S-4/A 1 f52641a3sv4za.htm AMENDMENT TO FORM S-4 sv4za
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As filed with the Securities and Exchange Commission on July 2, 2009
Registration No. 333-159722
 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 3
to
 
Form S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
 
NetApp, Inc.
(Exact name of Registrant as specified in its charter)
 
         
Delaware
  3572   77-0307520
(State or other jurisdiction
of incorporation)
  (Primary Standard Industrial
Classification Code Number)
  (I.R.S. Employer
Identification Number)
 
495 East Java Drive
Sunnyvale, California 94089
(408) 822-6000
(Address, including Zip Code, and Telephone Number, including Area Code, of Registrant’s Principal Executive Offices)
 
Daniel J. Warmenhoven
Chief Executive Officer and Director
NetApp, Inc.
495 East Java Drive
Sunnyvale, California 94089
(408) 822-6000
(Name, Address, including Zip Code, and Telephone Number, including Area Code, of Agent for Service)
 
With copies to:
 
         
Steven E. Bochner, Esq.
Michael S. Ringler, Esq.
Nathaniel P. Gallon, Esq.
Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304-1050
(650) 493-9300
  Robert G. Specker, Esq.
Vice President, In-house Counsel
Data Domain, Inc.
2421 Mission College Blvd.
Santa Clara, California 95054
(408) 980-4800
  Gordon K. Davidson, Esq.
Dennis R. DeBroeck, Esq.
Robert A. Freedman, Esq.
R. Gregory Roussel, Esq.
Fenwick & West LLP
801 California Street
Mountain View, California 94041
(650) 938-5200
 
Approximate date of commencement of the proposed sale of the securities to the public:  As soon as practicable after this Registration Statement becomes effective and upon completion of the merger described in the enclosed document.
 
If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.  o
 
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o
 
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
Large accelerated filer þ Accelerated filer o Non-accelerated filer o Smaller reporting company o
(Do not check if a smaller reporting company)
 
If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:
 
Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)  o
 
Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)  o
 
CALCULATION OF REGISTRATION FEE
 
                         
            Proposed Maximum
    Proposed Maximum
    Amount of
Title of Each Class of
    Amount to be
    Offering
    Aggregate
    Registration
Securities to be Registered(1)     Registered(2)     Price per Unit     Offering Price(3)     Fee(4)
Common Stock, par value $0.001 per share
    54,695,347     N/A     $613,152,900     $34,214
                         
(1) This Registration Statement relates to shares of common stock, par value $0.001 per share, of the Registrant (“NetApp”) issuable to holders of shares of common stock, par value $0.0001 per share, of Data Domain, Inc., a Delaware corporation (“Data Domain”), in the proposed acquisition of Data Domain by the Registrant pursuant to the terms of the Agreement and Plan of Merger, dated as of May 20, 2009, as amended on June 3, 2009, by and among the Registrant, Kentucky Merger Sub One Corporation, Derby Merger Sub Two LLC and Data Domain.
(2) Based on the maximum number of shares of NetApp common stock to be issued in connection with the merger, calculated as the product of (a) 70,275,404 shares, the maximum number of shares of Data Domain common stock that may be cancelled and exchanged in the merger and (b) the maximum exchange ratio of 0.7783 shares of the Registrant’s common stock for each share of Data Domain common stock, which represents the highest possible exchange ratio pursuant to the Agreement and Plan of Merger.
(3) Estimated solely for purposes of calculating the registration fee in accordance with Rules 457(c) and 457(f) of the Securities Act of 1933, as amended, the market value of the securities to be registered was calculated as the product of (A) $25.175, the average of the high and low prices per share of Data Domain common stock on May 29, 2009, as quoted on the NASDAQ Global Select Market, multiplied by (B) 70,275,404, the maximum number of shares of Data Domain common stock that may be cancelled and exchanged in the merger; less $1,156,030,396, the aggregate amount of cash that would be payable to the holders of Data Domain common stock in the merger assuming 70,275,404 shares of Data Domain common stock were outstanding and assuming a per share cash amount of $16.45.
(4) This fee has been previously paid.
 
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such dates as the Commission, acting pursuant to said Section 8(a), may determine.
 


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Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This document shall not constitute an offer to sell or the solicitation of any offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.
 
PRELIMINARY — SUBJECT TO COMPLETION — DATED JULY 2, 2009
 
     
(NETAPP LOGO)   (Data Domain Logo)
 
MERGER PROPOSAL
YOUR VOTE IS VERY IMPORTANT
Dear Stockholder:
 
On May 20, 2009, Data Domain, Inc., referred to as Data Domain, and NetApp, Inc., referred to as NetApp, announced a business combination in which a direct, wholly owned subsidiary of NetApp will merge with Data Domain, with Data Domain continuing as the interim surviving entity, and, immediately thereafter, subject to certain conditions, Data Domain will merge with a second direct, wholly owned subsidiary of NetApp, with such subsidiary continuing as the final surviving entity. On June 3, 2009, NetApp and Data Domain amended the original merger agreement to reflect the terms described in this proxy statement/prospectus. The first merger is referred to herein as the first-step merger, the second merger is referred to herein as the second-step merger, and together such mergers are referred to herein as the merger. If the first-step merger is completed, you will have the right to receive $16.45 in cash, without interest and less any applicable withholding, referred to as the cash consideration, subject to adjustment, and a number of shares of NetApp common stock equal to the exchange ratio, referred to as the stock consideration, and together with the cash consideration, referred to as the merger consideration, for each outstanding share of common stock of Data Domain that you hold immediately prior to the first-step merger.
 
 
The exchange ratio is equal to (i) 0.7783 shares of NetApp common stock if the closing average (as described below) is less than $17.41, (ii) 0.6370 shares of NetApp common stock if the closing average is greater than $21.27, and (iii) that fraction of a share of NetApp common stock (rounded to the nearest ten thousandth) equal to the quotient obtained by dividing $13.55 by the closing average, if the closing average is (A) less than or equal to $21.27 and (B) greater than or equal to $17.41. The closing average means the average of the closing sales prices for NetApp common stock (rounded to the nearest one-hundredth of a cent) as reported on the NASDAQ Global Select Market for the 10 most recent consecutive trading days ending on the third trading day immediately prior to the closing of the first-step merger. Data Domain stockholders may contact Innisfree M&A Incorporated, Data Domain’s information agent, toll free at (888) 750-5834, and banks or brokers may call collect at (212) 750-5833, for information regarding the approximate merger consideration payable in connection with the first-step merger based on information available as of the date of inquiry. In addition, on the third trading day preceding the date of the special meeting of the Data Domain stockholders described below, NetApp and Data Domain will issue a joint press release announcing the aggregate merger consideration that would be payable to the Data Domain stockholders, assuming that the merger closed on the date of the special meeting. If the first-step merger closes after the date of the special meeting, stockholders may not know on the date of the special meeting the actual value of the merger consideration. As further described in this proxy statement/prospectus, the determination of whether the merger will qualify as a tax-free reorganization will depend primarily upon the value of NetApp common stock on the last business day preceding the closing. If the first-step merger closes after the date of the special meeting, stockholders will not know on the date of the special meeting whether the merger will qualify as a tax-free reorganization or will be a fully taxable transaction. The parties anticipate that the first-step merger will close on the date of the special meeting. Depending upon the closing average, NetApp may issue between 44,765,433 and 54,695,347 shares of its common stock to the Data Domain stockholders, in which case Data Domain stockholders will own between 12 and 14% of NetApp’s outstanding common stock, based on the number of shares of NetApp common stock outstanding as of June 26, 2009. As further described in this proxy statement/prospectus, under certain conditions, NetApp may elect to reduce, or be required to reduce, the stock consideration, and in the event of such a reduction, NetApp will be required to increase the cash consideration. In connection with the closing of the first-step merger, NetApp will issue another press release confirming the aggregate merger consideration payable to the Data Domain stockholders and announcing whether the merger qualifies as a tax-free reorganization or is a fully taxable transaction.
 
 
If the closing average is less than $17.41, the value of the merger consideration will be less than the aggregate $30.00 value of the merger consideration on June 3, 2009, the date on which the revised terms of the merger were announced. If the closing average is greater than $21.27, the value of the merger consideration will be greater than the aggregate $30.00 value of the merger consideration on June 3, 2009. The following table shows the closing sale prices of NetApp common stock and Data Domain common stock as reported on the NASDAQ Global Select Market on June 2, 2009, the last trading day before the revised terms of the merger were announced, and on July 1, 2009, the last trading day before the distribution of the enclosed proxy statement/prospectus for which data was available. This table also shows the implied value of the merger consideration proposed for each share of Data Domain common stock, which was calculated by adding to $16.45, or the cash consideration, the product obtained by multiplying the closing price of NetApp common stock on those dates by the implied exchange ratio for the stock consideration that would apply if the closing average were equal to such closing price on such dates.
 
                         
                Implied Value of
 
                One Share of
 
    NetApp
    Data Domain
    Data Domain
 
    Common Stock     Common Stock     Common Stock  
 
June 2, 2009
  $ 19.34     $ 31.58     $ 30.00  
July 1, 2009
  $ 19.97     $ 33.49     $ 30.00  
 
 
The market prices of both NetApp common stock and Data Domain common stock will fluctuate before the merger. You should obtain current stock price quotations for NetApp common stock and Data Domain common stock. NetApp common stock is quoted on the NASDAQ Global Select Market under the symbol “NTAP.” Data Domain common stock is quoted on the NASDAQ Global Select Market under the symbol “DDUP.”
 
 
We cannot complete the merger unless Data Domain’s stockholders adopt the merger agreement, the proposal to adopt the merger agreement being referred to in the proxy statement/prospectus as the merger proposal. Data Domain will hold a special meeting of its stockholders to vote on the merger proposal at 2421 Mission College Blvd., Santa Clara, CA 95054 at 9 a.m., local time, on August 14, 2009. Your vote is important. The market price of NetApp common stock will continue to fluctuate following the date of the stockholder vote on the merger proposal at the special meeting. Consequently, at the time of the stockholder vote, the value of the stock consideration will not yet be determined. Regardless of whether you plan to attend the special meeting, please take the time to vote your shares in accordance with the instructions contained in this proxy statement/prospectus. Failing to vote will have the same effect as voting against the merger proposal. You will also have an opportunity to vote to approve the adjournment or postponement of the special meeting, if necessary, to solicit additional proxies in favor of the approval of the merger proposal, referred to as the adjournment proposal.
 
The Data Domain board of directors unanimously recommends that Data Domain stockholders vote “FOR” approval of the merger proposal and “FOR” the adjournment proposal.
 
 
This proxy statement/prospectus describes the special meeting, the merger proposal and the adjournment proposal, the documents related to each proposal, and other related matters. Please carefully read this entire proxy statement/prospectus, including “Risk Factors” beginning on page 14, for a discussion of the risks relating to the merger proposal. You also can obtain information about NetApp and Data Domain from documents that each of us has filed with the Securities and Exchange Commission.
 
By Order of the Board of Directors
 
Sincerely,
 
-s- FRANK SLOOTMAN
Frank Slootman
President and Chief Executive Officer
 
 
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the NetApp common stock to be issued under this proxy statement/prospectus or determined if this proxy statement/prospectus is accurate or adequate. Any representation to the contrary is a criminal offense.
 
 
The date of this proxy statement/prospectus is July 2, 2009, and it is first being mailed or otherwise delivered to Data Domain stockholders on or about July 7, 2009.


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DATA DOMAIN, INC.
2421 Mission College Blvd.
Santa Clara, CA 95054
 
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
 
July 2, 2009
 
To the Stockholders of Data Domain, Inc.:
 
Data Domain, Inc., or Data Domain, will hold a special meeting of stockholders at 2421 Mission College Blvd., Santa Clara, CA 95054 at 9 a.m., local time, on August 14, 2009 to consider and vote upon the following proposals:
 
1. To adopt the Agreement and Plan of Merger, dated as of May 20, 2009, as amended on June 3, 2009, by and among NetApp, Kentucky Merger Sub One Corporation, Derby Merger Sub Two LLC and Data Domain, as the agreement may be amended from time to time, which proposal is referred to as the merger proposal; and
 
2. To approve the adjournment or postponement of the special meeting, if necessary, to solicit additional proxies, in the event that there are not sufficient votes at the time of the special meeting to approve the merger proposal, which proposal is referred to as the adjournment proposal.
 
The Data Domain board of directors has fixed the close of business on June 17, 2009 as the record date for the special meeting. Only Data Domain stockholders of record at that time are entitled to notice of, and to vote at, the special meeting, or any adjournment or postponement of the special meeting. In order for the merger proposal to be approved, the holders of at least a majority of the Data Domain shares outstanding and entitled to vote thereon must vote in favor of approval of the merger proposal. In the event that a quorum is not present in person or represented by proxy at the special meeting, the chairman of the meeting may adjourn the meeting to another place, date or time. If a quorum is present in person or represented by proxy at the special meeting, approval of the adjournment proposal requires the affirmative vote of the majority of the outstanding shares that are present in person or represented by proxy and entitled to vote at the special meeting.
 
Regardless of whether you plan to attend the special meeting, please submit your proxy with voting instructions. Please vote as soon as possible. If you hold stock in your name as a stockholder of record, please vote your shares by (i) completing, signing, dating and returning the enclosed proxy card, (ii) using the telephone number on your proxy card, or (iii) using the Internet voting instructions on your proxy card. If you hold your stock in “street name” through a bank, broker, or other nominee, please direct your bank, broker, or other nominee to vote in accordance with the instructions you have received from your bank, broker, or other nominee. This will not prevent you from voting in person, but it will help to secure a quorum and avoid additional solicitation costs. Any holder of Data Domain common stock who is present at the special meeting may vote in person instead of by proxy, thereby canceling any previous proxy. In any event, a proxy may be revoked in writing at any time before the special meeting in the manner described in the accompanying document.
 
The Data Domain board of directors has unanimously approved the merger proposal and unanimously recommends that Data Domain stockholders vote “FOR” approval of the merger proposal and “FOR” approval of the adjournment proposal.
 
BY ORDER OF THE BOARD OF DIRECTORS,
 
Sincerely,
 
-s- FRANK SLOOTMAN
Frank Slootman
President and Chief Executive Officer
 
July 2, 2009
 
 
YOUR VOTE IS IMPORTANT.
 
PLEASE VOTE YOUR SHARES PROMPTLY, REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE SPECIAL MEETING.
 


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REFERENCES TO ADDITIONAL INFORMATION
 
This proxy statement/prospectus incorporates important business and financial information about NetApp and Data Domain from documents that are not included in or delivered with this document. You can obtain documents incorporated by reference in this proxy statement/prospectus, other than certain exhibits to those documents, or filed as exhibits to the registration statement of which this proxy statement/prospectus is a part, by requesting them in writing or by telephone from the appropriate company at the following addresses:
 
     
NetApp, Inc.
495 East Java Drive
Sunnyvale, CA 94089
Attention: Investor Relations
Telephone: (408) 822-7098
  Data Domain, Inc.
2421 Mission College Blvd.
Santa Clara, CA 95054
Attention: Investor Relations
Telephone: (408) 980-4909
 
You will not be charged for any of these documents that you request. Data Domain stockholders requesting documents should do so by August 7, 2009 (which is five business days prior to the date of the special meeting) to ensure that they receive them before the special meeting.
 
See “Where You Can Find More Information” on page 96.
 
ABOUT THIS PROXY STATEMENT/PROSPECTUS
 
This proxy statement/prospectus, which forms a part of a registration statement on Form S-4 filed with the Securities and Exchange Commission, referred to as the SEC, by NetApp, constitutes a prospectus of NetApp under Section 5 of the Securities Act of 1933, as amended, referred to as the Securities Act, with respect to the shares of NetApp common stock to be issued to Data Domain stockholders in connection with the merger. This document also constitutes a proxy statement under Section 14(a) of the Securities Exchange Act of 1934, as amended, referred to as the Exchange Act, and the rules thereunder, and a notice of meeting with respect to the special meeting of Data Domain stockholders to consider and vote upon the merger proposal and the adjournment proposal.
 
Except as otherwise provided herein, all descriptions of and calculations made under the terms of the merger agreement and the transactions contemplated by the merger agreement, including the merger, assume that no Data Domain stockholders exercise appraisal rights under Delaware law.
 
To facilitate the reading of this proxy statement/prospectus, in referring to “we,” “us” and other first person declarations, we are referring to both NetApp and Data Domain or, in some instances, the combined company as it would exist following the completion of the merger.


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TABLE OF CONTENTS
         
    Page
 
QUESTIONS AND ANSWERS ABOUT VOTING PROCEDURES FOR THE DATA DOMAIN SPECIAL MEETING     iii  
SUMMARY     1  
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF NETAPP     7  
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF DATA DOMAIN     8  
SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA     10  
COMPARATIVE HISTORICAL AND PRO FORMA PER SHARE DATA     11  
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS     13  
RISK FACTORS     14  
THE DATA DOMAIN SPECIAL MEETING     20  
    20  
    20  
    20  
    21  
    21  
    21  
    22  
    22  
    22  
    22  
    23  
    23  
    23  
INFORMATION ABOUT THE COMPANIES     24  
    24  
    24  
    24  
    24  
DATA DOMAIN PROPOSAL 1 — THE MERGER     25  
    25  
    37  
    40  
    46  
    49  
    50  
    50  
    50  
    50  
    52  
THE MERGER AGREEMENT     54  
    54  
    54  
    55  
    56  


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    Page
 
    56  
    57  
    58  
    59  
    61  
    63  
    65  
    66  
    66  
    68  
    70  
    71  
VOTING AGREEMENTS     71  
ACCOUNTING TREATMENT     73  
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER     73  
    74  
    75  
    75  
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS     76  
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS     80  
COMPARISON OF STOCKHOLDERS’ RIGHTS     88  
COMPARATIVE MARKET PRICES AND DIVIDENDS     94  
DATA DOMAIN PROPOSAL 2 — POSSIBLE ADJOURNMENT OR POSTPONEMENT OF THE DATA DOMAIN SPECIAL MEETING     95  
LEGAL MATTERS     95  
EXPERTS     95  
OTHER MATTERS     96  
DATA DOMAIN STOCKHOLDER PROPOSALS     96  
WHERE YOU CAN FIND MORE INFORMATION     96  
APPENDIX A — Agreement and Plan of Merger and Amendment No. 1 thereto     A-1  
APPENDIX B — Form of Voting Agreement     B-1  
APPENDIX C — §262 of the General Corporation Law of the State of Delaware — Appraisal Rights     C-1  
APPENDIX D — Opinion of Qatalyst Partners LP     D-1  
PART II — INFORMATION NOT REQUIRED IN PROSPECTUS     II-1  
    II-1  
    II-2  
    II-3  
EXHIBIT INDEX        
 EX-5.1
 EX-8.1
 EX-8.2
 EX-8.3
 EX-8.4
 EX-23.2
 EX-23.3
 EX-99.1


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QUESTIONS AND ANSWERS ABOUT VOTING PROCEDURES FOR THE
DATA DOMAIN SPECIAL MEETING
 
 
Q: Why am I receiving this proxy statement/prospectus?
 
A: NetApp, Inc., referred to as NetApp, has agreed to acquire Data Domain, Inc., referred to as Data Domain, by means of a merger of Data Domain with a subsidiary of NetApp. Please see “Data Domain Proposal 1 — The Merger” beginning on page 25 and “The Merger Agreement” beginning on page 54 for a description of the merger and the merger agreement. A copy of the merger agreement is attached to this proxy statement/prospectus as Appendix A.
 
To complete the merger, Data Domain stockholders must vote to approve the merger proposal. Data Domain will hold a special meeting of stockholders to obtain this approval. You will also be given an opportunity to vote to approve the adjournment or postponement of the special meeting, if necessary, to solicit additional proxies in favor of the merger proposal, referred to as the adjournment proposal.
 
Q: What will happen in the merger?
 
A: As the first step in the transaction, a direct, wholly owned subsidiary of NetApp will merge with Data Domain, with Data Domain continuing as the surviving entity, and as a direct, wholly owned subsidiary of NetApp. Immediately thereafter, provided that certain conditions described below are satisfied, Data Domain will merge with a second direct, wholly owned subsidiary of NetApp, with such second subsidiary continuing as the surviving corporation. The first merger is referred to herein as the first-step merger and the second merger is referred to herein as the second-step merger. If the second-step merger occurs, the first-step merger and the second-step merger together are referred to herein as the merger. If the second-step merger does not occur, references herein to the merger shall mean the first-step merger. Upon completion of the first-step merger, Data Domain common stock will cease trading on the NASDAQ Global Select Market, and Data Domain common stockholders will be entitled to receive the merger consideration for each outstanding share of Data Domain common stock held immediately prior to the first-step merger.
 
Q: What will Data Domain stockholders receive in the merger?
 
A: In the merger, subject to the possible adjustments to the cash consideration and the stock consideration described below, each Data Domain stockholder will have a right to receive a cash amount of $16.45, without interest and less any applicable withholding, plus a number of shares of NetApp common stock equal to the exchange ratio for each outstanding share of Data Domain common stock. The exchange ratio will depend on the closing average of NetApp common stock. The closing average is the average of the closing sales prices for NetApp common stock as reported on the NASDAQ Global Select Market for the 10 most recent consecutive trading days ending on the third trading day immediately prior to the closing of the first-step merger.
 
The exchange ratio is equal to (i) 0.7783 shares of NetApp common stock if the closing average is less than $17.41, (ii) 0.6370 shares of NetApp common stock if the closing average is greater than $21.27, and (iii) that fraction of a share of NetApp common stock equal to the quotient obtained by dividing $13.55 by the closing average, if the closing average is (A) less than or equal to $21.27 and (B) greater than or equal to $17.41.
 
For example, if the closing average of NetApp common stock is $16.00, a holder of 100 shares of Data Domain common stock will receive $1,645 in cash and 77 shares of NetApp common stock (i.e., 100 x $16.45 = $1,645 in cash and 100 x 0.7783 = 77 shares of common stock), plus cash equal to the value of the fractional share of NetApp common stock to which such holder would otherwise be entitled.
 
If the closing average of NetApp common stock is $18.00, a holder of 100 shares of Data Domain common stock will receive $1,645 in cash and 75 shares of NetApp common stock (i.e., 100 x $16.45 = $1,645 in cash and 100 x ($13.55/$18.00) = 75 shares of common stock), plus cash equal to the value of the fractional share of NetApp common stock to which such holder would otherwise be entitled.
 
Finally, if the closing average of NetApp common stock is $22.00, a holder of 100 shares of Data Domain common stock will receive $1,645 in cash and 63 shares of NetApp common stock (i.e., 100 x $16.45 = $1,645 in cash and 100 x 0.6370 = 63 shares of common stock), plus cash equal to the value of the fractional share of NetApp common stock to which such holder would otherwise be entitled.


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The range of outcomes is illustrated by the following graph:
 
(GRAPH)
 
Stockholders of Data Domain should bear in mind, however, that under the merger agreement, if the exchange ratio is greater than or equal to 0.7006 and less than 0.7783, NetApp, in its sole discretion may reduce the number of shares of NetApp common stock you will receive and proportionately increase the amount of cash you will receive. However, NetApp may not reduce the amount of stock consideration and increase the cash consideration to the extent that it would reasonably be expected to cause the merger to fail to qualify as a tax-free reorganization under the Internal Revenue Code, except as may be required as described herein.
 
If the aggregate amount of the stock consideration issuable in the merger (including the stock consideration issuable to holders of Data Domain options and restricted stock units) would exceed 19.5% of the outstanding shares of NetApp common stock immediately prior to the effective time of the first-step merger, the stock consideration will be decreased to the minimum extent necessary so that no more than 19.5% of the outstanding shares of NetApp common stock will be issued in the merger (with such percentage measured immediately prior to the effective time of the first-step merger). In such event, the cash consideration will be increased by an amount equal to the product of (a) the amount of the reduction in the stock consideration multiplied by (b) the closing average. In the event that the stock consideration is decreased in accordance with this paragraph, the merger may fail to qualify as a tax-free reorganization under the Internal Revenue Code.
 
Data Domain stockholders may contact Innisfree M&A Incorporated, Data Domain’s information agent, toll free at (888) 750-5834, and banks or brokers may call collect at (212) 750-5833, for information regarding the approximate merger consideration payable in connection with the merger. In addition, on the third trading day preceding the date of the special meeting of the Data Domain stockholders, NetApp and Data Domain will issue a joint press release announcing the aggregate merger consideration that would be payable to the Data Domain stockholders, assuming that the merger closed on the date of the special meeting. However, there can be no assurance that the merger will close on the date of the special meeting of the stockholders. As such, the assumptions in the joint press release may differ from the actual merger consideration payable in the merger at the closing. Further, the determination of whether the merger will qualify as a tax-free reorganization will depend upon the value of NetApp common stock on the last business day preceding the closing. If the first-step merger closes after the date of the special meeting, stockholders will not know on the date of the special meeting whether the merger will qualify as a tax-free reorganization or will be a fully taxable transaction. The parties anticipate that the first-step merger will close on the date of the special meeting. In connection with the closing of the first-step merger, NetApp will issue another press release confirming the aggregate merger consideration payable to the Data Domain stockholders and announcing whether the merger qualifies as a tax-free reorganization or is a fully taxable transaction.


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Q: What do I need to do now?
 
A: After you have carefully read this proxy statement/prospectus and have decided how you wish to vote your shares, please vote your shares promptly. If you hold stock in your name as a stockholder of record, please vote your shares by (i) completing, signing, dating and returning the enclosed proxy card, (ii) using the telephone number on your proxy card or (iii) using the Internet voting instructions on your proxy card. If you have Internet access, you are encouraged to record your vote via the Internet.
 
If you hold your stock in “street name” through a bank, broker or other nominee, you must direct your bank, broker or other nominee to vote in accordance with the instructions you have received from your bank, broker or other nominee. Submitting your proxy card or directing your bank, broker or other nominee to vote your shares will ensure that your shares are represented and voted at the special meeting.
 
Q: Why is my vote important?
 
A: If you do not vote by proxy or vote in person at the special meeting, it will be more difficult for us to obtain the necessary quorum to hold the special meeting. In addition, your failure to vote, by proxy or in person, or failure to instruct your broker, will have the same effect as a vote against the merger proposal. The merger proposal must be approved by the holders of a majority of the outstanding shares of Data Domain common stock entitled to vote at the special meeting. In the event that a quorum is not present in person or represented by proxy at the special meeting, the chairman of the meeting may adjourn the meeting to another place, date or time. Approval of the adjournment proposal requires the affirmative vote of the majority of the outstanding shares that are present in person or represented by proxy and entitled to vote at the special meeting. The Data Domain board of directors unanimously recommends that you vote to approve the merger proposal and the adjournment proposal.
 
Q: If my shares of common stock are held in street name by my broker, will my broker automatically vote my shares for me?
 
A: No. Your broker cannot vote your shares without instructions from you. You should instruct your broker as to how to vote your shares, following the directions your broker provides to you. Please check the voting form used by your broker.
 
Q: What if I abstain from voting or fail to instruct my broker?
 
A: If you abstain from voting, the abstention will be counted toward a quorum at the special meeting, but it will have the same effect as a vote against the merger proposal and against the adjournment proposal. If you fail to instruct your broker, a “broker non-vote,” those shares would be counted towards a quorum at the special meeting, but the shares would not be considered entitled vote, and thus it will have the same effect as a vote against the merger proposal, but it will have no effect on the adjournment proposal.
 
Q: Can I attend the special meeting and vote my shares in person?
 
A: Yes. All stockholders, including stockholders of record and stockholders who hold their shares through banks, brokers, nominees or any other holder of record, are invited to attend the special meeting. Holders of record of Data Domain common stock can vote in person at the special meeting. If you are not a stockholder of record, you must obtain a proxy, executed in your favor, from the record holder of your shares, such as a broker, bank or other nominee, to be able to vote in person at the special meeting. If you plan to attend the special meeting, you must hold your shares in your own name or have a letter from the record holder of your shares confirming your ownership, and you must bring a form of personal photo identification with you to be admitted. Data Domain reserves the right to refuse admittance to anyone without proper proof of share ownership or without proper photo identification.
 
Q: Can I change my vote?
 
A: Yes. You may revoke any proxy at any time before it is voted by signing and returning a proxy card with a later date, delivering a written revocation letter to the Data Domain Corporate Secretary, or by attending the special meeting in person, notifying the Corporate Secretary and voting by ballot at the special meeting. The Data Domain Corporate Secretary’s mailing address is 2421 Mission College Blvd., Santa Clara, CA 95054.


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Any stockholder entitled to vote in person at the special meeting may vote in person regardless of whether a proxy has been previously given, but the mere presence (without notifying the Data Domain Corporate Secretary) of a stockholder at the special meeting will not constitute revocation of a previously given proxy.
 
Q: If I am a Data Domain stockholder, should I send in my Data Domain stock certificates now?
 
A: No. You should not send in your Data Domain stock certificates at this time. After the merger is completed, NetApp will send you instructions for exchanging Data Domain stock certificates for the merger consideration. Unless Data Domain stockholders specifically request to receive NetApp stock certificates, the shares of NetApp stock they receive in the merger will be issued in book-entry form.
 
Q: Is the merger subject to the approval of stockholders of NetApp?
 
A: No. NetApp is not required to obtain the approval of its stockholders with respect to the merger proposal.
 
Q: When do you expect to complete the merger?
 
A: Data Domain currently expects to complete the merger within 60 to 120 days following May 20, 2009, the date on which the merger agreement was initially executed. However, there can be no assurance as to when, or if, the merger will occur. Data Domain must first obtain the approval of Data Domain stockholders at the special meeting and the necessary regulatory approvals.
 
Q: What are the material U.S. tax consequences of the merger?
 
A: The U.S. tax consequences of the merger depend on whether the second-step merger occurs. The second-step merger will occur only if Wilson Sonsini Goodrich & Rosati, Professional Corporation, counsel to NetApp, and Fenwick & West LLP, counsel to Data Domain, deliver opinions to the effect that the first-step merger and the second-step merger together will qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended, or the Code. The tax opinions are conditioned upon receipt of customary written representations from NetApp and Data Domain, including representations that the stock consideration, valued as of the last business day immediately prior to the closing date of the first-step merger, will constitute at least 40% of the total consideration paid or payable to Data Domain stockholders in the first-step merger, referred to as the continuity of interest test. The tax opinions will be delivered, if at all, on the closing date of the first-step merger.
 
Whether the continuity of interest test will be satisfied depends primarily upon the market value of the NetApp common stock immediately before the first-step merger. Other relevant factors may include (i) whether the stock consideration is required to be decreased, and the cash consideration correspondingly increased, so that the aggregate amount of stock consideration issuable in the merger (including the stock consideration issuable to the holders of Data Domain options and restricted stock units) will not exceed 19.5% of the outstanding shares of NetApp common stock immediately prior to the first-step merger, as more fully described above, (ii) the potential payment of cash to Data Domain stockholders properly exercising appraisal rights under Delaware law, and (iii) the amount of cash paid in the merger in lieu of the issuance of fractional shares of NetApp common stock. No assurances can be given that the continuity of interest test will be met. As a result, in deciding whether to approve the merger, you should consider the possibility that it may be taxable to you because the continuity of interest test is not satisfied and the second-step merger does not occur. You will not be entitled to change your vote in the event that the merger is taxable. In connection with the closing of the first-step merger, NetApp will issue a press release announcing whether the merger qualifies as a tax-free reorganization or is a fully taxable transaction.
 
If the second-step merger occurs and the merger qualifies as a reorganization, a U.S. holder of Data Domain common stock receiving NetApp common stock and cash in exchange for Data Domain common stock in the merger generally will recognize gain equal to the lesser of (i) the amount of cash received by the U.S. holder (excluding any cash received in lieu of fractional shares) and (ii) the excess of the “amount realized” by the U.S. holder over the U.S. holder’s tax basis in the Data Domain common stock. The “amount realized” by the U.S. holder will equal the sum of the fair market value of the NetApp common stock and the amount of cash (including any cash received in lieu of fractional shares) received by the U.S. holder. Losses will not be permitted to be recognized. Realized gain or loss must be calculated separately for each identifiable block of shares (i.e., shares


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acquired at different times and prices) exchanged in the merger, and a loss realized on the exchange of one block cannot be used to offset a gain recognized on the exchange of another block.
 
If the second-step merger does not occur, the exchange of Data Domain common stock for NetApp common stock and cash in the first-step merger will be a fully taxable transaction in which a U.S. holder generally will recognize gain or loss equal to the difference between the “amount realized” (as defined above) and the U.S. holder’s tax basis in the Data Domain common stock. Gain or loss must be calculated separately for each identifiable block of shares (i.e., shares acquired at different times and prices) exchanged in the first-step merger.
 
Please see “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 73.
 
Q: Whom should I call with questions?
 
A: If you need any assistance in completing your proxy card or have questions regarding the special meeting, you may call Innisfree M&A Incorporated, Data Domain’s proxy solicitor, at (888) 750-5834 (toll-free) if you are a stockholder or (212) 750-5833 (collect) if you are a bank or broker.


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SUMMARY
 
This summary highlights material information from this proxy statement/prospectus. It may not contain all of the information that is important to you. Data Domain urges you to read carefully the entire proxy statement/prospectus and the other documents to which we refer to fully understand the merger and the related transactions. See “Where You Can Find More Information” on page 96. Each item in this summary refers to the page of this proxy statement/prospectus on which that subject is discussed in more detail.
 
Following the first-step merger, for each share of Data Domain common stock held by them, Data Domain stockholders will have a right to receive a cash amount of $16.45, without interest and less any required withholding under United States federal, state, or local law or under foreign law, plus a number of validly issued, fully paid and non-assessable shares of NetApp common stock equal to the exchange ratio. The exchange ratio is equal to (i) 0.7783 shares of NetApp common stock if the closing average (as described below) is less than $17.41, (ii) 0.6370 shares of NetApp common stock if the closing average is greater than $21.27, and (iii) that fraction of a share of NetApp common stock equal to the quotient obtained by dividing $13.55 by the closing average, if the closing average is (A) less than or equal to $21.27 and (B) greater than or equal to $17.41. The closing average means the average of the closing sales prices for NetApp common stock as reported on the NASDAQ Global Select Market for the 10 most recent consecutive trading days ending on the third trading day immediately prior to the closing of the first-step merger. Under certain conditions, NetApp may elect to reduce, or may be required to reduce, the stock consideration, and, in the event of such a reduction, NetApp will be required to increase the cash consideration. See “The Merger Agreement — Per Share Merger Consideration.” Data Domain stockholders may contact Innisfree M&A Incorporated, Data Domain’s information agent, toll free at (888) 750-5834, and banks or brokers can call collect at (212) 750-5833, for information regarding the merger consideration to be received upon exchange of each share of Data Domain common stock in connection with the merger. In addition, on the third trading day preceding the date of the special meeting of the Data Domain stockholders, NetApp and Data Domain will issue a joint press release announcing the aggregate merger consideration that would be payable to the Data Domain stockholders, assuming that the merger closed on the date of the special meeting. However, there can be no assurance that the merger will close on the date of the special meeting of the stockholders. As such, the assumptions in the joint press release may differ from the actual merger consideration payable in the merger at the closing. Further, the determination of whether the merger will qualify as a tax-free reorganization will depend upon the value of NetApp common stock on the last business day preceding the closing. If the first-step merger closes after the date of the special meeting, stockholders will not know on the date of the special meeting whether the merger will qualify as a tax-free reorganization or will be a fully taxable transaction. The parties anticipate that the first-step merger will close on the date of the special meeting. In connection with the closing of the first-step merger, NetApp will issue another press release confirming the aggregate merger consideration payable to the Data Domain stockholders and announcing whether the merger qualifies as a tax-free reorganization or is a fully taxable transaction.
 
On May 20, 2009, NetApp entered into an Agreement and Plan of Merger, referred to as the original merger agreement, by and among NetApp, Kentucky Merger Sub One Corporation, a wholly owned subsidiary of NetApp, referred to as Merger Sub One, Derby Merger Sub Two LLC, a wholly owned subsidiary of NetApp, referred to as Merger Sub Two, and Data Domain, pursuant to which for each share of Data Domain common stock held by them, Data Domain stockholders would have had a right to receive a cash amount of $11.45 plus a number of validly issued, fully paid and non-assessable shares of NetApp common stock equal to an exchange ratio of (i) 0.833 shares of NetApp common stock if the closing average was less than $16.26, (ii) 0.682 shares of NetApp common stock if the closing average was greater than $19.88, and (iii) that fraction of a share of NetApp common stock equal to the quotient obtained by dividing $13.55 by the closing average, if the closing average was (A) less than or equal to $19.88 and (B) greater than or equal to $16.26. On June 3, 2009, NetApp and Data Domain amended the original merger agreement to reflect the terms described in this proxy statement/prospectus. The merger agreement provides for the acquisition of Data Domain by NetApp by means of a merger of Merger Sub One with and into Data Domain, referred to as the first-step merger, with Data Domain as the interim surviving entity. Immediately thereafter, subject to certain conditions, Data Domain, as the interim surviving entity, will merge with and into Merger Sub Two, referred to as the second-step merger, with Merger Sub Two as the final surviving entity. Unless otherwise


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specified herein, the second-step merger, taken together with the first-step merger, is referred to in this proxy statement/prospectus as the merger. As a result of the first-step merger, Data Domain will become a wholly owned subsidiary of NetApp. See “Material U.S. Federal Income Tax Consequences of the Merger” for an explanation of the two-step merger structure. Based on NetApp’s stock trading price as of June 2, 2009, the aggregate value of the consideration payable in connection with the merger, is $1.9 billion on a fully diluted basis (net of cash on Data Domain’s balance sheet). The aggregate value of the consideration payable at closing is subject to change, as further described in this proxy statement/prospectus.
 
Each share of Data Domain common stock issued and outstanding immediately prior to the effective time of the merger will be cancelled and extinguished and automatically converted into the right to receive a cash amount of $16.45, or the cash consideration, without interest and less any required withholding under United States federal, state, local or foreign law, plus a number of validly issued, fully paid and non-assessable shares of NetApp common stock equal to the exchange ratio, referred to as the stock consideration, and together with the cash consideration, the merger consideration.
 
The merger agreement is included as Appendix A to this proxy statement/prospectus.
 
What Holders of Data Domain Stock Options and Other Equity-Based Awards Will Receive (page 55)
 
Each of the vested and unvested options to purchase shares of Data Domain common stock that is outstanding at the effective time of the first-step merger will be assumed and converted into an option to acquire shares of NetApp common stock, subject to the option exchange ratio, at the effective time of the merger, and will otherwise be subject to the terms and conditions of such award prior to the completion of the first-step merger, including vesting and exercisability.
 
