiscal year 2005 that you have
continuously provided services to Oracle.

We believe that your current employer, Accenture, will ultimately realize that
attempting to enforce any non-compete is inadvisable for various reasons
including that it and Oracle do much more partnering than competing. Oracle was
only recently added to its list of competitors and you are not a billable
consultant bringing competitive skills to Oracle. However, if your current
employer will not waive your non-compete agreement and, in order to provide
services to Oracle, you are required in accordance with your agreements with
Accenture to (i) pay Accenture an amount in cash in “liquidated damages or
(ii) forfeit all or a portion of your restricted stock units or Accenture stock,
Oracle agrees to partially reimburse you for this loss. Specifically, for up to
the first $2,000,000 dollars that you are required to repay, Oracle will
reimburse you one-half of your loss. For amounts between $2,000,000 dollars and
$3,500,000 that you are required to repay,

 

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Oracle will reimburse you in full. Oracle will have no reimbursement obligation
beyond these amounts. Legal expenses to contest a non-compete clause will be
paid by Oracle, provided Oracle consents to the course of action (which consent
shall not be unreasonably withheld or delayed) and to the selection of counsel.

This letter shall be assignable by Oracle only to an acquirer of all or
substantially all of the assets of Oracle, provided such acquirer promptly
assumes all of the obligations hereunder in a writing delivered to you.

No provision of this letter agreement may be modified unless such modification
is agreed to in writing and signed by you and an authorized officer or director
of Oracle.

To accept this offer, please sign the enclosed Employment Agreement (be sure to
confirm your intended start date), the Proprietary Information Agreement and all
other documents required and return them to Oracle in the enclosed envelope.
Employment and employee benefits can only begin after you have signed these
documents and they have been received by our Employee Service Center. If you
have any questions regarding these documents, please feel free to call our
Employee Service Center at (888) 404-2494.

Harry, we’re very excited to have you join Oracle. We agree that you will
initially work from Dallas, and that you expect to move to the Oracle
headquarters area in the summer of 2005. While we understand that you may be
required to delay your start of employment due to the four month notice period
in your agreement with Accenture, please indicate your acceptance of our offer
no later than August 9. If you have any questions feel free to contact me or
Larry Ellison.

Sincerely,

/s/ Jeff Henley

Jeff Henley
Chairman of the Board

 

Enclosure: New Employee Packet

CC: Larry Ellison, Don Lucas.

 

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Employment Agreement & Mutual Agreement to Arbitrate

Please read this Agreement carefully before you agree to its terms by signing
it. You may wish to consult an attorney prior to signing the Agreement. The
Agreement sets forth certain important benefits, terms and conditions related to
your employment with Oracle. It also sets forth the mutual agreement between you
and Oracle to arbitrate any dispute or claim arising out of or related to your
Oracle employment and to waive all rights to a trial or hearing before a court
or jury.

Proprietary Information
Oracle’s proprietary rights and confidential information are among the company’s
most important assets. In addition to signing this Agreement as a condition of
employment, you also must sign the Proprietary Information Agreement included in
the New Employee Packet.

Oracle Policies
Your adherence to the Oracle Code of Ethics and Business Conduct, set forth in a
booklet included in the New Employee Packet, is vital to Oracle and to your
success at Oracle. When you sign this Agreement, you are agreeing to thoroughly
familiarize yourself with the Oracle Code of Ethics and Business Conduct and you
are agreeing to abide by it. You also agree to take Oracle’s Ethics and Business
Conduct course, available on-line through Oracle’s intranet. In addition, when
you sign this Agreement, you are acknowledging that you have read the letter
addressing Oracle’s Safety Program highlights included in the New Employee
Packet. The Oracle Code of Ethics and Business Conduct and the Oracle Employee
Handbook are on the Oracle intranet and accessible to all employees. You agree,
after beginning employment, to access the Employee Handbook and thoroughly
familiarize yourself with Oracle policies and to abide by them. Additionally,
from time to time, Oracle will communicate important information about its
policies by way of electronic mail notification and/or the Oracle intranet. By
signing this agreement, you agree to thoroughly review these policy
communications and to abide by them.

Employment Eligibility
In order to comply with the Immigration Reform and Control Act of 1986, the
federal government requires the company to examine documents which prove your
legal right to work in the United States. Please see the Verification of
Eligibility for Employment information which also is a part of the New Employee
Packet.

Benefits
Oracle offers its employees a comprehensive medical, dental, vision, life and
disability insurance package through Oracleflex, a flexible benefits program.
Oracleflex may require employee contributions. The company also offers benefits
including a 401(k) Savings and Retirement Plan, an Employee Stock Purchase Plan,
a Dependent Care Reimbursement Plan and an Educational Reimbursement Plan. The
details of these plans are included in the New Employee Packet and/or are
available on the Oracle intranet. You understand that you must make your
Oracleflex benefits elections within the limited time period set forth in the
communication accompanying your personal identification number that you will
receive after beginning employment.

By signing this Agreement, you authorize Oracle to deduct from your compensation
any and all contributions associated with your elections under Oracleflex, the
Oracle 401(k) Savings and Investment Plan, the Oracle Employee Stock Purchase
Plan, or any other benefit offered by Oracle in which you participate and for
which an employee contribution is required.

 

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Your starting compensation, position and other terms and conditions related to
your employment are set forth in the offer letter you received. By signing this
Agreement, you also are agreeing to the terms and conditions set forth in the
offer letter. Oral or written representations contradicting or supplementing the
terms of the offer letter are not valid.

