SEC FORM 4

SEC Form 4

FORM 4

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

STATEMENT OF CHANGES IN BENEFICIAL OWNERSHIP

Filed pursuant to Section 16(a) of the Securities Exchange Act of 1934
or Section 30(h) of the Investment Company Act of 1940

OMB APPROVAL

OMB Number:			3235-0287
Estimated average burden
hours per response:			0.5

Check this box if no longer subject to Section 16. Form 4 or Form 5 obligations may continue. See Instruction 1(b).

1. Name and Address of Reporting Person^*

ERCANBRACK RON L

(Last)

(First)

(Middle)

FILENET CORPORATION

(Street)

COSTA MESA

92626-1420

(City)

(State)

(Zip)

2. Issuer Name and Ticker or Trading Symbol
FILENET CORP [ FILE ]

5. Relationship of Reporting Person(s) to Issuer
(Check all applicable)

	Director	10% Owner
X	Officer (give title below)	Other (specify below)
	President/Exec. VP WW Sales

3. Date of Earliest Transaction (Month/Day/Year)
10/12/2006

4. If Amendment, Date of Original Filed (Month/Day/Year)

6. Individual or Joint/Group Filing (Check Applicable Line)

X	Form filed by One Reporting Person
	Form filed by More than One Reporting Person

Table I - Non-Derivative Securities Acquired, Disposed of, or Beneficially Owned
1. Title of Security (Instr. 3)	2. Transaction Date (Month/Day/Year)	2A. Deemed Execution Date, if any (Month/Day/Year)	3. Transaction Code (Instr. 8)		4. Securities Acquired (A) or Disposed Of (D) (Instr. 3, 4 and 5)			5. Amount of Securities Beneficially Owned Following Reported Transaction(s) (Instr. 3 and 4)	6. Ownership Form: Direct (D) or Indirect (I) (Instr. 4)	7. Nature of Indirect Beneficial Ownership (Instr. 4)
1. Title of Security (Instr. 3)	2. Transaction Date (Month/Day/Year)	2A. Deemed Execution Date, if any (Month/Day/Year)	Code	V	Amount	(A) or (D)	Price		6. Ownership Form: Direct (D) or Indirect (I) (Instr. 4)	7. Nature of Indirect Beneficial Ownership (Instr. 4)
Common Stock	10/12/2006		D		10,625⁽¹⁾	D	$35	0	D
Common Stock	10/12/2006		D		10,625	D	⁽²⁾	0	D

Table II - Derivative Securities Acquired, Disposed of, or Beneficially Owned (e.g., puts, calls, warrants, options, convertible securities)
1. Title of Derivative Security (Instr. 3)	2. Conversion or Exercise Price of Derivative Security	3. Transaction Date (Month/Day/Year)	3A. Deemed Execution Date, if any (Month/Day/Year)	4. Transaction Code (Instr. 8)		5. Number of Derivative Securities Acquired (A) or Disposed of (D) (Instr. 3, 4 and 5)		6. Date Exercisable and Expiration Date (Month/Day/Year)		7. Title and Amount of Securities Underlying Derivative Security (Instr. 3 and 4)		8. Price of Derivative Security (Instr. 5)	9. Number of derivative Securities Beneficially Owned Following Reported Transaction(s) (Instr. 4)	10. Ownership Form: Direct (D) or Indirect (I) (Instr. 4)	11. Nature of Indirect Beneficial Ownership (Instr. 4)
1. Title of Derivative Security (Instr. 3)	2. Conversion or Exercise Price of Derivative Security	3. Transaction Date (Month/Day/Year)	3A. Deemed Execution Date, if any (Month/Day/Year)	Code	V	(A)	(D)	Date Exercisable	Expiration Date	Title	Amount or Number of Shares	8. Price of Derivative Security (Instr. 5)		10. Ownership Form: Direct (D) or Indirect (I) (Instr. 4)	11. Nature of Indirect Beneficial Ownership (Instr. 4)
Restricted Stock Units⁽⁴⁾	$35	10/12/2006		D			165,000	⁽³⁾	⁽³⁾	Common Stock	165,000	⁽³⁾	0	D
Stock Option (right to buy)	$12.85	10/12/2006		D			16,666	⁽⁵⁾	12/04/2012	Common Stock	16,666	$22.15⁽⁵⁾	0	D
Stock Option (right to buy)	$12.85	10/12/2006		D			4,167	⁽⁶⁾	12/04/2012	Common Stock	4,167	$22.15⁽⁶⁾	0	D
Stock Option (right to buy)	$26.505	10/12/2006		D			14,628	⁽⁷⁾	12/04/2013	Common Stock	14,628	$8.495⁽⁷⁾	0	D
Stock Option (right to buy)	$26.505	10/12/2006		D			8,750	⁽⁸⁾	12/02/2013	Common Stock	8,750	$8.495	0	D
Stock Option (right to buy)	$26.64	10/12/2006		D			15,858	⁽⁹⁾	12/15/2014	Common Stock	15,858	$8.36	0	D
Stock Option (right to buy)	$26.64	10/12/2006		D			22,499	⁽¹⁰⁾	12/15/2014	Common Stock	22,499	$8.36	0	D

