8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) November 23, 2004

Quest Software, Inc.

(Exact name of registrant as specified in its charter)

California	000-26937	33-0231678
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

8001 Irvine Center Drive, Irvine, California	92618
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code (949) 754-8000

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement.

On November 29, 2004, Quest Software, Inc. (“Quest”) announced the hiring of Michael J. Lambert as Senior Vice President, Finance. Mr. Lambert’s principal terms of employment are described in Quest’s offer letter, which was accepted by Mr. Lambert when it was signed and returned to Quest on November 23, 2004. Mr. Lambert will receive an annual salary of $350,000 and will be eligible to receive a discretionary annual bonus up to $100,000. Mr. Lambert will also receive options to purchase 400,000 shares of Quest common stock at an exercise price equal to the closing price on the date of grant. Quest and Mr. Lambert will also enter into Quest’s standard form of indemnification agreement.

Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.

(b) and (c). On November 29, 2004, Quest appointed Michael J. Lambert, age 43, as Senior Vice President, Finance. Mr. Lambert is expected to assume the role of Chief Financial Officer of Quest in Spring 2005 following a transition period. The press release issued by Quest announcing the hiring of Mr. Lambert is attached hereto as Exhibit 99.1.

Prior to joining Quest, Mr. Lambert was Executive Vice President and Chief Financial Officer at Quantum Corporation (NYSE:DSS), an $800 million publicly held provider of storage solutions, from June 2001 through June 2004. From July 2000 to May 2001, Mr. Lambert was Senior Vice President and Chief Financial Officer of NerveWire, a systems integration consulting firm. From March 1996 to July 2000, Mr. Lambert worked for Lucent Technologies, most recently as Vice President and Chief Financial Officer of the InterNetworking Systems Division. From July 1993 to March 1996, Mr. Lambert was at IBM Storage Systems Division, where he held several financial management positions.

The description of Mr. Lambert’s offer letter set forth in Item 1.01 of this Current Report on Form 8-K is hereby incorporated by reference into this Item 5.02.

As a result of Mr. Lambert’s appointment, Brinkley Morse is expected to relinquish his role as Chief Financial Officer in Spring 2005 at the end of the transition period. Quest anticipates that Mr. Morse will retain certain of his current administrative and operational responsibilities.

Item 9.01 Financial Statements and Exhibits.

(c) Exhibits.

10.1	Offer Letter Agreement between Quest Software, Inc. and Michael Lambert
99.1	Press release issued by Quest Software, Inc. on November 29, 2004

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	QUEST SOFTWARE, INC.
Date: November 29, 2004	By:	/s/ J. MICHAEL VAUGHN
		J. Michael Vaughn
		General Counsel and Secretary

EXHIBIT INDEX

Exhibit Number	Exhibit Title or Description
10.1	Offer Letter Agreement between Quest Software, Inc. and Michael Lambert
99.1	Press release issued by Quest Software, Inc. on November 29, 2004.

EX-10.1

Exhibit 10.1

November 10, 2004

VIA FACSIMILE AND U.S. MAIL

949-720-0911

Michael Lambert

2527 Bunya Street

Newport Beach, CA 92660

Re: Employment Terms

Dear Michael:

Quest Software, Inc. (“Quest”) is pleased to offer you the position of Senior Vice President, Finance, on the following terms. It is our understanding that you will be designated Quest’s Chief Financial Officer as well following an orderly transition period (expected to continue until March 15, 2005).

You will report to me, work out of our corporate offices in Aliso Viejo, California and be expected to perform various duties consistent with your position. Of course, Quest may change your position, duties, and work location from time to time as Quest deems necessary.