Each of Data Domain’s restricted stock units outstanding at the effective time of the first-step merger will be assumed and converted into a restricted stock unit representing the right to receive the merger consideration payable for shares underlying each assumed and converted Data Domain restricted stock unit. The assumed and converted restricted stock units will otherwise be subject to the same terms and conditions, including vesting restrictions, applicable to such Data Domain restricted stock units prior to the effective time of the first-step merger.
 
Each of Data Domain’s unvested shares of restricted stock outstanding at the effective time of the first-step merger will be assumed and converted into the right to receive the merger consideration payable for such shares. The merger consideration payable for such unvested shares of restricted stock will be subject to the same terms and conditions, including vesting restrictions, applicable to such shares of Data Domain restricted stock prior to the effective time of the first-step merger.
 
Material U.S. Federal Income Tax Consequences of the Merger to Data Domain Stockholders (page 73)
 
The U.S. tax consequences of the merger depend on whether the second-step merger occurs. The second-step merger will occur only if Wilson Sonsini Goodrich & Rosati, Professional Corporation, counsel to NetApp, and Fenwick & West LLP, counsel to Data Domain, deliver tax opinions to the effect that the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. The tax opinions are conditioned upon receipt of customary written representations from NetApp and Data Domain, including representations that continuity of interest test will be satisfied, requiring that the stock consideration constitute at least 40% of the total consideration paid or payable to Data Domain stockholders in the first-step merger. The tax opinions will be delivered, if at all, on the closing date of the first-step merger.
 
Whether the continuity of interest test will be satisfied depends primarily upon the market value of the NetApp common stock immediately before the first-step merger. Other relevant factors may include (i) whether the stock consideration is required to be decreased, and the cash consideration correspondingly increased, so that the aggregate amount of stock consideration issuable in the merger (including the stock consideration issuable to the holders of Data Domain options and restricted stock units) will not exceed 19.5% of the outstanding shares of NetApp common stock immediately prior to the first-step merger, as more fully described above, (ii) the potential payment of cash to Data Domain stockholders properly exercising appraisal rights under Delaware law, and (iii) the amount of cash paid in the merger in lieu of the issuance of fractional shares of NetApp common stock. No assurances can be given that the continuity of interest test will be met. As a result, in deciding whether to approve the merger, you should consider the possibility that the it may be taxable to you because the continuity of interest test is not satisfied and the second-step merger does not occur. You will not be entitled to change your vote in the event that


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the merger is taxable. In connection with the closing of the first-step merger, NetApp will issue a press release announcing whether the merger qualifies as a tax-free reorganization or is a fully taxable transaction.
 
If the second-step merger occurs and the merger qualifies as a reorganization, a U.S. holder of Data Domain common stock receiving NetApp common stock and cash in exchange for such Data Domain common stock in the merger generally will recognize gain equal to the lesser of (i) the amount of cash received by the U.S. holder (excluding any cash received in lieu of fractional shares) and (ii) the excess of the “amount realized” by the U.S. holder over the U.S. holder’s tax basis in the Data Domain common stock. The “amount realized” by the U.S. holder will equal the sum of the fair market value of the NetApp common stock and the amount of cash (including any cash received in lieu of fractional shares) received by the U.S. holder. Losses will not be permitted to be recognized. Realized gain or loss must be calculated separately for each identifiable block of shares (i.e., shares acquired at different times and prices) exchanged in the merger, and a loss realized on the exchange of one block cannot be used to offset a gain recognized on the exchange of another block. Any gain recognized by a U.S. holder of Data Domain common stock generally will be long-term capital gain if the U.S. holder’s holding period of the Data Domain common stock is more than one year, and short-term capital gain if the U.S. holder’s holding period is one year or less, at the time of the first-step merger. Long-term capital gains of individuals are eligible for reduced rates of taxation.
 
If the second-step merger does not occur, the exchange of Data Domain common stock for NetApp common stock and cash in the first-step merger will be a fully taxable transaction in which a U.S. holder generally will recognize gain or loss equal to the difference between the “amount realized” (as defined above) and the U.S. holder’s tax basis in the Data Domain common stock. Gain or loss must be calculated separately for each identifiable block of shares (i.e., shares acquired at different times and prices) exchanged in the first-step merger. Any gain or loss recognized by a U.S. holder of Data Domain common stock generally will be long-term capital gain or loss if the U.S. holder’s holding period of the Data Domain common stock is more than one year, and short-term capital gain or loss if the U.S. holder’s holding period is one year or less, at the time of the first-step merger. Long-term capital gains of individuals are eligible for reduced rates of taxation. The deductibility of capital losses is subject to limitations.
 
The U.S. federal income tax consequences described above may not apply to all holders of Data Domain common stock. Your tax consequences will depend on your individual situation. Accordingly, NetApp and Data Domain strongly urge you to consult with your tax advisor for a full understanding of the particular tax consequences of the merger to you.
 
Comparative Market Prices and Dividends (page 94)
 
NetApp common stock trades on the NASDAQ Global Select Market under the symbol “NTAP,” and Data Domain common stock trades on the NASDAQ Global Select Market under the symbol “DDUP.” The following table shows the closing sale prices of NetApp common stock and Data Domain common stock as reported on the NASDAQ Global Select Market on June 2, 2009, the last trading day before the signing of the amended merger agreement, and on July 1, 2009, the last trading day before the distribution of this proxy statement/prospectus for which data was available. This table also shows the implied value of the merger consideration proposed for each share of Data Domain common stock, which was calculated by adding to $16.45, or the cash consideration, the product obtained by multiplying the closing price of a share of NetApp common stock on those dates by the implied exchange ratio for the stock consideration that would apply if the closing average were equal to the closing sale price on those dates.
 
                         
            Implied Value of
            One Share of
    NetApp
  Data Domain
  Data Domain
    Common Stock   Common Stock   Common Stock
 
June 2, 2009
  $ 19.34     $ 31.58     $ 30.00  
July 1, 2009
  $ 19.97     $ 33.49     $ 30.00  
 
The market price of NetApp common stock and Data Domain common stock will fluctuate prior to the closing of the first-step merger. You should obtain current market quotations for the shares.


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The Data Domain Board of Directors Unanimously Recommends that Data Domain Stockholders Vote “FOR” the Proposals (pages 25 and 95)
 
The Data Domain board of directors believes that the merger is in the best interests of Data Domain and its stockholders and has unanimously approved the merger and the merger agreement. The Data Domain board of directors unanimously recommends that Data Domain stockholders vote “FOR” the merger proposal and “FOR” the adjournment proposal.
 
Qatalyst Partners Provided an Opinion to the Data Domain Board of Directors (page 40)
 
As financial advisor to Data Domain, on May 20, 2009, Qatalyst Partners LP, which is referred to herein as Qatalyst, rendered to the Data Domain board of directors its opinion that, as of such date and based upon and subject to the various assumptions, qualifications and limitations set forth in its opinion, the merger consideration to be received by the holders of shares of Data Domain common stock, other than affiliates who have executed voting agreements, pursuant to the original merger agreement was fair, from a financial point of view, to such holders. Qatalyst’s opinion was based on the terms of the original merger agreement, and the Data Domain board of directors has not requested that Qatalyst provide an additional or revised opinion reflecting the terms of the merger agreement, as amended on June 3, 2009. Qatalyst’s opinion was rendered to the Data Domain board of directors prior to the announcement of EMC’s tender offer. Thus, the impact of EMC’s offer on Qatalyst’s view, as of the date of the amendment to the original merger agreement, as to the fairness, from a financial point of view, of the merger consideration to be received by the holders of shares of Data Domain common stock pursuant to the amendment to the original merger agreement cannot be presumed, and such view could be different than its view, as of the date of the original merger agreement, as to the fairness, from a financial point of view, of the original merger consideration to be received by the holders of shares of Data Domain common stock pursuant to the original merger agreement.
 
The full text of the written opinion of Qatalyst, dated May 20, 2009, is attached hereto as Appendix D and is incorporated by reference herein. The opinion sets forth, among other things, the assumptions made, procedures followed, matters considered and limitations and qualifications of the review undertaken by Qatalyst in rendering its opinion. You should read the opinion carefully in its entirety. Qatalyst’s opinion was provided to the Data Domain board of directors and addresses only the fairness, from a financial point of view, of the merger consideration to be received by the holders of shares of Data Domain common stock pursuant to the original merger agreement as of the date of the opinion. It does not address any other aspect of the transaction and does not constitute a recommendation to the stockholders of Data Domain as to how to vote with respect to the merger proposal or act on any other matter.
 
Data Domain’s Officers and Directors Have Financial Interests in the Merger That Differ From Your Interests (page 46)
 
Data Domain’s executive officers and directors have interests in the merger that are different from those of other Data Domain stockholders. As of the record date, all directors and executive officers of Data Domain, together with their affiliates, beneficially owned approximately 23.6% of the outstanding shares of Data Domain common stock, which includes shares of common stock and shares of restricted stock that will vest within 60 days of the record date, shares underlying vested options and options that will vest within 60 days of the record date, and shares issuable upon settlement of restricted stock units and that will be issuable within 60 days of such date. Additionally, certain executive officers and the non-employee directors of Data Domain will be entitled to additional benefits as a result of the completion of the merger or upon certain events following the completion of the merger.
 
Directors and Executive Officers of Data Domain Have Agreed to Vote in Favor of the Merger Proposal (page 71)
 
In connection with the execution of the merger agreement, directors and executive officers of Data Domain and certain of their affiliates entered into voting agreements pursuant to which they have agreed to vote all shares of Data Domain common stock owned by them in favor of the merger proposal. As of the record date these directors, executive officers and affiliates owned shares representing approximately 20.6% of Data Domain’s issued and outstanding common stock. They have also agreed to comply with certain restrictions on the disposition of their


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shares, subject to the terms and conditions contained in the voting agreements. Pursuant to their terms, these voting agreements will terminate concurrently with any termination of the merger agreement.
 
The form of voting agreement is included as Appendix B to this proxy statement/prospectus.
 
Holders of Data Domain Common Stock Are Entitled to Appraisal Rights (page 50)
 
Under the Delaware General Corporation Law, referred to as the DGCL, holders of Data Domain common stock who do not vote for the approval of the first-step merger proposal have the right to seek appraisal of the fair value of their shares as determined by the Delaware Court of Chancery if the merger is completed, but only if they comply with all requirements of Delaware law, which are summarized in this proxy statement/prospectus. This appraisal amount could be more than, the same as, or less than the amount a Data Domain stockholder would be entitled to receive under the merger agreement. Any holder of Data Domain common stock intending to exercise appraisal rights, among other things, must submit a written demand for appraisal to Data Domain prior to the vote on the approval of the merger proposal and must not vote or otherwise submit a proxy in favor of approval of the merger proposal. Failure to follow exactly the procedures specified under Delaware law will result in the loss of appraisal rights. Because of the complexity of the Delaware law relating to appraisal rights, if you are considering exercising your appraisal right, Data Domain encourages you to seek the advice of your own legal counsel.
 
A copy of Section 262 of the DGCL is also included as Appendix C to this proxy statement/prospectus.
 
Conditions That Must Be Satisfied or Waived for the Merger to Occur (page 66)
 
Currently, NetApp and Data Domain expect to complete the first-step merger within 60 to 120 days following May 20, 2009, the date on which the merger agreement was initially executed. As more fully described in this proxy statement/prospectus and in the merger agreement, the completion of the first-step merger depends on a number of conditions being satisfied or, where legally permissible, waived. These conditions include, among others, approval of the merger proposal by Data Domain stockholders, the expiration or termination of the applicable Hart-Scott-Rodino waiting period, the receipt of all required regulatory approvals.
 
Neither NetApp nor Data Domain can be certain when, or if, the conditions to the merger will be satisfied or waived, or that the merger will be completed.
 
Termination of the Merger Agreement (page 68)
 
Either NetApp or Data Domain may terminate the merger agreement under certain circumstances, which would prevent the merger from being completed.
 
Termination Fee (page 70)
 
A termination fee of $57,000,000 may be payable by Data Domain to NetApp upon the termination of the merger agreement under several circumstances.
 
Regulatory Approvals Required for the Merger (page 52)
 
NetApp and Data Domain have agreed to use reasonable best efforts to obtain as promptly as practicable all regulatory approvals that are required to complete the transactions contemplated in the merger agreement. This includes filing all required notices to governmental authorities, including the required filings with the Department of Justice and the Federal Trade Commission pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, referred to herein as the HSR Act. NetApp and Data Domain are not permitted to complete the merger until the applicable waiting periods under the HSR Act have expired or been terminated. On July 2, 2009, the Federal Trade Commission granted early termination of the HSR waiting period. Although neither NetApp nor Data Domain know of any reason why regulatory approvals would not be obtained in a timely manner, NetApp and Data Domain cannot be certain when, or if, the approvals will be obtained.


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Board of Directors and Management of NetApp following Completion of the Merger (page 50)
 
The directors of Data Domain and its subsidiaries will resign in connection with the first-step merger. The composition of NetApp’s board of directors and management is not anticipated to change in connection with the completion of the first-step merger, although it is possible that following the first-step merger, one or more members of Data Domain’s management may be asked to join NetApp’s board of directors and/or management.
 
The Rights of Data Domain Stockholders will Change as a Result of the Merger (page 88)
 
The rights of Data Domain stockholders will change as a result of the merger due to differences in NetApp’s and Data Domain’s governing documents. This proxy statement/prospectus contains a summary description of stockholder rights under each of the NetApp and Data Domain governing documents and describes the material differences between them.
 
Data Domain will Hold its Special Meeting on August 14, 2009 (page 20)
 
The special meeting will be held on August 14, 2009 at 9 a.m., local time, at 2421 Mission College Blvd., Santa Clara, CA 95054. At the special meeting, Data Domain stockholders will be asked to:
 
  •  Adopt the merger agreement; and
 
  •  Approve the adjournment or postponement of the special meeting, if necessary, to solicit additional proxies, in the event that there are not sufficient votes at the time of the special meeting to adopt the merger agreement.
 
Record Date.  Only holders of record at the close of business on June 17, 2009 will be entitled to vote at the special meeting. Each share of Data Domain common stock is entitled to vote. As of the record date, 62,885,090 shares of Data Domain common stock were outstanding, held by approximately 114 registered holders.
 
Required Vote.  Approval of the merger proposal requires the affirmative vote of the holders of a majority of the outstanding shares of Data Domain common stock entitled to vote at the special meeting. Because approval of the merger proposal is based on the affirmative vote of a majority of shares outstanding, a Data Domain stockholder’s failure to vote, abstention or failure to instruct a broker, a “broker non-vote,” will have the same effect as a vote against the merger proposal.
 
In the event that a quorum is not present in person or represented by proxy at the special meeting, the chairman of the meeting may adjourn the meeting to another place, date or time. If a quorum is present in person or represented by proxy at the special meeting, approval of the adjournment proposal requires the affirmative vote of the majority of the outstanding shares that are present in person or represented by proxy and entitled to vote at the special meeting. A Data Domain stockholder’s abstention will have the same effect as a vote against the adjournment proposal. A broker non-vote will have no effect on the adjournment proposal.
 
Information about the Companies (page 24)
 
NetApp, Inc.
 
NetApp, a Delaware corporation, was established in 1992. NetApp is a leading provider of storage and data management solutions. NetApp common stock is traded on the NASDAQ Global Select Market under the symbol “NTAP.” The principal executive offices of NetApp are located at 495 East Java Drive, Sunnyvale, CA 94089, and its telephone number is (408) 822-6000.
 
Additional information about NetApp and its subsidiaries is included in documents incorporated by reference in this proxy statement/prospectus. See “Where You Can Find More Information” beginning on page 96.
 
Kentucky Merger Sub One Corporation
 
Kentucky Merger Sub One Corporation, a wholly owned subsidiary of NetApp, was formed solely for the purpose of completing the merger. Kentucky Merger Sub One Corporation has not carried on any activities to date, except for activities incidental to its formation and activities undertaken in connection with the transactions


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contemplated by the merger agreement. The principal executive offices of Kentucky Merger Sub One Corporation are located at 495 East Java Drive, Sunnyvale, CA 94089, and its telephone number is (408) 822-6000.
 
Derby Merger Sub Two LLC
 
Derby Merger Sub Two LLC, a wholly owned subsidiary of NetApp, was formed solely for the purpose of completing the merger. Derby Merger Sub Two LLC has not carried on any activities to date, except for activities incidental to its formation and activities undertaken in connection with the transactions contemplated by the merger agreement. The principal executive offices of Derby Merger Sub Two LLC are located at 495 East Java Drive, Sunnyvale, CA 94089, and its telephone number is (408) 822-6000.
 
Data Domain, Inc.
 
Data Domain, a Delaware corporation, was incorporated in Delaware in October 2001. Data Domain is a leading provider of storage solutions for backup and archive applications based on deduplication technology.
 
Data Domain common stock is traded on the NASDAQ Global Select Market under the symbol “DDUP.” The principal executive offices of Data Domain are located at 2421 Mission College Blvd., Santa Clara, CA 95054, and its telephone number is (408) 980-4800.
 
Additional information about Data Domain and its subsidiaries is included in documents incorporated by reference in this proxy statement/prospectus. See “Where You Can Find More Information” beginning on page 96.


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SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF NETAPP
 
The tables below present selected consolidated financial data of NetApp prepared in accordance with U.S. generally accepted accounting principles, or GAAP. The data below are only a summary and should be read in conjunction with NetApp’s consolidated financial statements and accompanying notes, as well as NetApp’s management’s discussion and analysis of financial condition and results of operations, all of which can be found in publicly available documents, including those incorporated by reference in this proxy statement/prospectus. For a complete list of documents incorporated by reference in this proxy statement/prospectus, see “Where You Can Find More Information” beginning on page 96.
 
NetApp derived the consolidated statements of operations data for the years ended April 24, 2009, April 25, 2008 and April 27, 2007, and the consolidated balance sheet data as of April 24, 2009 and April 25, 2008, from its audited consolidated financial statements incorporated by reference in this proxy statement/prospectus. NetApp derived the consolidated statement of operations data for the year ended April 28, 2006 and April 29, 2005, and the consolidated balance sheet data as of April 27, 2007, April 28, 2006 and April 29, 2005, from its audited consolidated financial statements not included or incorporated by reference in this proxy statement/prospectus. NetApp’s historical results are not necessarily indicative of the results to be expected in the future.
 
                                         
    Year Ended
    Year Ended
    Year Ended
    Year Ended
    Year Ended
 
    April 24,
    April 25,
    April 27,
    April 28,
    April 29,
 
    2009     2008     2007     2006     2005  
    (In thousands, except per share amounts)  
 
Consolidated Statements of Operations Data:
                                       
Net revenues(1)
  $ 3,406,393     $ 3,303,167     $ 2,804,282     $ 2,066,456     $ 1,598,131  
Total cost of revenue
    1,416,478       1,289,791       1,099,782       809,995       623,083  
                                         
Gross profit
    1,989,915       2,013,376       1,704,500       1,256,461       975,048  
Total operating expenses
    1,942,740       1,699,776       1,403,258       948,170       721,861  
                                         
Income from operations
    47,175       313,600       301,242       308,291       253,187  
                                         
Net income(1)
  $ 86,545     $ 309,738     $ 297,735     $ 266,452     $ 225,754  
                                         
Net income per share, basic
  $ 0.26     $ 0.88     $ 0.80     $ 0.72     $ 0.63  
                                         
Net income per share, diluted
  $ 0.26     $ 0.86     $ 0.77     $ 0.69     $ 0.59  
                                         
Shares used in basic net income per share calculation
    330,279       351,676       371,204       371,061       361,009  
                                         
Shares used in diluted net income per share calculation
    334,575       361,090       388,454       388,381       380,412  
                                         
                                         
                                         
    April 24,
    April 25,
    April 27,
    April 28,
    April 29,
 
    2009     2008     2007     2006     2005  
    (In thousands)  
 
Cash and cash equivalents and short-term investments
  $ 2,604,206     $ 1,164,390     $ 1,308,781     $ 1,322,892     $ 1,169,965  
Working capital
    1,759,459       653,331       1,053,256       1,116,047       1,055,700  
Total assets
    5,472,819       4,070,988       3,658,478       3,260,965       2,372,647  
Short-term debt
                85,110       166,211        
Long-term debt and other long-term obligations
    1,429,499       318,658       9,487       138,200       4,474  
Total stockholders’ equity
    1,662,346       1,700,339       1,989,021       1,923,453       1,660,804  
 
 
(1) Net revenues and net income for the fiscal year ended April 24, 2009 included a GSA settlement of $128,715. Net income for fiscal 2006 included an income tax expense of $22,500 related to the American Jobs Creation Act and the repatriation of foreign subsidiary earnings back to the U.S.


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SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF DATA DOMAIN
 
The tables below present selected consolidated financial data of Data Domain prepared in accordance with GAAP. The data below are only a summary and should be read in conjunction with Data Domain’s consolidated financial statements and accompanying notes, as well as Data Domain’s management’s discussion and analysis of financial condition and results of operations, all of which can be found in publicly available documents, including those incorporated by reference in this proxy statement/prospectus. The unaudited consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and include, in the opinion of management, all adjustments, which include only normal recurring adjustments that management considers necessary for the fair presentation of the financial information set forth in those statements. Historical results are not necessarily indicative of future results. For a complete list of documents incorporated by reference in this proxy statement/prospectus, see “Where You Can Find More Information” beginning on page 96.
 
The consolidated statements of operations data for the three months ended March 31, 2009 and 2008, and the consolidated balance sheet data as of March 31, 2009 are derived from the unaudited consolidated financial statements of Data Domain and the related notes thereto that are incorporated by reference into this proxy statement/prospectus. The consolidated statement of operations data for the fiscal years ended December 31, 2008, 2007 and 2006, and the consolidated balance sheet data as of December 31, 2008 and 2007 are derived from the audited consolidated financial statements of Data Domain and the related notes thereto that are incorporated by reference into this proxy statement/prospectus. The consolidated statements of operations data for the fiscal years ended December 31, 2005 and 2004, and the consolidated balance sheet data as of December 31, 2006 and 2005 are derived from audited consolidated financial statements not included, or incorporated by reference, in this proxy statement/prospectus. The consolidated balance sheet data as of December 31, 2004 are derived from unaudited consolidated financial statements not included, or incorporated by reference, into this proxy statement/prospectus.
 
                                                         
    Three Months
    Three Months
                               
    Ended
    Ended
    Year Ended
    Year Ended
    Year Ended
    Year Ended
    Year Ended
 
    March 31,
    March 31,
    December 31,
    December 31,
    December 31,
    December 31,
    December 31,
 
    2009     2008     2008     2007     2006     2005     2004  
    (In thousands, except per share amounts)  
 
Consolidated Statements of Operations Data:
                                                       
Total revenue
  $ 79,036     $ 52,615     $ 274,085     $ 123,622     $ 46,434     $ 8,121     $ 779  
Total cost of revenue
    22,831       13,806       76,180       35,901       14,523       5,170       1,424  
                                                         
Gross profit (loss)
    56,205       38,809       197,905       87,721       31,911       2,951       (645 )
Total operating expenses
    54,083       37,574       181,095       94,910       36,449       16,984       9,370  
Operating income (loss)
    2,122       1,235       16,810       (7,189 )     (4,538 )     (14,033 )     (10,015 )
Net income (loss)
  $ 1,250     $ 2,741     $ 21,593     $ (3,660 )   $ (4,026 )   $ (13,783 )   $ (9,828 )
                                                         
Net income (loss) per common share, basic
  $ 0.02     $ 0.05     $ 0.37     $ (0.12 )   $ (0.56 )   $ (2.38 )   $ (2.10 )
                                                         
Net income (loss) per common share, diluted
  $ 0.02     $ 0.04     $ 0.33     $ (0.12 )   $ (0.56 )   $ (2.38 )   $ (2.10 )
                                                         
Shares used in computing basic net income (loss) per share
    60,157       56,414       58,254       31,482       7,128       5,801       4,672  
                                                         
Shares used in computing diluted net income (loss) per share
    65,739       65,378       65,814       31,482       7,128       5,801       4,672  
                                                         
 


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    March 31,
    December 31,
    December 31,
    December 31,
    December 31,
    December 31,
 
    2009     2008     2007     2006     2005     2004  
    (In thousands)  
 
Consolidated Balance Sheet Data:
                                               
Cash and cash equivalents and short-term investments
  $ 246,852     $ 233,892     $ 207,136     $ 11,857     $ 12,505     $ 9,358  
Working capital
    248,058       232,996       203,688       12,856       9,692       8,233  
Total assets
    400,713       386,981       261,364       30,913       18,896       11,394  
Other liabilities
    2,058       2,910       594       3,319              
Mandatorily redeemable convertible preferred stock
                      41,514       41,309       26,273  
Common stock and additional paid-in capital
    308,619       295,564       248,078       3,049       1,542       1,293  
Total stockholders’ equity (deficit)
    289,748       276,884       207,862       (33,566 )     (31,037 )     (17,516 )

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SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA
 
The following selected unaudited pro forma condensed combined financial data was prepared using the purchase method of accounting. The NetApp and Data Domain selected unaudited pro forma condensed combined balance sheet data assume that the merger of NetApp and Data Domain took place on April 24, 2009, and combines the NetApp historical consolidated balance sheet at April 24, 2009 with Data Domain’s historical consolidated balance sheet at March 31, 2009. The NetApp and Data Domain selected unaudited pro forma condensed combined statement of operations data assume that the merger of NetApp and Data Domain took place as of April 26, 2008. The selected unaudited pro forma condensed combined statement of operations data for the fiscal year ended April 24, 2009 combines NetApp’s historical consolidated statement of income for the fiscal year then ended with Data Domain’s results of operations for the twelve months ended March 31, 2009.
 
The selected unaudited pro forma condensed combined financial data is presented for illustrative purposes only and is not necessarily indicative of the combined financial position or results of operations of future periods or the results that actually would have been realized had the entities been a single entity during these periods. The selected unaudited pro forma condensed combined financial data as of and for the fiscal year ended April 24, 2009 is derived from the unaudited pro forma condensed combined financial statements included elsewhere in this proxy statement/prospectus and should be read in conjunction with those statements and the related notes. See “Unaudited Pro Forma Condensed Combined Financial Statements.”
 
         
    Fiscal Year
 
    Ended
 
    April 24,
 
    2009  
    (In thousands,
 
    except per share amounts)  
 
Selected Unaudited Pro Forma Condensed Combined Statement of Operations Data:
       
Net revenues
  $ 3,706,899  
Gross profit
    2,160,066  
Loss before income taxes
    (22,306 )
Net income
    51,628  
Net income per share: basic
  $ 0.14  
Net income per share: diluted
  $ 0.14  
Weighted average number of shares used in computing net income per share:
       
Basic
    374,485  
Diluted
    381,194  
 
         
    As of
 
    April 24,
 
    2009  
 
Selected Unaudited Pro Forma Condensed Combined Balance Sheet Data:
       
Cash and cash equivalents and short-term investments
  $ 1,800,024  
Working capital
    967,848  
Total assets
    6,703,341  
Long-term debt and other long-term obligations
    1,575,248  
Stockholders’ equity
    2,656,333  


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COMPARATIVE HISTORICAL AND PRO FORMA PER SHARE DATA
 
The following table shows historical information about NetApp’s and Data Domain’s respective income per share and book value per share, and similar information reflecting the merger, referred to as pro forma information. As NetApp has a fiscal year ending on the last Friday in April and Data Domain has a fiscal year ending on December 31, the unaudited pro forma condensed combined balance sheet combines the historical balances of NetApp as of April 24, 2009 with the historical balances of Data Domain as of March 31, 2009, plus pro forma adjustments as if the merger had occurred on April 26, 2008. In addition, the unaudited pro forma condensed combined statement of operations combines the historical results of NetApp for the year ended April 24, 2009 with the historical results of Data Domain for the twelve months ended March 31, 2009, plus pro forma adjustments as if the merger had occurred on April 26, 2008. Data Domain’s data has been calculated by combining its reported interim data for each quarter within the respective period.
 
NetApp is required to account for the merger using the purchase method of accounting under GAAP, for accounting and financial reporting purposes. Under the purchase method of accounting, the assets acquired and liabilities assumed from Data Domain as of the completion of the merger will be recorded at their respective fair values and added to those of NetApp. Any excess of the purchase price over the fair value of assets acquired and liabilities assumed will be recorded as goodwill. The consolidated financial statements of NetApp issued after the merger will reflect these fair values and will not be restated retroactively to reflect the historical financial position or results of operations of Data Domain.
 
The pro forma financial information includes estimates of the purchase price and adjustments to record certain assets and liabilities of Data Domain at their respective fair values. These pro forma adjustments are subject to updates as additional information becomes available and as additional analyses are performed. Certain other assets and liabilities of Data Domain will also be subject to adjustment to their respective fair values. Pending more detailed analyses, no pro forma adjustments are included for those assets and liabilities, including additional intangible assets that may be identified. Any change in the fair value of the net assets of Data Domain will change the amount of the purchase price allocable to goodwill. Additionally, changes to Data Domain’s stockholders’ equity, including net income through the date the merger is completed, will change the amount of goodwill recorded. The final adjustments may differ materially from the pro forma adjustments reflected in this proxy statement/prospectus.
 
NetApp also anticipates that the merger will provide it with financial benefits that include, with respect to the combined entity, revenue and operating expense synergies, but these financial benefits are not reflected in the pro forma information. Accordingly, the pro forma information does not attempt to predict or suggest future results. It also does not necessarily reflect what the historical results of NetApp would have been had NetApp and Data Domain been combined during the periods presented.
 
The information in the following table is based on historical financial information and related notes for Data Domain and NetApp, as well as the unaudited pro forma condensed combined financial statements. You should read the summary financial information provided in the following table together with historical financial information and related notes. The historical financial information of Data Domain and NetApp is also incorporated by reference into this proxy statement/prospectus. See “Where You Can Find More Information” beginning on page 96 for a description of where you can find this historical information. Neither NetApp nor Data Domain has declared dividends on its common stock during the last three fiscal years.
 
                                 
    NetApp     Data Domain(1)  
          Fiscal Year
          Twelve Months
 
    Fiscal Year
    Ended
    Twelve Months
    Ended
 
    Ended
    April 24, 2009
    Ended
    March 31, 2009
 
    April 24, 2009
    Pro Forma
    March 31, 2009
    Pro Forma
 
    Historical     Combined     Historical     Combined Equivalent(2)  
 
Income per share:
                               
Basic
  $ 0.26     $ 0.14     $ 0.34     $ 0.10  
Diluted
  $ 0.26     $ 0.14     $ 0.30     $ 0.10  
Book value per share at period end
  $ 5.00     $ 7.06     $ 4.78     $ 4.96  


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(1) Data Domain book value per share is stockholders’ equity divided by total shares outstanding reduced by shares subject to repurchase.
 
(2) The pro forma Data Domain equivalent per share amounts were calculated by applying an exchange ratio of 0.7026 as described in Note 4 to the Unaudited Pro Forma Condensed Combined Financial Statements, to the pro forma combined net income and book value per share. The exchange ratio used in this pro forma table reflects the value of the per share merger consideration, exclusive of the cash portion of $16.45, of $14.00 divided by the value of a share of NetApp common stock of $19.92 (as of June 11, 2009), with each of the numerator and denominator calculated based on the average of the closing price for NetApp common stock for the 10 trading day period ended June 8, 2009. The final ratio of the per share merger consideration to the value of a share of NetApp common stock will vary based on the trading price of NetApp common stock.


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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
 
In addition to historical information, this proxy statement/prospectus contains or incorporates by reference certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical facts but instead represent NetApp’s beliefs and expectations regarding future events, many of which are, by their nature, inherently uncertain and outside NetApp’s control. Forward-looking statements include statements preceded by, followed by, or including the words “could,” “would,” “should,” “may,” “will,” “target,” “plan, “believe,” “expect,” “intend,” anticipate,” “estimate,” “project,” “potential,” “possible,” “objective,” “outlook,” “probably,” “seek,” “strategy” and other similar expressions. In particular, the forward-looking statements contained in this proxy statement/prospectus include, but are not limited to, statements regarding:
 
  •  the expected financial condition, results of operations, earnings outlook and prospects of NetApp, Data Domain and the combined company;
 
  •  the expected benefits and synergies of the merger;
 
  •  the likelihood that NetApp and Data Domain will receive the regulatory approvals required to complete the merger;
 
  •  NetApp’s expectation that customers will continue to adopt deduplication technology;
 
  •  the expectation that the acquisition of Data Domain will complement NetApp’s storage and data management business;
 
  •  the expectation that the merger will allow NetApp to capture a greater share of the capacity optimized disk market;
 
  •  the expectation that the merger will result in increased operational efficiency and create opportunities for cost reduction through the elimination of redundant overhead expenses and public company costs; and
 
  •  the expectation that the second-step merger will occur.
 
The forward-looking statements contained or incorporated by reference herein are subject to certain risks and uncertainties that may cause actual results to differ materially from those reflected in the forward-looking statements. Such risk and uncertainties include those set forth on page 14 under the heading “Risk Factors,” as well as, among others, the following:
 
  •  the expenses of the merger being greater than anticipated, including as a result of unexpected factors or events and unanticipated tax consequences of the merger;
 
  •  the exposure to litigation, including the possibility that litigation relating to the merger agreement and related transactions could delay or impede the completion of the merger;
 
  •  the integration of Data Domain’s business and operations with those of NetApp taking longer than anticipated, being costlier than anticipated and having unanticipated adverse results relating to Data Domain’s or NetApp’s existing businesses; and
 
  •  the anticipated cost savings and other synergies of the merger taking longer to be realized or failing to be achieved in their entirety, and attrition in key client, partner and other relationships relating to the merger greater than expected.
 
You are cautioned not to place undue reliance on the forward-looking statements contained herein, which speak only as of the date of this proxy statement/prospectus or the date of any document incorporated by reference in this document. Except to the extent required by applicable law or regulation, neither NetApp nor Data Domain undertakes any obligation to update these forward-looking statements to reflect events or circumstances after the date of this proxy statement/prospectus or to reflect the occurrence of unanticipated events.
 
All subsequent written and oral forward-looking statements concerning the merger or other matters addressed in this proxy statement/prospectus and attributable to NetApp or Data Domain or any person acting on their behalf are expressly qualified in their entirety by the preceding cautionary statement.


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RISK FACTORS
 
In addition to the other information included in and incorporated by reference into this proxy statement/prospectus, including the matters addressed in the section entitled “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 13, you should carefully consider the following risk factors before deciding whether to vote for approval of the merger proposal and the adjournment proposal. In addition, you should read and consider the risks associated with the business of NetApp and the business of Data Domain because these risks will also affect the combined company. These risks can be found in NetApp’s Annual Report on Form 10-K, as filed with the SEC on June 16, 2009, and Data Domain’s Annual Report on Form 10-K and Form 10-K/A, as filed with the SEC on March 13, 2009 and April 30, 2009, respectively, each of which is incorporated herein by reference. You should also read and consider the other information in this proxy statement/prospectus and the other documents incorporated by reference into this proxy statement/prospectus. See the section entitled “Where You Can Find More Information” beginning on page 96.
 
Risks Relating to the Merger
 
The consideration that you will receive in the merger depends upon the price of NetApp’s common stock at the closing of the first-step merger and may fall below $30 per share of Data Domain stock.
 
At the closing of the first-step merger, each share of Data Domain common stock will be converted into the right to receive a cash payment of $16.45, plus a fraction of a share of NetApp common stock equal to the exchange ratio. The exchange ratio is based on the closing average of NetApp common stock and, within a certain range of possible closing averages, will result in the right to receive NetApp common stock with a market value of $13.55 per share of Data Domain stock, or a total merger consideration of $30 per share. Under the terms of the merger agreement, the exchange ratio will be calculated as follows:
 
  •  if the closing average is less than $17.41, then the exchange ratio will be 0.7783;
 
  •  if the closing average is greater than $21.27, then the exchange ratio will be 0.6370; and
 
  •  if the closing average is less than or equal to $21.27 and greater than or equal to $17.41, then the exchange ratio will be calculated as the fraction obtained by dividing $13.55 by the closing average.
 
As a result of the collar mechanism described above, if the closing average (as described in the second paragraph of the section entitled “Summary” beginning on page 1) is less than $17.41, then for each share of Data Domain stock you own, you will receive less than $13.55 worth of NetApp common stock, resulting in a total merger consideration of less than $30 per share.
 
The market price of NetApp’s common stock may decline as a result of the merger.
 
The market price of NetApp’s common stock may decline as a result of the merger for a number of reasons, including:
 
  •  the integration of Data Domain by NetApp may be unsuccessful;
 
  •  NetApp may not achieve the perceived benefits of the merger as rapidly as, or to the extent, anticipated by financial or industry analysts; or
 
  •  the effect of the merger on NetApp’s financial results may not be consistent with the expectations of financial or industry analysts.
 
These factors are, to some extent, beyond NetApp’s control. In addition, for Data Domain stockholders who hold their shares in certificated form, there will be a time period between the effective time of the merger and the time when Data Domain stockholders actually receive book-entry shares evidencing NetApp common stock. Until book-entry shares are received, Data Domain stockholders will not be able to sell their shares of NetApp common stock in the open market and, thus, will not be able to avoid losses resulting from any decline in the market price of NetApp common stock during this period.


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The failure of NetApp to operate and manage the combined company effectively could have a material adverse effect on NetApp’s business, financial condition and operating results.
 
NetApp will need to meet significant challenges to realize the expected benefits and synergies of the merger. These challenges include:
 
  •  integrating the management teams, strategies, cultures, technologies and operations of the two companies;
 
  •  retaining and assimilating the key personnel of each company;
 
  •  retaining existing Data Domain customers; and
 
  •  creating uniform standards, controls, procedures, policies and information systems.
 
The accomplishment of these post-merger objectives will involve considerable risk, including:
 
  •  the potential disruption of each company’s ongoing business and distraction of their respective management teams;
 
  •  the difficulty of incorporating acquired technology and rights into NetApp’s operations;
 
  •  unanticipated expenses related to the integration;
 
  •  potential unknown liabilities associated with the merger; and
 
  •  managing the risks related to Data Domain’s business as described in Data Domain’s Annual Report on Form 10-K for the period ending December 31, 2008, as amended, that may continue to impact the business following the merger.
 
