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) June 20, 2007

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.)

5 Polaris Way, Aliso Viejo, California	92656
(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 June 20, 2007, Quest Software, Inc. (“Quest”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) with ScriptLogic Corporation (“ScriptLogic”) contemplating the acquisition of ScriptLogic by Quest. ScriptLogic, based in Boca Raton, Florida, is a privately held company that provides systems lifecycle management solutions for Windows-based networks. The Merger Agreement provides for the merger of Quickstep Acquisition Corp., a newly formed Quest subsidiary, with and into ScriptLogic, with ScriptLogic surviving the merger as a wholly-owned subsidiary of Quest. The contemplated transaction is valued at approximately $90.0 million in cash, of which $12.0 million would be placed in an indemnity escrow fund at the closing of the transaction which would ultimately be distributed to ScriptLogic’s securityholders in accordance with the Merger Agreement (subject to reduction for claims Quest may make against the indemnity escrow fund following the closing). In connection with the proposed acquisition, Quest has also agreed to provide key members of the current management team of ScriptLogic with the opportunity to participate in a post-closing incentive bonus plan in an aggregate amount of up to $8.0 million payable over a four-year period (the “Incentive Plan”). A portion of the payments under the Incentive Plan would be based on the satisfaction of financial performance objectives and a portion of the payments would be based solely on continued employment. The closing of the transaction is subject to customary closing conditions, including the expiration of the applicable Hart-Scott-Rodino Act waiting period, and is anticipated to occur during the third quarter of 2007.

A copy of the joint press release announcing the execution of the Merger Agreement is attached as Exhibit 99.1 to this Report and is incorporated herein by reference.

Certain venture capital funds associated with Insight Venture Partners (the “Insight Funds”) hold shares of ScriptLogic’s preferred stock, and will be entitled upon the closing of the transaction to receive (in respect of those shares of preferred stock) cash in an aggregate amount of up to approximately $37.7 million (including the portion of the merger consideration to be placed in the indemnity escrow fund described above). Jerry Murdock, a director of Quest, is a Managing Director and the co-founder of Insight Venture Partners and an investor in the Insight Funds. Each of Vincent Smith, Quest’s Chairman of the Board and CEO, and Ray Lane and Paul Sallaberry, both directors of Quest, are passive limited partners in the Insight Funds, and will be entitled to a portion of the proceeds from the transaction by virtue of their respective ownership interests therein. Quest believes that the financial interests of Messrs. Smith, Lane and Sallaberry in the transaction are not material.

The proposed acquisition of ScriptLogic was reviewed and approved by Quest’s Board of Directors, as well as by the Audit Committee of Quest’s Board of Directors. Mr. Murdock did not participate in the meetings of the Board of Directors and the Audit Committee at which the transaction was considered and ultimately approved. Prior to approving the transaction, Quest’s Board of Directors received, from an internationally recognized investment bank, an opinion that as of the date of such opinion, and subject to the assumptions and qualifications set forth therein, the consideration to be paid by Quest in the acquisition of ScriptLogic is fair, from a financial point of view, to Quest.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

99.1    Joint press release issued by Quest Software, Inc. and ScriptLogic Corporation on June 21, 2007.

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: June 26, 2007
	By:	/s/ J. Michael Vaughn
		J. Michael Vaughn
		Vice President, General Counsel

EXHIBIT INDEX

Exhibit Number	Exhibit Title or Description
99.1	Joint press release issued by Quest Software, Inc. and ScriptLogic Corporation on June 21, 2007.

EX-99.1

Exhibit 99.1

NEWS For Immediate Release

Editorial Contact: Joe Horine

614-726-4775

joe.horine@quest.com

Investor Contact: Scott Davidson

949-754-8659

scott.davidson@quest.com

QUEST SOFTWARE TO ACQUIRE SCRIPTLOGIC

Combination of Leaders in Windows Management Products

Expands Quest’s Presence Into Small- and Medium-Sized Business Market

ALISO VIEJO, Calif. and BOCA RATON, Fla., June 21, 2007 – Quest Software, Inc. (Nasdaq: QSFT) and ScriptLogic Corporation (www.scriptlogic.com) today announced a definitive agreement for Quest to acquire ScriptLogic in a cash transaction valued at approximately $90 million. The union is a natural fit for Quest, a market-leading provider of database, applications, and Windows management solutions, and privately-held ScriptLogic, a leading provider of systems lifecycle management solutions for Windows-based networks. The acquisition is subject to customary closing conditions and regulatory approvals, including expiration or termination of the Hart-Scott-Rodino waiting period, and is expected to be completed early in the third quarter of 2007.

In addition to expanding Quest’s presence in the small- and medium-sized business (SMB) space, the deal broadens Quest’s capabilities to support both Windows server-based and client-side needs as well as allowing ScriptLogic to benefit from Quest’s global footprint and extensive presence and knowledge in the Windows market.

