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) March 21, 2005

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.

Settlement Agreement

On March 21, 2005, Quest Software, Inc. entered into a Settlement Agreement with Computer Associates International, Inc. (“CA”), Michael J. Friel, an employee of Quest Software (“Friel”), and former Quest Software employees Robert M. Mackowiak, Elizabeth W. Wahlgren, Frank L. Bisotti, and Debra A. Jenson. The Settlement Agreement relates to a lawsuit filed by CA alleging that Quest Software used CA proprietary information and infringed CA intellectual property rights in the development of database administration products. The agreement also resolves Quest Software’s counterclaims challenging the validity of certain CA copyrights. As part of the settlement, Quest Software agreed to pay CA $16 million plus royalties under a non-exclusive licensing agreement. Under the agreement, Quest and CA make no admission regarding fault or liability.

The settlement also dissolves the preliminary injunction prohibiting Quest from marketing or licensing the Quest Central for DB2 line of Quest’s database management products and further releases Quest and Quest’s customers using Quest Central for DB2 from any and all claims regarding possession or use of CA’s Enterprise DBA and proprietary information.

A copy of the joint press release announcing this Settlement Agreement is attached hereto as Exhibit 99.1 and is hereby incorporated by reference.

Executive Bonuses

On March 22, 2005, Quest Software determined the cash bonuses to be paid in the amounts and to the executive officers indicated below. The bonuses were granted in recognition of the efforts and services provided by these executive officers on behalf of Quest Software in 2004.

NAME AND POSITION	YEAR	BONUS PAID		TARGET BONUS
Vincent C. Smith Chairman of the Board and Chief Executive Officer	2004	$	200,000	$	200,000
Douglas F. Garn President (1)	2004		125,000		125,000
M. Brinkley Morse Vice President, Finance and Operations and Chief Financial Officer	2004		50,000		50,000

(1) During 2004, Mr. Garn was Vice President, Worldwide Sales.

Item 9.01 Financial Statements and Exhibits.

(c) Exhibits.

99.1   Joint press release issued by Computer Associates International, Inc. and Quest Software, Inc. on March 24, 2005.

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: March 25, 2005
	By:	/s/ J. Michael Vaughn
		J. Michael Vaughn
		General Counsel and Secretary

EXHIBIT INDEX

Exhibit Number	Exhibit Title or Description
99.1	Joint press release issued by Computer Associates International, Inc. and Quest Software, Inc. on March 24, 2005.

EX-99.1

Exhibit 99.1

CA Contacts: Shannon Lapierre Public Relations (631) 342-3839 shannon.lapierre@ca.com	Quest Software Contacts:                     Erin Jones                     Public Relations                     (949) 754-8032                     erin.jones@quest.com
Olivia Bellingham Investor Relations (631) 342-4687 olivia.bellingham@ca.com	Scott Davidson                     Investor Relations                     (949) 754-8659                     scott.davidson@quest.com

COMPUTER ASSOCIATES AND QUEST SOFTWARE SETTLE

INTELLECTUAL PROPERTY CLAIMS

Quest to Resume Licensing and Full Support for Quest Central for DB2

ISLANDIA, NY and IRVINE, Calif., March 24, 2005 –Computer Associates International, Inc. (NYSE: CA), one of the world’s largest management software companies, and Quest Software Inc. (Nasdaq: QSFT), a leading provider of application, database and Windows management solutions, today announced the companies have settled a lawsuit filed by CA alleging that Quest used CA proprietary information and infringed CA intellectual property rights in the development of database administration products. The agreement also resolves Quest’s counterclaims challenging the validity of certain CA copyrights. As part of the settlement, Quest has agreed to pay CA $16 million plus royalties under a non-exclusive licensing agreement. Under the agreement, Quest and CA make no admission regarding fault or liability.

The settlement also dissolves the preliminary injunction prohibiting Quest from marketing or licensing the Quest Central for DB2 line of Quest’s database management products and further releases Quest and Quest’s customers using Quest Central for DB2 from any and all claims regarding possession or use of CA’s Enterprise DBA and proprietary information.

“CA is pleased with the resolution of this dispute,” said Kenneth V. Handal, CA’s executive vice president, general counsel and corporate secretary. “We value our intellectual property rights, and it is CA’s policy to protect and defend those rights against third parties.”

“Settling this litigation underscores Quest’s commitment to our customers to stand behind our software products as well as our commitment to the importance of intellectual property rights, “ said Michael Vaughn, general counsel and secretary, Quest Software. “We felt that the opportunity to settle was best for our business and customers. By resolving this matter now, we can resume marketing and licensing our Quest Central for DB2 products and providing full support for this solution to our customers, and we will avoid the distraction, risk and expense of continued litigation.”

About Quest Software, Inc.

Quest Software, Inc. delivers innovative products that help organizations get more performance and productivity from their applications, databases and infrastructure. Through a deep expertise in IT operations and a continued focus on what works best, Quest helps more than 18,000 customers worldwide meet higher expectations for enterprise IT. Quest Software, headquartered in Irvine, Calif., can be found in offices around the globe and at www.quest.com.

About CA

Computer Associates International, Inc. (NYSE: CA - News), one of the world’s largest management software companies, delivers software and services across operations, security, storage, life cycle and service management to optimize the performance, reliability and efficiency of enterprise IT environments. Founded in 1976, CA is headquartered in Islandia, N.Y. and serves customers in more than 140 countries. For more information, please visit http://ca.com.

^© 2005 Computer Associates International, Inc. One Computer Associates Plaza, Islandia, N.Y.11749. All trademarks, trade names, service marks, and logos referenced herein belong to their respective companies.

Quest and Quest Software are registered trademarks of Quest Software, Inc. The Quest Software logo and all other Quest Software product or service names and slogans are registered trademarks or trademarks of Quest Software, Inc.

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