NetApp and Data Domain have operated and, until the completion of the merger, will continue to operate, independently. It is possible that the integration process could result in the loss of the technical skills and management expertise of key employees, the disruption of each company’s ongoing businesses or inconsistencies in standards, controls, procedures and policies due to possible cultural conflicts or differences of opinions on technical decisions and product roadmaps that adversely affect NetApp’s ability to maintain relationships with customers, suppliers and employees or to achieve the anticipated benefits of the merger.
 
Even if NetApp is able to integrate the Data Domain business operations successfully, this integration may not result in the realization of the full benefits of synergies, cost savings, innovation and operational efficiencies that may be possible from this integration, and these benefits may not be achieved within a reasonable period of time.
 
The merger may be a fully taxable transaction for U.S. federal income tax purposes.
 
The U.S. tax consequences of the merger depend on whether it meets the requirements of Section 368(a) of the Code, including the continuity of interest test, which will be satisfied if the stock consideration, valued as of the last business day immediately prior to the closing date of the merger, constitutes at least 40% of the total consideration paid or payable to Data Domain stockholders in the first-step merger. Whether the continuity of interest test will be satisfied depends primarily upon the market value of the NetApp common stock immediately before the first-step merger and the extent to which NetApp is required to substitute cash for stock at the closing pursuant to the terms of merger agreement. No assurances can be given that the continuity of interest test will be met. If the test is not met, the second-step merger will not occur, and the merger will be a fully taxable transaction. In deciding whether to approve the merger, you should consider the possibility that the merger may be fully taxable to you, because you will not be entitled to change your vote in that event.
 
Failure to retain key employees could diminish the anticipated benefits of the merger.
 
The success of the merger will depend in part on the retention of personnel critical to the business and operations of the combined company due to, for example, their technical skills or management expertise. Employees may experience uncertainty about their future role with Data Domain and NetApp until strategies with regard to these employees are announced or executed. If Data Domain and NetApp are unable to retain personnel, including Data Domain’s key management, technical and sales personnel, who are critical to the successful integration and future operations of the companies, Data Domain and NetApp could face disruptions in their operations, loss of existing customers, loss of key information, expertise or know-how, and unanticipated additional recruitment and training costs. In addition, the loss of key personnel could diminish the anticipated benefits of the merger.


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Uncertainty regarding the merger may cause customers, suppliers or strategic partners to delay or defer decisions concerning NetApp and Data Domain and adversely affect each company’s ability to attract and retain key employees.
 
The merger will happen only if stated conditions are met, including the approval of the merger proposal by Data Domain’s stockholders, the receipt of regulatory approvals, and the absence of any material adverse effect in the business of Data Domain or NetApp. Many of the conditions are outside the control of Data Domain and NetApp, and both parties also have stated rights to terminate the merger agreement. Accordingly, there may be uncertainty regarding the completion of the merger. This uncertainty may cause customers, suppliers or strategic partners to delay or defer decisions concerning Data Domain or NetApp, which could negatively affect their respective businesses. Any delay or deferral of those decisions or changes in existing agreements could have a material adverse effect on the respective businesses of Data Domain and NetApp, regardless of whether the merger is ultimately completed. Moreover, diversion of management focus and resources from the day-to-day operation of the business to matters relating to the merger could have a material adverse effect on each company’s business, regardless of whether the merger is completed. Current and prospective employees of each company may experience uncertainty about their future roles with the combined company. This may adversely affect each company’s ability to attract and retain key management, sales, marketing and technical personnel.
 
The market price of NetApp common stock after the merger may be affected by factors different from those affecting the shares of Data Domain or NetApp currently.
 
The businesses of NetApp and Data Domain differ in important respects and, accordingly, the results of operations of the combined company and the market price of the combined company’s shares of common stock may be affected by factors different from those currently affecting the independent results of operations of NetApp and Data Domain. For a discussion of the businesses of NetApp and Data Domain and of certain factors to consider in connection with those businesses, see the documents incorporated by reference in this proxy statement/prospectus and referred to under “Where You Can Find More Information” beginning on page 96.
 
The merger may go forward in certain circumstances even if NetApp or Data Domain suffers a material adverse effect.
 
In general, either party can refuse to complete the merger if a “material adverse effect” (as defined below under the heading “The Merger Agreement — Material Adverse Effect”) occurs with regard to the other party before the closing. However, neither party may refuse to complete the merger on that basis as a result of any fact, circumstance, change or effect resulting from:
 
  •  changes in the general economic conditions in the United States or any other country or region in the world, or changes in conditions in the global economy generally, to the extent that they do not have a disproportionate impact on NetApp or Data Domain relative to other companies and operating in the same industries in which NetApp or Data Domain operates;
 
  •  changes in general conditions in the industries in which NetApp or Data Domain operates, to the extent that they do not have a disproportionate impact on NetApp or Data Domain relative to other companies operating in the same industries in which NetApp or Data Domain, as a operates;
 
  •  changes in generally accepted accounting principles or other accounting standards, or the interpretation of such principles or standards by a third party, applicable federal, state, local, municipal, foreign or other law or regulatory conditions, or the interpretation of such law or regulations by a third party;
 
  •  any failure to take any action or the taking of any specific action by NetApp or Data Domain taken with the prior written consent or written direction of the other party;
 
  •  the taking of any specific action expressly required by the merger agreement;
 
  •  acts of war, armed hostilities or terrorism, to the extent that they do not have a disproportionate impact on NetApp or Data Domain relative to other companies operating in the same industries in which NetApp or Data Domain operates;


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  •  changes in the trading price or trading volume of NetApp’s or Data Domain’s common stock, in and of itself, provided that the exception described in this bullet shall not in any way prevent or otherwise affect a determination that any fact, circumstance, change or effect that has resulted in, or contributed to, a material adverse effect;
 
  •  the public announcement of the merger agreement or pendency of the merger, including any loss of employees, provided that the exception described in this bullet shall not apply to any fact, circumstance, change or effect related to or caused by any legal proceedings resulting from the announcement and pendency of the merger and the transactions contemplated by the merger agreement;
 
  •  any failure of NetApp or Data Domain to meet any public or internal estimates or expectations of revenue, earnings or other financial performance or results of operations for any period, or failure to meet any internal budgets, plans, or forecasts of revenues, earnings or other financial performance or results of operations (it being understood that any underlying cause of any such failure may be deemed to constitute, in and of itself, a material adverse effect and may be taken into consideration when determining whether a material adverse effect has occurred); or
 
  •  stockholder class action, derivative litigation or other legal proceedings made or brought by any of the current or former stockholders of NetApp or Data Domain against NetApp or Data Domain arising out of the merger or any other transactions contemplated by the merger agreement.
 
If adverse changes occur but NetApp and Data Domain must still complete the merger, NetApp’s stock price may suffer. This in turn may reduce the value of the merger to Data Domain stockholders.
 
Data Domain stockholders will have a reduced ownership and voting interest after the merger and will exercise less influence over management.
 
Data Domain stockholders currently have the right to vote in the election of the board of directors of Data Domain and on other matters affecting Data Domain. When the merger occurs, each Data Domain stockholder that receives shares of NetApp common stock will become a stockholder of NetApp with a percentage ownership of the combined company that is much smaller than the stockholder’s percentage ownership of Data Domain. It is expected that the former stockholders of Data Domain as a group will own less than 15% of the outstanding shares of NetApp immediately after the completion of merger. Because of this, Data Domain’s stockholders will have less influence on the management and policies of NetApp than they now have on the management and policies of Data Domain.
 
The merger agreement limits Data Domain’s ability to pursue alternatives to the merger.
 
The merger agreement contains “no shop” provisions that, subject to limited exceptions, limit Data Domain’s ability to discuss, facilitate or commit to competing third-party proposals, including, but not limited to, EMC’s cash tender offer to the Data Domain stockholders, to acquire all or a significant part of Data Domain, as well as a termination fee that is payable by Data Domain under certain circumstances. These provisions might discourage other potential competing acquirors that might have an interest in acquiring all or a significant part of Data Domain from considering or proposing that acquisition even if it were prepared to pay consideration with a higher per share market price than that proposed in the merger or might result in a potential competing acquiror proposing to pay a lower per share price to acquire Data Domain than it might otherwise have proposed to pay.
 
The merger is subject to the receipt of consents and approvals from regulatory authorities that may impose conditions that could have an adverse effect on NetApp or, if not obtained, could prevent completion of the merger.
 
Before the merger may be completed, various approvals or consents must be obtained from various regulatory and other authorities. While NetApp and Data Domain believe that they will receive the requisite regulatory approvals from these governmental authorities, there can be no assurance of this. If such approvals are not obtained, the merger will not be completed. In addition, these governmental authorities may impose conditions on the completion of the merger or require changes to the terms of the merger. Although NetApp and Data Domain do not currently expect that any such conditions or changes would be imposed, there can be no assurance that they will not be, and such conditions or changes could have the effect of delaying completion of the merger or imposing additional costs on or limiting the revenues of NetApp following the merger, any of which might have a material


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adverse effect on NetApp following the merger. For a full description of the regulatory clearances, consents and approvals required for the merger, please see “Data Domain Proposal 1 — The Merger — Regulatory Approvals Required for the Merger” beginning on page 52.
 
Failure to complete the merger could negatively affect Data Domain’s stock price and its future business and operations.
 
If the merger is not completed for any reason, Data Domain may be subject to a number of material risks, including the following:
 
  •  Data Domain may be required under certain circumstances to pay NetApp a termination fee of $57.0 million;
 
  •  the price of Data Domain’s common stock may decline; and
 
  •  costs related to the merger, such as financial advisory, legal, accounting and printing fees, must be paid even if the merger is not completed.
 
If the merger agreement is terminated, Data Domain may be unable to pursue another business combination transaction on terms as favorable as those set forth in the merger agreement, or at all. This could limit Data Domain’s ability to pursue its strategic goals.
 
NetApp and Data Domain may waive one or more of the conditions of the merger without re-soliciting stockholder approval for the merger.
 
Each of the conditions to NetApp’s and Data Domain’s obligations to complete the merger may be waived, in whole or in part, to the extent permitted by applicable law, by agreement of NetApp and Data Domain, if the condition is a condition to both NetApp’s and Data Domain’s obligation to complete the merger, or by the party for which such condition is a condition of its obligation to complete the merger. The boards of directors of NetApp and Data Domain may evaluate the materiality of any such waiver to determine whether amendment of this proxy statement/prospectus and re-solicitation of proxies are necessary. NetApp and Data Domain, however, generally do not expect any such waiver to be significant enough to require re-solicitation of stockholders. In the event that any such waiver is not determined to be significant enough to require re-solicitation of stockholders, the companies will have the discretion to complete the merger without seeking further stockholder approval.
 
If Data Domain stockholders sell the NetApp common stock received in the merger, they could cause a decline in the market price of NetApp common stock.
 
NetApp’s issuance of common stock in the merger will be registered with the SEC. As a result, those shares will be immediately available for resale in the public market. The maximum number of shares of NetApp common stock to be issued to Data Domain stockholders in connection with the merger and immediately available for resale will equal approximately 14% of the number of outstanding shares of NetApp common stock currently in the public market. Data Domain stockholders may sell the stock they receive commencing immediately after the merger. If this occurs, or if other holders of NetApp common stock sell significant amounts of NetApp common stock immediately after the merger is completed, the market price of NetApp common stock may decline.
 
A shift or decline in the demand for deduplication technology could substantially reduce the anticipated benefits of the merger.
 
NetApp expects that customers will continue to adopt deduplication technology and that the acquisition of Data Domain will result in certain market synergies. However, if customer demand in the deduplication market decreases or is less than expected, or if customer preferences shift to a new or different technology, then NetApp may not realize all of the anticipated benefits of the merger.
 
Although NetApp has traditionally used a single operating system, NetApp’s ability to realize the expected benefits of the merger will depend upon its ability to successfully operate the Data Domain operating system as a separate platform.
 
NetApp currently runs a single platform, Data ONTAP, and expects to run the Data Domain operating system as a separate platform. Running two platforms could require significant investments of time and financial resources. If NetApp is unable to effectively maintain and support both platforms or otherwise adjust its infrastructure and


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processes to accommodate the parallel operation of both platforms in a timely manner, then the strategic benefits of the merger may not be realized or could be significantly reduced.
 
Failure to achieve significant cost synergies could harm NetApp’s business and operating results.
 
NetApp anticipates that the merger will result in cost synergies associated with combining facilities, IT infrastructure, and certain functions such as finance, human resources and administrative services. However, differences between the two companies’ operations could cause unforeseen delays in the integration process, result in lower savings than originally anticipated, or both, which could adversely affect NetApp’s business and operating results.


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THE DATA DOMAIN SPECIAL MEETING
 
This section contains information about the special meeting of Data Domain stockholders that has been called to consider and approve the merger proposal and the adjournment proposal.
 
Together with this proxy statement/prospectus, Data Domain is also sending you a notice of the special meeting and a form of proxy that is solicited by the Data Domain board of directors.
 
Time, Date and Place
 
The special meeting will be held on August 14, 2009 at 9 a.m., local time, at 2421 Mission College Blvd., Santa Clara, CA 95054.
 
Matters to Be Considered
 
The purpose of the special meeting is to vote on the following proposals:
 
1. To adopt the Agreement and Plan of Merger, dated as of May 20, 2009, as amended on June 3, 2009, by and among NetApp, Kentucky Merger Sub One Corporation, Derby Merger Sub Two LLC and Data Domain, as the agreement may be amended from time to time, which proposal is referred to as the merger proposal; and
 
2. To approve the adjournment or postponement of the special meeting, if necessary, to solicit additional proxies, in the event that there are not sufficient votes at the time of the special meeting to approve the merger proposal, which proposal is referred to as the adjournment proposal.
 
Proxies
 
Each copy of this proxy statement/prospectus mailed to holders of Data Domain common stock is accompanied by a form of proxy with instructions for voting. If you hold stock in your name as a stockholder of record, you should vote your shares by (i) completing, signing, dating and returning the enclosed proxy card, (ii) using the telephone number on your proxy card or (iii) using the Internet voting instructions on your proxy card to ensure that your vote is counted at the special meeting, or at any adjournment or postponement of the special meeting, regardless of whether you plan to attend the special meeting.
 
If you hold your stock in “street name” through a bank, broker or other nominee, you must direct your bank, broker or other nominee to vote in accordance with the instructions you have received from your bank, broker or other nominee.
 
If you hold stock in your name as a stockholder of record, you may revoke any proxy at any time before it is voted by signing and returning a proxy card with a later date, delivering a written revocation letter to Data Domain’s Secretary, or by attending the special meeting in person, notifying Data Domain’s Corporate Secretary, and voting by ballot at the special meeting.
 
Any stockholder entitled to vote in person at the special meeting may vote in person regardless of whether a proxy has been previously given, but the mere presence (without notifying Data Domain’s Corporate Secretary) of a stockholder at the special meeting will not constitute revocation of a previously given proxy.
 
Written notices of revocation and other communications about revoking your proxy should be addressed to:
 
Data Domain, Inc.
2421 Mission College Blvd.
Santa Clara, CA 95054
Attention: Corporate Secretary
 
If your shares are held in “street name” by a bank, broker or other nominee, you should follow the instructions of your bank, broker or other nominee regarding the revocation of proxies.
 
According to the Data Domain amended and restated bylaws, business to be conducted at a special meeting of stockholders may only be brought before the meeting by or at the direction of the Data Domain board of directors, or by any Data Domain stockholder who is entitled to vote at the meeting and who complies with the notice provisions set forth in the Data Domain amended and restated bylaws. No matters other than the matters described in this document are anticipated to be presented for action at the special meeting or at any adjournment or postponement of the special meeting.


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Data Domain stockholders should not send Data Domain stock certificates with their proxy cards. After the merger is completed, NetApp will mail to holders of Data Domain common stock a transmittal form with instructions on how to exchange their Data Domain stock certificates for the merger consideration.
 
Solicitation of Proxies
 
Since many Data Domain stockholders may be unable to attend the special meeting, Data Domain’s board of directors is soliciting proxies to be voted at the special meeting to give each stockholder an opportunity to vote on all matters scheduled to come before the meeting and set forth in this proxy statement/prospectus. Data Domain’s board of directors is asking stockholders to designate Frank Slootman and Michael P. Scarpelli, or any one of them, as their proxies.
 
NetApp will pay the costs of printing and mailing this proxy statement/prospectus to Data Domain’s stockholders, and Data Domain will pay all other costs incurred by it in connection with the solicitation of proxies from its stockholders on behalf of its board of directors, including the entire cost of soliciting proxies from you. In addition to solicitation of proxies by mail, Data Domain will request that banks, brokers, and other record holders send proxies and proxy material to the beneficial owners of Data Domain common stock and secure their voting instructions. Data Domain will reimburse the record holders for their reasonable expenses in taking those actions. Data Domain has also made arrangements with Innisfree M&A Incorporated to assist it in soliciting proxies and has agreed to pay them $50,000 plus reasonable expenses for these services over a three month period. Data Domain has agreed to indemnify Innisfree M&A Incorporated for claims related to these services. If necessary, Data Domain may use several of its directors, executive officers and employees, who will not be specially compensated, to solicit proxies from Data Domain stockholders, either personally or by telephone, facsimile, letter or other electronic means.
 
Record Date
 
The close of business on June 17, 2009 has been fixed as the record date for determining the Data Domain stockholders entitled to receive notice of and to vote at the special meeting. At that time, 62,885,090 shares of Data Domain common stock were outstanding, held by approximately 114 registered holders.
 
Voting Rights and Vote Required
 
The presence, in person or by proxy, of the holders of a majority of the outstanding shares of Data Domain common stock entitled to vote is necessary to constitute a quorum at the special meeting. Abstentions will be counted for the purpose of determining whether a quorum is present.
 
Approval of the merger proposal requires the affirmative vote of the holders of a majority of the outstanding shares of Data Domain common stock entitled to vote at the special meeting. You are entitled to one vote for each share of Data Domain common stock you hold as of the record date.
 
Because the affirmative vote of the holders of a majority of the outstanding shares of Data Domain common stock entitled to vote at the special meeting is needed to approve the merger proposal, the failure to vote by proxy or in person will have the same effect as a vote against the approval of the merger proposal. Abstentions and broker non-votes will also have the same effect as a vote against the approval of the merger proposal. Accordingly, the Data Domain board of directors urges Data Domain stockholders to promptly vote by (i) completing, signing, dating and returning the enclosed proxy card, (ii) using the telephone number on your proxy card, or (iii) using the Internet voting instructions on your proxy card, or, if you hold your stock in “street name” through a bank, broker or other nominee, by following the voting instructions of your bank, broker or other nominee.
 
Approval of the adjournment proposal requires the affirmative vote of the holders of a majority of the shares entitled to vote and present in person or by proxy. Because approval of this proposal requires the affirmative vote of a majority of shares present in person or by proxy, abstentions will have the same effect as a vote against this proposal. However, the failure to vote, either by proxy or in person, and broker non-votes, will have no effect on the adjournment proposal.
 
Stockholders may vote at the meeting by ballot. Votes cast at the meeting, in person or by proxy, will be tallied by Innisfree M&A Incorporated, Data Domain’s proxy solicitor.


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As of the record date, directors and executive officers of Data Domain, and their affiliates, had the right to vote 12,949,507 shares of Data Domain common stock, or 20.6% of the outstanding Data Domain common stock at that date. Data Domain currently expects that each of these individuals will vote their shares of Data Domain common stock in favor of the proposals to be presented at the special meeting. Certain executive officers of Data Domain and their affiliates, collectively holding 12,449,507 shares of Data Domain common stock, or 19.8% of the outstanding Data Domain common stock as of the record date have entered voting agreements with NetApp. Pursuant to the voting agreements, these officers have agreed to vote such shares of Data Domain common stock in favor of the approval of the merger proposal, and have granted a proxy to NetApp to vote the shares in such manner.
 
Recommendation of the Data Domain Board of Directors
 
The Data Domain board of directors has unanimously approved and adopted the merger agreement and the transactions contemplated thereby. The Data Domain board of directors determined that the merger agreement and the transactions contemplated thereby are advisable and in the best interests of Data Domain and its stockholders and unanimously recommends that you vote “FOR” approval of the merger proposal and “FOR” approval of the adjournment proposal. See “Data Domain Proposal 1 — The Merger — Data Domain’s Reasons for the Merger; Recommendation of the Data Domain Board of Directors” on page 37 for a more detailed discussion of the Data Domain board of directors’ recommendation.
 
Attending the Meeting
 
All holders of Data Domain common stock, including stockholders of record and stockholders who hold their shares through banks, brokers, nominees or any other holder of record, are invited to attend the special meeting. Stockholders of record can vote in person at the special meeting. If you are not a stockholder of record, you must obtain a proxy executed in your favor, from the record holder of your shares, such as a broker, bank or other nominee, to be able to vote in person at the special meeting. If you plan to attend the special meeting, you must hold your shares in your own name or have a letter from the record holder of your shares confirming your ownership and you must bring a form of personal photo identification with you in order to be admitted. Data Domain reserves the right to refuse admittance to anyone without proper proof of share ownership and without proper photo identification.
 
Voting By Telephone or Via the Internet
 
In addition to voting by proxy or in person at the special meeting, Data Domain stockholders that hold their shares as the stockholder of record also may vote their shares by using the telephone number on the proxy card or using the Internet voting instructions on the proxy card. Data Domain stockholders that hold their shares in “street name” through a bank, broker or other nominee may also vote their shares by following the telephone or Internet voting instructions provided by the bank, broker or other nominee. If you have access to the Internet, you are encouraged to vote via the Internet.
 
Adjournments and Postponements
 
Although it is not currently expected, the special meeting may be adjourned for the purpose of soliciting additional proxies if Data Domain has not received sufficient votes to approve the merger proposal at the special meeting of stockholders. Any adjournments may be made without notice, other than an announcement at the special meeting, by approval of the affirmative vote of holders of at least a majority of shares of Data Domain common stock who are present in person or represented by proxy at the special meeting. Any adjournment of the special meeting for the purpose of soliciting additional proxies will allow stockholders who have already sent in their proxies to revoke them at any time prior to their use.
 
At any time prior to convening the special meeting, Data Domain’s board of directors may postpone the special meeting for any reason without the approval of Data Domain stockholders. If postponed, Data Domain will provide notice of the new meeting date as required by law. Although it is not currently expected, Data Domain’s board of directors may postpone the special meeting for the purpose of soliciting additional proxies if Data Domain has not received sufficient proxies to constitute a quorum or sufficient votes for adoption of the merger agreement. Similar to adjournments, any postponement of the special meeting for the purpose of soliciting additional proxies will allow stockholders who have already sent in their proxies to revoke them at any time prior to their use.


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Appraisal Rights
 
Under Delaware law, Data Domain stockholders are entitled to appraisal rights in connection with the merger. Failure to take any of the steps required under Delaware law on a timely basis may result in the loss of these appraisal rights, as more fully described in “Data Domain Proposal 1 — The Merger — Appraisal Rights” beginning on page 50.
 
Other Matters
 
As of the date of this proxy statement/prospectus, the Data Domain board of directors does not know of any other business to be presented for consideration at the special meeting. If other matters properly come before the special meeting, the persons named in the accompanying form of proxy intend to vote on such matters based on their best judgment and they intend to vote the shares as the Data Domain board of directors may recommend.
 
Questions and Additional Information
 
Data Domain stockholders who would like additional copies, without charge, of this proxy statement/prospectus or have additional questions about the merger, including the procedures for voting their shares of Data Domain common stock, should contact:
 
Data Domain, Inc.
2421 Mission College Blvd.
Santa Clara, CA 95054
Attention: Investor Relations
Telephone: (408) 980-4909
 
or Data Domain’s solicitation agent:
 
Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, NY 10022
Stockholders Call Toll-Free at: (888) 750-5834
Banks and Brokers Call Collect at: (212) 750-5833


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INFORMATION ABOUT THE COMPANIES
 
NetApp, Inc.
 
NetApp is a supplier of enterprise storage and data management software and hardware products and services. NetApp provides solutions to help global enterprises meet major information technology challenges such as managing storage growth, assuring secure and timely information access, protecting data and controlling costs by providing innovative solutions that simplify the complexity associated with managing corporate data. NetApp was incorporated in 1992 and shipped the world’s first networked storage appliance a year later. Since then, NetApp has brought to market many significant innovations and industry firsts in storage and data management.
 
NetApp common stock is traded on the NASDAQ Global Select Market under the symbol “NTAP.” The principal executive offices of NetApp are located at 495 East Java Drive, Sunnyvale, CA 94089, and its telephone number is (408) 822-6000.
 
On May 22, 2009, NetApp commenced an option exchange program pursuant to which employees of NetApp (other than executive officers and directors) who hold certain options to purchase shares of NetApp’s common stock are being given the opportunity to exchange such options for restricted stock units. The option exchange program was approved by NetApp’s stockholders on April 21, 2009. Unless extended by NetApp, the option exchange offer will expire on June 19, 2009. For more information, please see NetApp’s tender offer statement on Schedule TO, as filed with the SEC on May 22, 2009, as may be amended from time to time.
 
Additional information about NetApp and its subsidiaries is included in documents incorporated by reference in this document. See “Where You Can Find More Information” beginning on page 96.
 
Kentucky Merger Sub One Corporation
 
Kentucky Merger Sub One Corporation, a wholly owned subsidiary of NetApp, was formed solely for the purpose of completing the merger. Kentucky Merger Sub One has not carried on any activities to date, except for activities incidental to its formation and activities undertaken in connection with the transactions contemplated by the merger agreement. The principal executive offices of Kentucky Merger Sub One Corporation are located at 495 East Java Drive, Sunnyvale, CA 94089, and its telephone number is (408) 822-6000.
 
Derby Merger Sub Two LLC
 
Derby Merger Sub Two LLC, a wholly owned subsidiary of NetApp, was formed solely for the purpose of completing the merger. Derby Merger Sub Two has not carried on any activities to date, except for activities incidental to its formation and activities undertaken in connection with the transactions contemplated by the merger agreement. The principal executive offices of Derby Merger Sub Two LLC are located at 495 East Java Drive, Sunnyvale, CA 94089, and its telephone number is (408) 822-6000.
 
Data Domain, Inc.
 
Data Domain, a Delaware corporation, was incorporated in Delaware in October 2001. Data Domain is a leading provider of storage solutions for backup and archive applications based on deduplication technology. Data Domain deduplication storage systems are designed to deliver reliable, efficient and cost-effective solutions that enable enterprises of all sizes to manage, retain and protect their data.
 
Data Domain common stock is traded on the NASDAQ Global Select Market under the symbol “DDUP.” The principal executive offices of Data Domain are located at 2421 Mission College Blvd., Santa Clara, CA 95054 and its telephone number is (408) 980-4800.
 
Additional information about Data Domain and its subsidiaries is included in documents incorporated by reference in this proxy statement/prospectus. See “Where You Can Find More Information” beginning on page 96. Data Domain also plans to file a proxy statement for its 2009 annual meeting of stockholders with the SEC. The annual meeting is expected to be held on July 2, 2009, and the purpose of the meeting is to reelect three members of Data Domain’s board of directors and to ratify Data Domain’s independent registered public accounting firm for the fiscal year ending December 31, 2009.


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DATA DOMAIN PROPOSAL 1 — THE MERGER
 
The stockholders of Data Domain are being asked to adopt the Agreement and Plan of Merger, dated as of May 20, 2009, as amended on June 3, 2009, by and among NetApp, Inc., Kentucky Merger Sub One Corporation, Derby Merger Sub Two LLC and Data Domain, as the agreement may be amended from time to time. This proposal is referred to as the merger proposal.
 
Background of the Merger
 
Since 2006, Frank Slootman, President and Chief Executive Officer of Data Domain, and Daniel J. Warmenhoven, Chairman and Chief Executive Officer of NetApp, have from time to time had informal discussions regarding their respective businesses and the data storage industry in general.
 
Goldman Sachs & Co., or Goldman Sachs, had served as co-managing underwriters in Data Domain’s initial public offering in June 2007. In November 2008, prior to the engagement of Goldman Sachs by NetApp, a representative of Goldman Sachs arranged for a meeting between Messrs. Slootman and Warmenhoven to discuss the possibility of a business combination involving NetApp and Data Domain.
 
On November 4, 2008, Messrs. Slootman and Warmenhoven and a representative of Goldman Sachs met to discuss the merits of a potential business combination involving NetApp and Data Domain. Messrs. Slootman and Warmenhoven agreed that although there was value in a potential business combination, considering current market conditions and trading prices of the stock of the respective companies, such a business combination was not feasible at that time. Messrs. Slootman and Warmenhoven agreed that no further discussions of a potential business combination involving NetApp and Data Domain would occur for the foreseeable future.
 
In early 2009, Mr. Slootman and a representative of Goldman Sachs had ongoing discussions of potential strategic transactions involving Data Domain. A representative of Goldman Sachs arranged for a meeting on March 17, 2009, between Mr. Slootman and Thomas Georgens, President and Chief Operating Officer of NetApp to discuss potential strategic opportunities involving NetApp and Data Domain.
 
On March 17, 2009, Messrs. Slootman and Georgens and a representative of Goldman Sachs met to discuss potential strategic opportunities involving NetApp and Data Domain. Mr. Georgens inquired as to whether Data Domain would be interested in a potential business combination with NetApp at that time. Mr. Slootman agreed to discuss such a potential business combination with members of the Data Domain board of directors.
 
On March 17, 2009, Mr. Slootman briefed Aneel Bhusri, Chairman of the Data Domain board of directors, and some of the other members of the Data Domain board of directors on his discussions with Mr. Georgens regarding a potential business combination with NetApp. The members of the Data Domain board of directors agreed to open a dialogue with NetApp regarding a potential business combination dependent upon the value of the consideration offered by NetApp.
 
On March 18, 2009, Mr. Slootman telephoned Mr. Georgens to inform him that Data Domain was receptive to a potential business combination with NetApp, but that further discussions would be dependent upon the value of the consideration offered by NetApp to the Data Domain stockholders.
 
On March 24, 2009, Mr. Slootman, Michael P. Scarpelli, Senior Vice President and Chief Financial Officer of Data Domain, Mr. Georgens and Steven J. Gomo, Executive Vice President and Chief Financial Officer of NetApp, met to discuss a potential business combination involving NetApp and Data Domain. After discussing the potential synergies, cultural fit and strategic benefits of a potential business combination involving NetApp and Data Domain, the parties expressed their respective continued interests in further exploring such a business combination.
 
On March 26, 2009, the Data Domain board of directors held a meeting to discuss a potential business combination with NetApp. Mr. Slootman reviewed the conversation he and Mr. Scarpelli had with Messrs. Georgens and Gomo regarding a potential proposal from NetApp to acquire Data Domain. Mr. Slootman proposed hiring Qatalyst Partners LP, or Qatalyst, as Data Domain’s financial advisor to advise the Data Domain board of directors regarding the evaluation of a potential NetApp proposal and other strategic alternatives for Data Domain. Mr. Slootman noted that Goldman Sachs had been previously engaged by NetApp to serve as its financial advisor. The Data Domain board of directors approved the engagement of Qatalyst as Data Domain’s financial advisor.


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Mr. Slootman also reviewed potential benefits and synergies from a potential business combination with NetApp. Representatives of Fenwick & West LLP, or Fenwick & West, Data Domain’s legal counsel, then reviewed considerations regarding the Data Domain board of directors’ fiduciary duties in the context of such a potential business combination. Representatives of Qatalyst led a discussion regarding current macro economic market conditions, recent strategic developments in the technology sector, potential deal structures, processes and other issues to consider in such a potential business combination. The Data Domain board of directors expressed concerns regarding the potential harm to Data Domain’s business relating to any uncertainty perceived by its current or future customers should they learn of discussions regarding a potential business combination involving Data Domain and the ability of Data Domain’s competition to take advantage of any such perceived uncertainty. At the conclusion of the meeting, the Data Domain board of directors confirmed that it had not been seeking a sale of Data Domain, however should NetApp elect to proceed with an offer it would merit further consideration.
 
On March 27, 2009, NetApp and Goldman Sachs executed an engagement letter for Goldman Sachs to act as NetApp’s financial advisor.
 
On April 1, 2009, the NetApp board of directors met to discuss the potential business combination between NetApp and Data Domain.
 
On April 2, 2009, Messrs. Slootman and Warmenhoven met to further discuss the opportunities and strategic benefits of a potential business combination involving NetApp and Data Domain. Mr. Warmenhoven indicated his interest in Data Domain’s business and his respect for the long-term value of Data Domain as an enterprise. Mr. Warmenhoven indicated that NetApp was serious about making an offer for Data Domain and that the value of the consideration that NetApp would offer would reflect NetApp’s commitment to securing such a potential business combination with Data Domain. Later that day representatives of Qatalyst had a call with Mr. Warmenhoven in which he informed them that the NetApp board of directors had authorized him to move forward with discussions regarding a potential business combination with Data Domain and the parties discussed the potential timing of a potential business combination.
 
On April 3, 2009, Messrs. Warmenhoven and Bhusri met to discuss the strategic rationale and benefits of a potential business combination involving NetApp and Data Domain. Both parties reiterated their interest in considering such a potential business combination. Mr. Bhusri indicated that the amount and certainty of the value of the consideration to be delivered to the Data Domain stockholders at closing was a priority of the Data Domain board of directors given the general economic uncertainty and volatile stock market conditions over the past several months. Mr. Bhusri indicated that the Data Domain board of directors intended to continue operating Data Domain as an independent entity absent a potential business combination at a sufficient value and therefore he expressed concern over the risks to Data Domain’s business if competitors or customers became aware of discussions regarding a business combination involving Data Domain. Mr. Warmenhoven informed Mr. Bhusri that NetApp intended to place discussions of a potential business combination with Data Domain on hold temporarily. Mr. Bhusri agreed that the parties should not move forward at all until such time as both of the parties were in a position to move forward expeditiously.
 
On April 6, 2009, Mr. Slootman met with a representative of Company A to discuss the terms of a proposed commercial relationship that was being negotiated. The representative of Company A indicated that Company A might be interested in a business combination involving Data Domain and asked Mr. Slootman when a discussion of such a potential business combination would be appropriate. Mr. Slootman informed the representative of Company A that such a discussion should happen sooner rather than later. After this meeting, the parties continued to discuss the proposed commercial relationship, but no representatives of Company A contacted Mr. Slootman or any other representatives of Data Domain regarding a business combination involving Data Domain and Company A.
 
On April 9, 2009, the Data Domain board of directors met to further discuss the potential business combination with NetApp. Mr. Bhusri reviewed the status of discussions with Mr. Warmenhoven regarding NetApp’s potential interest in pursuing a business combination, but noted that no offer or specific terms had been proposed to date and that NetApp did not wish to engage in further conversations regarding a business combination for the time being and likely would not be in a position to reengage in such discussions until near the end of NetApp’s fiscal quarter. Mr. Slootman reviewed his discussion with the representative of Company A. Representatives of Qatalyst summarized their conversations with Mr. Warmenhoven regarding the potential business combination with NetApp.


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Representatives of Fenwick & West reviewed the Data Domain board of directors’ fiduciary duties and commented on legal considerations in the event Data Domain were to receive an offer from NetApp. At the conclusion of the meeting, the Data Domain board of directors confirmed that it was not seeking a sale of Data Domain absent a potential business combination involving sufficient value. However, the Data Domain board of directors acknowledged that should NetApp elect to proceed with an offer that provided for significant value to Data Domain’s stockholders a transaction with NetApp would merit further consideration. The Data Domain board of directors further determined that Data Domain would not initiate any further discussions with NetApp or any other parties at this time.
 
On April 14, 2009, the NetApp board of directors held a meeting to discuss a potential business combination with Data Domain. Certain members of management presented the board of directors with a market analysis, as well as evaluations of the potential market opportunities and Data Domain’s valuation and discounted cash flows. Following discussion among the NetApp board of directors and management, the NetApp board of directors authorized NetApp management to approach Data Domain with an offer to acquire Data Domain, subject to the parameters discussed and approved by the NetApp board of directors.
 
On April 21, 2009, the Data Domain board of directors held a meeting, during which it discussed, among other matters, trends in the data storage market and potential consolidation in the data storage market. Mr. Slootman reviewed the opportunities and challenges of remaining an independent entity in the current and foreseeable market environment in light of the storage market trends toward vertically integrated product offerings, noting that Data Domain may need to consider strategic alternatives or partnerships in the future to provide a more complete product offering in order to grow and remain competitive in the marketplace.
 
On April 22, 2009, Data Domain and Qatalyst executed an engagement letter for Qatalyst to act as Data Domain’s financial advisor.
 
On April 24, 2009, Mr. Warmenhoven contacted Mr. Slootman to arrange a meeting to reinitiate discussions about a potential business combination involving NetApp and Data Domain.
 
On April 27, 2009, Fenwick & West provided a mutual non-disclosure agreement to Wilson Sonsini Goodrich & Rosati P.C., or Wilson Sonsini, NetApp’s legal counsel, which, after some discussions between respective counsel, was executed later that day by Data Domain and NetApp.
 
On April 27, 2009, Messrs. Slootman, Bhusri, Warmenhoven and Georgens met to further discuss a potential business combination involving NetApp and Data Domain. Messrs. Warmenhoven and Georgens presented a written summary of proposed terms for the potential transaction, including, among other items, consideration consisting of a mix of $7.00 to $8.00 per share in cash and 0.805 shares of NetApp common stock per share of Data Domain common stock, representing an implied value of $22.00 to $23.00 per share. The proposed terms also provided for a limited period of exclusivity for discussions with NetApp. Messrs. Slootman and Bhusri indicated that an exclusivity agreement was not acceptable to Data Domain, but that they would discuss the other aspects of the proposal with the Data Domain board of directors. Mr. Warmenhoven informed Mr. Bhusri of the potential for a role on the NetApp board of directors for Mr. Bhusri and a role in the management of NetApp for Mr. Slootman.
 
