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                                                                   EXHIBIT 10.12
June 20, 1999

Mr. James J. Flatley
7 Magnolia Lane
Colts Neck, NJ 07722

Dear Jim:

I am very pleased to extend an offer for you to join Plumtree Software as Vice
President, Sales & Services, reporting to the Chief Executive Officer. You will
be responsible for the overall sales and services organization. This will
include, but not be limited to, pre-sales, direct sales, indirect sales,
tele-sales, sales operations, services/delivery, account & customer management
and other executive level tasks that leverage your skills. As discussed, your
start date will be no later than July 12th of 1999.

We have structured a compensation package that consists of six components:
salary, bonus, equity, severance, relocation and benefits:

1.   Salary

     Base salary of $200,000 paid according to standard company payroll policy.

2.   Bonus

     Your bonus, upon attainment of corporate plans, objectives and target
     revenue plan, will be 100% of your base salary ($200,000 per annum). The
     specific objectives and target plan will be mutually agreed upon by you
     and the Chief Executive Officer at a later date.

3.   Equity

     You will be granted options to purchase 2% of Plumtree Software's
     outstanding shares under the Company's Stock Option Plan. The exercise
     price of such options will be based on the fair market value on the day you
     start your employment. Additionally, following the Company impending series
     D round of financing you will be granted options to purchase 2% of any
     newly created shares. The terms and conditions of this issuance shall be
     governed by Plumtree Software's standard stock option plan. Your options
     will vest over a four (4) year period, with 25% vesting after 1 year and
     the remaining shares vesting 1/36th each month thereafter for three (3)
     years.

4.   Severance & Change of Control

     Although we hope that the employment relationship will be mutually
     satisfactory, your employment will Plumtree Software is 'at will.' If
     employment is terminated by the Company without cause, within your first
     12 months of employment, you will receive 12 months of base salary
     continuation. If employment is terminated by the Company without cause
     following your one year anniversary with the Company, you will receive 6
     months of base salary continuation.

     In the event of a change of control of the Company 50% of the then unvested
     shares shall immediately vest.









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5.  Relocation Assistance

    The Company shall reimburse you for the costs associated with moving your
    family and possessions to the greater San Francisco area. This amount shall
    not exceed $30,000. In addition, the Company shall reimburse you for up to
    three months "temporary housing" and up to three months rental car usage in
    the greater San Francisco area.

6.  Benefits

    The company provides a comprehensive health plan to its employees. A copy of
    the complete medical plan will be sent to you at a later date.

This letter sets forth, fully, all understandings and agreements between you and
Plumtree Software regarding your employment. Please acknowledge your acceptance
of our offer by signing and dating this letter and returning it to me no later
than June 21st, 1999. A copy is being sent to your house for your records.

Jim, I think Plumtree Software is an excellent opportunity for you to leverage
your background and abilities to build an incredibly successfully company. The
Board of Directors and I look forward to partnering with you to achieve both
your personal and professional goals at Plumtree Software.

Sincerely,


                                                 /s/ James J. Flatley
                                            --------------------------------
                                                     James J. Flatley


John Kunze
Chief Executive Officer
Plumtree Software


Date                                        Date  June 20, 99
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