At-Will Employment
Employment at Oracle is at-will. The company makes no express or implied
commitment that your employment will have a minimum or fixed term, that Oracle
may take adverse employment action only for cause or that your employment is
terminable only for cause. Either you or Oracle may terminate the employment
relationship at any time for any reason. Additionally, Oracle may take any other
employment action at any time for any reason. No one at Oracle may make, unless
specifically authorized in writing by Oracle’s Board of Directors, any promise,
express or implied, that employment is for any fixed term or that cause is
required for the termination of or change in the employment relationship.

Equal Employment Opportunity and Escalation Process
Oracle believes that all employees should be treated fairly and equitably in
conformance with its Equal Employment Opportunity policies. We take personnel
action without regard to race, color, national origin, sex, marital status, age,
religion, disability or sexual orientation. Our commitment to these policies
applies to every phase of the employment relationship, and we make every effort
to comply with these policies. If, however, you feel you have not been treated
fairly in some way in your Oracle employment, you agree, before taking any other
action, to make a written complaint to a Director of the Human Resources
Department and to allow individuals within the Department a reasonable period of
time in which to investigate and informally attempt to resolve your issues.

Mutual Agreement to Arbitrate
You and Oracle understand and agree that any existing or future dispute or claim
arising out of or related to your Oracle employment, or the termination of that
employment, will be resolved by final and binding arbitration and that no other
forum for dispute resolution will be available to either party, except as to
those claims identified below. The decision of the arbitrator shall be final and
binding on both you and Oracle and it shall be enforceable by any court having
proper jurisdiction.

The arbitration proceedings shall be conducted pursuant to the Federal
Arbitration Act, and in accordance with the National Rules for the Resolution of
Employment Disputes of the American Arbitration Association or the Employment
Arbitration Rules and Procedures adopted by Judicial Arbitration & Mediation
Services (“JAMS”). The arbitrator will have all the powers a judge would have in
dealing with any question or dispute that may arise before, during and after the
arbitration.

          Claims Not Covered
Claims for benefits under the workers’ compensation, unemployment insurance and
state disability insurance laws are not covered by this Arbitration Agreement.
Additionally, claims by you or by Oracle for temporary restraining orders or
preliminary injunctions (“temporary equitable relief”) in cases in which such
temporary equitable relief would be otherwise authorized by law are not covered
by this Arbitration Agreement. In such cases where temporary equitable relief is
sought, the trial on the merits of the action will occur in front of, and will
be decided by, the arbitrator, who will have the same ability to order legal or
equitable remedies as could a court of general jurisdiction.

          Costs
Oracle agrees to bear the costs of the arbitrator’s fee and all other costs
related to the arbitration, assuming such costs are not expenses that you would
be required to bear if you were bringing the action

 

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in a court of law. You and Oracle shall each bear your own attorneys’ fees
incurred in connection with the arbitration, and the arbitrator will not have
authority to award attorneys’ fees unless a statute at issue in the dispute or
other appropriate law authorizes the award of attorneys’ fees to the prevailing
party, in which case the arbitrator shall have the authority to make an award of
attorneys’ fees as permitted by the applicable statute or law.

          Consideration
You understand and acknowledge that you are offered employment in consideration
of your promise to arbitrate claims. In addition, the promises by Oracle and by
you to resolve claims by arbitration in accordance with the provisions of this
Arbitration Agreement, rather than through the courts, provide consideration for
each other.

          Knowing and Voluntary Agreement; Complete Agreement
You understand and agree that you have been advised to consult with an attorney
of your own choosing before signing this Employment Agreement & Mutual Agreement
to Arbitrate, and you have had an opportunity to do so.

           YOU FURTHER UNDERSTAND AND AGREE THAT YOU HAVE READ THIS EMPLOYMENT
AGREEMENT & MUTUAL AGREEMENT TO ARBITRATIE CAREFULLY. BY SIGNING IT, YOU ARE
EXPRESSLY WAIVING ANY AND ALL RIGHTS TO A TRIAL OR HEARING BEFORE A COURT OR
JURY OF ANY AND ALL DISPUTES AND CLAIMS SUBJECT TO ARBITRATION UNDER THIS
ARBITRATION AGREEMENT WHICH CLAIMS YOU MAY NOW OR IN THE FUTURE HAVE.

This Arbitration Agreement contains the complete agreement between Oracle and
you regarding the subject of arbitration and alternate dispute resolution, and
supersedes any and all prior written, oral, or other types of representations
and agreements between Oracle and you, if any.

Severability
If any portion of this Employment Agreement & Mutual Agreement to Arbitrate
shall, for any reason, be held invalid or unenforceable, or contrary to public
policy or any law, the remainder of the Agreement shall not be affected by such
invalidity or unenforceability, but shall remain in full force and effect, as if
the invalid or unenforceable term or portion thereof had not existed within this
Agreement.

Modification
This Employment Agreement & Mutual Agreement to Arbitrate may be modified only
in a writing, expressly referencing this Agreement and you by full name, signed
by you and Oracle’s Board of Directors.

By signing below you are agreeing that you have read and understood every
provision of this Agreement and that, in consideration for your employment at
Oracle, you agree to abide by its terms.

         
ACKNOWLEDGED AND ACCEPTED:
       
 
       
Harry L. You

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Print Name
       
 
       
/s/ Harry L. You

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Signature
  9/16/04

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Date