Explanation of Responses:

1. Represents shares of unvested restricted stock disposed of pursuant to the Merger Agreement under which International Business Machines Corporation ("IBM") acquired the issuer ("Merger") which provides for the cancellation of shares of common stock of the Issuer in exchange $35.00 per share (the "Merger Consideration).

2. Represents unvested shares of restriced common stock converted in the Merger into cash retention payments to be made by IBM until 2008 in a total amount of $371,875.

3. The RSU's originally vested based upon issuer's achievement of targeted financial performance in 2006, 2007 and 2008, subject to partial accelaration upon change of control. Pursuant to the Merger, 50% or 82,500 shares vested and will be paid the Merger Consideration of $2,887,500, the remaining unvested 82,500 RSUs were converted into 34,972 generally comparable IBM RSUs to be paid out over 2006 - 2008.

4. Each RSU represents the right to receive one share of Issuer's common stock, subject to the terms of the plan authorizing RSUs.

5. This option, which provided for vesting 25% on December 4, 2003 and 1/36 of the total grant each month thereafter, was disposed of pursuant to the Merger Agreement in exchange for the per share Merger Consideration less the exercise price.

6. This option, which provided for vesting in installments of 25% on December 4, 2003 and as to 1/36 of the total grant amount each month thereafter, was disposed of pursuant to the Merger Agreement into options to acquire 1,766 shares of common stock of IBM at a per share exercise price of $30.31.

7. This option, which provided for vesting 25% on December 2, 2004 and 1/36 of the total grant each month thereafter, was disposed of pursuant to the Merger Agreement in exchange for the per share Merger Consideration less the exercise price.

8. This option, which provided for vesting in installments of 25% on December 2, 2004 and as to 1/36 of the total grant amount each month thereafter, was disposed of pursuant to the Merger Agreement into options to acquire 3,708 shares of common stock of IBM at a per share exercise price of $62.52.

9. This option, which provided for vesting 25% on December 15, 2005 and 1/36 of the total grant each month thereafter, was disposed of pursuant to the Merger Agreement in exchange for the per share Merger Consideration less the exercise price.

10. This option, which provided for vesting in installments of 25% on December 15, 2005 and as to 1/36 of the total grant amount each month thereafter, was disposed of pursuant to the Merger Agreement into options to acquire 9,536 shares of common stock of IBM at a per share exercise price of $62.84.

	Sam M. Auriemma, Attorney-in-Fact for Ron L. Ercanbrack	10/16/2006
	** Signature of Reporting Person	Date
Reminder: Report on a separate line for each class of securities beneficially owned directly or indirectly.
* If the form is filed by more than one reporting person, see Instruction 4 (b)(v).
** Intentional misstatements or omissions of facts constitute Federal Criminal Violations See 18 U.S.C. 1001 and 15 U.S.C. 78ff(a).
Note: File three copies of this Form, one of which must be manually signed. If space is insufficient, see Instruction 6 for procedure.
Persons who respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB Number.