On April 28, 2009, the Data Domain board of directors met to discuss the status of the potential business combination with NetApp. Mr. Slootman reviewed the discussions that occurred with Messrs. Warmenhoven and Georgens regarding NetApp’s interest in a business combination with Data Domain and the written terms that were proposed by NetApp, including the proposed per share consideration. Mr. Bhusri informed the Data Domain board of directors of the potential for a role on the NetApp board of directors for Mr. Bhusri and a role in the management of NetApp for Mr. Slootman. A discussion then ensued among the Data Domain board of directors, Qatalyst and Fenwick & West regarding the NetApp proposal and potential responses thereto. Representatives of Fenwick & West reviewed the Data Domain board of directors’ fiduciary duties, the various processes the Data Domain board of directors might adopt and discussed potential responses to the offer from NetApp. Given the recent fluctuations of the trading prices of the respective companies’ stock and fluctuations in the market indices generally, the Data Domain board of directors determined that establishing a collar mechanism around any portion of the stock consideration was important to providing some protection for the value to be received to the Data Domain stockholders in the event that the market price of NetApp’s common stock price fluctuated within a given range


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between signing and closing of the proposed transaction. The Data Domain board of directors also expressed concerns regarding the timing of a potential business combination and the certainty of closing such a transaction once a definitive agreement was signed. Of particular concern was the negative impact of any uncertainty to Data Domain’s business perceived by its current or future customers and the ability of Data Domain’s competition to take advantage of any such uncertainty. The Data Domain board of directors considered the heightened risk of these harms to Data Domain’s business if any of Data Domain’s competitors were contacted regarding a potential strategic transaction. The Data Domain board of directors agreed that Mr. Bhusri would talk to Mr. Warmenhoven regarding NetApp’s offer, specifically to seek to increase the amount of total consideration in the potential transaction, to increase the cash component of the mix of consideration and to provide further protection from fluctuations in NetApp’s stock price between signing and closing of the potential transaction. The Data Domain board of directors also instructed representatives of Qatalyst to contact representatives of NetApp to seek favorable financial terms consistent with the objectives they provided to Mr. Bhusri.
 
Following the meeting of the Data Domain board of directors on April 28, 2009, Mr. Bhusri called Mr. Warmenhoven to discuss the potential business combination with NetApp. Mr. Bhusri indicated that the Data Domain board of directors was interested in pursuing a potential business combination with NetApp, however, they believed enhanced financial terms would be necessary for discussions to continue. Mr. Bhusri also informed Mr. Warmenhoven that the Data Domain board of directors thought the cash component of the mix of consideration should be increased and that the Data Domain board of directors wanted down-side protection around the stock component of the consideration to protect the value to the Data Domain stockholders in the event that the market price of NetApp’s common stock price fluctuated between signing and closing of the proposed transaction. Mr. Bhusri reiterated that Data Domain could not agree to an exclusive negotiating period for NetApp. Mr. Warmenhoven said that he would review this information with the NetApp board of directors.
 
On April 28, 2009 Fenwick & West provided a form of standstill agreement to Wilson Sonsini that provided that NetApp would not acquire shares of Data Domain, subject to limited exceptions.
 
On April 29, 2009, representatives of Qatalyst had a call with representatives of Goldman Sachs seeking a proposal with enhanced financial terms along the lines described above.
 
On May 1, 2009, Messrs. Slootman and Georgens met to further discuss the potential market, customer, product and cost synergies that could be achieved through a business combination of NetApp and Data Domain, the corporate culture of the two companies and how the companies would fit together and generally discussed the business of their respective companies. Messrs. Slootman and Georgens did not negotiate or discuss the substantive terms of the proposed business combination at this meeting.
 
On May 1, 2009, the NetApp board of directors held a meeting to further discuss the potential acquisition of Data Domain. The board of directors discussed with management the status of negotiations with Data Domain and NetApp’s strategy with respect to the transaction. The NetApp board of directors then authorized management to present Data Domain with a revised offer, subject to the parameters discussed and approved by the board of directors.
 
On May 4, 2009, Mr. Warmenhoven called Mr. Bhusri and indicated that NetApp would increase the proposed aggregate consideration to Data Domain stockholders in the business combination to $24.00 per share, comprised of $6.00 in cash and $18.00 dollars worth of shares of NetApp common stock for each share of Data Domain common stock, with a symmetrical 7.5% collar on the stock portion of the consideration so that Data Domain stockholders would receive a fixed amount of consideration in the event that the market price of NetApp’s common stock price fluctuated within that range between signing and closing of the proposed transaction. Mr. Bhusri informed Mr. Warmenhoven that while the Data Domain board of directors was interested in the potential business combination with NetApp, there were still several issues with the offer that needed to be resolved before the parties could move forward, including an increase in the aggregate consideration, the need for a greater portion of the aggregate consideration to be provided in cash and for a wider collar to be placed around the stock component of the consideration. On that same day, Mr. Slootman and Mr. Georgens also discussed NetApp’s revised proposal. Mr. Slootman also indicated that amount of the aggregate consideration, price certainty and protection against fluctuations NetApp’s common stock price were important to Data Domain and that the terms of any business combination involving Data Domain should include an increase in the aggregate consideration, an increased amount of cash and an appropriate collar on the stock portion of the consideration. Also on May 4, 2009, a


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representative of Qatalyst discussed the details of Data Domain’s views regarding the financial terms of a potential business combination involving Data Domain and NetApp with a representative of Goldman Sachs.
 
On May 5, 2009, Mr. Warmenhoven emailed a revised written summary of proposed terms of the potential business combination with NetApp to Mr. Bhusri. The revised offer consisted of $24.00 per share in aggregate consideration, comprised of $9.50 per share in cash and $14.50 worth of shares of NetApp common stock for each share of Data Domain common stock, with a symmetrical 7.5% collar on the stock portion of the consideration.
 
On May 6, 2009, the Data Domain board of directors held a meeting at which it had an extensive discussion with Qatalyst and Fenwick & West regarding, among other matters, NetApp’s original offer, NetApp’s subsequent offers and the current offer of $24.00 per share (consisting of $9.50 per share in cash and $14.50 per share in NetApp common stock, with a 7.5% symmetrical collar around the stock portion of the consideration), NetApp’s desire to sign a merger agreement for any potential transaction by May 20, 2009 (the scheduled date for the announcement of NetApp’s fiscal fourth quarter results) and other parties that may potentially be interested in a strategic transaction with Data Domain. Representatives of Fenwick & West reviewed the fiduciary duties of the Data Domain board of directors and the various processes the Data Domain board of directors might adopt. The Data Domain board of directors considered conducting a market check prior to the signing of a merger agreement with NetApp only if it could be conducted in a manner that did not jeopardize securing a firm proposal from NetApp and did not disrupt Data Domain’s relationships with its current and future customers during the process. However, the Data Domain board of directors ultimately determined that it was not clear that Data Domain could come to mutually agreeable terms regarding a business combination with NetApp and therefore such a market check would involve a high degree of risk to Data Domain’s customer relationships. The Data Domain board of directors authorized Mr. Bhusri and representatives of Qatalyst to propose a counteroffer to NetApp seeking a higher price of $26.00 per share in the aggregate and wider collar of 15% around the stock portion of the consideration.
 
After the Data Domain board of directors meeting on May 6, 2009, Mr. Bhusri called Mr. Warmenhoven to make a counter proposal at a higher price of $26.00 in aggregate consideration per share. After further negotiation, the parties tentatively agreed on $25.00 in aggregate consideration per share, with the remaining financial terms to be negotiated the following day at a meeting that included Mr. Bhusri, representatives of Qatalyst, Messrs. Georgens and Gomo, J.R. Ahn, Vice President, Corporate Development of NetApp, and representatives of Goldman Sachs.
 
On May 6, 2009, representatives of Qatalyst contacted representatives of Goldman Sachs to discuss the revised terms of the proposed transaction.
 
On May 7, 2009, Data Domain and NetApp executed a revised mutual non-disclosure agreement that contained a “standstill” provision with respect to shares of Data Domain common stock.
 
On May 7, 2009, Mr. Bhusri, representatives of Qatalyst, Messrs. Georgens, Gomo and Ahn, and representatives of Goldman Sachs met to discuss the detailed financial terms of the proposed business combination between NetApp and Data Domain. The parties agreed to a mix of consideration consisting of $11.00 per share in cash and $14.00 per share in NetApp common stock. The parties also agreed to a 10% symmetrical collar so that Data Domain stockholders would receive a fixed amount of consideration in the event that the market price of NetApp’s common stock price fluctuated within a that range between signing and closing of the proposed transaction.
 
On May 7, 2009, Mr. Slootman, David L. Schneider, Senior Vice President Worldwide Sales of Data Domain, Mr. Georgens and Robert E. Salmon, Executive Vice President, Field Operations of NetApp, met to get acquainted and discuss potential product sales synergies to be derived from a business combination between NetApp and Data Domain.
 
On May 7, 2009, a member of the board of directors of EMC, a competitor of Data Domain, contacted Mr. Slootman. The EMC board member sought to arrange a meeting between Mr. Slootman and the Chief Executive Officer of EMC to share with them EMC’s vision for the future. Mr. Slootman asked for more specific information on the nature of the meeting, but the board member of EMC did not provide any further detail.
 
On May 7, 2009, the Data Domain board of directors held a meeting to further discuss the potential business combination with NetApp. At this meeting, Mr. Bhusri reviewed for the Data Domain board of directors his discussion with Mr. Warmenhoven regarding valuation and informed the Data Domain board of directors that they


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had negotiated an increase in NetApp’s offer from $24.00 to $25.00 per share in aggregate consideration, consisting of $11.00 per share in cash and $14.00 per share in NetApp common stock, with a 10% symmetrical collar around the value of the stock portion of the consideration. The Data Domain board of directors then discussed with representatives of Qatalyst the negotiations regarding the collar mechanism around the value of the stock portion of the consideration, the progression of the proposed terms from NetApp and the value of the current NetApp proposal. Mr. Slootman reviewed for the Data Domain board of directors the call he received from a director of EMC asking whether Mr. Slootman would be available to meet with the Chief Executive Officer of EMC. The Data Domain board of directors engaged in an extensive discussion regarding the NetApp offer and the whether to call other companies, including competitors, that could be candidates for a strategic transaction prior to signing a definitive merger agreement with NetApp. The Data Domain board of directors expressed further concerns regarding the high risk of potential harm to Data Domain’s business relating to any uncertainty perceived by its current or future customers should they learn of discussions regarding a business combination involving Data Domain prior to the announcement of a definitive agreement and the ability of Data Domain’s competition to take advantage of any such perceived uncertainty. The Data Domain board of directors further evaluated the heightened risk of these harms to Data Domain’s business if any of Data Domain’s competitors were contacted regarding a potential strategic transaction. Representatives of Fenwick & West then discussed the fiduciary duties of the Data Domain board of directors and the various processes the Data Domain board of directors might adopt. The Data Domain board of directors was concerned that initiating a market check at this time could jeopardize securing a firm agreement from NetApp and could disrupt Data Domain’s relationships with its current and future customers during the process. The Data Domain board of directors determined that Data Domain should move forward with the potential business combination with NetApp without contacting other companies that might be candidates for a strategic transaction with Data Domain, but that the Data Domain board of directors would continue to evaluate this strategy and consider the matter further based upon the progress and terms of the potential business combination with NetApp.
 
On May 7, 2009, with the authorization of the Data Domain board of directors, Mr. Bhusri called Mr. Warmenhoven to inform him of the conversation between the EMC board member and Mr. Slootman earlier that day.
 
On May 8, 2009, Wilson Sonsini delivered an initial draft of the merger agreement to Data Domain and Fenwick & West. Also on May 8, 2009, Fenwick & West granted access to an online data room containing Data Domain due diligence materials to representatives of NetApp, Wilson Sonsini and Goldman Sachs.
 
On May 8, 2009, the Chief Executive Officer of EMC contacted Mr. Slootman via email to request a meeting the next time that the Chief Executive Officer was in the San Francisco Bay Area and suggested proposed dates. Mr. Slootman agreed via email to such dates, resulting in a meeting being scheduled on May 27, 2009.
 
On May 9, 2009, Messrs, Scarpelli and Slootman and Robert Specker, Vice President, In-house Counsel to Data Domain provided financial and business due diligence on Data Domain to representatives of NetApp and Goldman Sachs.
 
Between May 9 and May 20, 2009, Messrs. Warmenhoven, Georgens and Gomo, other executive officers of NetApp, and other employees of NetApp met numerous times with Messrs. Bhusri, Slootman, Scarpelli and Specker, other executive officers and employees of Data Domain to discuss various aspects of the potential business combination. During this period, NetApp and its advisors reviewed due diligence materials relating to Data Domain made available to NetApp in an online data room, requested and reviewed additional materials relating to Data Domain and engaged in due diligence discussions with their counterparts.
 
On May 11, 2009, the Data Domain board of directors met to further discuss, among other matters, the potential business combination with NetApp. Mr. Slootman informed the Data Domain board of directors that the Chief Executive Officer of EMC had contacted him to schedule a meeting and, based upon the availability of the Chief Executive Officer of EMC, the meeting had been scheduled for May 27, 2009. A representative of Qatalyst reviewed a discussion with Mr. Warmenhoven in which Mr. Warmenhoven had reiterated NetApp’s position that NetApp would not engage in a bidding contest if additional parties emerged seeking to acquire Data Domain. Representatives of Fenwick & West reviewed key terms of the initial draft of the merger agreement, including the omission of the ability of Data Domain to accept such a superior proposal and terminate the merger agreement with NetApp and the Data Domain board of directors’ ability to change its recommendation in favor of the proposed


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business combination with NetApp for any reason consistent with its fiduciary duties and NetApp’s initial request of a termination fee of 5.00% of the transaction value, and then discussed the fiduciary duties of the Data Domain board of directors and the various processes the Data Domain board of directors might adopt. The Data Domain board of directors and its advisors determined that in the negotiations with NetApp, Data Domain would insist on a process that would permit a superior proposal from a third party to surface after the signing of the merger agreement with NetApp and for the Data Domain board of directors to consider and accept such a superior proposal and terminate the merger agreement with NetApp, the Data Domain board of directors’ ability to change its recommendation in favor of the proposed business combination with NetApp for any reason consistent with its fiduciary duties and an amount of the termination fee that would not be preclusive of a superior proposal. The Data Domain board of directors reaffirmed the priority of its objectives of retaining the compelling valuation of the proposed business combination with NetApp, obtaining deal certainty with respect to the proposed business combination with NetApp and not exposing Data Domain’s business and customers to uncertainty and risk. The Data Domain board of directors and its advisors discussed the fact that NetApp’s board of directors would be meeting on May 13, 2009, and that it would be important to assess NetApp’s continued resolve to pursue a deal with Data Domain before deciding whether to taking any action relative to soliciting the interest of other parties with respect to a strategic transaction with Data Domain. In the interim, the Data Domain board of directors determined that Data Domain should move forward with the due diligence and other aspects of the potential business combination with NetApp.
 
On May 12, 2009, Fenwick & West delivered proposed revisions to the draft merger agreement to NetApp and Wilson Sonsini. Between May 12 and May 20, 2009, in addition to continuing their due diligence investigations of each other, NetApp and Data Domain, along with their respective legal and financial advisors, negotiated the terms of the merger agreement.
 
On May 12 and 13, 2009, Messrs. Warmenhoven, Georgens, Gomo and Ahn, other employees of NetApp and representatives of Goldman Sachs met with Messrs. Slootman, Scarpelli and Specker, other employees of Data Domain and representatives of Qatalyst to discuss specific functional areas of diligence with respect to Data Domain and the potential business combination between NetApp and Data Domain, including financial, sales and marketing, human resources, services, product, supply chain and manufacturing, information technologies and facilities, and legal and intellectual property.
 
On May 13, 2009, the Data Domain board of directors held a meeting at which it discussed with representatives of Qatalyst the current financial terms of the transaction, the significant premiums the proposed business combination from NetApp provided and the likelihood that another party would offer more value to the Data Domain stockholders. The Data Domain board of directors engaged in further extensive discussions regarding the NetApp offer. The Data Domain board of directors reviewed the value of the NetApp offer, the significant premiums implied by the offer, the current economic conditions and stock market volatility. The Data Domain board of directors confirmed the desire to avoid the downside risk of further economic and stock market uncertainties by securing the attractive deal value reflected in the proposed business combination with NetApp, while obtaining protection of this deal value with the cash component of the offer and the collar around the stock portion of the consideration. Representatives of Fenwick & West discussed key terms of the merger agreement and the fiduciary duties of the Data Domain board of directors. The Data Domain board of directors discussed with representatives of Fenwick & West the legal issues surrounding its decision of whether to contact other companies, including competitors, that could be candidates for a strategic transaction with Data Domain prior to signing a definitive merger agreement with NetApp in light of the applicable merger agreement terms proposed by NetApp. The Data Domain board of directors expressed further concerns regarding the potential harm to Data Domain’s business relating to any uncertainty perceived by its current or future customers should they learn of discussions regarding a business combination involving Data Domain prior to the announcement of a definitive agreement and the ability of Data Domain’s competition to take advantage of any such perceived uncertainty. The Data Domain board of directors acknowledged the heightened risk of these harms to Data Domain’s business if any of Data Domain’s competitors were contacted regarding a potential strategic transaction. The Data Domain board of directors was concerned that initiating a market check at this time could jeopardize securing the proposed business combination with NetApp. The Data Domain board of directors also expressed concerns regarding additional delay and uncertainty associated with soliciting the interest of other parties with respect to a strategic transaction with Data Domain. The Data Domain board of directors determined that Data Domain should move forward with the potential


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business combination with NetApp without contacting other companies and reaffirmed its commitment to insisting on merger agreement terms that would not unduly preclude the possibility of Data Domain receiving and implementing a superior proposal after the signing of a merger agreement with NetApp.
 
On May 13, 2009, the NetApp board of directors held a meeting to discuss the progress of the potential acquisition of Data Domain. Members of NetApp’s management team were present to update the board of directors on work completed to date, initial findings from the due diligence process and next steps. The board of directors reviewed with management the preliminary terms of the potential transaction and discussed at length the stand-alone prospects of the potential transaction as well as expected net synergies. Following such discussion, the members of the board of directors authorized management to continue with its diligence review and discussions with Data Domain regarding a potential transaction.
 
On May 14, 2009, Messrs. Warmenhoven, Georgens, Gomo and Ahn, other employees of NetApp and representatives of Goldman Sachs met with Messrs. Bhusri, Slootman, Scarpelli and Specker, and representatives of Qatalyst to discuss due diligence of NetApp with respect to the potential business combination between NetApp and Data Domain. Between May 14 and May 19, 2009, representatives of NetApp and its advisors met with representatives of Data Domain and its advisors to engage in further due diligence discussions regarding the potential business combination between NetApp and Data Domain.
 
On May 14, 2009, Messrs. Bhusri and Warmenhoven met to discuss the terms of the proposed merger agreement. Mr. Bhusri indicated that, among other items, the Data Domain board of directors considered it important that the merger agreement allow for a process by which other parties could submit offers for alternate strategic transactions after the signing of a definitive merger agreement and that the Data Domain board of directors maintain the ability to consider such offers presented to it after the signing of a merger agreement with NetApp consistent with its fiduciary duties. Specifically, the Data Domain board of directors insisted on the ability to change its recommendation in favor of the proposed business combination with NetApp for any reason consistent with its fiduciary duties, a right to terminate the merger agreement after receipt of an alternative offer with respect to a strategic transaction that it determines to be a superior proposal and that the termination fee proposed by NetApp be reduced. Mr. Warmenhoven also mentioned to Mr. Bhusri that NetApp was currently conducting a search for a new member of its board of directors of Directors and suggested that Mr. Bhusri consider participating in the search process. Both parties agreed that no determinations would be made with respect to Mr. Bhusri’s consideration for a position on the NetApp board of directors until after completion of the business combination between Data Domain and NetApp. On the same day, representatives of Qatalyst met with Mr. Warmenhoven to underscore the views that Mr. Bhusri had communicated regarding the deal protection terms of the merger agreement.
 
Also on May 14, 2009, Wilson Sonsini delivered an initial draft of the form of voting agreement to Fenwick & West.
 
On May 16, 2009, the Data Domain board of directors met to further discuss the potential business combination with NetApp. Representatives of Qatalyst reviewed due diligence that had been conducted on NetApp with respect to, among other matters, NetApp’s recent financial results and outlook. Representatives of Fenwick & West then led a discussion regarding the voting agreements that were requested from officers, directors and associated funds and the status of the previous day’s negotiations on key terms of the merger agreement. Representatives of Fenwick & West informed the Data Domain board of directors that NetApp agreed to include a process that would permit a superior proposal from a third party to surface after the signing of the merger agreement with NetApp and for the Data Domain board of directors to consider and accept such a superior proposal and terminate the merger agreement with NetApp and had proposed a termination fee of 4.50% of the transaction value, and the impact of the outcome of these negotiations on the Data Domain board of directors’ fiduciary duties. The Data Domain board of directors discussed the fact that NetApp still appeared to be committed to the transaction. The Data Domain board of directors reaffirmed its commitment to the need for a provision of the merger agreement that provided for the Data Domain board of directors’ ability to change its recommendation in favor of the proposed business combination with NetApp for any reason consistent with its fiduciary duties and agreeing to an amount of the termination fee that would not be preclusive of a superior proposal. At the conclusion of this meeting, the Data Domain board of directors reiterated its commitment to continue negotiating the potential business combination with NetApp.


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On May 17, 2009, Fenwick & West delivered proposed revisions to the draft form of voting agreement to Wilson Sonsini. Between May 18 and May 20, 2009, NetApp, Data Domain and certain parties that were asked to sign the voting agreements, along with their respective legal advisors, negotiated the terms of the form of voting agreement.
 
On May 16 and 17, 2009, Mr. Slootman exchanged emails with Mr. Georgens regarding whether NetApp would be providing offer letters to any Data Domain employees prior to the signing of a merger agreement. No such offer letters were provided to any Data Domain employees by NetApp prior to the signing of the merger agreement.
 
On May 18, 2009, Messrs. Schneider and Warmenhoven, James Lau, Co-Founder, Chief Strategy Officer and Executive Vice President of NetApp and David Hitz, Co-Founder and Executive Vice President of NetApp, met to get acquainted and discuss potential synergies to be derived from a business combination between NetApp and Data Domain.
 
On May 18, 2009, the Data Domain board of directors held a meeting to further discuss the potential business combination with NetApp. At this meeting, Mr. Bhusri and representatives of Fenwick & West reviewed for the Data Domain board of directors the results of the negotiations that had taken place earlier that day between Mr. Slootman, representatives of Fenwick & West, Mr. Georgens, in-house attorneys for NetApp and representatives of Wilson Sonsini. Specifically, they noted that as a result of the negotiations the merger agreement would now provide for the Data Domain board of directors’ ability to change its recommendation in favor of the proposed business combination with NetApp for any reason consistent with its fiduciary duties, a right to terminate the merger agreement after receipt of an alternative offer with respect to a strategic transaction that the Data Domain board of directors determines to be a superior proposal and the amount of the termination fee had been reduced to 3.25% of the transaction value. Representatives of Qatalyst reviewed the stock and cash components of the consideration to be received by the Data Domain stockholders proposed by NetApp, and other financial terms of the proposed merger. At the conclusion of this meeting, the Data Domain board of directors reiterated its commitment to finalize the terms of the potential business combination with NetApp.
 
On May 19, 2009, several conversations occurred among representatives of Qatalyst and Goldman Sachs and Mr. Bhusri and Mr. Georgens to discuss the exchange ratio, collar mechanics and final mix of consideration. As a result of these meetings and conference calls, the parties agreed to use the closing stock price of NetApp common stock on May 19, 2009 of $18.07 in order to calculate the stock exchange ratio for the basis for the 10% symmetrical collar on the stock portion of the consideration that will provide adjustments to maintain the $25 per share merger consideration for variations in NetApp’s stock price of up to 10% in either direction between signing and closing of the merger, thereby providing downside protection for Data Domain stockholders if NetApp’s stock declines by up to 10% while maintaining the upside potential if NetApp’s stock increases in value by more than 10%. The parties also agreed that the cash portion of the merger consideration would be increased from $11.00 to $11.45 and the stock portion of the merger consideration would be decreased from $14.00 to $13.55.
 
On May 19, 2009, the NetApp board of directors held a meeting to further discuss the potential business combination with Data Domain. Representatives of Wilson Sonsini reviewed the board of directors’ fiduciary duty obligations in the context of the potential acquisition, and the board of directors took note of the significant legal and financial due diligence that had been conducted over the past several weeks, including the analyses and various detailed models prepared by Goldman Sachs. Next, the board of directors reviewed the key terms of the merger agreement and engaged in extensive discussions in this regard. Representatives of Goldman Sachs then provided a summary of the potential transaction, presented various detailed financial analyses, and provided a review of its fairness opinion, which concluded that the merger consideration was fair to NetApp from a financial point of view. The members of the board of directors made inquiry of management and its advisors in this regard, and further discussion then ensured. At the conclusion of the meeting, the board of directors unanimously approved the acquisition of Data Domain, the merger agreement and related matters.
 
On May 20, 2009, the Data Domain board of directors held a meeting at which the proposed business combination with NetApp was further discussed and considered for final approval. At this meeting, Mr. Bhusri updated the Data Domain board of directors on the current status of negotiations with NetApp. Representatives of Fenwick & West reviewed in detail with the Data Domain board of directors the outcome of further negotiations and the terms of the merger agreement and related agreements, as well as the fiduciary duties of the Data Domain board


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of directors. Mr. Slootman reviewed an analysis of strengths, weaknesses, opportunities and challenges of Data Domain remaining as a stand alone company. Representatives of Qatalyst presented to the Data Domain board of directors its financial analysis of the proposed transaction and delivered to the Data Domain board of directors its oral opinion, subsequently confirmed in writing as of May 20, 2009, that, as of that date the consideration to be received by holders of shares of Data Domain common stock, other than affiliates who had executed voting agreements, pursuant to the original merger agreement, was fair, from a financial point of view, to such holders. The full text of the written opinion of Qatalyst, dated May 20, 2009, which sets forth, among other things, the assumptions made, procedures followed, matters considered and limitations and qualifications of the review undertaken by Qatalyst in rendering its opinion, is attached hereto as Appendix D. Following the presentations, and after further review and discussion, the Data Domain board of directors unanimously voted to approve the merger, the merger agreement and related matters and resolved to recommend that Data Domain stockholders adopt the merger agreement, which was subsequently filed with the SEC as an exhibit to Data Domain’s Current Report on Form 8-K filed on May 21, 2009.
 
Following the adjournment of the meeting of the Data Domain board of directors on May 20, 2009, the parties signed the merger agreement. The signing of the merger agreement was publicly announced later that day, following the closing of trading on the NASDAQ Global Select Market.
 
On May 20, 2009, after the announcement of the signing of the merger agreement, Mr. Slootman contacted the Chief Executive Officer of EMC to cancel the meeting previously scheduled for May 27, 2009.
 
Additional Background to the Merger
 
On various occasions after the announcement of the signing of the merger agreement on May 20, 2009 and through June 1, 2009, individual representatives of EMC and members of the board of directors of EMC contacted individual representatives of Data Domain and members of the Data Domain board of directors regarding an alternative acquisition proposal from EMC. None of the representatives of Data Domain or members of the Data Domain board of directors responded to such inquiries other than to inform the respective representatives of EMC and members of the board of directors of EMC that they could not discuss the matter since they were bound by the non-solicitation provisions of the merger agreement.
 
On June 1, 2009, EMC announced an unsolicited $30.00 per share all cash tender offer to the stockholders of Data Domain. EMC sent a letter to Mr. Slootman that same day regarding the cash tender offer to the stockholders of Data Domain and enclosed a proposed form of merger agreement.
 
On June 1, 2009, the Data Domain board of directors held a meeting at which EMC’s announcement of a cash tender offer to the stockholders of Data Domain and the proposed business combination with NetApp were discussed. Representatives of Qatalyst and Fenwick & West reviewed the terms of EMC’s cash tender offer. After further review and discussion, the Data Domain board of directors determined (after consultation with Qatalyst and Fenwick & West) that EMC’s announcement of a $30.00 per share all cash tender offer to the stockholders of Data Domain was reasonably likely to lead to a Superior Proposal (as that term is defined in the merger agreement). In accordance with the merger agreement, Data Domain then informed NetApp of this determination and of Data Domain’s intent to contact EMC and offer to enter into discussions if EMC entered into a nondisclosure and standstill agreement as required by the merger agreement.
 
On June 2, 2009, EMC formally commenced a $30.00 per share all cash tender offer to the stockholders of Data Domain. Unless extended by EMC, the tender offer expires at midnight, New York City time, on Monday June 29, 2009.
 
On June 2, 2009, Mr. Warmenhoven called Mr. Bhusri to inform him that NetApp would be willing to increase the aggregate consideration in the proposed business combination with Data Domain from $25.00 to $30.00, and maintaining the 10% symmetrical collar around the value of the stock portion of the consideration.
 
On June 2, 2009, the Data Domain board of directors held a meeting at which both EMC’s cash tender offer to the stockholders of Data Domain and the proposed business combination with NetApp were discussed. At this meeting, Mr. Bhusri updated the Data Domain board of directors on the revised proposal from NetApp to increase the aggregate consideration from $25.00 to $30.00. Representatives of Qatalyst and Fenwick & West reviewed the


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terms of EMC’s cash tender offer to the stockholders of Data Domain. In addition, the Data Domain board of directors discussed potential additional terms it might seek in connection with the revised oral proposal from NetApp and determined to review and seek to negotiate the terms of the revised proposal from NetApp once they were received.
 
On June 2, 2009, a representative of Qatalyst called Mr. Gomo to discuss the financial terms of NetApp’s revised proposal regarding the proposed business combination involving Data Domain and NetApp and proposed additional terms that would enhance the proposal from Data Domain’s point of view.
 
Late in the evening on June 2, 2009, Mr. Georgens delivered a letter to Messrs. Bhusri and Slootman containing the financial terms of the revised proposal regarding the proposed business combination involving Data Domain and NetApp, which provided for $30.00 per share in aggregate consideration, consisting of $16.45 per share in cash and $13.55 per share in NetApp stock, with a 10% symmetrical collar around the value of the stock portion of the consideration, based upon the closing stock price of NetApp common stock on June 2, 2009 of $19.34. At this time, Mr. Georgens also delivered to Messrs. Bhusri and Slootman an initial draft of the amendment to the original merger agreement to effect this revised proposal.
 
On June 2, 2009, the NetApp board of directors held a meeting to discuss EMC’s announcement of an all cash tender offer and the business combination with Data Domain. Representatives of Wilson Sonsini and Goldman Sachs reviewed the key terms of EMC’s cash tender offer to the stockholders of Data Domain. Next, representatives of Goldman Sachs provided a summary of potential responses and presented various detailed financial analyses associated with these responses. Then, the NetApp board of directors reviewed the key terms of a potential response and engaged in extensive discussion in this regard. Representatives of Goldman Sachs have provided a fairness opinion to the NetApp board of directors, which concluded that the revised proposal which provided for $30.00 per share in aggregate consideration, consisting of $16.45 per share in cash and $13.55 per share in NetApp stock, with a 10% symmetrical collar around the value of the stock portion of the consideration was fair to NetApp from a financial point of view. The NetApp board of directors unanimously approved the terms of NetApp’s revised proposal and approved the amendment to the original merger agreement and related matters.
 
Following receipt of the revised proposal from NetApp, representatives of Qatalyst and Goldman Sachs discussed the financial terms of NetApp’s revised proposal regarding the proposed business combination involving Data Domain and NetApp and continued to request additional terms that would enhance the proposal from Data Domain’s point of view.
 
On the morning of June 3, 2009, the Data Domain board of directors held a meeting at which both EMC’s cash tender offer to the stockholders of Data Domain and the revised financial terms of the proposed business combination with NetApp were discussed. At this meeting, representatives of Fenwick & West and Qatalyst updated the Data Domain board of directors on the terms of the revised proposal regarding the proposed business combination with NetApp and the related amendment to the merger agreement, including the fact that the stock portion of the merger consideration has a 10% symmetrical collar around the closing stock price of NetApp common stock on June 2, 2009 (the last trading day prior to the Data Domain board of directors’ approval of the amendment to the merger agreement) of $19.34 that will provide adjustments to maintain the $30.00 per share merger consideration for variations in NetApp’s stock price of up to 10% in either direction between signing and closing of the proposed business combination involving Data Domain and NetApp, thereby providing downside protection for the Data Domain stockholders if the NetApp common stock price declines by up to 10% while maintaining a portion of the upside potential if the NetApp common stock price increases in value by more than 10%. After further review and discussion, the Data Domain board of directors unanimously determined that the revised terms of NetApp’s proposal were advisable, fair to and in the best interests of Data Domain’s stockholders and voted to approve the amendment to the original merger agreement, which was filed with the SEC as an exhibit to Data Domain’s Current Report on Form 8-K filed later that day. The Data Domain board of directors further considered and discussed EMC’s cash tender offer to the stockholders of Data Domain and, after consultation with Qatalyst and Fenwick & West, the Data Domain board of directors reaffirmed its determination that EMC’s $30.00 per share all cash tender offer to the stockholders of Data Domain was reasonably likely to lead to a Superior Proposal (as that term is defined in the merger agreement). Later that day, the parties executed the amendment to the


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merger agreement and Data Domain issued a press release announcing the execution of the amendment to the merger agreement.
 
On June 3, 2009, a representative of Fenwick & West delivered to a representative of Skadden, Arps, Slate, Meagher & Flom LLP, legal counsel to EMC, a form of mutual non-disclosure agreement that contained a “standstill” provision with respect to shares of Data Domain common stock, which, under the original merger agreement, is a pre-condition to Data Domain’s discussions or negotiations with a third party, such as EMC, with respect to a potential Superior Proposal (as that term is defined in the merger agreement). Later in the day, EMC issued a press release reaffirming its $30.00 per share tender offer for all Data Domain shares. As of June 16, 2009, EMC had not executed a non-disclosure agreement that contains a “standstill” provision with Data Domain and therefore Data Domain is still prohibited from discussing or negotiating the terms of EMC’s cash tender offer with EMC by the terms of the merger agreement with NetApp.
 
On June 4, 2009, NetApp and Data Domain filed the proxy statement/prospectus with the SEC.
 
In addition, the Data Domain board of directors held meetings on June 4, 5, 8, 11, 14, 17 and 22 and July 1, 2009, to discuss the proposed business combination with NetApp, EMC’s cash tender offer and related matters. The Data Domain board of directors consulted with representatives of Fenwick & West and Qatalyst during the discussions at each of these meetings.
 
On June 12, 2009, the Police & Fire Retirement System of the City of Detroit, or PFRS Detroit, filed a lawsuit in Delaware Chancery Court against the Data Domain board of directors and NetApp alleging that the Data Domain board of directors breached its fiduciary duties in connection with the proposed business combination with NetApp and that NetApp aided and abetted such breach. PFRS Detroit seeks unspecified damages, preliminary and permanent injunctive relief against the proposed business combination with NetApp, and costs and attorneys’ fees.
 
On June 15, 2009, Data Domain filed a Schedule 14D-9 with the SEC in which the Data Domain board of directors recommended that the Data Domain stockholders reject EMC’s cash tender offer and in which the Data Domain board of directors reaffirmed its unanimous recommendation that the Data Domain stockholders vote to approve the adoption of the merger agreement with NetApp.
 
On June 17, 2009, NetApp and Data Domain filed an amendment to the proxy statement/prospectus with the SEC in which the Data Domain board of directors recommended that the Data Domain stockholders reject EMC’s cash tender offer and in which the Data Domain board of directors reaffirmed its unanimous recommendation that the Data Domain stockholders vote to approve the adoption of the merger agreement with NetApp.
 
On June 18, 2009, Data Domain filed an amendment the Schedule 14D-9 with the SEC in which the Data Domain board of directors recommended that the Data Domain stockholders reject EMC’s cash tender offer and in which the Data Domain board of directors reaffirmed its unanimous recommendation that the Data Domain stockholders vote to approve the adoption of the merger agreement with NetApp.
 
On June 19, 2009, David Kluger filed a lawsuit in the Superior Court of the State of California, County of Santa Clara, against the Data Domain board of directors, Data Domain, NetApp and two NetApp subsidiaries alleging that the Data Domain board of directors breached its fiduciary duties in connection with the potential business combination with NetApp and that Data Domain and NetApp aided and abetted such breach. Mr. Kluger seeks, on behalf of an alleged class of the Data Domain stockholders, unspecified damages and other monetary relief, preliminary and permanent injunctive relief against the potential business combination with NetApp, and costs and attorneys’ fees.
 
On June 26, 2009, the Delaware Chancery Court granted PFRS Detroit’s motion for expedited proceedings, scheduling a hearing on PFRS Detroit’s motion for a preliminary injunction of the proposed business combination with NetApp for 10:00 a.m. on August 13, 2009.
 
Also on June 26, 2009, EMC issued a press release announcing that it had extended the expiration date of EMC’s cash tender offer until 12:00 midnight, New York City time, on July 10, 2009.
 
On July 2, 2009, the Federal Trade Commission granted early termination of the HSR waiting period.


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Data Domain’s Reasons for the Merger; Recommendation of the Data Domain Board of Directors
 
In the course of reaching its decision to approve the merger, adopt the merger agreement and recommend that Data Domain stockholders vote “FOR” the adoption of the merger agreement, the Data Domain board of directors consulted with senior management, legal counsel and its financial advisor. The Data Domain board of directors also consulted with outside legal counsel regarding its fiduciary duties, legal due diligence matters and the terms of the merger agreement and related agreements. The following discussion includes all material reasons and factors considered by the Data Domain board of directors in making its recommendation, but is not, and is not intended to be, exhaustive:
 
  •  Merger Consideration.  The Data Domain board of directors considered the following with respect to the merger consideration to be received by the Data Domain stockholders:
 
  •  that our stockholders will receive merger consideration of $30.00 per share consisting of $16.45 per share in cash and $13.55 per share in NetApp stock upon the completion of the merger (assuming NetApp’s common stock price remains within the 10% symmetrical collar discussed below), as compared to the uncertain future long-term value to our stockholders that might be realized if we remained independent;
 
  •  the fact that the cash portion of the merger consideration will provide liquidity and certainty of value to our stockholders;
 
  •  the fact that the stock portion of the merger consideration has a 10% symmetrical collar around the closing stock price of NetApp common stock on June 2, 2009 (the last trading day prior to the Data Domain board of directors’ approval of the Merger) of $19.34 that will provide adjustments to maintain the $30.00 per share merger consideration for variations in NetApp’s stock price of up to 10% in either direction between signing and closing of the merger, thereby providing downside protection for Data Domain stockholders if NetApp’s stock declines by up to 10% while maintaining a portion of the upside potential if NetApp’s stock increases in value by more than 10%;
 
  •  the fact that the $30.00 per share value of the consideration for Data Domain common stock in the merger (assuming NetApp’s stock price remains within the 10% collar discussed above) represents significant premiums to our stockholders of approximately 115% premium over the average closing price of our common stock on The NASDAQ Global Select Market over the 60 trading day period ending on May 19, 2009 (the last trading day prior to the Data Domain board of directors’ approval of the merger) and a 72% premium over the closing price of our common stock on The NASDAQ Global Select Market on May 19, 2009 (the last trading day prior to the Data Domain board of directors’ approval of the merger) and the levels of those premiums as compared to the premiums in other comparable merger transactions; and
 
  •  the then current financial market conditions and the recent and historical market prices of Data Domain common stock, including the market price performance of Data Domain common stock relative to those of other industry participants. See “Comparative Market Prices and Dividends” for information about our common stock prices over the past two years.
 
