The Department of Justice on Monday released information that it was dropping charges against Gibson guitars stemming from a raid on the plant in Nashville last year.
Armed federal agents raided the plant and executive offices and confiscated wood that was being used to build fret boards on Gibson's classic guitars.
The ebony wood, according to the Department of Justice, came from the Madagascar region and violated the nation's Lacey Act that prevents the importing of wood in violation of laws of another country.
The harvest of ebony and export of unfinished ebony from Madagascar has been banned since 2006.
The tactics used by federal agents have been the subject of criticism from members of Congress and other government officials.
In a statement, Tennessee Rep. Marsha Blackburn, said, "I am extremely disappointed with the intimidation tactics. There is no reason that hard-working employees at the Gibson plants should have been raided by armed federal agents."
She concluded, "It didn't have to come to this."
Ben Cunningham, president and founder of Nashville's Tea Party movement agreed. "That's an abuse of power and authority and that's an abuse that we as citizens simply cannot allow," he said.
Cunningham helped organize a rally in support of Gibson last October to raise awareness of how the guitar maker was treated.
"This is an abuse of power. You should never have come in there with guns blazing and raided a factory. You simply walked in and said to the executives of Gibson Guitar, ‘How are you using your wood? What's going on here?" he said.
The agreement states that Gibson will pay $300,000 in penalties and another $50,000 public service payment to the National Fish and Wildlife Foundation to promote the conservation, identification and propagation of protected tree species used in the musical instrument industry.
Gibson also will withdraw its claim to the wood seized in the course of the criminal investigation totaling some $261,000.
In a statement released late Monday, Gibson CEO, Henry Juszkiewicz said, "We felt compelled to settle as the costs of proving our case at trial would have cost millions of dollars and taken a very long time to resolve."
He continued, "This allows us to get back to the business of making guitars. An important part of the settlement is that we are getting back the materials seized in a second armed raid on our factories and we have formal acknowledgement that we can continue to source rosewood and ebony fingerboards from India, as we have done for many decades."