“Windows server-based services and products have become a cornerstone of Quest’s success and central to our opportunity for on-going growth,” said Vinny Smith, Quest CEO. “By adding ScriptLogic’s established strength in PC life-cycle management to complement our current offerings, we are increasing our ability to meet the Windows

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Quest Software to Acquire ScriptLogic

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management needs of SMB customers while at the same time extending Quest’s direct sales model further with ScriptLogic’s successful high-volume, indirect reseller channel approach to market.”

ScriptLogic will operate as a wholly-owned subsidiary of Quest with Jason Judge, ScriptLogic CEO, reporting directly into Smith, and other key members of the management team remaining in place following the acquisition. With revenue around $20 million last year, the company has generated positive cash flow from operations and has more than 19,000 customers including many leading small and medium-sized businesses.

“We are excited about becoming part of Quest as that will help us penetrate further into existing markets and give us the resources and expertise to expand into new markets,” said Judge. “We’ve been successful in building a strong reputation in the SMB market for Windows-based products that complement the existing Quest products. Now we’re looking forward to capitalizing on this momentum as part of Quest and taking our success to the next level.”

About Quest Software, Inc.

Quest Software, Inc. delivers innovative products that help organizations get more performance and productivity from their applications, databases and Windows infrastructure. Through a deep expertise in IT operations and a continued focus on what works best, Quest helps more than 50,000 customers worldwide meet higher expectations for enterprise IT. Quest’s Windows Management solutions simplify, automate and secure Active Directory, Exchange and Windows, as well as integrate Unix, Linux and Java into the managed environment. Quest Software can be found in offices around the globe and at www.quest.com.

About ScriptLogic Corporation

ScriptLogic Corporation is a leading global provider of systems lifecycle management solutions for Microsoft Windows-based networks. ScriptLogic’s award-winning suite of

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desktop, server, and Active Directory management solutions help empower IT organizations to proactively save time, increase security, and maintain regulatory compliance. More than 19,000 customers use ScriptLogic solutions to manage approximately 4.75 million desktops and 110,000 servers. ScriptLogic solutions benefit any size network in any industry. ScriptLogic is currently headquartered in Boca Raton, Florida and can be found on the Internet at www.scriptlogic.com.

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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. All other trademarks and registered trademarks are property of their respective owners.

Forward Looking Statements

This press release includes predictions, estimates and other information relating to our proposed acquisition of ScriptLogic Corporation that might be considered forward-looking statements. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ from those anticipated as a result of various factors, including: the inability to complete the acquisition due to the failure to satisfy closing conditions, including the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the receipt of other required approvals; risks that the proposed transaction or related integration activity may disrupt current plans, projects and operations; and the ability to recognize the benefits of the acquisition.

Other risks and uncertainties that may affect forward-looking statements include those resulting from the conclusions of the Special Committee relating to our historic stock option grants and related accounting; the ultimate determinations of the amounts and timing of stock-based compensation expense resulting from such conclusions as well as other potential adjustments that may result from our ongoing internal review of historic financial statements for the periods in question; the consequences of our inability to file required reports with the Securities and Exchange Commission on a timely basis, including potential delisting of our common stock from The Nasdaq Global Select Market; potential claims and proceedings relating to such matters, including shareholder litigation and action by the SEC or other governmental agencies; other actions taken or required as a result of the investigation; negative tax or other implications for the company resulting from the accounting adjustments and other factors. The foregoing factors are in addition to risks inherent in software businesses, which include but are not limited to: introducing quality products on a timely basis that satisfy customer requirements and achieve market acceptance; lengthy and variable sales cycles create difficulty in forecasting the timing of revenue; integrating the business and personnel of ScriptLogic and our other recent acquisitions, including implementation of adequate internal controls; risks associated with significant foreign operations, including fluctuations in foreign currency exchange rates; aggressive competition in all of our markets, which creates pricing pressure; risks that our intellectual property rights may not be adequate to protect Quest’s business or that others may claim that Quest infringes upon their intellectual property rights; risks associated with the ability to retain existing personnel and recruit and retain qualified personnel; declines or delays in information technology spending; changes in the demand for our products and services; inability to maintain or expand relationships with channel partners, value added resellers and systems integrators; difficulty of improving our infrastructure in order to be able to continue to grow; and other risks described from time to time in Quest’s filings with the SEC. For a discussion of these and other related risks, please refer to our SEC filings, including our Annual Report on Form 10-K for the year ended December 31, 2005, which are available through the SEC’s EDGAR system at www.sec.gov or from Quest’s website at www.quest.com. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date thereof. We undertake no obligation to update forward-looking statements to reflect events or circumstances after the date thereof.

Web Links Referenced in this Release:

Quest Software Inc.: www.quest.com

ScriptLogic – www.scriptlogic.com