  •  Synergy between NetApp and Data Domain.  The Data Domain board of directors considered NetApp’s prospects following the closing of the merger. NetApp’s sales and distribution channels and international reach to offer the Data Domain product line to more customers, accelerating growth and market adoption. The Data Domain board of directors believed that the combination of the two companies would increase the value of NetApp and thereby the value of the NetApp common stock that Data Domain stockholders would receive in the merger.
 
  •  Review of Prospects in Remaining Independent.  The Data Domain board of directors considered the possibility of continuing to operate Data Domain as an independent public company. The Data Domain board of directors also considered the perceived risks and uncertainties of remaining an independent public company, the range of possible values to its stockholders arising from this alternative and the timing and uncertainty of successfully accomplishing meaningful growth under Data Domain’s strategic plan. The Data


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  Domain board of directors’ assessment was that pursuit of a growth strategy as an independent company was not reasonably likely to create greater value for the Data Domain stockholders than the merger, after discounting for the elapse of time and considering the factors reviewed below. In considering the alternative of pursuing growth as an independent company, the Data Domain board of directors considered the following factors:
 
  •  increased competition, especially from competitors with greater name recognition, more resources, financial and otherwise, broader product offerings and more vertically integrated product offerings than Data Domain;
 
  •  Data Domain’s slowing growth rates and the challenge of expanding beyond its core deduplication product offerings in the context of enterprise customers and large data centers increasing requests for a broader suite of data storage products and services;
 
  •  the increasing preference of enterprises to consolidate vendors and use one vendor for all of its data center needs instead of using multiple vendors that offer best-of-breed products independently;
 
  •  customer concern regarding Data Domain’s relatively small size compared to its competitors due to the critical nature of its storage products in customer data centers; and
 
  •  the time and risk involved in integrating new management members and key employees if Data Domain were successful in recruiting new management and key employees.
 
  •  Economic Conditions.  The Data Domain board of directors considered the fact that the United States economy, in general, appears to be in a downturn. This turmoil and uncertainty could adversely affect the demand for Data Domain’s products and services. In addition, because Data Domain’s sales are primarily to corporate customers, Data Domain’s business depends on general economic and business conditions.
 
  •  Opinion of Qatalyst Partners LP.  The Data Domain board of directors considered the financial presentation of Qatalyst and the opinion of Qatalyst, dated May 20, 2009, that, as of the date of the opinion, and subject to and based on the assumptions made, procedures followed, matters considered and limitations and qualifications of the review undertaken in such opinion, the merger consideration to be received by holders of shares of Data Domain common stock, other than affiliates who have executed voting agreements, pursuant to the original merger agreement was fair, from a financial point of view, to such holders, as more fully described in the section entitled “Data Domain Proposal 1 — The Merger — Opinion of Qatalyst Partners LP” on page 40. Qatalyst’s opinion was based on the terms of the original merger agreement, and the Data Domain board of directors has not requested that Qatalyst provide an additional or revised opinion reflecting the terms of the merger agreement, as amended on June 3, 2009. Qatalyst’s opinion was rendered to the Data Domain board of directors prior to the announcement of EMC’s tender offer. Thus, the impact of EMC’s offer on Qatalyst’s view, as of the date of the amendment to the original merger agreement, as to the fairness, from a financial point of view, of the merger consideration to be received by the holders of shares of Data Domain common stock pursuant to the amendment to the original merger agreement cannot be presumed, and such view could be different than its view, as of the date of the original merger agreement, as to the fairness, from a financial point of view, of the original merger consideration to be received by the holders of shares of Data Domain common stock pursuant to the original merger agreement.
 
  •  Likelihood and Timing of Closing.  The Data Domain board of directors considered the likelihood that the proposed acquisition would be completed on a timely basis, in light of:
 
  •  the customary closing conditions included in the merger agreement;
 
  •  the fact that the merger does not need to be approved by foreign anti-trust authorities;
 
  •  the available cash resources of NetApp to pay the cash portion of the merger consideration without the need for outside financing and the representation that NetApp made in the merger agreement to that effect; and
 
  •  the fact that the merger does not need to be approved by NetApp’s stockholders and the representation that NetApp made in the merger agreement to that effect.


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  •  Terms of the Merger Agreement.  The Data Domain board of directors considered the terms and conditions of the merger agreement and the course of negotiations thereof, including:
 
  •  the limited conditions to NetApp’s obligation to complete the merger, including the absence of a financing condition or vote of NetApp’s stockholders and limited ability of NetApp to terminate the merger agreement under clearly defined circumstances;
 
  •  the structure of the transaction as a merger, requiring approval by Data Domain’s stockholders, which would result in detailed public disclosure and a period of time prior to completion of the merger during which an unsolicited superior proposal, if any, could be brought forth;
 
  •  the ability of the Data Domain board of directors, under certain circumstances, to furnish information to and conduct negotiations with a third party, if the Data Domain board of directors determines in good faith (after consultation with its financial advisor and its outside legal counsel) that (A) the third party has made an acquisition proposal that either constitutes or is reasonably likely to lead to a superior proposal and (B) the failure to take such action is reasonably likely to result in a breach of its fiduciary duties to the Data Domain stockholders;
 
  •  the ability of the Data Domain board of directors, under certain circumstances, to change its recommendation that the Data Domain stockholders adopt the merger agreement if the Data Domain board of directors determines in good faith (after consultation with its outside counsel) that the failure to change its recommendation is reasonably likely to be a breach of its fiduciary duties to the Data Domain stockholders;
 
  •  the ability of Data Domain to terminate the merger agreement in order to accept a superior proposal, subject to certain conditions and payment to NetApp of $57.0 million, representing approximately 2.7% of the total equity value of the proposed transaction at the time of the execution of the merger agreement;
 
  •  the belief of the Data Domain board of directors that the termination fee is within the range of reasonable termination fees provided for in comparable transactions and is not a significant deterrent to possible competing offers; and
 
  •  that Data Domain’s stockholders will be entitled to appraisal rights under Delaware law.
 
  •  NetApp’s Reputation.  The Data Domain board of directors considered the business reputation of NetApp and its management and the substantial financial resources of NetApp, which the Data Domain board of directors believed supported the conclusion that the merger could be completed relatively quickly and in an orderly manner.
 
In the course of its deliberations, the Data Domain board of directors also considered a variety of risks and factors weighing against the merger, including:
 
  •  Risks of Announcement and Completion.  The Data Domain board of directors considered:
 
  •  the risks and contingencies related to the announcement of the merger, including our ability to retain key employees and maintain our relationships with customers, commercial partners and third parties;
 
  •  the conditions to NetApp’s obligation to complete the merger and the right of NetApp to terminate the merger agreement under certain circumstances; and
 
  •  the risks and costs to Data Domain if the merger is not completed, including the diversion of management and employee attention, potential employee attrition, the potential impact on our stock price and the effect on our business relationships.
 
  •  Limitations on Data Domain’s Business.  The Data Domain board of directors considered the potential limitations on Data Domain’s pursuit of business opportunities due to pre-closing covenants in the merger agreement whereby Data Domain agreed that it will carry on its business in the ordinary course of business consistent with past practice, and subject to specified exceptions, will not take certain actions related to the conduct of its business without the prior written consent of NetApp.


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  •  Absence of Pre-Signing Solicitation.  The Data Domain board of directors considered the absence of contacting other companies or other effort to solicit interest from other potential buyers that might be a likely candidates for a strategic transaction with Data Domain prior to the execution and delivery of the merger agreement.
 
  •  Potential Taxable Transaction.  The Data Domain board of directors considered that the merger agreement allows for NetApp to increase the cash portion of the merger consideration in the event that the issuance of additional shares of its common stock would require NetApp to obtain a vote of its stockholders to approve the issuance and that a decline in the value of the NetApp common stock or an increase in the cash portion could result in the stock portion of the merger consideration being taxable to the Data Domain stockholders.
 
  •  Stockholder Vote.  The Data Domain board of directors considered the requirement that, unless the merger agreement is earlier terminated by Data Domain as a result of a receipt of a superior proposal, Data Domain must submit the merger agreement for adoption by Data Domain’s stockholders even if the Data Domain board of directors withdraws its recommendation of the merger.
 
  •  Voting Agreements.  The Data Domain board of directors considered that the directors, executive officers and affiliated entities holding shares that represent approximately 20.6% of Data Domain outstanding common stock as of May 20, 2009, would be entering into voting agreements to vote in favor of the merger and that even if the Data Domain board of directors changed its recommendation to vote against the merger under circumstances in which Data Domain is not entitled to terminate the merger agreement, those directors, executive officers and affiliated entities would still be required to approve the merger proposal.
 
  •  Termination Fee and Other Alternative Acquirers.  The Data Domain board of directors considered the possibility that the $57.0 million termination fee payable to NetApp under clearly defined circumstances might discourage a competing proposal to acquire Data Domain or reduce the price of any such proposal.
 
  •  Interests of Directors and Officers.  The Data Domain board of directors considered the interests that certain of our directors and executive officers have with respect to the merger in addition to their interests as Data Domain stockholders generally, as described in “Data Domain Proposal 1 — The Merger — Data Domain Officers and Directors Have Financial Interests in the Merger” on page 46.
 
The preceding discussion of the information and factors considered by the Data Domain board of directors is intended to be illustrative and not exhaustive. In light of the variety of factors considered in connection with its evaluation of the merger and the complexity of these matters, the Data Domain board of directors did not find it practicable to, and did not, quantify or otherwise attempt to assign relative weights to the various factors considered in reaching its determination, and individual directors may have given different weight to different factors. In addition, the Data Domain board of directors did not reach any specific conclusion with respect to any of the factors or reasons considered. Instead, the Data Domain board of directors conducted an overall analysis of the factors and reasons described above and determined that, in the aggregate, the potential benefits considered outweighed the potential risks or possible negative consequences of approving the merger, adopting the merger agreement and recommending that Data Domain stockholders vote “FOR” the adoption of the merger agreement.
 
Opinion of Qatalyst Partners LP
 
Data Domain retained Qatalyst to act as its financial advisor in connection with a potential transaction involving Data Domain. Data Domain selected Qatalyst to act as its financial advisor based on Qatalyst’s qualifications, expertise, reputation and knowledge of the business and affairs of Data Domain. As financial advisor to Data Domain, on May 20, 2009, Qatalyst rendered to the Data Domain board of directors its written opinion that, as of such date and based upon and subject to the various assumptions, limitations and qualifications set forth in its opinion, the merger consideration to be received by the holders of shares of Data Domain common stock, other than affiliates who have executed voting agreements, pursuant to the original merger agreement was fair, from a financial point of view, to such holders.
 
The full text of Qatalyst’s written opinion, dated May 20, 2009, to the board of directors of Data Domain is attached hereto as Appendix D and is incorporated by reference herein. The opinion sets forth, among other things, the assumptions made, procedures followed, matters considered and limitations and


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qualifications of the review undertaken by Qatalyst in rendering its opinion. You should read the entire opinion carefully in its entirety. Qatalyst’s opinion was provided to the Data Domain board of directors and addressed only the fairness, from a financial point of view, of the merger consideration to be received by the holders of shares of Data Domain common stock, other than affiliates who have executed voting agreements, pursuant to the original merger agreement as of the date of the opinion. It did not address any other aspect of the transaction and does not constitute a recommendation to the stockholders of Data Domain as to how to vote or act on any matter with respect to the merger. The summary of Qatalyst’s opinion set forth herein is qualified in its entirety by reference to the full text of the opinion.
 
In arriving at its opinion, Qatalyst reviewed the original merger agreement and certain publicly available financial statements and other business and financial information of Data Domain and NetApp. Qatalyst also reviewed certain financial projections and operating data prepared by the management of Data Domain (the “Data Domain Projections”) and by the management of NetApp (the “NetApp Projections”) and reviewed information relating to certain strategic, financial and operational benefits anticipated from the merger, prepared by the managements of Data Domain and NetApp, respectively. Additionally, Qatalyst discussed the past and current operations and financial condition and the prospects of Data Domain and NetApp, including information relating to certain strategic, financial and operational benefits anticipated from the merger, with senior executives of Data Domain and NetApp. Qatalyst also reviewed the historical market prices and trading activity for Data Domain common stock and NetApp common stock and compared the financial performance of Data Domain and the prices and trading activity of Data Domain common stock with that of certain other selected publicly-traded companies and their securities. In addition, Qatalyst reviewed the financial terms, to the extent publicly available, of selected acquisition transactions and performed such other analyses, reviewed such other information and considered such other factors as it deemed appropriate.
 
In arriving at its opinion, Qatalyst assumed and relied upon, without independent verification, the accuracy and completeness of the information that was publicly available or supplied or otherwise made available to, or discussed with, it by Data Domain and NetApp. With respect to the Data Domain Projections and the NetApp Projections, including information relating to certain strategic, financial and operational benefits anticipated from the merger and other matters covered thereby, Qatalyst was advised by the management of Data Domain and NetApp, respectively, and Qatalyst assumed, that they had been reasonably prepared on bases reflecting the best currently available estimates and judgments of the management of Data Domain and NetApp, respectively, of the future financial performance of Data Domain and NetApp, respectively. Qatalyst assumed that the merger would be completed in accordance with the terms set forth in the original merger agreement, without any modification or delay. In addition, Qatalyst assumed that in connection with the receipt of all the necessary approvals of the proposed merger, no delays, limitations, conditions or restrictions would be imposed that would have an adverse effect on Data Domain, NetApp or the contemplated benefits expected to be derived in the proposed merger. Qatalyst also assumed that the merger would qualify as a tax-free reorganization under the Internal Revenue Code of 1986, as amended. Qatalyst did not make any independent evaluation or appraisal of the assets or liabilities (contingent or otherwise) of Data Domain or NetApp, nor was it furnished with any such evaluation or appraisal. In addition, Qatalyst relied, without independent verification, upon the assessments of the managements of Data Domain and NetApp as to (i) the existing and future technology and products of Data Domain and NetApp and the risks associated with such technology and products, (ii) their ability to integrate the businesses of Data Domain and NetApp and (iii) their ability to retain key employees of Data Domain and NetApp. In arriving at its opinion, Qatalyst was not authorized to solicit, and did not solicit, interest from any party with respect to an acquisition, business combination or other extraordinary transaction involving Data Domain.
 
Qatalyst’s opinion has been approved by its opinion committee in accordance with its standard practice. Qatalyst’s opinion does not constitute a recommendation to any holder of shares of Data Domain common stock as to how to vote with respect to the merger and does not in any manner address the prices at which Data Domain common stock or NetApp common stock will trade at any time. Qatalyst’s opinion was necessarily based on financial, economic, market and other conditions as in effect on, and the information made available to it as of, the date the opinion was delivered. Events occurring after the date of the opinion may affect Qatalyst’s opinion and the assumptions used in preparing it, and Qatalyst has not assumed any obligation to update, revise or reaffirm its opinion. Qatalyst’s opinion did not address the underlying business decision of Data Domain to engage in the


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merger, or the relative merits of the merger as compared to any strategic alternatives that may have been available to Data Domain. Qatalyst’s opinion was limited to the fairness, from a financial point of view, of the merger consideration to be received by the holders of shares of Data Domain common stock, other than affiliates who have executed voting agreements, pursuant to the original merger agreement and Qatalyst expressed no opinion with respect to the fairness of the amount or nature of the compensation to any of Data Domain’s officers, directors or employees, or any class of such persons, relative to such merger consideration.
 
The following is a summary of the material analyses performed by Qatalyst in connection with its opinion dated May 20, 2009. The analyses described below must be considered as a whole; considering any portion of such analyses and of the factor considered, without considering all analyses and factors, could create a misleading or incomplete view of the process underlying Qatalyst’s opinion. Except as otherwise noted, for purposes of its analyses, Qatalyst utilized equity research analyst projections for both Data Domain and NetApp, or the street projections, and the Data Domain Projections (which consisted of two sets of projections, denoted as Management Case 1 and Management Case 2 herein) for Data Domain.
 
Illustrative Discounted Cash Flow Analysis.  Qatalyst performed an illustrative discounted cash flow analysis, which is designed to imply a value of a company by calculating the net present value of estimated future cash flows of the company. Qatalyst calculated ranges of implied equity values per share for Data Domain based on discounted cash flow analyses utilizing the Data Domain Projections for the fiscal years 2009 through 2013. Qatalyst computed the unlevered free cash flows for Data Domain for the years 2009 through 2013 and calculated the terminal value based on the year 2013 unlevered free cash flow by applying a range of perpetual growth rates ranging from 3.0% to 5.0%. These values were then discounted to present values using cost of equity ranging from 12.0% to 15.0%. Qatalyst then applied a range of dilution factors from 5.0% to 10.0% to illustrate the terminal value dilution to current stockholders due to projected equity compensation grants by Data Domain. Based on the calculations set forth above, this analysis implied a range for Data Domain common stock of approximately $18.70 to $29.22 per share based on Management Case 1 and approximately $12.96 to $19.43 per share based on Management Case 2, in each case, net of Data Domain’s cash, in each case, including Data Domain’s net cash balance.
 
Selected Company Analysis.  Qatalyst performed a selected company analysis, which attempts to provide an implied value of a company by comparing it to selected publicly-traded companies. Qatalyst compared selected financial information and public markets multiples for Data Domain with publicly available information and public market multiples for selected technology ecosystems companies and data management companies. The companies used in this comparison included those companies listed below:
 
Technology Ecosystems Companies:
 
  •  Microsoft Corporation
 
  •  International Business Machines Corporation
 
  •  Cisco Systems, Inc.
 
  •  Oracle Corporation
 
  •  Hewlett-Packard Company
 
  •  EMC Corporation
 
  •  Dell Inc.
 
  •  VMware, Inc.
 
Data Management Companies:
 
  •  Symantec Corporation
 
  •  Citrix Systems, Inc.
 
  •  F5 Networks, Inc.


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  •  Open Text Corporation
 
  •  Riverbed Technology, Inc.
 
  •  CommVault Systems, Inc.
 
  •  3Par Inc.
 
  •  Netezza Corporation
 
Based upon equity research analyst estimates for calendar year 2009 and the Data Domain Projections and using the closing prices as of May 19, 2009 for shares of the selected companies, Qatalyst calculated the following ratios for each of these companies:
 
  •  the enterprise value divided by the estimated revenue for calendar year 2009;
 
  •  the enterprise value divided by the estimated revenue for calendar year 2010;
 
  •  the closing stock price divided by the estimated earnings per share for calendar year 2009; and
 
  •  the closing stock price divided by the estimated earnings per share for calendar year 2010.
 
Based on the analysis of the relevant ratios for each of the selected companies, Qatalyst selected representative ranges of financial multiples of the selected companies and applied these ranges of multiples to the relevant Data Domain statistic. Based on the calculations set forth above, this analysis implied a range for Data Domain common stock of approximately $11.34 to $22.43 based on street projections, approximately $12.69 to $24.24 based on Management Case 1 and approximately $10.25 to $20.38 based on Management Case 2.
 
No company included in the selected company analysis is identical to Data Domain. In evaluating the selected companies, Qatalyst made judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions and other matters. Many of these matters are beyond the control of Data Domain, such as the impact of competition on the business of Data Domain and the industry in general, industry growth and the absence of any material adverse change in the financial condition and prospects of Data Domain or the industry or in the financial markets in general. Mathematical analysis, such as determining the arithmetic mean or median, or the high or low, is not in itself a meaningful method of using selected company data.


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Selected Transaction Analysis.  Qatalyst performed a selected transaction analysis, which is designed to imply a value of a company based on publicly available financial terms of selected transactions that share some characteristics with the merger. Qatalyst compared the multiples paid in (i) 10 transactions from June 2005 through April 2009 involving public and private companies in the hardware/systems industry and (ii) 14 transactions from July 2003 through January 2009 involving public companies in the software industry. These transactions are listed below:
 
     
Target
 
Acquiror
 
Hardware/Systems Companies
   
Sun Microsystems, Inc. 
  Oracle Corporation
Foundry Networks, Inc. 
  Brocade Communications Systems, Inc.
LeftHand Networks
  Hewlett-Packard Company
Diligent Technologies
  International Business Machines Corporation
XIV
  International Business Machines Corporation
EqualLogic, Inc. 
  Dell Inc.
McDATA Corporation
  Brocade Communications Systems, Inc.
Advanced Digital Information Corporation
  Quantum Corporation
Maxtor Corporation
  Seagate Technology
Storage Technology Corporation
  Sun Microsystems, Inc.
     
Software Companies
   
Interwoven, Inc. 
  Autonomy Corporation plc
BladeLogic, Inc. 
  BMC Software, Inc.
BEA Systems, Inc. 
  Oracle Corporation
Opsware Inc. 
  Hewlett-Packard Company
WebEx Communications, Inc. 
  Cisco Systems, Inc.
Altiris, Inc. 
  Symantec Corporation
Internet Security Systems, Inc. 
  International Business Machines Corporation
FileNet Corporation
  International Business Machines Corporation
Mercury Interactive Corporation
  Hewlett-Packard Company
RSA Security Inc. 
  EMC Corporation
MicroMuse Inc. 
  International Business Machines Corporation
Veritas Software Corporation
  Symantec Corporation
Documentum, Inc. 
  EMC Corporation
Legato Systems, Inc. 
  EMC Corporation
 
For each of the transactions listed above, Qatalyst calculated the following ratios:
 
  •  the ratio of the enterprise value to the estimated next twelve months revenue; and
 
  •  the estimated next twelve months price to earnings multiple.
 
Based on the analysis of the relevant metrics for each transaction noted above, Qatalyst selected representative ranges of multiples of the transactions and applied these ranges of multiples to the relevant Data Domain financial statistic. Based on the calculations set forth above, this analysis implied a range for Data Domain common stock of approximately $15.96 to $25.96 based on street projections, approximately $17.50 to $27.05 based on Management Case 1 and approximately $14.26 to $25.96 based on Management Case 2.
 
No company or transaction utilized in the selected transactions analysis is identical to Data Domain, NetApp or the merger. In evaluating the selected transactions, Qatalyst made judgments and assumptions with regard to general business, market and financial conditions and other matters, many of which are beyond the control of Data Domain and NetApp, such as the impact of competition on the business of Data Domain, NetApp or the industry generally, industry growth and the absence of any adverse material change in the financial condition of Data Domain, NetApp or the industry or in the financial markets in general, which could affect the public trading value of the companies and the aggregate value of the transactions to which they are being compared.
 
Qatalyst also performed and considered various other financial statistics in connection with its opinion dated May 20, 2009 as set forth below.
 
Future Trading Analysis.  Qatalyst performed an illustrative analysis of the implied present value of the future price per share of Data Domain common stock on a stand-alone basis, which is designed to provide an


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indication of the present value of a theoretical future value of a company’s equity as a function of its estimated future earnings and assumed price to future earnings per share multiple. For this analysis, Qatalyst used the street projections for calendar year 2010 only and the Data Domain Projections for Management Case 1 and Management Case 2 for calendar years 2010 and 2011. Qatalyst first calculated the implied value per share of Data Domain common stock for calendar year 2010 with respect to the street projections and each of calendar years 2010 and 2011 with respect to Management Case 1 and Management Case 2 by applying a representative range of public market price to forward earnings per share multiples to earnings per share estimates for Data Domain. Qatalyst then discounted these values using a cost of equity of 13.5%. Based on the calculations set forth above, this analysis implied a range for Data Domain common stock of approximately $15.81 to $19.76 per share based on street projections, approximately $17.09 to $25.10 per share based on Management Case 1 and approximately $12.04 to $15.69 per share based on Management Case 2.
 
Contribution Analysis.  Qatalyst reviewed estimated 2009 and 2010 operating and financial information based on the street projections for Data Domain and NetApp. Such operating and financial information included, among other things, revenues, gross profits, operating profits and net income. Qatalyst analyzed the relative potential financial contribution of Data Domain to the combined company following completion of the merger, the implied equity ownership determined by valuing such contributions and the implied value per share. Based on the calculations set forth above, this analysis implied a range for Data Domain common stock of approximately $9.64 to $14.07 per share.
 
Premia Paid Statistics.  Qatalyst reviewed the premia paid in selected domestic public company cash and cash/stock mix transactions that have been completed or are pending since 2003 in which the target company was a publicly-traded technology company and the transaction value was greater than $500 million. Qatalyst selected a representative range of implied premia (representing the 25th percentile and 75th percentile) and applied this range of premia to the price of Data Domain common stock of $17.43 as of May 19, 2009, which implied a range for Data Domain common stock of approximately $20.36 to $24.16 per share.
 
Equity Research Analyst Price Targets Statistics.  Qatalyst reviewed and analyzed the price targets for Data Domain common stock prepared and published by equity research analysts during the period from April 23, 2009 through April 28, 2009. These targets reflect each analyst’s estimate of the future public market trading price of Data Domain common stock and are not discounted to reflect present values.
 
Qatalyst noted that the range of undiscounted equity research analyst price targets of Data Domain common stock was between $11.00 and $24.00 per share. Qatalyst further calculated that using a cost of equity of 13.5% and a discount period of one year, the present value of the equity research analyst price target range for Data Domain common stock was approximately $9.69 to $21.15 per share.
 
The public market trading price targets published by equity research analysts do not necessarily reflect current market trading prices for Data Domain common stock and these estimates are subject to uncertainties, including the future financial performance of Data Domain and future financial market conditions.
 
Miscellaneous
 
In connection with the review of the transaction by the Data Domain board of directors, Qatalyst performed a variety of financial and comparative analyses for purposes of rendering its opinion. The preparation of a financial opinion is a complex process and is not necessarily susceptible to a partial analysis or summary description. In arriving at its opinion, Qatalyst considered the results of all of its analyses as a whole and did not attribute any particular weight to any analysis or factor it considered. Qatalyst believes that selecting any portion of its analyses, without considering all analyses as a whole, would create an incomplete view of the process underlying its analyses and opinion. In addition, Qatalyst may have given various analyses and factors more or less weight than other analyses and factors, and may have deemed various assumptions more or less probable than other assumptions. As a result, the ranges of valuations resulting from any particular analysis described above should not be taken to be Qatalyst’s view of the actual value of Data Domain or NetApp. In performing its analyses, Qatalyst made numerous assumptions with respect to industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond the control of Data Domain and NetApp. Any estimates contained in


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Qatalyst’s analyses are not necessarily indicative of future results or actual values, which may be significantly more or less favorable than those suggested by such estimates.
 
Qatalyst conducted the analyses described above solely as part of its analysis of the fairness of the merger consideration pursuant to the original merger agreement, from a financial point of view, to holders of shares of Data Domain common stock, other than affiliates who have executed voting agreements, and in connection with the delivery of its opinion to the Data Domain board of directors. These analyses do not purport to be appraisals or to reflect the prices at which shares of Data Domain common stock might actually trade.
 
Qatalyst’s opinion and its presentation to the Data Domain board of directors was one of many factors taken into consideration by the Data Domain board of directors in deciding to approve the merger agreement. Consequently, the analyses as described above should not be viewed as determinative of the opinion of the Data Domain board of directors with respect to the merger consideration or of whether the Data Domain board of directors would have been willing to agree to a different merger consideration. The merger consideration was determined through arm’s-length negotiations between Data Domain and NetApp and was approved by the Data Domain board of directors. Qatalyst provided advice to Data Domain during these negotiations. Qatalyst did not, however, recommend any specific merger consideration to Data Domain or that any specific merger consideration constituted the only appropriate merger consideration for the merger.
 
Qatalyst provides investment banking and other services to a wide range of corporations and individuals, domestically and offshore, from which conflicting interests or duties may arise. In the ordinary course of these activities, affiliates of Qatalyst may at any time hold long or short positions, and may trade or otherwise effect transactions in debt or equity securities or loans of Data Domain, NetApp or their respective affiliates. During the two year period prior to the date of Qatalyst’s opinion, no material relationship existed between Qatalyst and its affiliates and Data Domain or NetApp pursuant to which compensation was received by Qatalyst or its affiliates; however Qatalyst and its affiliates may in the future provide investment banking and other financial services to Data Domain and NetApp and their respective affiliates for which they would expect to receive compensation.
 
Under the terms of its engagement letter, Qatalyst provided Data Domain with financial advisory services in connection with the transaction for which it will be paid a fee based on the size of the transaction which would be approximately $17 million (all numbers herein based on an assumed closing date of June 23, 2009), a portion of which became payable upon execution of the engagement letter, a portion of which became payable upon delivery of its opinion and approximately $15.9 million, or 93.5%, of which is contingent upon, and will become payable upon, completion of the merger. Data Domain has also agreed to reimburse Qatalyst for its expenses incurred in performing its services. In addition, Data Domain has agreed to indemnify Qatalyst and its affiliates, their respective members, directors, officers, partners, agents and employees and any person controlling Qatalyst or any of its affiliates against certain liabilities and expenses related to or arising out of Qatalyst’s engagement.
 
Data Domain Officers and Directors Have Financial Interests in the Merger
 
In considering the recommendation of the Data Domain board of directors that you vote to approve the merger proposal, you should be aware that Data Domain’s executive officers and directors have financial interests in the merger that are different from, or in addition to, those of Data Domain’s stockholders generally and that are described below. The members of Data Domain’s board of directors were aware of and considered these interests, among other matters, in evaluating and negotiating the merger agreement, and in recommending to the stockholders that the merger agreement be approved and adopted. For purposes of all of the Data Domain and NetApp agreements and plans described below, the completion of the transactions contemplated by the merger agreement will constitute a change in control.
 
Equity Compensation Awards
 
The merger agreement provides that, upon completion of the merger, each Data Domain option to purchase shares of Data Domain common stock will be assumed and converted, based on the option exchange ratio, into an option to purchase NetApp common stock subject to the same vesting restrictions and other terms and conditions of such Data Domain option. The merger agreement also provides that, upon completion of the merger, each then outstanding restricted stock unit or share of restricted stock of Data Domain will be assumed and converted into the


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right to receive the merger consideration, but will otherwise be subject to the same vesting restrictions and other terms and conditions of the Data Domain awards. Please see “The Merger Agreement — Treatment of Data Domain Stock Options and Other Equity-Based Awards” beginning on page 55 for a detailed discussion of the treatment of equity-based awards.
 
Our executive officers, Frank Slootman, Michael P. Scarpelli, David L. Schneider, Daniel R. McGee and Nick Bacica, are participants in the Data Domain Management Change in Control Plan, which provides for vesting acceleration of their equity awards upon an involuntary termination (without cause or voluntary resignation for good reason) following a change in control of Data Domain. Pursuant to the Data Domain Management Change in Control Plan, upon such an involuntary termination following a change in control of Data Domain, 50% (or 100% in the case of Mr. Slootman) of their then unvested equity awards will immediately vest.
 
Pursuant to agreements with the non-employee directors of Data Domain, namely Aneel Bhusri, Ronald Bernal, Ronald Codd, Reed Hundt, Kai Li, Jeffrey Miller and Scott Sandell, certain of their awards of Data Domain stock options and restricted stock will fully vest as a result of the completion of the merger. Upon completion of the merger, the directors of Data Domain will cease to be directors. The following table identifies, for each of Messrs. Bhusri, Bernal, Codd, Hundt, Li, Miller and Sandell (A) the number of unvested options to acquire shares of Data Domain common stock (at exercise prices ranging from $1.00 to $8.90) that would vest upon completion of the merger and the corresponding value representing the difference between the exercise price and the assumed share price of $30.00 multiplied by the number of shares accelerated, and (B) the number of shares of unvested Data Domain restricted stock that would vest upon completion of the merger, and the corresponding value of shares accelerated based on the assumed share price of $30.00, assuming a closing date of August 31, 2009:
 
                                 
                Unvested Data
       
    Unvested Data
          Domain
    Value of
 
    Domain
    Value of
    Restricted Stock
    Accelerated
 
    Options Vesting
    Accelerated Option
    Vesting Upon
    Restricted Stock
 
    Upon Completion of
    Vesting Assuming
    Completion of the
    Vesting Assuming
 
Name
  the Merger     $30 Share Price     Merger     $30 Share Price  
 
Mr. Bernal
    39,584     $ 835,222           $  
Mr. Bhusri
    39,584       835,222              
Mr. Codd
    58,334       1,691,686              
Mr. Hundt
    79,167       1,670,423              
Mr. Li
                83,997       2,519,910  
Mr. Miller
                58,334       1,750,020  
Mr. Sandell
    39,584       835,222              
 
Severance Benefits in Certain Employment Agreements
 
Each of Mr. Slootman, Mr. Scarpelli, Mr. Schneider, Mr. McGee and Mr. Bacica are party to employment agreements that provide for severance benefits in the event their employment is terminated for any reason other than cause or permanent disability, provided they sign a general release of claims. In the event Mr. Slootman’s employment is terminated for any reason other than cause or permanent disability, he would be entitled to receive continued cash severance payments equal to his base salary for a period of six months. In addition, the stock options granted to Mr. Slootman prior to 2007 provide that if Mr. Slootman’s employment is terminated for any reason other than cause or disability, he will receive 6 months of additional vesting. In the event Mr. Scarpelli’s employment is terminated for any reason other than cause or permanent disability, he would be entitled to receive continued cash severance payments equal to his base salary for a period of three months and reimbursement for the premiums paid for continued health coverage through COBRA for up to three months; however, if such termination occurs within 12 months following a change in control of Data Domain, the cash severance will instead be a lump sum equal to six months of his base salary and 50% of his target bonus in effect at the time of termination. Each of the employment agreements for Mr. Schneider, Mr. McGee and Mr. Bacica provide that in the event they are terminated for any reason other than cause or permanent disability, they would be entitled to receive continued cash severance payments equal to their base salary for a period of three months and reimbursement for the premiums paid for continued health insurance through COBRA for up to three months.


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The information for each of Mr. Slootman, Mr. Scarpelli, Mr. Schneider, Mr. McGee and Mr. Bacica regarding vesting acceleration and severance payments in the event their employment is terminated for certain reasons, as of June 1, 2009 assuming a share price of $30.00 per share, is set forth in the table below.
 
                             
        Termination
    Termination
       
        Other Than
    Other Than
       
        for Cause or
    for Cause or
    Resignation
 
        Disability
    Disability
    for Good
 
        Prior to
    After a
    Reason After
 
        Change in
    Change in
    a Change in
 
Name
 
Benefit
  Control     Control     Control  
 
Frank Slootman
  Severance   $ 175,000     $ 175,000     $  
    Option Acceleration     1,306,958       17,130,958       17,130,958  
    RSU Acceleration           1,500,000       1,500,000  
    COBRA Premiums                  
    Total Value     1,481,958       18,805,958       18,630,958  
Michael P. Scarpelli
  Severance     72,500       217,500        
    Option Acceleration           4,365,385       4,365,385  
    RSU Acceleration           375,000       375,000  
    COBRA Premiums     5,141       5,141        
    Total Value     77,641       4,963,026       4,740,385  
David L. Schneider
  Severance     61,250       61,250        
    Option Acceleration           1,947,852       1,947,852  
    RSU Acceleration           350,010       350,010  
    COBRA Premiums     5,141       5,141        
    Total Value     66,391       2,364,253       2,297,862  
Daniel R. McGee
  Severance     68,750       68,750        
    Option Acceleration           2,019,069       2,019,069  
    RSU Acceleration           300,000       300,000  
    COBRA Premiums     3,544       3,544        
    Total Value     72,294       2,391,363       2,319,069  
Nick Bacica
  Severance     62,500       62,500        
    Option Acceleration           1,071,700       1,071,700  
    RSU Acceleration           300,000       300,000  
    COBRA Premiums     3,544       3,544        
    Total Value     66,044       1,437,744       1,371,700  
 
Protection of Data Domain Directors and Officers Against Claims
 
NetApp has agreed to cause the surviving entity in the merger to indemnify and hold harmless each present and former director and officer of Data Domain and its subsidiaries from liability for matters arising at or prior to the completion of the merger to the fullest extent provided by applicable law. NetApp also has agreed that it will maintain in place existing indemnification and exculpation rights in favor of Data Domain’s and its subsidiaries’ directors and officers for six years after the merger, and that it will enter into a policy of directors’ and officers’ liability insurance coverage providing at least equivalent insurance coverage of Data Domain’s and its subsidiaries’ directors and officers for six years following completion of the merger, except that NetApp is not required to incur annual premium expenses in excess of two hundred percent (200%) of the amount paid by Data Domain for coverage for its last fiscal year.


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NetApp’s Reasons for the Merger
 
NetApp’s board of directors approved the merger agreement at a special meeting held on June 2, 2009, and determined that the merger agreement and the merger are in the best interests of NetApp and its stockholders. At a special meeting on June 2, 2009, the board of directors approved an amendment to the merger agreement and determined that the merger agreement, as amended, and the merger are in the best interests to NetApp and its stockholders. In reaching this decision, NetApp’s board of directors considered the financial performance and condition, business operations and prospects of each of NetApp, Data Domain and the combined company, the terms and conditions of the merger agreement and the ancillary documents, the results of the due diligence investigation conducted by NetApp’s management, accountants and legal counsel, and the analysis of NetApp’s legal and financial advisors.
 
NetApp’s board of directors also considered a number of potential benefits of the merger, including those listed below:
 
  •  the acquisition of Data Domain is expected to complement NetApp’s storage and data management business, and maximize growth of the combined company and market adoption of NetApp and Data Domain product offerings;
 
  •  the merger will permit NetApp to enhance product offerings to international markets and a greater number of enterprise customers;
 
  •  the merger will expand NetApp’s product portfolio, including the addition of multi-vendor disk-based backup solutions currently offered in the Data Domain product line;
 
  •  the merger will provide NetApp’s resellers with access to an industry-leading deduplication solution for disk-based backup solutions and channel partners with a more robust partner program;
 
  •  the merger will allow NetApp to capture a greater share of the capacity optimized disk market;
 
  •  the merger advances NetApp’s ability to enable customers to adopt disk-based backup in any storage environment; and
 
  •  the merger is expected to increase operational efficiency and create opportunities for cost reduction through the elimination of redundant overhead expenses and public company costs.
 
