Item 1.01 Entry into a Material Definitive Agreement.
Effective as of April 7, 2009, NetApp, Inc. and its wholly owned subsidiary, NetApp U.S. Public Sector, Inc. (collectively, "NetApp"), entered into a settlement agreement (the "Agreement") with the United States of America, acting through the United States Department of Justice ("DOJ") and on behalf of the General Services Administration (the "GSA"). The Agreement relates to the previously-disclosed investigation which was being conducted by the GSA and the DOJ in connection with NetApp's GSA contracting activity, including NetApp's compliance with the price reduction clauses in certain of its contracts with the GSA between August 1997 and February 2005. In connection with the Agreement, NetApp has agreed to pay the United States $128.0 million, plus interest accruing at a rate of 3% per annum from February 18, 2009 through the date on which the payment is actually made. NetApp is obligated to make the payments no later than April 27, 2009. In consideration for such payments, the parties to the Agreement have agreed to release NetApp with respect to the claims alleged in the investigation as set forth in the Agreement. The Agreement reflects neither an admission nor denial by NetApp of any of the claims alleged by the DOJ, and represents a compromise to avoid continued litigation and associated risks. As previously reported, NetApp recorded a $128.0 million accrual for this contingency in the third quarter of fiscal 2009.
The foregoing description of the Agreement does not purport to be complete and is qualified in its entirety by the terms and conditions of the Agreement itself, which will be filed as an exhibit to NetApp's Annual Report on Form 10-K for the period ending April 24, 2009.

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