Your compensation will be $350,000 per year, to be paid semi-monthly and subject to payroll deductions and all required withholdings, commencing when you report to work on or about November 29, 2004. In addition to your base salary, you will be eligible to receive an annual discretionary bonus of up to $100,000. The bonus amount you may receive, if any, shall be discretionary and based your performance during the previous year as evaluated by the Chief Executive Officer and the Compensation Committee of the Quest Board of Directors, in their sole and absolute discretion. You will be eligible for standard Quest benefits, including group medical, dental and life insurance plans and participation in our 401k Plan. Details about these benefits and our policies for vacation, sick leave and holidays, are available for your review. Quest may modify compensation and benefits from time to time as it deems necessary.

If Quest terminates your employment without cause, Quest will pay your base salary and accrued and unused vacation earned through the date of termination, at the rate in effect at the time of termination subject to standard deductions and withholdings. In addition, upon your furnishing to the Company an effective waiver and release of claims in our standard form, you will continue to receive 50% of your base salary for a period of twelve months from the termination date, less standard deductions and withholdings.

The Compensation Committee of Quest’s Board of Directors has approved Quest’s grant to you of a nonqualified stock option under the Quest 1999 Stock Incentive Plan to purchase 400,000 shares of Quest Common Stock (the “Option”). The Option will be granted on the date your employment commences, and will be governed by and granted pursuant to a separate Stock Option Agreement. The exercise price per share of the Option will be equal to the fair market value of the common stock established on the date of grant, and will be subject to vesting over five (5) years so long as you continue to be employed with Quest, according to the following schedule: twenty percent (20%) of such options will vest one year from the grant date and the remaining shares will vest in equal installments at the end of each six-month period thereafter for four (4) years.

As a Quest employee, you will be expected to abide by Quest rules and regulations and acknowledge in writing that you have read our Employee Handbook which will govern the terms and conditions of your employment. The Employee Handbook may be modified from time to time at the sole discretion of Quest. You will also be expected to abide by Quest’s Code of Business Ethics.

As a condition of employment, you will be required to sign and comply with our form of Proprietary Information and Inventions Agreement which, among other customary restrictions, prohibits unauthorized use or disclosure of our proprietary information.

In your work for Quest, you will be expected not to use or disclose any confidential information, including trade secrets, of any former employer or other person to whom you have an obligation of confidentiality. Rather, you will be expected to use only that information which is generally known and used by persons with training and experience comparable to your own, which is common knowledge in the industry or otherwise legally in the public domain, or which is otherwise provided or developed by Quest. During our discussions about your proposed job duties, you assured us that you would be able to perform those duties within the guidelines just described. You agree that you will not bring onto Quest premises any unpublished documents or property belonging to any former employer or other person to whom you have an obligation of confidentiality.

Your employment with Quest is not for a guaranteed or definite period of time. Rather, the employment relationship is “at will”. This means that you may terminate your employment with Quest at any time and for any reason whatsoever simply by notifying Quest. Likewise, Quest may terminate your employment at any time and for any reason whatsoever, with or without cause or advance notice. This at-will employment relationship cannot be changed except in a writing signed by a Quest executive officer.

Except with the prior written consent of the Quest Chief Executive Officer, you will not, during any period during which you are receiving compensation or any other consideration from Quest, including, but not limited to, severance pay, engage in competition with Quest and/or any of its affiliates, either directly or indirectly, in any manner or capacity, as adviser, principal, agent, affiliate, promoter, partner, officer, director, employee, stockholder, owner, co-owner, consultant, or member of any association or otherwise, in any phase of the business of developing, manufacturing and marketing of products or services which are in the same field of use or which otherwise compete with the products or services or proposed products or services of Quest and/or any of its affiliates.

This letter, together with your Proprietary Information and Inventions Agreement and the Employee Handbook, forms the complete and exclusive statement of the terms of your employment with Quest. The employment terms in this letter supersede any other agreements or promises made to you by anyone, whether oral or written. As required by law, this offer is subject to satisfactory proof of your right to work in the United States. This letter will be binding upon your heirs, executors, administrators and other legal representatives and will be binding upon and shall inure to the benefit of Quest, its successors, and its assigns.