NetApp’s board of directors also considered a number of potentially negative factors, including those listed below:
 
  •  the risk that the value of the Data Domain business could decline after the execution of the merger agreement, particularly in light of the fact that the merger consideration would not be adjusted to reflect declines in the market price of Data Domain common stock;
 
  •  the risk that the potential benefits of the merger would not be realized fully as a result of challenges the companies might face in integrating their technology, personnel and operations, as well as general industry-wide or economic conditions or other factors;
 
  •  the risk that, if the merger is not completed, NetApp’s management would have devoted substantial time and resources to the combination at the expense of attending to and growing NetApp’s business or other business opportunities;
 
  •  the risk associated with the additional demands that the acquisition of Data Domain would place on NetApp and its management, including the potential disruption of NetApp’s ongoing business as NetApp’s management and employees are required to dedicate significant time and effort in order to integrate the two companies’ systems, cultures, processes, controls and two separate client experiences; and
 
  •  the risk that the potential growth, perceived synergies and anticipated opportunities considered by NetApp’s board of directors will not be achieved through the completion of the merger.
 
The foregoing list comprises the material factors considered by NetApp’s board of directors in its consideration of the merger and intended to be a summary rather than an exhaustive list. In view of the variety and complexity of factors and information considered, NetApp’s board of directors did not find it practicable to, and did


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not, make specific assessments of, quantify or otherwise assign relative weights to the specific factors considered in reaching its decision. Rather, the decision was made after consideration of all of the factors as a whole. In addition, individual members of NetApp’s board of directors may have given different weight to different factors.
 
Board of Directors and Management of NetApp Following Completion of the Merger
 
Upon completion of the merger, the current directors and officers of NetApp are expected to continue in their current positions. Information about the current NetApp directors and executive officers can be found in the documents listed under the heading “NetApp SEC Filings” in the section entitled “Where You Can Find More Information” beginning on page 96.
 
Public Trading Markets
 
NetApp’s common stock trades on the NASDAQ Global Select Market under the symbol “NTAP.” Data Domain’s common stock trades on the NASDAQ Global Select Market under the symbol “DDUP.” Upon completion of the merger, Data Domain common stock will be delisted from the NASDAQ Global Select Market and deregistered under the Exchange Act. The newly issued NetApp common stock issuable pursuant to the merger agreement will be listed on the NASDAQ Global Select Market. The shares of NetApp common stock to be issued in connection with the merger will be freely transferable under the Securities Act.
 
NetApp’s Dividend Policy
 
NetApp has never paid cash dividends on its capital stock. NetApp currently anticipates retaining all available funds, if any, to finance internal growth and product development as well as other possible management initiatives, including stock repurchases and acquisitions. Payment of dividends in the future will depend upon NetApp’s earnings and financial condition and such other factors as the directors may consider or deem appropriate at the time.
 
Appraisal Rights
 
Under Section 262 of the DGCL, any holder of Data Domain common stock who does not wish to accept the merger consideration may elect to exercise appraisal rights in lieu of receiving the merger consideration. A stockholder who exercises appraisal rights may petition the Delaware Court of Chancery to determine the “fair value” of his, her or its shares, exclusive of any element of value arising from the accomplishment or expectation of the first-step merger, and receive payment of fair value in cash, together with interest, if any. However, the stockholder must comply with the provisions of Section 262 of the DGCL.
 
The following discussion is a summary of the law pertaining to appraisal rights under the DGCL. The full text of Section 262 of the DGCL is attached to this proxy statement/prospectus as Appendix C. All references in Section 262 of the DGCL and in this summary to a “stockholder” are to the record holder of the shares of Data Domain common stock who exercises appraisal rights.
 
Under Section 262 of the DGCL, when a merger is submitted for approval at a meeting of stockholders, as in the case of the merger agreement, the company, not less than 20 days prior to the meeting, must notify each of its stockholders entitled to appraisal rights that appraisal rights are available and include in the notice a copy of Section 262 of the DGCL. This proxy statement/prospectus constitutes the required notice, and the applicable statutory provisions are attached to this proxy statement/prospectus as Appendix C. This summary of appraisal rights is not a complete summary of the law pertaining to appraisal rights under the DGCL and is qualified in its entirety by the text of Section 262 of the DGCL attached as Appendix C. Any holder of Data Domain common stock who wishes to exercise appraisal rights or who wishes to preserve the right to do so should review the following discussion and Appendix C carefully. Failure to comply with the procedures of Section 262 of the DGCL in a timely and proper manner will result in the loss of appraisal rights. A stockholder who loses his, her or its appraisal rights, will be entitled to receive the merger consideration described in the merger agreement.


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Stockholders wishing to exercise the right to seek an appraisal of their shares must do ALL of the following:
 
  •  the stockholder must not vote in favor of the proposal to adopt the merger agreement. Because a proxy that does not contain voting instructions will, unless revoked, be voted in favor of the proposal, a stockholder who votes by proxy and who wishes to exercise appraisal rights must vote against the proposal, abstain or not vote its shares;
 
  •  the stockholder must deliver to Data Domain a written demand for appraisal before the vote on the merger agreement at the special meeting;
 
  •  the stockholder must continuously hold the shares from the date of making the demand through the effective time of the first-step merger. A stockholder will lose appraisal rights if the stockholder transfers the shares before the effective time of the merger; and
 
  •  the stockholder or the surviving company must file a petition in the Delaware Court of Chancery requesting a determination of the fair value of the shares within 120 days after the effective time of the first-step merger. The surviving company is under no obligation to file any petition and has no intention of doing so.
 
Voting, in person or by proxy, against, abstaining from voting on or failing to vote on the proposal to adopt the merger agreement will not constitute a written demand for appraisal as required by Section 262 of the DGCL. The written demand for appraisal must be in addition to and separate from any proxy or vote.
 
Only a holder of record of shares of Data Domain common stock issued and outstanding immediately prior to the effective time of the first-step merger may assert appraisal rights for the shares of stock registered in that holder’s name. A demand for appraisal must be executed by or on behalf of the stockholder of record, fully and correctly, as the stockholder’s name appears on the stock certificates. The demand must reasonably inform Data Domain of the identity of the stockholder and that the stockholder intends to demand appraisal of his, her or its common stock. STOCKHOLDERS WHO HOLD THEIR SHARES IN BROKERAGE ACCOUNTS OR OTHER NOMINEE FORMS, AND WHO WISH TO EXERCISE APPRAISAL RIGHTS, SHOULD CONSULT WITH THEIR BROKERS TO DETERMINE THE APPROPRIATE PROCEDURES FOR THE NOMINEE HOLDER TO MAKE A DEMAND FOR APPRAISAL OF THOSE SHARES. A PERSON HAVING A BENEFICIAL INTEREST IN SHARES HELD OF RECORD IN THE NAME OF ANOTHER PERSON, SUCH AS A BROKER OR NOMINEE, MUST ACT PROMPTLY TO CAUSE THE RECORD HOLDER TO FOLLOW PROPERLY AND IN A TIMELY MANNER THE STEPS NECESSARY TO PERFECT APPRAISAL RIGHTS.
 
A stockholder who elects to exercise appraisal rights under Section 262 of the DGCL should mail or deliver a written demand to:
 
Data Domain, Inc.
2421 Mission College Blvd.
Santa Clara, CA 95054
Attention: Corporate Secretary
 
If the merger is completed, NetApp will give written notice of the effective time of the merger within 10 days after the effective time to each former Data Domain stockholder who did not vote in favor of the merger proposal and who made a written demand for appraisal in accordance with Section 262 of the DGCL. Within 120 days after the effective time of the merger, but not later, either the surviving company or any dissenting stockholder who has complied with the requirements of Section 262 of the DGCL may file a petition in the Delaware Court of Chancery demanding a determination of the value of the shares of Data Domain common stock held by all dissenting stockholders. The surviving company is under no obligation to file any petition and has no intention of doing so. Stockholders who desire to have their shares appraised should initiate any petitions necessary for the perfection of their appraisal rights within the time periods and in the manner prescribed in Section 262 of the DGCL.
 
Within 120 days after the effective time of the first-step merger, any stockholder who, to that point in time, has complied with the provisions of Section 262 of the DGCL, may receive from the surviving company, upon written request, a statement setting forth the aggregate number of shares not voted in favor of the merger proposal and with


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respect to which Data Domain has received demands for appraisal, and the aggregate number of holders of those shares. The surviving company must mail this statement to the stockholder within the later of 10 days of receipt of the request or 10 days after expiration of the period for delivery of demands for appraisal.
 
If any party files a petition for appraisal in a timely manner, the Delaware Court of Chancery will determine which stockholders are entitled to appraisal rights and may require the stockholders demanding appraisal who hold certificated shares to submit their stock certificates to the court for notation of the pendency of the appraisal proceedings and any stockholder who fails to comply with this direction may be dismissed from the proceedings. The Delaware Court of Chancery will thereafter determine the fair value of the shares of Data Domain common stock held by dissenting stockholders, exclusive of any element of value arising from the accomplishment or expectation of the merger, but together with interest, if any, to be paid on the amount determined to be fair value.
 
In determining the fair value, the Delaware Court of Chancery will take into account all relevant factors. The Delaware Supreme Court has stated that “proof of value by any techniques or methods that are generally considered acceptable in the financial community and otherwise admissible in court” should be considered in the appraisal proceedings. In addition, Delaware courts have decided that the statutory appraisal remedy, in cases of unfair dealing, may or may not be a dissenter’s exclusive remedy. If no party files a petition for appraisal in a timely manner, then stockholders will lose the right to an appraisal, and will instead receive the merger consideration described in the merger agreement. The fair value of their shares as determined under Section 262 of the DGCL could be greater than, the same as, or less than the merger consideration. An opinion of an investment banking firm as to the fairness from a financial point of view of the consideration payable in a merger is not an opinion as to, and does not in any manner address, fair value under Section 262 of the DGCL.
 
The Delaware Court of Chancery will determine the costs of the appraisal proceeding and will allocate those costs to the parties as the Delaware Court of Chancery determines to be equitable under the circumstances. Upon application of a stockholder, the Delaware Court of Chancery may order all or a portion of the expenses incurred by any stockholder in connection with the appraisal proceeding, including reasonable attorneys’ fees and the fees and expenses of experts, to be charged pro rata against the value of all shares entitled to appraisal.
 
Any stockholder who has duly demanded an appraisal in compliance with Section 262 of the DGCL may not, after the effective time of the first-step merger, vote the shares subject to the demand for any purpose or receive any dividends or other distributions on those shares, except dividends or other distributions payable to holders of record of shares as of a record date prior to the effective time of the first-step merger.
 
Any stockholder may withdraw a demand for appraisal and accept the merger consideration by delivering a written withdrawal of the demand for appraisal to the surviving company, except that any attempt to withdraw made more than 60 days after the effective time of the first-step merger will require written approval of the surviving company, and no appraisal proceeding in the Delaware Court of Chancery will be dismissed as to any stockholder without the approval of the Delaware Court of Chancery, and may be conditioned on the terms the Delaware Court of Chancery deems just. If the stockholder fails to perfect, successfully withdraws or loses the appraisal right, the stockholder’s shares will be converted into the right to receive the merger consideration.
 
Failure to follow the steps required by Section 262 of the DGCL for perfecting appraisal rights may result in the loss of appraisal rights. In that event, you will be entitled to receive the consideration for your dissenting shares in accordance with the merger agreement. In view of the complexity of the provisions of Section 262 of the DGCL, if you are a Data Domain stockholder and are considering exercising your appraisal rights under the DGCL, you should consult your own legal advisor.
 
Regulatory Approvals Required for the Merger
 
NetApp and Data Domain have agreed to use reasonable best efforts to obtain as promptly as practicable all regulatory approvals that are required to complete the transactions contemplated in the merger agreement. This includes filing all required notices to governmental authorities, including the required filings with the Department of Justice, or the DOJ, and the Federal Trade Commission, or the FTC, pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, referred to herein as the HSR Act. NetApp and Data Domain have


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completed, or will complete, the filing of the applications to obtain the applicable regulatory approvals. NetApp and Data Domain are not permitted to complete the merger until the applicable waiting periods under the HSR Act have expired or been terminated.
 
Based upon an examination of information available relating to the businesses in which the companies are engaged, NetApp and Data Domain believe that the completion of the merger will not violate any U.S. antitrust laws. However, either the DOJ or FTC could open an investigation of the merger that could extend the statutory waiting period, and could also challenge or seek to block the merger under the antitrust laws, as it deems necessary or desirable in the public interest, before or after the statutory waiting period, and even after completion of the merger. State attorneys general in the various states in which NetApp and Data Domain operate may also open an investigation of the merger. In addition, in some jurisdictions, a competitor, customer or other third party could initiate a private action under the antitrust laws challenging or seeking to enjoin the merger, before or after completion of the merger. NetApp and Data Domain cannot be sure that a challenge to the merger will not be made or that, if a challenge is made, NetApp and Data Domain will prevail.
 
On July 2, 2009, the Federal Trade Commission granted early termination of the HSR waiting period.


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THE MERGER AGREEMENT
 
The following description describes the material terms of the merger agreement. This description of the merger agreement is qualified in its entirety by reference to the full text of the merger agreement which is attached as Appendix A to this proxy statement/prospectus and is incorporated herein by reference. The merger agreement has been included to provide you with information regarding its terms. NetApp and Data Domain encourage you to read the entire merger agreement. The merger agreement is not intended to provide any other factual information about NetApp or Data Domain. Such information can be found elsewhere in this proxy statement/prospectus and in the other public filings each of NetApp and Data Domain makes with the Securities and Exchange Commission, which are available without charge at www.sec.gov.
 
The Merger
 
Each of the Data Domain board of directors and NetApp board of directors has approved the merger agreement, as amended, which provides for the merger of Kentucky Merger Sub One Corporation with and into Data Domain, with Data Domain, as a wholly owned subsidiary of NetApp, remaining as the “interim” surviving entity, immediately followed (subject to the satisfaction of certain conditions described below) by the merger of the “interim” surviving entity with and into Derby Merger Sub Two LLC, with Derby Merger Sub Two LLC remaining as the surviving entity. The second step will occur only if Wilson Sonsini Goodrich & Rosati, Professional Corporation and Fenwick & West LLP deliver tax opinions at the closing, as further described below. The first-step merger and the second-step merger are referred to collectively as the merger unless otherwise indicated herein.
 
Per Share Merger Consideration
 
Each share of Data Domain common stock issued and outstanding immediately prior to the effective time of the first-step merger will be converted into the right to receive (a) $16.45 per share in cash, without interest and less any required withholding under United States federal, state, local or foreign law, referred to as the cash consideration, plus (b) a number of validly issued, fully paid and non-assessable shares of NetApp common stock equal to the following exchange ratio, which shares are referred to as the stock consideration:
 
(i) 0.7783 shares of NetApp common stock if the closing average (as defined below) is less than $17.41;
 
(ii) 0.6370 shares of NetApp common stock if the closing average is greater than $21.27; and
 
(iii) that fraction of a share of NetApp common stock (rounded to the nearest ten thousandth) equal to the quotient obtained by dividing $13.55 by the closing average, if the closing average is (A) less than or equal to $21.27 and (B) greater than or equal to $17.41.
 
The closing average is the average of the closing prices for NetApp common stock, rounded to the nearest one-hundredth of a cent, on the NASDAQ Global Select Market for the 10 most recent consecutive trading days ending on the third trading day immediately prior to the effective time of the first-step merger. Data Domain stockholders may contact Innisfree M&A Incorporated, Data Domain’s information agent, toll free at (888) 750-5834, and banks or brokers may call collect at (212) 750-5833, for information regarding the merger consideration payable in connection with the merger based on information available as of the date of inquiry.
 
In the event that the exchange ratio is greater than or equal to 0.7006 and less than 0.7783, NetApp, in its sole discretion, may (a) reduce the stock consideration by such amount as NetApp may determine and (b) increase the cash consideration by an amount equal to the product of (i) the amount of such reduction in the stock consideration multiplied by (ii) the closing average. However, NetApp may not reduce the amount of the stock consideration and increase the cash consideration to the extent that it would reasonably be expected to cause the merger to fail to qualify as a tax-free reorganization under the Internal Revenue Code, except as may be required as described below.
 
If the aggregate amount of the stock consideration issuable in the merger (including the stock consideration issuable to holders of Data Domain options and restricted stock units) would exceed 19.5% of the outstanding shares of NetApp common stock immediately prior to the effective time of the first-step merger, the stock consideration will be decreased to the minimum extent necessary so that no more than 19.5% of the outstanding shares of NetApp common stock will be issued in the merger (with such percentage measured immediately prior to


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the effective time of the first-step merger). In such event, the cash consideration will be increased by an amount equal to the product of (a) the amount of the reduction in the stock consideration multiplied by (b) the closing average. In the event that the stock consideration is decreased in accordance with this paragraph, the merger may fail to qualify as a tax-free reorganization under the Internal Revenue Code. In addition, on the third trading day preceding the date of the special meeting of the Data Domain stockholders, NetApp and Data Domain will issue a joint press release announcing the aggregate merger consideration that would be payable to the Data Domain stockholders, assuming that the merger closed on the date of the special meeting. However, there can be no assurance that the merger will close on the date of the special meeting of the stockholders. As such, the assumptions in the joint press release may differ from the actual merger consideration payable in the merger at the closing. Further, the determination of whether the merger will qualify as a tax-free reorganization will depend upon the value of NetApp common stock on the last business day preceding the closing. If the first-step merger closes after the date of the special meeting, stockholders will not know on the date of the special meeting whether the merger will qualify as a tax-free reorganization or will be a fully taxable transaction. The parties anticipate that the first-step merger will close on the date of the special meeting. In connection with the closing of the first-step merger, NetApp will issue another press release confirming the aggregate merger consideration payable to the Data Domain stockholders and announcing whether the merger qualifies as a tax-free reorganization or is a fully taxable transaction.
 
The stock consideration will be adjusted appropriately to reflect the effect of any stock split, reverse stock split, stock dividend (including any dividend or distribution of securities convertible into shares of NetApp’s common stock), reorganization, recapitalization, reclassification or other similar change with respect to NetApp’s common stock having a record date on or after May 20, 2009, the date the original merger agreement was signed, but before the completion of the first-step merger. No fractional shares of NetApp common stock will be issued in the first-step merger. Instead, each Data Domain stockholder otherwise entitled to a fraction of a share of NetApp common stock (after aggregating all fractional shares of NetApp common stock issuable to such stockholder) will be entitled to receive in cash the dollar amount (rounded to the nearest whole cent), without interest, determined by multiplying such fraction by the closing price of a share of NetApp common stock as reported on the NASDAQ Global Select Market on the trading day immediately prior to the date the first-step merger is completed.
 
As a result of the first-step merger, each share of common stock of Kentucky Merger Sub One issued and outstanding immediately prior to the effective time of the first-step merger will be converted into common stock of the “interim” surviving entity. If the second-step merger occurs, each share of common stock of the “interim” surviving entity issued and outstanding immediately prior to the effective time of the second-step merger will be converted into membership interests of Merger Sub Two.
 
Treatment of Data Domain Stock Options and Other Equity-Based Awards
 
Data Domain Stock Options
 
Each outstanding option to acquire Data Domain common stock granted under Data Domain’s stock incentive plans will be assumed and converted automatically at the effective time of the first-step merger into an option to purchase NetApp common stock and will continue to be governed by the terms of the applicable Data Domain stock plan and related grant agreement under which it was granted, except that:
 
  •  The number of shares of NetApp common stock subject to each converted Data Domain stock option will equal the product, rounded down to the nearest whole share of NetApp common stock, of (A) the number of shares of Data Domain common stock previously subject to the Data Domain stock option and (B) the option exchange ratio, which is the sum of (X) the exchange ratio for the stock consideration payable to Data Domain stockholders in the merger (which will be a number greater than or equal to 0.6370 shares and less than or equal to 0.7783 shares of NetApp common stock) and (Y) a fraction (represented as a decimal) whose numerator is the cash consideration and whose denominator is the closing average as defined herein; and
 
  •  The exercise price of NetApp common stock subject to each converted Data Domain stock option will equal the exercise price for each share of Data Domain common stock previously subject to the Data Domain option, divided by the option exchange ratio, rounded up to the nearest cent.


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Data Domain Restricted Stock Units and Restricted Shares
 
Each of Data Domain’s restricted stock units outstanding at the effective time of the first-step merger will be assumed and converted into a restricted stock unit representing the right to receive the merger consideration payable for shares underlying each assumed and converted restricted stock unit. The assumed and converted restricted stock units will otherwise be payable or distributable in accordance with the same terms and conditions of the agreements and the applicable Data Domain stock plans, including vesting restrictions, that applied to such Data Domain restricted stock units immediately prior to the effective time of the first-step merger.
 
Each of Data Domain’s unvested shares of restricted stock outstanding at the effective time of the first-step merger will be assumed and converted into the right to receive the merger consideration payable for such shares. The merger consideration payable for such unvested shares of restricted stock will otherwise be payable or distributable in accordance with the terms and conditions, including vesting restrictions that applied to such shares of Data Domain restricted stock immediately prior to the effective time of the first-step merger.
 
NetApp has agreed to file a Form S-8 registration statement within two business days of the effective time of the first-step merger with the SEC to the extent eligible to register the NetApp common stock subject to the assumed and converted stock options and restricted stock units.
 
Completion of the Merger
 
The merger agreement requires the parties to complete the merger after all of the conditions to the completion of the merger contained in the merger agreement are satisfied or waived, including the adoption of the merger agreement by the stockholders of Data Domain. The first-step merger will become effective upon the filing of a certificate of merger with the Secretary of State of the State of Delaware, or at such later time as is agreed to by NetApp, Kentucky Merger Sub One and Data Domain and specified in the certificate of merger. The second-step merger will become effective, if at all, at the time of filing of a certificate of merger with the Secretary of State of the State of Delaware. Because the completion of the merger is subject to the receipt of governmental and regulatory approvals and the satisfaction of other conditions, the exact timing of the completion of the merger cannot be predicted.
 
Conversion of Shares; Exchange of Certificates
 
The merger agreement provides that NetApp will select a reputable bank or trust company, reasonably acceptable to Data Domain, to act as the exchange agent. The merger agreement provides that on or prior to the date of completion of the first-step merger, NetApp will deposit with the exchange agent a sufficient amount of cash to make the payment of the cash consideration, a sufficient number of shares of NetApp common stock to provide for the issuance of the stock consideration, and a sufficient amount of cash to make payments in lieu of fractional shares and any dividends or distributions to which holders of Data Domain common stock are entitled pursuant to the terms of the merger agreement. The exchange agent will be entitled to deduct and withhold from the cash amounts payable to any Data Domain stockholder the amounts it is required to deduct and withhold under any federal, state, local or foreign tax law. If the exchange agent withholds any amounts, these amounts will be treated for all purposes of the merger as having been paid to the stockholders from whom they were withheld.
 
The merger agreement contemplates that, promptly following the completion of the first-step merger, the exchange agent will mail to each record holder of Data Domain common stock immediately prior to the completion of the first-step merger a letter of transmittal and instructions for surrendering and exchanging the record holder’s Data Domain stock certificates. The merger agreement provides that, upon surrender of a Data Domain common stock certificate for exchange to the exchange agent (or upon receipt of an appropriate agent’s message in the case of book-entry shares), together with a duly signed and completed letter of transmittal, and such other documents as the exchange agent or NetApp may reasonably require, the holder of the Data Domain stock certificate will be entitled to receive the following:
 
  •  the number of shares of NetApp common stock calculated based on the exchange ratio (which, at NetApp’s election, may be in book-entry form unless a physical stock certificate is requested or is otherwise required by applicable law);


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  •  the per share cash amount payable for each share of Data Domain common stock;
 
  •  cash in lieu of any fractional share of NetApp common stock; and
 
  •  cash in respect of any dividends or other distributions declared or made by NetApp after the date of the merger agreement.
 
After the completion of the first-step merger, all holders of certificates representing shares of Data Domain common stock that were outstanding immediately prior to the completion of the first-step merger will cease to have any rights as stockholders of Data Domain, other than the right to receive the merger consideration (or, in the alternative, the appraisal rights described under the heading “Data Domain Proposal 1 — The Merger — Appraisal Rights,” if so elected) and any rights to dividends or other distributions. In addition, no transfer of Data Domain common stock after the completion of the first-step merger will be registered on the stock transfer books of Data Domain.
 
If any Data Domain stock certificate has been lost, stolen or destroyed, the exchange agent will issue in exchange for such lost, stolen or destroyed stock certificate the merger consideration upon the delivery of an affidavit by the owner of such stock certificate claiming that such stock certificate has been lost, stolen or destroyed. However, NetApp and/or the exchange agent may, in its discretion and as a condition to the payment of cash or the issuance of any shares of NetApp common stock in exchange therefor, also require the owner of such lost, stolen or destroyed stock certificate to deliver a bond as indemnity against any claim that may be made with respect to that stock certificate against NetApp, the “interim” surviving entity, the surviving entity or the exchange agent.
 
Stock certificates should not be surrendered for exchange by Data Domain stockholders before the completion of the first-step merger and should be sent only pursuant to instructions set forth in the letters of transmittal, which the merger agreement provides will be mailed to Data Domain stockholders promptly following the completion of the first-step merger. In all cases, the cash payments, shares of NetApp common stock and cash in lieu of fractional shares will be delivered only in accordance with the procedures set forth in the letter of transmittal.
 
Representations and Warranties
 
In the merger agreement, Data Domain, NetApp, Kentucky Merger Sub One Corporation and Derby Merger Sub Two LLC each made representations and warranties relating to, among other things:
 
  •  organization and standing;
 
  •  corporate power and authority to enter into and perform its obligations under, and enforceability of, the merger agreement;
 
  •  the absence of conflicts with organizational documents, other contracts and applicable laws;
 
  •  required regulatory filings and consents and approvals of governmental entities;
 
  •  capitalization;
 
  •  documents filed with the SEC and other governmental authorities;
 
  •  financial statements and controls;
 
  •  the absence of undisclosed liabilities;
 
  •  the absence of certain changes since a recent balance sheet date (in the case of NetApp and Data Domain only);
 
  •  the absence of litigation and orders; and
 
  •  broker’s fees.


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In the merger agreement, NetApp, Kentucky Merger Sub One Corporation and Derby Merger Sub Two LLC also each made representations and warranties relating to:
 
  •  their not owning any shares of Data Domain common stock; and
 
  •  available funding.
 
In the merger agreement, Data Domain also made representations and warranties relating to:
 
  •  subsidiaries;
 
  •  compliance with laws and orders;
 
  •  permits;
 
  •  material contracts;
 
  •  tax matters;
 
  •  employee benefits;
 
  •  labor matters;
 
  •  real property;
 
  •  environmental matters;
 
  •  assets and personal property;
 
  •  intellectual property;
 
  •  insurance;
 
  •  the absence of transactions with related parties;
 
  •  state anti-takeover statutes; and
 
  •  receipt by the Data Domain board of directors of an opinion from Qatalyst Partners LP.
 
Material Adverse Effect
 
Several of the representations, warranties, covenants, closing conditions and termination provisions in the merger agreement use the phrase “material adverse effect.” The merger agreement provides that “material adverse effect” means, with respect to either NetApp or Data Domain, as the case may be, any fact, circumstance, change or effect that, individually or when taken together with all other such facts, circumstances, changes or effects that exist at the date of determination of the occurrence of the material adverse effect that:
 
  •  is or would reasonably be expected to have a material adverse effect on the business, operations, financial condition or results of operations of NetApp or Data Domain, as applicable, taken as a whole; or
 
  •  is or would reasonably be expected to have a material adverse effect on NetApp’s or Data Domain’s ability, as applicable, to complete the merger in accordance with the terms of the merger agreement and applicable law.
 
The merger agreement provides, however, that none of the following (by themselves or when taken with any other fact, circumstance, change or effect) will be deemed to constitute, or be taken into account in determining whether there has occurred or could reasonably be expected to occur, a material adverse effect on NetApp or Data Domain, as applicable:
 
  •  changes in the general economic conditions in the United States or any other country or region in the world, or changes in conditions in the global economy generally, to the extent that they do not have a disproportionate impact on NetApp or Data Domain relative to other companies and operating in the same industries in which NetApp or Data Domain operates;


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  •  changes in general conditions in the industries in which NetApp or Data Domain operates, to the extent that they do not have a disproportionate impact on NetApp or Data Domain relative to other companies operating in the same industries in which NetApp or Data Domain operates;
 
  •  changes in generally accepted accounting principles or other accounting standards, or the interpretation of such principles or standards by a third party, applicable federal, state, local, municipal, foreign or other law or regulatory conditions, or the interpretation of such law or regulations by a third party;
 
  •  any failure to take any action or the taking of any specific action by NetApp or Data Domain taken with the prior written consent or written direction of the other party;
 
  •  the taking of any specific action expressly required by the merger agreement;
 
  •  acts of war, armed hostilities or terrorism, to the extent that they do not have a disproportionate impact on NetApp or Data Domain relative to other companies operating in the same industries in which NetApp or Data Domain operates;
 
  •  changes in the trading price or trading volume of NetApp’s or Data Domain’s common stock, in and of itself, provided that the exception described in this bullet shall not in any way prevent or otherwise affect a determination that any fact, circumstance, change or effect that has resulted in, or contributed to, a material adverse effect;
 
  •  the public announcement of the merger agreement or pendency of the merger, including any loss of employees, provided that the exception described in this bullet shall not apply to any fact, circumstance, change or effect related to or caused by any legal proceedings resulting from the announcement and pendency of the merger and the transactions contemplated by the merger agreement;
 
  •  any failure of NetApp or Data Domain to meet any public or internal estimates or expectations of revenue, earnings or other financial performance or results of operations for any period, or failure to meet any internal budgets, plans, or forecasts of revenues, earnings or other financial performance or results of operations (it being understood that any underlying cause of any such failure may be deemed to constitute, in and of itself, a material adverse effect and may be taken into consideration when determining whether a material adverse effect has occurred); or
 
  •  stockholder class action, derivative litigation or other legal proceedings made or brought by any of the current or former stockholders of NetApp or Data Domain against NetApp or Data Domain arising out of the merger or any other transactions contemplated by the merger agreement.
 
Covenants; Conduct of Business Prior to the Merger
 
Interim Conduct of Data Domain’s Business
 
Data Domain has undertaken customary covenants that place restrictions on it and its subsidiaries until the effective time of the first-step merger. In general, Data Domain agreed to (1) carry on its business in the ordinary course in all material respects in substantially the same manner as previously conducted and in material compliance with all applicable laws and (2) use commercially reasonable efforts consistent with its past practices to (A) preserve intact its present business organization, (B) keep available the services of its present officers and employees and (C) preserve its relationships with customers, suppliers, distributors, licensors, licensees and others with which it has significant business dealings.
 
Data Domain further agreed that, except (a) as expressly contemplated or permitted by the merger agreement, (b) as specifically set forth in Data Domain’s disclosure schedule that was delivered to NetApp on May 20, 2009, (c) as required by applicable law or the terms of any Data Domain employee benefit plan, or (d) with NetApp’s prior written consent, Data Domain will not, and will not permit any of its subsidiaries to, among other things, undertake the following actions:
 
  •  amend its certificate of incorporation or bylaws;


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  •  authorize for issuance, issue, sell, deliver or agree or commit to issue, sell or deliver securities of Data Domain or any of its subsidiaries, except for the issuance and sale of capital stock pursuant to outstanding stock awards, the issuance of shares pursuant to the Data Domain 2007 Employee Stock Purchase Plan and the issuance of up to 250,000 restricted stock units granted in the ordinary course of business after the date of the merger agreement;
 
  •  acquire, redeem, or amend any securities of Data Domain or any of its subsidiaries, except to the extent that such acquisition or redemption is pursuant to the terms of any employee benefit plan or any agreement subject to any such employee benefit plan;
 
  •  other than dividends or distributions made by any direct or indirect wholly owned subsidiary of Data Domain to Data Domain or one of its subsidiaries, set any record or payment dates for the payment of any dividends or distributions on capital stock, split, combine or reclassify any shares of capital stock, declare, set aside or pay any dividend or other distribution in respect of any shares of capital stock, or make any other actual, constructive or deemed distribution in respect of the shares of capital stock;
 
  •  propose or adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of Data Domain or any of its subsidiaries;
 
  •  (i) except to or from subsidiaries of Data Domain, incur or assume any indebtedness or issue any debt securities, assume or guarantee the obligations of any other person or acquire or make any capital contributions to or investments in any other person, (ii) except for advances made in the ordinary course of business consistent with past practice, make any loans or advances to employees of Data Domain or any of its subsidiaries, or (iii) mortgage or pledge any of its or its subsidiaries assets, tangible or intangible, or create or suffer to exist any lien, subject to certain exceptions;
 
  •  (i) except as may be required by applicable law or the terms of any employee benefit plan in effect at the time of the merger agreement, enter into, adopt, amend, modify or terminate any employee benefit plan in any material respect, (ii) except for certain limited increases made in the ordinary course of business, increase or decrease the compensation or fringe benefits of any employee or director of Data Domain or any of its subsidiaries, pay any bonus or special remuneration to any employee, consultant, independent contractor or director, or pay any benefit not required by any employee benefit plan, or (iii) amend the targets or the goals of the 2009 Executive Bonus Plan;
 
  •  forgive any loans to any employees, officers or directors of Data Domain or any of its subsidiaries, or any of their respective affiliates;
 
  •  make any deposits or contributions to or fund the compensation or benefits under the employee benefit plans or contracts subject to the employee benefit plans, other than as required pursuant to the terms of the employee benefit plans or any contracts subject to the employee benefit plans in effect as of the date of the merger agreement;
 
  •  enter into, amend, or extend any collective bargaining agreement or similar contract;
 
  •  (i) acquire, lease or license any property or assets with a fair market value in excess of $5,000,000 in the aggregate per fiscal quarter, except transactions required pursuant to existing contracts, or (ii) sell, lease, license or dispose of any property or assets with a net book value in excess of $100,000 in any individual transaction, except (A) transactions required pursuant to existing contracts or (B) transactions in the ordinary course of business consistent with past practice;
 
  •  except as may be required as a result of a change in applicable laws or in the generally accepted accounting principles (as applied in the United States), make any change in any of the accounting principles or practices used by Data Domain;
 
  •  make or change any tax election, settle or compromise any material United States federal, state, local or foreign tax liability, change any material tax accounting method, or consent to any extension or waiver of any limitation period with respect to any claim or assessment for material taxes;


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  •  enter into or amend any licenses of Data Domain intellectual property, except, in the ordinary course of business, to customers, or for non-exclusive in-bound licenses for commercially available technology, in each case in the ordinary course of business consistent with past practice;
 
  •  grant any exclusive rights with respect to any Data Domain intellectual property, divest any Data Domain intellectual property, or materially modify Data Domain’s warranty terms, except if such divestiture, amendment or modification individually or in the aggregate, is not material to Data Domain or any of its subsidiaries;
 
  •  authorize, incur or commit to incur any capital expenditures that do not exceed $5,000,000 in the aggregate per fiscal quarter, other than pursuant to existing contracts as in effect as of the date of the merger agreement;
 
  •  settle or compromise any pending or threatened legal proceeding or pay, discharge or satisfy or agree to pay, discharge or satisfy any claim, liability or obligation, unless such settlement has been reserved for in, or incurred since the date of, the Data Domain balance sheet, is covered by existing insurance policies or such payment does not exceed $200,000 in the aggregate;
 
  •  except as required by applicable laws or the generally accepted accounting principles (as applied in the United States), revalue in any material respect any of its properties or assets including writing-off accounts receivable;
 
  •  other than in the ordinary course of business consistent with past practice, enter into, renew, extend or terminate any material contract or make any material amendment or change in any such material contract;
 
  •  enter into any lease or sublease of material real property (whether as a lessor, sublessor, lessee or sublessee) with a term that exceeds six (6) months; (ii) modify, amend or exercise any right to renew any lease or sublease of real property; or (iii) make application for the opening, relocation or closing of any, or open, relocate or close any, branch office or other real property;
 
  •  make any representations or issue any communications to current or former employee, independent contractor or director that are inconsistent with the merger agreement or the transactions contemplated thereby, including any representations regarding offers of employment from NetApp, any subsidiary of NetApp, or the surviving entity;
 
  •  enter into a contract to do any of the foregoing or make any arrangement or understanding with respect to any of the foregoing; or
 
  •  take any action which would materially impair Data Domain’s ability to complete the transactions contemplated by the merger agreement or materially delay the completion of the merger and the other transactions contemplated by the merger agreement.
 
Interim Conduct of NetApp’s Business
 
NetApp has agreed that, unless approved by Data Domain in writing in advance, neither NetApp nor any of its subsidiaries will acquire or agree to acquire any other entity to the extent that such acquisition would reasonably be expected to (i) impair the ability of NetApp, Merger Sub One, Merger Sub Two and Data Domain to complete the merger or (ii) delay the completion of the merger in any material respect.
 
Other Covenants
 
The merger agreement also contains covenants relating to the preparation of this proxy statement/prospectus and the holding of the annual and special meeting of Data Domain stockholders, the granting of access to information of the other company and the coordination of public announcements with respect to the transactions contemplated by the merger agreement, cooperation regarding regulatory filings, employee matters, efforts to develop and use commercially reasonable efforts to implement any reasonable remediation plan requested by NetApp with respect to any open source materials used by Data Domain in its products and other matters as described further below.


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Limitation on the Solicitation, Negotiation and Discussion of Other Acquisition Proposals by Data Domain
 
Data Domain also has agreed that neither it nor its subsidiaries will, and that they will not authorize or permit their respective directors, officers, or other employees, controlled affiliates, advisors or other agents to, directly or indirectly:
 
  •  solicit, initiate or knowingly encourage or facilitate or knowingly induce any inquiry with respect to, or the making, submission or announcement of, an “acquisition proposal” or an “acquisition transaction” (each as defined below);
 
  •  furnish to any person any non-public information relating to Data Domain or any of its subsidiaries, or afford access to the business properties, assets, books or records of Data Domain or any of its subsidiaries to any person or entity, or take any other action in a manner that is intended or would reasonably be expected to assist or facilitate any inquiries or the making of any proposal that constitutes or could lead to an acquisition proposal or an acquisition transaction;
 
  •  participate or engage in discussions or negotiations with any person with respect to an acquisition proposal or an acquisition transaction;
 
  •  approve, endorse or recommend an acquisition proposal or an acquisition transaction;
 
  •  enter into any letter of intent, memorandum of understanding or other agreement contemplating or otherwise relating to an acquisition proposal or acquisition transaction;
 
  •  terminate, amend or waive any material rights under (or fail to enforce by seeking an injunction or by seeking to specifically enforce the material terms of) any confidentiality or “standstill” or other similar agreement between Data Domain or any of its subsidiaries and any other person;
 
  •  take any action to exempt any person from applicable anti-takeover laws; or
 
  •  agree with a third party to do any of the foregoing, or propose to third parties, including Data Domain stockholders, to do any of the foregoing.
 
