SEC Division of Corporation Finance no-action letter: Adobe Systems Incorporated

February 28,2007 Eric C, Jensen
Office of Mergers and Acquisitions
Securities and Exchange Commission
Division of Corporation Finance
100 F Street, NE
Washington, DC 20549
Attention: Brian V. Breheny, Chief
Christina Chalk, Special Counsel
Michael Pressman, Special Counsel
Dear Mr. Breheny, Ms. Chalk and Mr. Pressman:
Adobe Systems Incorporated, a Delaware corporation (the "Company" or "Adobe"), has commenced an offer to eligible current employees to amend certain outstanding compensatory stock options to increase the exercise price of these options and to pay a special one-time cash payment equal to the increase in the exercise price (the "Offer"). The Offer is being conducted for compensatory purposes and has been structured in reliance upon the Division of Corporation Finance's Exemptive Order for Issuer Exchange Offers that are Conducted for Compensatory Purposes, dated March 21, 2001, which provides relief under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Offer is more fully described in the Schedule TO filed with the Securities and Exchange Commission (the "Commission") on January 4, 2007, as amended. On behalf of Adobe, we hereby request, pursuant to Rule 13e￾4(h)(9) under the Exchange Act, that the staff of the Division of Corporation Finance (the "Staff') of the Commission grant the Company relief from compliance with Rule 13e-4(f)(5) and with Rule 14e-l(c) under the Exchange Act and confirm that the Staff will not recommend that the Commission take enforcement action against the Company pursuant to the "prompt payment" provisions of Rule 14e-l(c) of the Exchange Act in order to permit the Company to make the "Cash Payments" as described more fully in this letter. FACTUAL BACKGROUND Adobe grants equity awards under its compensatory stock plans to its employees as a means to advance the interests of the Company and its stockholders by providing an incentive to attract, retain and reward such employees and by motivating them to contribute to the growth and profitability of the Company. As reported in Adobe's Quarterly Report on Form 10-Q for the third quarter ended September I,2006, filed wlth the Commission on October II, 2006, Adobe has concluded a voluntary review of its stock option granting practices covering the period from 1997 to 2006. A review earlier in 2006 of executive officer grants uncovered no improper grants to Adobe's executive officers. Following this management review in the fourth quarter of last year, the Board of Directors of the Company voluntarily formed a Special Committee of outside directors to undertake a review of annual non-executive employee stock option grants. As a result of the Special Committee's review, Adobe identified occasions on which Adobe used FIVE PAL0 ALTO SOUARE 3000 EL CAMINO REAL PAL0 ALTO CA 94306-2155 T: (650) 843-5000 F: (650) 849-7400 W.COOLEY.COM