Please sign and date this letter, and return it to me by November 27^th, 2004, if you wish to accept employment at the Company under the terms described above. If so, we’ll consider you part of the Quest senior management team and hired for employment on these terms. We look forward to your favorable reply and to a productive and enjoyable work relationship.

Sincerely,

/s/ VINCENT C. SMITH

Vincent C. Smith

Chief Executive Officer

Accepted:

/s/ MICHAEL LAMBERT

Michael Lambert

November 23, 2004

Date

EX-99.1

Exhibit 99.1

NEWS For Immediate Release

Editorial Contact: Erin Jones

949-754-8032

erin.jones@quest.com

Investor Contact: Scott Davidson

949-754-8659

scott.davidson@quest.com

QUEST SOFTWARE ANNOUNCES HIRING OF TECHNOLOGY VETERAN MICHAEL

LAMBERT AS SENIOR VICE PRESIDENT, FINANCE

IRVINE, Calif., November 29, 2004 - Quest Software, Inc. (Nasdaq: QSFT), a leading provider of application, database and Windows management solutions, today announced that Michael J. Lambert has joined its executive management team as senior vice president, finance, reporting to Vinny Smith, Quest’s chairman and CEO. Quest anticipates that Lambert will assume the role of chief financial officer in the Spring of 2005 following a transition period.

“I am extremely pleased that Quest is of a size and quality that can attract a seasoned financial executive like Michael Lambert. He will bring a wealth of very relevant skills and experiences to Quest,” said Smith. “Our company has more than doubled in revenues in the last four years and our operations are increasingly global in scope. We are continuing to strengthen our management team and Michael’s addition is another important step forward.”

Michael Lambert most recently served as executive vice president and CFO at Quantum Corporation (NYSE: DSS), an $800 million publicly held provider of storage solutions, from June 2001 through June 2004. Prior to Quantum, Lambert was senior vice president and CFO of NerveWire, a systems integration consulting firm. From March 1996 to July 2000, Lambert worked for Lucent Technologies, most recently as vice president and CFO of the InterNetworking Systems Division. From July 1993 to March 1996, Lambert was at IBM Storage Systems Division, where he held several financial management positions. Lambert holds an MBA from Harvard Business School and a bachelor’s degree in Business Administration from Stonehill College.

-more-

Michael Lambert Joins Quest Software as senior vice president, finance

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Brinkley Morse, Quest’s current CFO, will continue to serve in that capacity during the transition period. Following the transition, the Company anticipates that Morse will remain with Quest and continue to perform many of his existing operational and administrative responsibilities. Kevin Brooks, Quest’s vice president, corporate controller, will continue in the role of principal accounting officer following Lambert’s assumption of CFO responsibilities.

Conference Call Information

Quest Software will host a conference call today, Monday, November 29, 2004 at 1:30 p.m. Pacific Time, to introduce Lambert. To listen to the live call, dial (800) 811-0667 (from the U.S. or Canada) or (913) 981-4901 (outside the U.S. and Canada), using confirmation code: 862553. A simultaneous Web cast of the conference call will be available on Quest Software’s Web site in the Investors - IR Events section at www.quest.com. A Web cast replay will be available on the same Web site through November 29, 2005. An audio replay of the call will also be available through December 17, 2004 by dialing (888) 203-1112 (from the U.S. or Canada) or (719) 457-0820 (outside the U.S. and Canada), using confirmation code: 862553.

About Quest Software, Inc.

Quest Software, Inc. provides software to simplify IT management to 18,000 customers worldwide, including 75 percent of the Fortune 500. Quest products for application, database and Windows management help customers develop, deploy, manage and maintain the IT enterprise without expensive downtime or business interruption. Headquartered in Irvine, Calif., Quest Software can be found in offices around the globe and at www.quest.com.

Quest and Quest Software are registered trademarks of Quest Software, Inc. All other trademarks and registered trademarks are property of their respective owners.

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