As used in the merger agreement, an “acquisition proposal” is any indication of interest, offer or proposal relating to an acquisition transaction (as defined below) from any person other than NetApp or any of its affiliates.
 
As used in the merger agreement, an “acquisition transaction” is any transaction or series of related transactions (other than a transaction with NetApp or any of its affiliates) involving:
 
  •  any direct or indirect purchase or other acquisition by any person or group from Data Domain of 15% or more of Data Domain’s total outstanding equity interests or voting securities, or any tender offer or exchange offer that, if completed, would result in any person or group beneficially owning 15% or more of Data Domain’s outstanding equity interests or voting securities;
 
  •  any direct or indirect purchase or other acquisition of 50% or more of any class of equity or other voting securities of one or more of Data Domain’s subsidiaries that, individually or in the aggregate, generate or constitute 15% or more of Data Domain’s consolidated net revenues or net income (for the 12-month period ending on the last day of Data Domain’s most recently completed fiscal year) or assets (measured by the lesser of book value or fair market value thereof as of the date of such transaction), which are referred to as significant subsidiaries;
 
  •  any merger, consolidation, business combination, liquidation, dissolution, recapitalization, reorganization or other similar transaction involving Data Domain or one or more of its significant subsidiaries, pursuant to which Data Domain’s stockholders (as a group) or the stockholders of such significant subsidiary would hold less than 85% of the equity interests in or voting securities of the surviving or resulting entity of such transaction;
 
  •  any direct or indirect sale, transfer or disposition of assets (other than in the ordinary course of business) of Data Domain or one or more of its significant subsidiaries; or
 
  •  any combination of the foregoing that results in one of the effects in the first two bullets above.


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Data Domain and its subsidiaries have also agreed:
 
  •  to cease any and all existing activities, discussions or negotiations with respect to any acquisition proposal or acquisition transaction;
 
  •  to notify NetApp promptly (but no later than 48 hours) after it receives any acquisition proposal, any request for information that would reasonably be expected to lead to an acquisition proposal, or any inquiry with respect to, or which would reasonably be expected to lead to, an acquisition proposal, and to provide NetApp with the material terms and conditions of the acquisition proposal, request or inquiry, as well as all related agreements, commitment letters and other documents relating thereto, and the identity of the person or group making any such acquisition proposal, request or inquiry;
 
  •  to keep NetApp reasonably informed of the status and any changes in the material terms and conditions of any such acquisition proposal or request; and
 
  •  to provide NetApp with at least 24 hours prior written notice (or any shorter period of advance notice provided to members of Data Domain’s board of directors) of a meeting of its board of directors (or any committee thereof) at which the board of directors (or any committee thereof) is reasonably expected to consider an acquisition proposal or acquisition transaction.
 
Exception to the Limitation on the Negotiation and Discussion by Data Domain of Other Acquisition Proposals
 
However, prior to obtaining approval of the merger proposal from its stockholders, Data Domain may engage and participate in discussions and negotiations with respect to an unsolicited, written acquisition proposal, and furnish non-public information regarding Data Domain to the party making such acquisition proposal if:
 
  •  the Data Domain board of directors determines in good faith, after consultation with its financial advisor and outside legal counsel, that the acquisition proposal either constitutes or is reasonably likely to lead to a “superior proposal” (as defined below) and the failure to take such action is reasonably likely to result in a breach of the Data Domain board of directors’ fiduciary duties to the Data Domain stockholders under Delaware law;
 
  •  none of Data Domain, any of its subsidiaries or any of their respective directors, officers or other employees, controlled affiliates, advisors or agents, collectively referred to as representatives, have breached or violated in any material respect, with respect to such acquisition proposal or any other acquisition proposal, the restrictions on solicitation of other offers;
 
  •  Data Domain has first entered into a confidentiality and “standstill” agreement with the party making the acquisition proposal on terms no less favorable to Data Domain than those contained in the Data Domain’s confidentiality agreement with NetApp, and with “standstill” provisions that do not include a “sunset,” “fall-away” or other similar exception that would result in the “standstill” provisions applicable to such other party becoming inapplicable at any time prior to the valid termination of the merger agreement;
 
  •  Data Domain provides NetApp’s Chief Executive Officer with at least 24 hours prior written notice of its intent to participate in discussions or furnish non-public information regarding Data Domain with respect to such acquisition proposal (including disclosing the identity of the party making the acquisition proposal and the material terms and conditions of such acquisition proposal); and
 
  •  Data Domain contemporaneously provides NetApp with any non-public information provided to the party making such acquisition proposal, to the extent that such information has not been previously furnished or made available by Data Domain to NetApp.
 
Reasonable Best Efforts of Data Domain to Obtain the Required Stockholder Vote
 
Data Domain has agreed to hold a meeting of its stockholders as promptly as practicable following the date of the merger agreement (which shall be within 45 days following the date that this proxy statement/prospectus is first disseminated to Data Domain stockholders) for the purpose of obtaining stockholder approval of the merger


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proposal. Data Domain will use its reasonable best efforts to solicit proxies from its stockholders to obtain such approval. Unless the merger agreement is terminated, Data Domain has agreed to submit the merger agreement to a stockholder vote even if its board of directors no longer recommends approval of the merger proposal.
 
Data Domain Board Recommendation of the Merger
 
Pursuant to the merger agreement, Data Domain’s board of directors is required to recommend that Data Domain’s stockholders adopt the merger agreement at the special meeting in accordance with the applicable provisions of Delaware law. Moreover, except as described in the merger agreement and as set forth below under the headings “Board Recommendation Change for Superior Proposal” and “Board Recommendation Change in the Absence of a Superior Proposal,” neither Data Domain’s board of directors nor any committee thereof is permitted to (i) withhold, withdraw, amend or modify the board of directors’ recommendation or (ii) approve, endorse or recommend any indication of interest, offer or proposal relating to an acquisition proposal from any person other than NetApp or its affiliates or any agreement pursuant to which any such acquisition proposal would be completed. Any of the actions listed above is referred to as a board recommendation change. However, notwithstanding the foregoing, “stop, look and listen” communications by Data Domain’s board of directors to Data Domain stockholders pursuant to Rule 14d-9(f) of the Exchange Act will not be deemed to be a board recommendation change if such communications are accompanied by a statement of Data Domain’s board of directors expressly and publicly reaffirming the board recommendation in connection with such statement or disclosure.
 
Board Recommendation Change for Superior Proposal
 
Notwithstanding the foregoing, prior to obtaining approval of the merger proposal from the Data Domain stockholders, Data Domain’s board of directors may effect a board recommendation change if all of the following conditions have been met:
 
  •  Data Domain’s board of directors has received an unsolicited acquisition proposal in writing after May 20, 2009;
 
  •  neither Data Domain nor any of its subsidiaries nor any of their respective representatives has materially breached any of the non-solicitation provisions of the merger agreement in connection with the acquisition proposal (or in connection with any other acquisition proposal made by any other person) (as described in “The Merger Agreement — Limitation on the Solicitation, Negotiation and Discussion of Other Acquisition Proposals by Data Domain”);
 
  •  Data Domain’s board of directors has determined in good faith (after consultation with its financial advisor and its outside legal counsel) that such acquisition proposal constitutes a superior proposal (as defined below) and, in light of such superior proposal, the failure to effect the board recommendation change is reasonably likely to be breach of the board of directors’ fiduciary duties to Data Domain’s stockholders under Delaware law;
 
  •  Data Domain’s board of directors has given NetApp at least five business days prior written notice of the superior proposal, which notice must include the identity of the persons making the superior proposal, all of the material terms and conditions of the superior proposal, copies of the superior proposal as well as related agreements and material documents (if available in written form), a statement that Data Domain’s board of directors intends to effect a board recommendation change in response to such superior proposal, and an opportunity for NetApp to meet with Data Domain’s board of directors, financial advisors and outside legal counsel at such times as NetApp may reasonably request for the purpose of enabling NetApp and Data Domain to discuss in good faith any modifications to the terms and conditions of the merger agreement that NetApp may propose in response to the superior proposal; and
 
  •  after such five business day period and any extensions thereof and, if requested by NetApp, meetings with NetApp and its financial advisors and legal counsel during such period, (i) NetApp has not made a proposal at least as favorable or more favorable to Data Domain’s stockholders as such acquisition proposal and (ii) Data Domain’s board of directors has determined in good faith (after consultation with its financial advisor its outside legal counsel) that such acquisition proposal continues to constitute a superior proposal


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  and, in light of such superior proposal and after good faith consideration of all proposals by NetApp, the failure to effect such board recommendation change is reasonably likely to constitute a breach of the board of directors’ fiduciary duties to Data Domain’s stockholders under Delaware law.
 
As used in the merger agreement, the term “superior proposal” means any unsolicited written offer or proposal (that has not been withdrawn) for a transaction or a series of related transactions providing for the acquisition of all of Data Domain’s outstanding voting securities, where Data Domain’s board of directors has determined in good faith (after consultation with its financial advisor and its outside legal counsel) that such proposal is more favorable to Data Domain’s stockholders than the merger described in this proxy statement/prospectus. Any such determination by Data Domain’s board of directors must take into consideration of all factors it deems to be relevant, including, but not limited to, (i) all relevant financial considerations, including conditions in the financial and credit markets, (ii) the identity of the person or persons making such offer or proposal and their sources of financing, (iii) the anticipated timing, conditions and prospects for completion of the transaction contemplated by such offer or proposal, (iv) the other terms and conditions of such offer or proposal and the implications thereof to Data Domain, including relevant legal, regulatory and other aspects of such offer or proposal deemed relevant by Data Domain’s board of directors, and (v) any proposal made by NetApp in connection therewith or response thereto.
 
Board Recommendation Change in the Absence of a Superior Proposal
 
Prior to obtaining approval of the merger proposal from Data Domain’s stockholders, Data Domain’s board of directors may effect a board recommendation change for a reason unrelated to an acquisition proposal if the conditions set forth below have been satisfied:
 
  •  Data Domain’s board of directors has determined in good faith (after consultation with its outside legal counsel) that the failure to make a board recommendation change is reasonably likely to be a breach of the board of directors’ fiduciary duties to Data Domain’s stockholders under Delaware law;
 
  •  Data Domain’s board of directors has given NetApp at least five business days prior written notice that Data Domain’s board of directors intends to effect such board recommendation change and the opportunity to meet with Data Domain’s board of directors and the Company’s financial advisors and outside legal counsel at such times as NetApp may reasonably request for the purpose of enabling NetApp and Data Domain to discuss in good faith (i) the basis and rationale for proposing to effect such board recommendation change, and/or (ii) possible modifications of the terms and conditions of the merger agreement in such a manner that would obviate the need for Data Domain’s board of directors to effect such board recommendation change; and
 
  •  after such five business day period and, if requested by NetApp, meetings with NetApp and its financial advisors and legal counsel during such period, Data Domain’s board of directors has determined in good faith (after consultation with its outside legal counsel) that the failure to effect such board recommendation change is reasonably likely to result in a breach of its fiduciary duties to Data Domain’s stockholders under Delaware law.
 
Employee Matters
 
NetApp has agreed to provide Data Domain employees who are offered and accept employment with NetApp or any subsidiary after the merger with substantially similar types and levels of benefits as those provided to similarly situated NetApp employees. Until such employees are enrolled in comparable NetApp employee benefit plans, NetApp has agreed to continue to maintain the Data Domain plans providing health, dental, vision, accidental death or disability and life insurance coverage.
 
NetApp has agreed, to the extent any Data Domain employee becomes eligible to participate in employee benefit plans of NetApp or any affiliate following the merger:
 
  •  generally to recognize each employee’s service with Data Domain prior to the completion of the merger for purposes of eligibility and vesting credits, except under defined benefit pension plans or to the extent it would result in a duplication of these benefits;


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  •  to cause any exclusion for pre-existing conditions or eligibility waiting periods under any NetApp health plans to be waived, to the extent the employee (and their eligible dependents) was not subject to such pre-existing conditions and eligibility waiting periods under comparable Data Domain plans as of the time immediately before the completion of the merger; and
 
  •  to provide each employee with credit for any deductibles paid under any Data Domain plan that provides medical, dental or vision benefits in the plan year in effect as of the closing of the merger for purposes of satisfying any applicable deductible or out-of-pocket requirements under any NetApp medical, dental or vision plans to the same extent that such expenses were recognized under the comparable Data Domain plan.
 
The merger agreement provides that prior to the effective time of the merger the Data Domain 401(k) plan shall be terminated unless NetApp provides prior notice that such plan will instead be continued and assumed by NetApp. Prior to the effective time of the merger, the Data Domain employee stock purchase plan will be terminated.
 
Indemnification and Insurance
 
The merger agreement provides that NetApp will honor and fulfill in all respects the obligations of Data Domain and its subsidiaries with respect to the indemnification of Data Domain and its subsidiaries’ directors and officers under their certificates of incorporation, bylaws and indemnification agreements effective as of the date of the merger agreement. The merger agreement also provides that, upon completion of the merger, NetApp will cause the surviving entity to indemnify and hold harmless, and provide advancement of expenses to, all past and present officers and directors of NetApp and its subsidiaries against all losses or liabilities incurred in their capacities as such to the fullest extent permitted by applicable laws.
 
The merger agreement provides that NetApp shall maintain in effect Data Domain’s current directors’ and officers’ liability insurance for a period of six (6) years, NetApp may substitute the policies of NetApp or the surviving entity, so long as the policies are no less favorable in the aggregate to the directors and officers of Data Domain than Data Domain’s current policy. Additionally, NetApp is not required to incur annual premium expenses in excess of two hundred percent (200%) of the amount paid by Data Domain for coverage for its last fiscal year. Prior to the effective time, Data Domain may also obtain a prepaid “tail” directors’ and officers’ liability insurance policy with a claims period of six years following the effective time of the merger.
 
Conditions to Complete the Merger
 
Conditions to the Obligations of NetApp and Data Domain
 
The respective obligations of Data Domain and NetApp to complete the first-step merger are subject to the satisfaction or waiver of certain conditions, including:
 
  •  the effectiveness of the registration statement of which this proxy statement/prospectus is a part with respect to the NetApp common stock to be issued in the merger under the Securities Act and the absence of any stop order or proceedings initiated or threatened by the SEC for that purpose;
 
  •  the approval of the merger proposal by Data Domain stockholders;
 
  •  the expiration or termination of all applicable waiting periods under the HSR Act;
 
  •  the approval of the listing of the NetApp common stock to be issued in the merger on the NASDAQ Global Select Market, subject to official notice of issuance; and
 
  •  the absence of any order, decree or injunction, or the threat of any order decree or injunction, by any court or other governmental entity or other law that prohibits or makes illegal completion of the transactions contemplated by the merger agreement.


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Conditions to the Obligations of NetApp
 
The merger agreement provides that the obligations of NetApp, Merger Sub One and Merger Sub Two to complete the first-step merger are subject to the satisfaction or waiver of each of the following conditions:
 
  •  the accuracy in all respects as of May 20, 2009 and the closing date of certain representations and warranties made by Data Domain in the merger agreement, relating to corporate organization, authorization to enter into the merger agreement, required consents, and inapplicability of state anti-takeover statutes;
 
  •  the accuracy in all respects as of May 20, 2009 and the closing date of certain representations and warranties made by Data Domain in the merger agreement, relating to Data Domain’s capitalization, other than inaccuracies in such representations and warranties (i) that would not result in the issuance or payment of an aggregate value of merger consideration and consideration allocated to Data Domain stock options, restricted stock and restricted stock units equal to or in excess of 101% of the aggregate value of the merger consideration otherwise issuable and payable and consideration allocated to Data Domain stock options, restricted stock and restricted stock units in the absence of such inaccuracies or (ii) that would not result in the issuance of shares of NetApp common stock equal to or in excess of 19.5% of the shares of NetApp common stock outstanding as of immediately prior to the effective time of the merger;
 
  •  the accuracy in all respects as of May 20, 2009 and the closing date of the remaining representations and warranties not qualified by “material adverse effect” made by Data Domain in the merger agreement, provided that inaccuracies in such representations and warranties will be disregarded to the extent that such inaccuracies, individually or in the aggregate, do not constitute, and would not reasonably be expected to have or result in, a material adverse effect on Data Domain;
 
  •  the accuracy in all respects as of May 20, 2009 and the closing date of the remaining representations and warranties qualified by “material adverse effect” made by Data Domain in the merger agreement;
 
  •  Data Domain’s performance, in all material respects, of all of its obligations and compliance, in all material respects, with all of its covenants or other agreements set forth in the merger agreement that are required to be performed or complied with by Data Domain at or prior to the effective time of the first-step merger;
 
  •  no material adverse effect with respect to Data Domain having occurred since May 20, 2009 that is continuing;
 
  •  Data Domain’s chief executive officer and chief financial officer having delivered to NetApp a certificate confirming that certain conditions have been satisfied; and
 
  •  there are no pending legal proceedings brought by a governmental body seeking to restrain or prohibit the completion of any of the transactions contemplated by the merger agreement or the voting agreements, or the performance of any of the transactions contemplated by the merger agreement or the voting agreements, or seeking to prohibit or impose any limitations on the ownership or operation by NetApp or any of its subsidiaries of all or any portion of Data Domain’s businesses or assets, or compelling NetApp or Data Domain or any of their subsidiaries to dispose of or hold separate any portion of Data Domain’s businesses or assets.
 
Conditions to the Obligations of Data Domain
 
The merger agreement provides that the obligations of Data Domain to complete the first-step merger are subject to the satisfaction or waiver of each of the following conditions:
 
  •  the accuracy in all respects as of the May 20, 2009 and the effective time of the merger of certain representations and warranties made by NetApp in the merger agreement, including those relating to corporate organization, authorization to enter into the merger agreement, and required consents;
 
  •  the accuracy in all respects as of May 20, 2009 and the effective time of the merger of the remaining representations and warranties not qualified by “material adverse effect” made by NetApp in the merger agreement, provided that inaccuracies in such representations and warranties will be disregarded to the


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  extent that such inaccuracies, individually or in the aggregate, do not constitute, and would not reasonably be expected to have or result in, a material adverse effect on NetApp;
 
  •  the accuracy in all respects as of May 20, 2009 and the effective time of the merger of the remaining representations and warranties qualified by “material adverse effect” made by NetApp in the merger agreement;
 
  •  NetApp’s performance of or compliance with, in all material respects, all of its agreements and covenants set forth in the merger agreement that are required to be performed or complied with by NetApp at or prior to the effective time of the first-step merger;
 
  •  no material adverse effect with respect to NetApp having occurred since May 20, 2009 that is continuing; and
 
  •  NetApp’s chief executive officer and chief financial officer having delivered to Data Domain a certificate confirming that certain conditions have been satisfied.
 
Termination of the Merger Agreement
 
The merger agreement provides that, at any time prior to the completion of the first-step merger, NetApp and Data Domain may terminate the merger agreement by mutual written consent.
 
The merger agreement also provides that, at any time prior to the completion of the first-step merger, either NetApp or Data Domain may terminate the merger agreement if:
 
  •  the merger has not been completed by December 31, 2009, provided that if the failure to complete the merger by December 31, 2009 is due solely to the failure to satisfy certain closing conditions relating to the expiration or termination of applicable waiting periods under the HSR Act, orders, decrees or injunctions by any court or other governmental entity relating to the merger, or legal proceedings brought by a governmental body seeking to restrain or prohibit the completion of any of the transactions contemplated by the merger agreement, then the right to terminate the merger agreement under this provision will not be available until March 30, 2010;
 
  •  a court or governmental body has enacted or issued a law or a final and non-appealable order prohibiting the completion of the merger or any other transaction contemplated by the merger agreement or otherwise rendering the merger illegal; or
 
  •  the Data Domain special stockholder meeting (including any adjournments and postponements thereof) has been held, a final vote on the approval of the merger proposal has been taken and Data Domain’s stockholders do not approve the merger proposal;
 
provided that in each instance, the right to terminate the merger agreement shall not be available to a company whose action or failure to act has been the cause of any of the conditions to the merger not being satisfied.
 
NetApp’s Termination Rights
 
The merger agreement further provides that NetApp may terminate the merger agreement at any time prior to the completion of the first-step merger, either before or after the requisite approval of Data Domain’s stockholders has been obtained, if:
 
  •  any of the following events have occurred (which are each referred to as a Data Domain triggering event):
 
  •  Data Domain (and, in the case of (A), any of its representatives or subsidiaries) breaches or violates in any material respect the provisions of the merger agreement relating to (A) prohibitions on the solicitation of other acquisition proposals (other than an inadvertent breach that does not result in an acquisition proposal), (B) Data Domain’s obligation to hold a meeting of its stockholders for the purpose of obtaining stockholder approval of the merger proposal, or (C) Data Domain’s obligations in connection with its board of directors’ recommendation that the Data Domain stockholders adopt the merger agreement, which collectively are referred to as the first Data Domain triggering event;


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  •  the Data Domain board of directors or a committee of the board of directors makes a board recommendation change;
 
  •  Data Domain fails to include in this proxy statement/prospectus its board of directors’ recommendation in favor of the adoption of the merger agreement;
 
  •  a tender or exchange offer relating to Data Domain common stock is commenced and (A) Data Domain does not issue a public statement (and make applicable SEC filings), within 10 business days, reaffirming the Data Domain board of directors’ recommendation of the merger and recommending rejection of the tender or exchange offer or (B) at any time after such 10 business day period, Data Domain issues a press release or files a Schedule 14D-9 with the SEC relating to the tender or exchange offer that fails to reaffirm its board of directors’ recommendation of the merger and recommendation to reject the tender or exchange offer; or
 
  •  the Data Domain board of directors fails to reaffirm its recommendation in favor of the adoption of the merger agreement within 10 business days after NetApp requests such a reaffirmation;
 
  •  subject to certain limitations, there are inaccuracies of any representation or warranty made by Data Domain in the merger agreement, provided that if any inaccuracy is curable, NetApp may not terminate the merger agreement under this provision unless the inaccuracy remains uncured for a period of 30 days following notice thereof; or
 
  •  subject to certain limitations, Data Domain has breached any of its covenants and obligations under the merger agreement, provided that if any breach is curable, NetApp may not terminate the merger agreement under this provision unless the breach remains uncured for a period of 30 days following notice thereof.
 
Data Domain’s Termination Rights
 
The merger agreement provides that Data Domain may terminate the merger agreement at any time prior to the completion of the first-step merger, either before or after the requisite approval of Data Domain’s stockholders has been obtained, if:
 
  •  subject to certain limitations, there are inaccuracies of any representation or warranty made by NetApp in the merger agreement, provided that if any inaccuracy is curable, Data Domain may not terminate the merger agreement under this provision unless the inaccuracy remains uncured for a period of 30 days following notice thereof; or
 
  •  subject to certain limitations, NetApp has breached any of its covenants and obligations under the merger agreement, provided that if any breach is curable, Data Domain may not terminate the merger agreement under this provision unless the breach remains uncured for a period of 30 days following notice thereof.
 
Finally, the merger agreement provides that Data Domain may terminate the merger agreement at any time prior to Data Domain’s special stockholder meeting, if all of the following conditions are satisfied, referred to as the superior proposal termination event:
 
  •  Data Domain has received an unsolicited, written acquisition proposal and Data Domain’s board of directors determines in good faith, after consultation with its financial advisor and outside legal counsel, that such acquisition proposal constitutes a superior proposal (as described in Data Domain Proposal 1 — The Merger — Data Domain’s Reasons for the Merger; Recommendation of the Data Domain Board of Directors”);
 
  •  neither Data Domain nor any of its subsidiaries nor any of their respective representatives has materially breached or violated any of the non-solicitation provisions of the merger agreement with such superior proposal or in connection with any other acquisition proposal made by any other person;
 
  •  Data Domain’s board of directors has determined in good faith (after consultation with its financial advisor and its outside legal counsel) that, in light of the superior proposal, the failure to terminate the merger agreement is reasonably likely to be a breach of the board of directors’ fiduciary duties to Data Domain’s stockholders under Delaware law;


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  •  Data Domain’s board of directors has given NetApp at least five business days prior written notice of the superior proposal, which notice must include the identity of the persons making the superior proposal, all of the material terms and conditions of the superior proposal, copies of the superior proposal as well as related agreements and material documents (if available in written form), a statement that Data Domain’s board of directors intends to terminate the merger agreement in response to such superior proposal, and an opportunity for NetApp to meet with Data Domain’s board of directors, financial advisors and outside legal counsel at such times as NetApp may reasonably request for the purpose of enabling NetApp and Data Domain to discuss in good faith any modifications to the terms and conditions of the merger agreement that NetApp may propose in response to the superior proposal;
 
  •  after such five business day period and any extensions thereof and, if requested by NetApp, meetings with NetApp and its financial advisors and legal counsel during such period, (i) NetApp has not made a proposal at least as favorable or more favorable to Data Domain’s stockholders as such acquisition proposal and (ii) Data Domain’s board of directors has determined in good faith (after consultation with its financial advisor its outside legal counsel) that, in light of such superior proposal and after good faith consideration of all proposals by NetApp, the failure to terminate the merger agreement is reasonably likely to constitute a breach of the board of directors’ fiduciary duties to Data Domain’s stockholders under Delaware law; and
 
  •  concurrently with the termination of the merger agreement, Data Domain enters into a definitive agreement for the superior proposal and pays NetApp a fee of $57.0 million.
 
Expenses and Termination Fees
 
The merger agreement provides that except as provided below, all fees and expenses incurred in connection with the merger agreement and the merger will be paid by the party incurring such expenses.
 
The merger agreement provides that Data Domain will pay NetApp a termination fee of $57.0 million if any one of the following events occur:
 
  •  (A) an acquisition proposal is publicly announced or otherwise becomes generally publicly known after the date of the merger agreement and prior to the date of the Data Domain special stockholder meeting, (B) the merger agreement is terminated by Data Domain or NetApp under the provision of the merger agreement permitting such termination in the event that the stockholders of Data Domain have voted not to adopt the merger agreement (or the merger agreement is terminated by Data Domain after such vote for any other reason), and (C) within twelve months following the termination of the merger agreement, Data Domain either closes a specified acquisition transaction (as defined below) or enters into a letter of intent, memorandum of understanding or other agreement with any third party providing for a specified acquisition transaction and such specified acquisition transaction or any other specified acquisition transaction is subsequently completed (whether or not such transaction is completed within twelve months following the termination of the merger agreement);
 
  •  (A) an acquisition proposal is publicly announced or otherwise becomes publicly known after May 20, 2009 and prior to the date of the Data Domain special stockholder meeting, (B) the merger agreement is terminated by Data Domain or NetApp under the provision of the merger agreement permitting such termination in the event that the merger is not completed by December 31, 2009 (or by NetApp at such later date as described in “The Merger Agreement — Termination of the Merger Agreement”), and (C) within twelve months following the termination of the merger agreement, Data Domain either closes a specified acquisition transaction or enters into a letter of intent, memorandum of understanding or other agreement with any third party providing for a specified acquisition transaction and such specified acquisition transaction or any other specified acquisition transaction is subsequently completed (whether or not such transaction is completed within twelve months following the termination of the merger agreement);
 
  •  (A) the merger agreement is terminated by NetApp as a result of a Data Domain triggering event, or (B) the merger agreement is terminated due to a failure of Data Domain to obtain stockholder approval of the merger proposal and such termination is preceded by a Data Domain triggering event (other than the first Data


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  Domain triggering event) (as defined in “The Merger Agreement — Termination of the Merger Agreement — NetApp’s Termination Rights); or
 
  •  the merger agreement is terminated pursuant to a superior proposal termination event (as described in “The Merger Agreement — Termination of the Merger Agreement — Data Domain’s Termination Rights”).
 
A “specified acquisition transaction” has the same meaning as an “acquisition transaction” except all references to “15%” or “85%” are replaced by “50%.”
 
In addition, the merger agreement provides that if the merger agreement is terminated by either NetApp or Data Domain after the Data Domain special stockholder meeting (including any adjournments and postponements thereof) has been held, a final vote on the approval of the merger proposal has been taken and Data Domain’s stockholders do not approve the merger proposal, Data Domain will pay NetApp all of NetApp’s out-of-pocket fees and expenses incurred by NetApp and its affiliates on or prior to the valid termination of the merger agreement in connection with the transactions contemplated by the merger agreement, but in no event more than $3 million.
 
If NetApp receives the $57.0 million termination fee, such fee will be considered liquidated damages for any and all losses or damages suffered or incurred by NetApp or its affiliates in connection with the merger agreement or the merger (including the abandonment of the merger), and neither NetApp nor any of its affiliates will be entitled to bring any other claim, action or proceeding against Data Domain or any of its affiliates arising from the merger agreement or the merger (including the abandonment of the merger).
 
Amendment and Waiver
 
The merger agreement provides that the parties may amend the merger agreement by written instrument signed by each of the parties to the agreement. However, following approval of the merger proposal by Data Domain’s stockholders, any amendment that would require the approval of Data Domain’s stockholders may not be made without such approval.
 
The merger agreement also provides that, at any time before completion of the first-step merger, any party to the merger agreement may:
 
  •  extend the time for the performance of any of the obligations or other acts of the other parties to the merger agreement;
 
  •  waive any inaccuracies in the representations and warranties made to such party contained in the merger agreement or in any document delivered pursuant to the merger agreement; and
 
  •  waive compliance with any of the agreements or conditions for the benefit of such party contained in the merger agreement.
 
The parties will disclose any material amendments or waivers to the merger agreement on a current report on Form 8-K. In addition, NetApp and Data Domain will issue a joint press release concurrently with the filing of the Form 8-K to notify stockholders promptly upon the occurrence of a material amendment or waiver to the merger agreement.
 
VOTING AGREEMENTS
 
Voting Agreements
 
As a condition and inducement to NetApp’s willingness to enter into the merger agreement, NetApp has entered into voting agreements with each of the beneficial owners of Data Domain’s common stock listed on the table below. According to the terms of such voting agreements, each party has agreed to vote (or to cause the holder of record of such shares to so vote) and has granted NetApp an irrevocable proxy to vote such party’s beneficially owned shares (i) in favor of the merger proposal, (ii) against any proposal made in opposition to or in competition with the merger or that would result in a breach of the merger agreement, and (iii) against certain other proposed business transactions that would interfere with the merger, including transactions that would result in any other


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merger, the sale, lease or transfer of any significant part of the assets of Data Domain or its subsidiaries or any material change in Data Domain’s capitalization.
 
Subject to certain exceptions described in the voting agreements, the parties to the voting agreements have agreed not to sell, pledge, encumber, assign, grant options with respect to, transfer, tender or dispose of the shares of Data Domain common stock beneficially owned by such parties or to enter into any agreement related to any of the foregoing transactions.
 
Subject to certain exceptions described in the voting agreements, each of the parties to the voting agreements has made representations and warranties to NetApp regarding, among other things, such party’s power and authority to enter into the voting agreement and deliver the proxy, such party’s unencumbered beneficial ownership of the shares of Data Domain common stock subject to the voting agreement, and such party’s sole voting power and sole power of disposition with respect to such shares of common stock.
 
The voting agreements will terminate at the earliest to occur of (i) the valid termination of the merger agreement, (ii) the date on which Data Domain has received the affirmative vote of the holders of a majority of the outstanding shares of Data Domain’s common stock, voting together as a single class, in favor of the merger proposal, or (iii) the date on which the parties to the voting agreements have agreed in writing to terminate such agreements.
 
As of May 22, 2009, the stockholders listed below together owned 12,544,004 shares of Data Domain common stock, or approximately 20.0% of the voting power of Data Domain common stock. In addition, such stockholders hold Data Domain stock awards to purchase an additional 4,628,797 shares of Data Domain common stock.
 


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          Number of
    Number of
 
          Shares of
    Shares of
 
          Common Stock
    Common Stock
 
          Issuable Upon
    Issuable Upon
 
    Number of
    Exercise of
    Settlement of
 
    Shares of
    Outstanding
    Restricted
 
Parties to the Voting Agreement
  Common Stock     Options     Stock Units  
 
NEA Partners 10, L.P. 
    31,977              
Scott D. Sandell
          115,000        
Nick Bacica
          160,000       20,000  
New Enterprise Associates 10, L.P. 
    8,637,152              
SHV Profit Sharing Plan FBO Ronald D. Bernal, Wells Fargo Bank, Trustee
    25,650              
Ronald E. F. Codd
    100,000       115,000        
Aneel Bhusri
    382,749       115,000        
Bernal Family Trust U/D/T/11/3/95, Ronald Daniel Bernal and Pamela Mayer Bernal, Trustees
    125,966              
Charles Ross Partners Investment Fund Number 29
    761              
The Codd Revocable Trust Dated 3/06/98, Ronald E. and Susan T. Codd, Trustees
    10,000              
Frank Slootman
    1,602       2,284,990       50,000  
J. Miller 2007 Grantor Retained Annuity Trust
    112,100 (1)            
Jeffrey A. Miller
          15,000        
K. Miller 2007 Grantor Retained Annuity Trust
    112,100 (1)            
Kai Li
    659,956 (2)     215,000        
Michael P. Scarpelli
    137,554       449,596       25,000  
Miller Living Trust
    6,496              
Reed E. Hundt
    30,000       195,000        
Ronald D. Bernal
          115,000        
Daniel R. McGee
    2,006       394,984       20,000  
David L. Schneider
    49,366       315,893       23,334  
Greylock XI Principals LLC
    195,948              
Greylock XI Limited Partnership
    1,712,529              
Greylock XI-A Limited Partnership
    47,819              
Schneider 2001 Living Trust, David & Barbara Schneider Trustees, August 31, 2001
    162,273              
 
 
(1) Includes 37,500 shares of restricted stock.
 
(2) Includes 94,997 shares of restricted stock.

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ACCOUNTING TREATMENT
 
The merger will be accounted for using the purchase method of accounting as a “purchase of a business,” as that phrase is used under U.S. generally accepted accounting principles, for accounting and financial reporting purposes. Under the purchase method of accounting, the assets acquired (including identifiable intangible assets) and liabilities assumed (including executory contracts and other commitments) from Data Domain as of the acquisition date (i.e., the completion of the merger) will be recorded at their respective fair values and added to those of NetApp. Any excess of purchase price over the fair value of assets acquired and liabilities assumed will be recorded as goodwill. The consolidated financial statements of NetApp issued after the merger will reflect these fair values and will not be restated retroactively to reflect the historical financial position or results of operations of Data Domain.
 
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
 
The following summary represents the opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation, counsel to NetApp, and Fenwick & West LLP, counsel to Data Domain, with respect to the material U.S. federal income tax consequences of the merger to U.S. holders of Data Domain common stock who hold their stock as capital assets (generally, for investment).
 
The summary is based on the Internal Revenue Code of 1986, as amended, or the Code, the Treasury regulations issued under the Code, and administrative rulings and court decisions in effect as of the date of this proxy statement/prospectus, all of which are subject to change at any time, possibly with retroactive effect. For purposes of this discussion, the term “U.S. holder” means:
 
  •  a citizen or resident of the United States;
 
  •  a corporation (including any entity treated as a corporation for U.S. federal income tax purposes) created or organized under the laws of the United States or any of its political subdivisions;
 
  •  a trust that (i) is subject to the supervision of a court within the United States and the control of one or more U.S. persons or (ii) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person; or
 
  •  an estate that is subject to U.S. federal income tax on its income regardless of its source.
 
A “non-U.S. holder” means a beneficial owner of Data Domain common stock (other than a partnership) that is not a U.S. holder. If a partnership (including any entity or arrangement, domestic or foreign, treated as a partnership for U.S. federal income tax purposes) holds Data Domain common stock, the tax treatment of a partner will generally depend on the status of the partners and the activities of the partnership. If a holder is a partner in a partnership holding Data Domain common stock, the holder should consult its tax advisors.
 
This summary is not a complete description of all the tax consequences of the merger and, in particular, may not address U.S. federal income tax considerations applicable to holders of Data Domain common stock who are subject to special treatment under U.S. federal income tax law (including, for example, non-U.S. holders, certain former citizens or residents of the United States, financial institutions, dealers in securities, insurance companies or tax-exempt entities, holders who acquired Data Domain common stock pursuant to the exercise of an employee stock option or right or otherwise as compensation, holders who hold Data Domain restricted stock, holders exercising dissenters’ rights or appraisal rights, and holders who hold Data Domain common stock as part of a hedge, straddle, constructive sale or conversion transaction). This summary does not address the tax consequences of any transaction other than the merger, whether or not such transaction is in connection with the merger. This summary does not address the tax consequences to any person who actually or constructively owns 5% or more of Data Domain common stock. Also, this summary does not address U.S. federal income tax considerations applicable to holders of options to purchase Data Domain common stock, or holders of debt instruments convertible into Data Domain common stock. In addition, no information is provided with respect to the tax consequences of the merger under applicable state, local or non-U.S. laws or under estate, gift, excise or other non-income tax laws.


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The U.S. tax consequences of the merger depend on whether the second-step merger occurs. The second-step merger will occur only if Wilson Sonsini Goodrich & Rosati, Professional Corporation, counsel to NetApp, and Fenwick & West LLP, counsel to Data Domain, deliver tax opinions to the effect that the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. The tax opinions are conditioned upon receipt of customary written representations from NetApp and Data Domain, including representations that continuity of interest test will be satisfied, requiring that the Stock Consideration constitute at least 40% of the total consideration paid or payable to Data Domain stockholders in the first-step merger. The tax opinions will be delivered, if at all, on the closing date of the first-step merger.
 
Whether the continuity of interest test will be satisfied depends primarily upon the market value of the NetApp common stock immediately before the first-step merger. Other relevant factors may include (i) whether the stock consideration is required to be decreased, and the cash consideration correspondingly increased, so that the aggregate amount of stock consideration issuable in the merger (including the stock consideration issuable to the holders of Data Domain options and restricted stock units) will not exceed 19.5% of the outstanding shares of NetApp common stock immediately prior to the first-step merger, as more fully described above, (ii) the potential payment of cash to Data Domain stockholders properly exercising appraisal rights under Delaware law, and (iii) the amount of cash paid in the merger in lieu of the issuance of fractional shares of NetApp common stock. No assurances can be given that the continuity of interest test will be met. As a result, in deciding whether to approve the merger, you should consider the possibility that it may be taxable to you because the continuity of interest test is not satisfied and the second-step merger does not occur. You will not be entitled to change your vote in the event that the merger is taxable. In connection with the closing of the first-step merger, NetApp will issue a press release announcing whether the merger qualifies as a tax-free reorganization or is a fully taxable transaction.
 
Neither the tax opinions nor the discussion that follows is binding on the Internal Revenue Service, referred to as the IRS, or the courts. The parties do not intend to request a ruling from the IRS with respect to the merger. Accordingly, there can be no assurance that the IRS will not challenge the discussion below or the conclusions expressed in the tax opinions if they are delivered, or that a court will not sustain such a challenge.
 
U.S. Federal Income Tax Consequences to U.S. Holders If the Merger is a Reorganization
 
If the second-step merger occurs and the merger qualifies as a reorganization within the meaning of Section 368(a) of the Code, a U.S. holder of Data Domain common stock receiving NetApp common stock and cash in exchange for such Data Domain common stock in the merger generally will recognize gain equal to the lesser of (i) the amount of cash received by the U.S. holder (excluding any cash received in lieu of fractional shares) and (ii) the excess of the “amount realized” by the U.S. holder over the U.S. holder’s tax basis in the Data Domain common stock (generally the purchase price paid by the U.S. holder to acquire such stock). The “amount realized” by the U.S. holder will equal the sum of the fair market value of the NetApp common stock and the amount of cash (including any cash received in lieu of fractional shares) received by the U.S. holder. Losses will not be permitted to be recognized by U.S. holders of Data Domain common stock in the merger, except in connection with the receipt of cash in lieu of fractional shares, as discussed below. Any gain recognized by a U.S. holder of Data Domain common stock generally will be long-term capital gain if the U.S. holder’s holding period of the Data Domain common stock is more than one year, and short-term capital gain if the U.S. holder’s holding period is one year or less, at the time of the first-step merger. Long-term capital gains of individuals are eligible for reduced rates of taxation.
 
The aggregate tax basis of the NetApp common stock received (including fractional shares deemed received and redeemed as described below) will be equal to the aggregate tax basis of the Data Domain common stock surrendered, reduced by the amount of cash the U.S. holder of Data Domain common stock received (excluding any cash received in lieu of fractional shares), and increased by the amount of gain that the U.S. holder of Data Domain common stock recognizes, but excluding any gain or loss from the deemed receipt and redemption of fractional shares described below. The holding period of NetApp common stock received by a U.S. holder of Data Domain common stock in the merger will include the holding period of the U.S. holder’s Data Domain common stock.
 
For a U.S. holder who acquired different blocks of Data Domain common stock at different times and at different prices, realized gain or loss generally must be calculated separately for each identifiable block of shares exchanged in the merger, and a loss realized on the exchange of one block of shares cannot be used to offset a gain


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recognized on the exchange of another block of shares. If a U.S. holder has differing bases or holding periods in respect of shares of Data Domain common stock, the U.S. holder should consult its tax advisor prior to the exchange with regard to identifying the bases or holding periods of the particular shares of NetApp common stock received in the merger.
 
Cash received by a U.S. holder of Data Domain common stock in lieu of fractional shares generally will be treated as if the U.S. holder received the fractional shares in the merger and then received the cash in redemption of the fractional shares. The U.S. holder generally should recognize capital gain or loss equal to the difference between the amount of the cash received in lieu of fractional shares and the portion of the U.S. holder’s tax basis allocable to the fractional shares.
 
U.S. holders of shares of Data Domain common stock receiving NetApp common stock and cash in the merger will be required to retain records pertaining to the merger. U.S. holders who owned at least 5% (by vote or value) of the total outstanding Data Domain common stock before the first-step merger or whose tax basis in the Data Domain common stock surrendered pursuant to the first-step merger equals or exceeds $1 million are subject to certain reporting requirements with respect to the merger. U.S. holders are urged to consult with their tax advisors with respect to these and other reporting requirements applicable to the merger.
 
U.S. Federal Income Tax Consequences to U.S. Holders If the Second-Step Merger Does Not Occur
 
If the second-step merger does not occur, the exchange of Data Domain common stock for NetApp common stock and cash in the first-step merger will be a fully taxable transaction in which a U.S. holder generally will recognize gain or loss equal to the difference between the “amount realized” (as defined above) and the U.S. holder’s tax basis in the Data Domain common stock. Gain or loss must be calculated separately for each identifiable block of shares (i.e., shares acquired at different times and prices) exchanged in the first-step merger. Any gain or loss recognized by a U.S. holder of Data Domain common stock generally will be long-term capital gain or loss if the U.S. holder’s holding period of the Data Domain common stock is more than one year, and short-term capital gain or loss if the U.S. holder’s holding period is one year or less, at the time of the first-step merger. Long-term capital gains of individuals are eligible for reduced rates of taxation. The deductibility of capital losses is subject to limitations. The aggregate tax basis of a Data Domain stockholder in the NetApp common stock received in the first-step merger will equal its fair market value at the time of the closing, and the holding period for the NetApp common stock will begin the day after the closing.
 
Backup Withholding
 
Backup withholding may apply with respect to the consideration received by a holder of Data Domain common stock in the first-step merger unless the holder is a corporation or comes within certain other exempt categories and, when required, demonstrates this fact, or provides a correct taxpayer identification number (typically by completing and signing an IRS Form W-9), certifies as to no loss of exemption from backup withholding and that such holder is a U.S. person (including a U.S. resident alien) and otherwise complies with applicable requirements of the backup withholding rules. Further, a holder of Data Domain common stock who does not provide NetApp (or the exchange agent) with its correct taxpayer identification number may be subject to penalties imposed by the IRS. Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against the holder’s federal income tax liability, provided that the holder timely furnishes certain required information to the IRS.
 
The foregoing discussion of U.S. federal income tax consequences is not intended to constitute a complete description of all tax consequences relating to the merger. The tax consequences of the merger to a holder of Data Domain common stock will depend upon the facts of a holder’s particular situation. Because individual circumstances may differ, holders of Data Domain common stock are urged to consult with their own tax advisor regarding the applicability of the rules discussed above and the particular tax effects of the merger, including the application of state, local and foreign tax laws, and, in the case of non-U.S. holders, possible eligibility for benefits under applicable income tax treaties. NetApp will issue a press release announcing whether the merger qualifies as a tax-free reorganization in connection with the closing of the first-step merger.


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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
 
Introduction to Unaudited Pro Forma Condensed Combined Financial Statements
 
On May 20, 2009, NetApp entered into an Agreement and Plan of Merger, referred to as the merger agreement, by and among NetApp, Kentucky Merger Sub One Corporation, a wholly owned subsidiary of NetApp, referred to as Merger Sub One, Derby Merger Sub Two LLC, a wholly owned subsidiary of NetApp, referred to as Merger Sub Two, and Data Domain. On June 3, 2009, NetApp and Data Domain amended the original merger agreement to reflect the terms described in this proxy statement/prospectus. The merger agreement provides for the acquisition of Data Domain by NetApp by means of a merger of Merger Sub One with and into Data Domain, referred to as the first-step merger, with Data Domain as the interim surviving entity, immediately followed by a merger of Data Domain, as the interim surviving entity, with and into Merger Sub Two, referred to as the second-step merger, with Merger Sub Two as the final surviving entity.
 
The following unaudited pro forma condensed combined financial statements are based on the historical consolidated financial statements of NetApp and Data Domain after giving effect to the acquisition of Data Domain by NetApp using the purchase method of accounting in accordance with Statement of Financial Accounting Standards (SFAS) No. 141(R), Business Combinations, and applying the assumptions and adjustments described in the accompanying notes. The unaudited pro forma condensed combined balance sheet is presented as if the merger had occurred on April 24, 2009. The unaudited pro forma condensed combined statement of operations for the twelve months ended April 24, 2009 is presented as if the merger had occurred on April 26, 2008. The preliminary estimate of purchase consideration is calculated as if the acquisition had taken place on June 11, 2009. You should read this information in conjunction with the:
 
  •  accompanying notes to the unaudited pro forma condensed combined financial statements;
 
  •  separate audited historical consolidated financial statements of NetApp as of and for the fiscal year ended April 24, 2009, included in NetApp’s annual report on Form 10-K for the fiscal year ended April 24, 2009, incorporated by reference into this proxy statement/prospectus;
 
  •  separate unaudited historical condensed consolidated financial statements of Data Domain as of and for the three months ended March 31, 2009 included in Data Domain’s quarterly report on Form 10-Q incorporated by reference into this proxy statement/prospectus; and
 
  •  separate audited historical consolidated financial statements of Data Domain as of and for the year ended December 31, 2008, included in Data Domain’s annual report on Form 10-K for the year ended December 31, 2008, incorporated by reference into this proxy statement/prospectus.
 
As NetApp has a fiscal year ending on the last Friday in April and Data Domain has a fiscal year ending on December 31, the unaudited pro forma condensed combined balance sheet combines the historical balances of NetApp as of April 24, 2009 with the historical balances of Data Domain as of March 31, 2009, plus pro forma adjustments. In addition, the unaudited pro forma condensed combined statement of operations combines the historical results of NetApp for the fiscal year ended April 24, 2009 with the historical results of Data Domain for the twelve months ended March 31, 2009 plus pro forma adjustments. Data Domain’s historical results have been calculated by combining its reported interim data for each quarter within the respective period.
 
For ease of reference, the unaudited pro forma condensed combined financial statements use NetApp’s period-end date and no adjustments were made to Data Domain’s reported information for the different quarter-end date. The pro forma condensed combined financial statements are presented for illustrative purposes only and are not necessarily indicative of the financial position or results of operations that would have been realized if the merger had been completed on the dates indicated, nor is it indicative of future operating results or financial position. The pro forma adjustments are based upon available information and certain assumptions that NetApp believes are reasonable.
 
The unaudited pro forma condensed combined financial statements do not reflect any cost savings, operating synergies or revenue enhancements that the combined company may achieve as a result of the merger or the costs to


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integrate the operations of NetApp and Data Domain or the costs necessary to achieve these cost savings, operating synergies and revenue enhancements.
 
Pursuant to the purchase method of accounting, the estimated preliminary purchase price, calculated as described in Notes 4 and 5 to the unaudited pro forma condensed combined financial statements, has been preliminarily allocated to assets acquired and liabilities assumed based on their respective fair values. NetApp’s management has determined the preliminary fair value of the intangible assets and tangible assets acquired and liabilities assumed at the pro forma combined balance sheet date. Any differences between the fair value of the consideration issued and the fair value of the assets acquired and liabilities assumed is recorded as goodwill. Since these unaudited pro forma condensed combined financial statements have been prepared based on preliminary estimates of purchase consideration and fair values, the actual amounts recorded may differ materially from the information presented. The estimation and allocations of purchase consideration are subject to change pending changes in the market value of NetApp common stock and further review of the fair value of the assets acquired and liabilities assumed. Additionally, the fair value of assets acquired and liabilities assumed may be materially impacted by the results of Data Domain’s operations up to the date of completion of the merger. A final determination of these estimated fair values will be based on the actual net tangible and intangible assets of Data Domain that will exist on the date of completion of the merger.
 
There were no significant intercompany transactions between NetApp and Data Domain as of the dates and for the periods of these pro forma condensed combined financial statements.
 
These unaudited pro forma condensed combined financial statements should be read in conjunction with the historical consolidated financial statements and notes thereto of NetApp and Data Domain and other financial information pertaining to NetApp and Data Domain including each company’s management’s discussion and analysis of financial condition and results of operations and risk factors incorporated by reference or included herein. For a complete list of documents incorporated by reference in this proxy statement/prospectus, see “Where You Can Find More Information” beginning on page 96.


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UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
 
                                 
    Historical              
    NetApp
    Data Domain
    Pro Forma
    Pro Forma
 
    April 24, 2009     March 31, 2009     Adjustments     Combined  
    (In thousands)  
 
ASSETS
Current Assets:
                               
Cash and cash equivalents
  $ 1,494,153     $ 119,167     $ (1,051,034 )(a)   $ 562,286  
Short-term investments
    1,110,053       127,685             1,237,738  
Accounts receivable, net of allowances
    446,537       60,563             507,100  
Inventories
    61,104       4,051       1,500 (b)     66,655  
Prepaid expenses and other assets
    119,887       4,737             124,624  
Short-term deferred income taxes
    207,050       8,517             215,567  
                                 
Total current assets
    3,438,784       324,720       (1,049,534 )     2,713,970  
Property and equipment, net
    807,923       39,333               847,256  
Goodwill
    680,986             1,463,671 (c)     2,144,657  
Intangible assets, net
    45,744       100       418,900 (d)     464,744  
Long-term investments and restricted cash
    127,317       30,931       (3,228 )(e)     155,020  
Long-term deferred income taxes and other assets
    372,065       5,629             377,694  
                                 
    $ 5,472,819     $ 400,713     $ 829,809     $ 6,703,341  
                                 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
                               
Accounts payable
  $ 137,826     $ 10,804     $     $ 148,630  
Accrued compensation and related benefits
    204,168       11,692       1,072 (f)     216,932  
Other accrued liabilities
    190,315       8,267             198,582  
Accrual for GSA settlement
    128,715                   128,715  
Income taxes payable
    4,732       2,150             6,882  
Deferred revenue
    1,013,569       43,749       (10,937 )(g)     1,046,381  
                                 
Total current liabilities
    1,679,325       76,662       (9,865 )     1,746,122  
1.75% convertible senior notes due 2013
    1,265,000                   1,265,000  
Other long-term obligations
    164,499       2,318       143,431 (h)     310,248  
Long-term deferred revenue
    701,649       31,985       (7,996 )(g)     725,638  
                                 
      3,810,473       110,965       125,570       4,047,008  
                                 
Commitments and Contingencies
                               
                                 
Stockholders’ Equity:
                               
Common stock
    437             44 (i)     481  
Additional paid-in capital
    2,971,995       308,619       701,324 (j)     3,981,938  
Treasury stock at cost
    (2,927,376 )                 (2,927,376 )
Retained earnings (deficit)
    1,622,448       (17,420 )     1,420 (k)     1,606,448  
Accumulated other comprehensive income (loss)
    (5,158 )     (1,451 )     1,451 (l)     (5,158 )
                                 
Total stockholders’ equity
    1,662,346       289,748       704,239       2,656,333  
                                 
Total liabilities and stockholders’ equity
  $ 5,472,819     $ 400,713     $ 829,809     $ 6,703,341  
                                 
 
 
See the accompanying notes to the unaudited pro forma condensed combined financial statements, which are an integral part of these statements. The pro forma adjustments are explained in Note 6, Pro Forma Adjustments.


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UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
 
                                 
    Historical              
    NetApp
    Data Domain
             
    Fiscal Year
    Twelve Months
             
    Ended
    Ended
    Pro Forma
    Pro Forma
 
    April 24, 2009     March 31, 2009     Adjustments     Combined  
    (In thousands, except per share amounts)  
 
Revenues:
                               
Product
  $ 2,152,657     $ 251,413     $ 60 (m)   $ 2,404,130  
Software entitlements and maintenance
    618,352             44,785 (m)     663,137  
Service
    764,099             4,248 (m)     768,347  
Support and service
          49,033       (49,033 )(m)      
Ratable product and related support and services
          60       (60 )(m)      
GSA Settlement
    (128,715 )                 (128,715 )
                                 
Net revenues
    3,406,393       300,506             3,706,899  
                                 
Cost of Revenues:
                               
Cost of product
    1,007,642       67,112       45,154 (m),(n)     1,119,908  
Cost of software entitlements and maintenance
    9,179             15,724 (m)     24,903  
Cost of service
    399,657             2,365 (m)     402,022  
Cost of support and services
          18,089       (18,089 )(m)      
Cost of ratable product and related support and services
          4       (4 )(m)      
                                 
Total cost of revenues
    1,416,478       85,205       45,150       1,546,833  
                                 
Gross profit
    1,989,915       215,301       (45,150 )     2,160,066  
                                 
Operating Expenses:
                               
Sales and marketing
    1,186,141       125,311       36,600 (o)     1,348,052  
Research and development
    498,495       46,514             545,009  
General and administrative
    203,698       25,779             229,477  
Restructuring charges
    54,406                   54,406  
                                 
Total operating expenses
    1,942,740       197,604       36,600       2,176,944  
                                 
Income (loss) from operations
    47,175       17,697       (81,750 )     (16,878 )
Other Income (Expenses), Net:
                               
Interest income
    57,610       5,134       (5,582 )(p)     57,162  
Interest expense
    (26,865 )                 (26,865 )
Loss on investments, net
    (29,571 )                 (29,571 )
Other expense, net
    (3,520 )     (2,634 )           (6,154 )
                                 
Total other income (expense), net
    (2,346 )     2,500       (5,582 )     (5,428 )
                                 
Income (loss) before income taxes
    44,829       20,197       (87,332 )     (22,306 )
Provision (benefit) for income taxes
    (41,716 )     95       (32,313 )(q)     (73,934 )
                                 
Net income
  $ 86,545     $ 20,102     $ (55,019 )   $ 51,628  
                                 
Net Income per Share:
                               
Basic
  $ 0.26     $ 0.34             $ 0.14  
                                 
Diluted
  $ 0.26     $ 0.30             $ 0.14  
                                 
Shares Used in Net Income per Share Calculations:                                
Basic
    330,279       59,129       (14,923 )(r)     374,485  
                                 
Diluted
    334,575       66,270       (19,651 )(s)     381,194  
                                 
 
 
See the accompanying notes to the unaudited pro forma condensed combined financial statements, which are an integral part of these statements. The pro forma adjustments are explained in Note 6, Pro Forma Adjustments.


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NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS
 
1.   Description of Transaction
 
On May 20, 2009, NetApp entered into an Agreement and Plan of Merger, referred to as the merger agreement, by and among NetApp, Kentucky Merger Sub One Corporation, a wholly owned subsidiary of NetApp, referred to as Merger Sub One, Derby Merger Sub Two LLC, a wholly owned subsidiary of NetApp, referred to as Merger Sub Two, and Data Domain. On June 3, 2009, NetApp and Data Domain amended the original merger agreement to reflect the terms described in this proxy statement/prospectus. The merger agreement provides for the acquisition of Data Domain by NetApp by means of a merger of Merger Sub One with and into Data Domain, referred to as the first-step merger, with Data Domain as the interim surviving entity, immediately followed by a merger of Data Domain, as the interim surviving entity, with and into Merger Sub Two, referred to as the second-step merger, with Merger Sub Two as the final surviving entity.
 
Upon the completion of the first-step merger, Data Domain will become a wholly owned subsidiary of NetApp, and each share of Data Domain common stock issued and outstanding immediately prior to the completion of the first-step merger, will be cancelled and converted into the right to receive, subject to adjustment as described below, a combination of $16.45 in cash, or the cash consideration, without interest and less any required withholding, and a certain number of shares of NetApp common stock, or the stock consideration, and together with the cash consideration, the merger consideration. The number of shares of NetApp Common Stock issuable in exchange for Data Domain common stock will be determined by dividing $13.55 by the closing average, defined as the average closing price of NetApp common stock on the NASDAQ Global Select Market for the 10 consecutive trading days ending on the third trading day immediately prior to the closing date of the first-step merger; provided, that if the closing average is less than $17.41, each share of Data Domain common stock will be exchangeable for 0.7783 shares of NetApp common stock and if the closing average is greater than $21.27, each share of Data Domain common stock will be exchangeable for 0.637 shares of NetApp common stock. In the event that the exchange ratio is greater than or equal to 0.7006 and less than 0.7783, NetApp, in its sole discretion, may (a) reduce the stock consideration by such amount as NetApp may determine and (b) increase the cash consideration by an amount equal to the product of (i) the amount of such reduction in the stock consideration multiplied by (ii) the closing average. However, NetApp may not reduce the amount of the stock consideration and increase the cash consideration as described in the immediately preceding sentence to the extent that it would reasonably be expected to cause the merger to fail to qualify as a tax-free reorganization under the Internal Revenue Code. In addition, if the aggregate amount of the stock consideration issuable in the merger (including the stock consideration issuable to holders of Data Domain options and restricted stock units) would exceed 19.5% of the outstanding shares of NetApp common stock immediately prior to the effective time of the first-step merger, the stock consideration will be decreased to the minimum extent necessary so that no more than 19.5% of the outstanding shares of NetApp common stock will be issued in the merger (with such percentage measured immediately prior to the effective time of the first-step merger). In such event, the cash consideration will be increased by an amount equal to the product of (a) the amount of the reduction in the stock consideration multiplied by (b) the closing average. In the event that the stock consideration is decreased in accordance with the immediately preceding sentence, the merger may fail to qualify as a tax-free reorganization under the Internal Revenue Code.
 
Upon the completion of the first-step merger, each outstanding Data Domain stock option, whether or not then vested and exercisable, will be assumed and converted by NetApp. In accordance with its terms and the requirements of applicable law, each option shall (i) be converted into an option to acquire that number of shares of NetApp common stock equal to the product obtained by multiplying (x) the number of shares of Data Domain common stock subject to such option, by (y) the option exchange ratio, rounded down to the nearest whole share, and (ii) have an exercise price per share equal to the quotient obtained by dividing (x) the per share exercise price of Data Domain common stock subject to such option, by (y) the option exchange ratio, rounded up to the nearest cent. The option exchange ratio is calculated as the sum of (x) the stock consideration to be received pursuant to the merger agreement for a share of Data Domain common stock plus (y) the quotient obtained by dividing (1) the cash consideration to be received pursuant to the merger agreement for a share of Data Domain common stock, by (2) the average closing sales prices of NetApp’s common stock, rounded to the nearest one-hundredth of a cent, for the ten most recent consecutive trading days ending on the third trading day immediately prior to the effective time of the


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merger. Each assumed and converted option shall otherwise be subject to the same terms and conditions (including as to vesting and exercisability) as were applicable to the option immediately prior to the completion of the first-step merger.
 
Each of Data Domain’s unvested restricted stock units and shares of restricted stock outstanding at the effective time of the first-step merger shall be assumed and converted into restricted stock units or shares of restricted stock, as applicable, representing the right to receive merger consideration payable for shares of Data Domain underlying each assumed and converted restricted stock unit or restricted share, as applicable. Each assumed and converted restricted stock unit and share of restricted stock shall otherwise be subject to the same terms and conditions, including vesting restrictions, as were applicable to such award immediately prior to the completion of the first-step merger.
 
The merger is subject to Data Domain stockholder approval and regulatory approvals and other usual and customary closing conditions. The merger is expected to be completed within 60 to 120 days following May 20, 2009, the date when the original merger agreement was signed.
 
2.   Basis of Presentation
 
The unaudited pro forma condensed combined financial statements were prepared in accordance with Securities and Exchange Commission Regulation S-X Article 11, using the purchase method of accounting based on Statement of Financial Accounting Standard (SFAS) No. 141R, Business Combinations, which NetApp adopted on April 25, 2009, and are based on the historical financial statements of NetApp and Data Domain after giving effect to the cash to be paid and the stock to be issued by NetApp to consummate the acquisition, as well as certain reclassifications and pro forma adjustments. As NetApp has a fiscal year ending on the last Friday in April and Data Domain has a fiscal year ending on December 31, the unaudited pro forma condensed combined balance sheet combines the historical balances of NetApp as of April 24, 2009 with the historical balances of Data Domain as of March 31, 2009, plus pro forma adjustments. In addition, the unaudited pro forma condensed combined statement of operations combines the historical results of NetApp for the year ended April 24, 2009 with the historical results of Data Domain for the twelve months ended March 31, 2009, plus pro forma adjustments. Data Domain’s historical results have been calculated by combining its reported interim data for each quarter within the respective period. For ease of reference, these pro forma statements use NetApp’s respective period end dates. In addition, no adjustments were made to Data Domain’s reported information for its respective historical three-month periods included in the unaudited pro forma condensed combined financial statements. Certain reclassifications have been made to the historical financial statements of Data Domain to conform with NetApp’s presentation, primarily related to the presentation of revenues and the associated cost of revenues.
 
The unaudited pro forma condensed combined balance sheet is presented as if the merger had occurred on April 24, 2009. The unaudited pro forma condensed combined statement of operations for the twelve months ended April 24, 2009 is presented as if the merger had occurred on April 26, 2008. The preliminary estimate of purchase consideration is calculated as if the acquisition had taken place on June 11, 2009.
 
SFAS No. 141R requires, among other things, that most assets acquired and liabilities assumed be recognized at their fair values, as determined in accordance with SFAS No. 157, Fair Value Measurements, as of the acquisition date and that the fair value of acquired in-process research and development be recorded on the balance sheet regardless of the likelihood of success as of the acquisition date. In addition, SFAS No. 141R establishes that the consideration transferred be measured at the closing date of the merger at the then-current market price, which may be different than the amount of consideration assumed in these unaudited pro forma condensed combined financial statements.
 
SFAS No. 157, as amended, defines the term “fair value” and sets forth the valuation requirements for any asset or liability measured at fair value, expands related disclosure requirements and specifies a hierarchy of valuation techniques based on the nature of the inputs used to develop the fair value measures. Fair value is defined in SFAS No. 157, as amended, as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” This is an exit price concept for the valuation of the asset or liability. In addition, market participants are assumed to be buyers and sellers in the principal (or the most advantageous) market for the asset or liability. Fair value measurements for an asset assume the highest and best use by these market participants. As a result of these standards, NetApp may be required to


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record assets which are not intended to be used or sold and/or to value assets at fair value measures that do not reflect NetApp’s intended use of those assets. Many of these fair value measurements can be highly subjective and it is also possible that other professionals, applying reasonable judgment to the same facts and circumstances, could develop and support a range of alternative estimated amounts.
 
Under the purchase method of accounting, the assets acquired and liabilities assumed will be recorded as of the completion of the merger, primarily at their respective fair values and added to those of NetApp. Financial statements and reported results of operations of NetApp issued after completion of the merger will reflect these values, but will not be retroactively restated to reflect the historical financial position or results of operations of Data Domain.
 
Under SFAS No. 141R, acquisition-related transaction costs (i.e., advisory, legal, valuation, other professional fees) and certain acquisition-related restructuring charges impacting the target company are expensed in the period in which the costs are incurred. Total advisory, legal, regulatory and valuation costs expected to be incurred by NetApp are estimated to be approximately $14 million to $18 million. An estimated $16 million of these transaction costs have been reflected in the unaudited pro forma condensed combined balance sheet; however, these costs have been excluded from the unaudited pro forma condensed combined statement of operations. The transaction costs for Data Domain are estimated to be $18 million. Data Domain’s expenses and cash outflows have not been reflected in the unaudited pro forma condensed combined balance sheet and statement of operations.
 
3.   Accounting Policies
 
Upon completion of the merger, NetApp will further review Data Domain’s accounting policies. As a result of that review, it may become necessary to harmonize the combined entity’s financial statements to conform to those accounting policies that are determined to be more appropriate for the combined entity.
 
4.   Preliminary Estimate of Consideration Expected to be Transferred
 
The following is a preliminary estimate of consideration expected to be transferred to effect the acquisition of Data Domain.
 
         
Purchase Price:
  (In thousands)  
 
Cash
  $ 1,035,034  
Common stock
    880,593  
Assumed and converted stock options
    241,501  
Assumed and converted restricted stock units
    41,089  
         
Total purchase price
    2,198,217  
         
Portion of assumed stock options and restricted stock units that are unearned or otherwise subject to future service requirements and therefore will be expensed in the financial statements prospectively rather than included in the purchase accounting
    (153,196 )
         
Net purchase price
  $ 2,045,021  
         
 
The preliminary estimate of merger consideration is calculated as if the acquisition had taken place on June 11, 2009, based upon NetApp’s closing common stock price of $19.92. As described in Note 1. Description of Transaction, the total purchase price can change based on the average closing price for NetApp common stock prior to closing.
 
The cash consideration is calculated by multiplying the estimated outstanding common shares of Data Domain as of June 11, 2009 of approximately 63 million by the agreed cash consideration amount of $16.45 per share.
 
The stock consideration has been calculated using an exchange ratio of .7026 NetApp shares per Data Domain share. The exchange ratio has been calculated as $13.55 divided by the average closing price for NetApp common stock for the 10 business days from May 26, 2009 to June 8, 2009 of $19.286. The stock consideration has been


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determined by multiplying the resulting approximately 44 million NetApp shares to be issued to Data Domain stockholders with the closing price on June 11, 2009 of $19.92.
 
Based on the option exchange ratio in the agreement Data Domain’s outstanding options have been assumed and converted into approximately 19 million NetApp options using an exchange ratio of 1.5555 NetApp options per Data Domain option. The fair value of the assumed and converted options have been estimated using a Black-Scholes valuation model with the following weighted-average assumptions: volatility of 47.58%; risk-free interest rate of 0.50% to 3.05%, average expected remaining life of 2.1 years and dividend yield of zero.
 
Based on the same exchange ratio as described above for Common Stock, Data Domain’s outstanding restricted stock units and restricted stock awards have been assumed and converted into approximately 1 million NetApp restricted stock units. Upon vesting, the holders will receive $16.45 in cash per unit and NetApp shares based on a conversion ratio of .7026. The fair value of the assumed and converted restricted stock units has been estimated using the closing price of NetApp’s common stock as of June 11, 2009.
 
The expense associated with the portion of the assumed and converted stock options and restricted stock units that are subject to future service requirements and therefore not included in the purchase accounting have not been included in the pro forma statement of operations.
 
5.   Estimate of Assets to be Acquired and Liabilities to be Assumed
 
The following is a preliminary estimate of the assets to be acquired and the liabilities to be assumed by NetApp in the merger, reconciled to the estimate of the consideration expected to be transferred:
 
         
    (In thousands)  
 
Net tangible assets acquired
  $ 289,648  
Other asset/liability adjustments related to:
       
Inventory(a)
    1,500  
Deferred revenue(b)
    18,933  
Other(c)
    (4,300 )
Acquired intangibles(d)
    419,000  
Deferred tax liability(e)
    (143,431 )
Goodwill(f)
    1,463,671  
Contingencies(g)
     
         
Total preliminary estimated purchase price
  $ 2,045,021  
         
 
 
a) As of the effective date of the merger, inventories are required to be measured at fair value. NetApp does not have detailed information at this time as to the specific finished goods on hand, evaluation units, or the specific types and nature of raw materials and supplies. The preliminary fair values adjustment to inventory is $1.5 million primarily to the finished goods inventory and evaluation units of Data Domain.
 
b) Data Domain’s deferred revenue relates primarily to support and service obligations, which are deferred and recognized ratably over the term of each agreement. The preliminary fair values have been estimated based on preliminary assumptions and will be updated upon the closing of the acquisition.
 
c) Other relates to certain assets that will not be assumed by NetApp and an additional liability for cash settlement of earned restricted stock units.
 
d) As of the effective date of the merger, identifiable intangible assets are required to be measured at fair value and these acquired assets could include assets that are not intended to be used or sold or that are intended to be used in a manner other than their highest and best use. For purposes of these unaudited pro forma condensed combined financial statements, it is assumed that all assets will be used and that all assets will be used in a manner that represents the highest and best use of those assets.
 
Under the HSR Act and other relevant laws and regulations, there are significant limitations regarding what NetApp can learn about the specifics of the Data Domain intangible assets. Obtaining the necessary information to complete the valuation of such intangible assets could take several months. As a result, the final


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determination of the values of such intangible assets will differ from these preliminary valuations and the differences could be material. As of the completion of the acquisition, NetApp will update the preliminary valuation of the acquired intangible assets.
 
The identifiable intangible assets acquired are as follows:
 
                 
    Estimated
    Estimated
 
Acquired Intangible Assets:
  Fair Value     Useful Life  
    (in thousands)  
 
Existing technology
  $ 217,000       5 years  
In-process research and development
    17,500       5 years  
Existing customer relationships
    147,500       5 years  
Trade name
    35,500       5 years  
Backlog
    1,500       1 year  
                 
Total acquired intangible assets
  $ 419,000          
                 
 
• Existing technology acquired primarily consists of Data Domain’s data invulnerability architecture, stream-informed segment layout architecture, replication technology and global compression. For the purposes of these pro forma financial statements it is assumed that these assets will be amortized using the straight line method over an estimated useful life of 5 years.
 
• In-process research and development relates to R&D projects that as of the acquisition date have not been completed. Acquired in-process research and development assets are initially recognized at fair value and are classified as indefinite-lived assets until the successful completion or abandonment of the associated research and development efforts. Accordingly, during the development period after the acquisition date, these assets will not be amortized into earnings; instead these assets will be subject to periodic impairment testing. Upon successful completion of the development process for an acquired in-process research and development project, determination as to the useful life of the asset will be made; at that point in time, the asset would then be considered a finite-lived intangible asset and NetApp would begin to amortize the asset into earnings. For the purposes of these pro forma financial statements it is assumed that it will take approximately 6 months to complete the on-going projects and that the acquired asset then will be amortized using the straight line method over an estimated useful life of 5 years.
 
• Existing customer relationships consists of Data Domain’s contractual relationships and customer loyalty especially related to their resellers, value added resellers, distributors and direct end customers. For the purposes of these pro forma financial statements it is assumed that these assets will be amortized using the straight line method over an estimated useful life of 5 years.
 
• Trade name primarily relates to the Data Domain brand and their various registered product names. For the purposes of these pro forma financial statements it is assumed that these assets will be amortized using the straight line method over an estimated useful life of 5 years.
 
• Backlog relates to Data Domain’s backlog as of the date of the acquisition. It is expected that this asset will be amortized within the first year after the acquisition.
 
e) To record the net deferred tax liability associated with the estimated fair value adjustment of assets to be acquired and liabilities to be assumed, offset by the deferred tax asset associated with assumed stock options and restricted stock units, recorded at an estimated 37% weighted average statutory tax rate in the jurisdictions where the fair value adjustments may occur, primarily the United States of America.
 
f) Goodwill is calculated as the difference between the preliminary acquisition date fair value of the consideration expected to be transferred and the values assigned to the assets acquired and liabilities assumed. Goodwill is not amortized.
 
g) As of the effective date of the merger, except as specifically excluded, contingencies are required to be measured at fair value, if the acquisition-date fair value of the asset or liability arising from a contingency can be determined. NetApp has currently not identified any pre-acquisition contingencies where a liability is probable and the amount of the liability can be reasonably estimated. If information becomes available prior to the end of the purchase price measurement period, which would indicate that a liability which existed at the


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acquisition date, is probable and the amount can be reasonably estimated, such items will be included in the purchase price allocation and result in additional goodwill.
 
In addition, Data Domain has recorded provisions for uncertain tax positions. Income taxes are exceptions to both the recognition and fair value measurement principles of SFAS No. 141R, as amended, and continue to be accounted for under the guidance of SFAS No. 109, Accounting for Income Taxes (SFAS 109), as amended, and related interpretative guidance. As such, the combined company would continue to account for the Data Domain uncertain tax positions using Interpretation No. 48, Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109 (FIN 48). NetApp has currently not identified any basis for modifying Data Domain’s current application of these standards. Therefore, for the purpose of these unaudited pro forma condensed combined financial statements, NetApp has not adjusted the Data Domain recorded book values for uncertain tax positions. This assessment is preliminary and subject to change.
 
6.   Pro Forma Adjustments
 
This note should be read in conjunction with Note 1. Description of Transaction; Note 2. Basis of Presentation; Note 4. Estimate of Consideration Expected to be Transferred; and Note 5. Estimate of Assets to be Acquired and Liabilities to be Assumed. Adjustments included in the column under the heading “Pro Forma Adjustments” represent the following:
 
a) To record the cash portion of the merger consideration estimated to be $1,035.0 million, as well as the estimated transaction costs of NetApp of approximately $16.0 million.
 
b) To adjust acquired inventory to an estimate of fair value. NetApp’s cost of sales will reflect the increased valuation of Data Domain’s inventory as the acquired inventory is sold, which for purposes of these unaudited pro forma condensed combined financial statements is assumed will occur within the first year post-acquisition. There is no continuing impact of the acquired inventory adjustment on the combined operating results and as such is not included in the unaudited pro forma condensed combined statement of operations.
 
c) To record goodwill as a result of the merger.
 
d) To record intangible assets acquired as a result of the merger and eliminate historical Data Domain intangible assets, as follows:
 
         
    (In thousands)  
 
Eliminate Data Domain’s historical intangible assets
  $ (100 )
Estimated fair value of intangible assets acquired
    419,000  
         
Total
  $ 418,900  
         
 
e) To adjust the fair value of Data Domain’s long-term investments and restricted cash.
 
f) To record the earned portion of assumed restricted stock units that will be settled in cash.
 
g) To adjust the carrying value of deferred revenue to the estimated fair value and write-off deferred revenue where no legal performance obligation exists subsequent to the closing of the merger.
 
h) To record the net deferred tax liability associated with the estimated fair value adjustment of assets to be acquired and liabilities to be assumed, offset by the deferred tax asset associated with assumed stock options and restricted stock units, recorded at an estimated 37% weighted average statutory tax rate in the jurisdictions where the fair value adjustments may occur, primarily the United States of America.
 
i) To adjust for the par value of the additional NetApp common shares issued as part of the merger.


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j) To record the common shares issued as a portion of the merger consideration, at fair value less par, and to eliminate Data Domain’s additional paid-in capital, as follows:
 
         
    (In thousands)  
 
Eliminate Data Domain additional paid in capital
  $ (308,619 )
Issuance of NetApp common stock, par value
    (44 )
Issuance of NetApp common stock
    880,593  
Additional Data Domain stock options assumed by NetApp
    241,501  
Additional Data Domain restricted stock units assumed and converted by NetApp
    41,089  
Portion of assumed stock options and restricted stock units that are unearned or otherwise subject to future service requirements and therefore will be expensed in the financial statements prospectively rather than included in the purchase accounting
    (153,196 )
         
Total
  $ 701,324  
         
 
k) To eliminate Data Domain’s accumulated deficit of $17.4 million, and to reflect NetApp’s estimated transaction costs of approximately $16.0 million.
 
l) To eliminate Data Domain’s accumulated other comprehensive loss.
 
m) To reclassify certain Data Domain historical revenue and cost of revenue amounts to conform to NetApp reporting methodology.
 
n) Related to the amortization of purchased existing technologies and in-process research and development included as a part of the cost of sales for the product revenue stream.