Quest Software, Insight Venture Partners And Vector Capital Enter Into Amendment To Merger Agreement

Quest Software, Inc. (NASDAQ: QSFT) (the “Company” or “Quest”) announced that it has entered into an amendment to its previously announced merger agreement (the “Insight Merger Agreement” and as amended, the “Amended Agreement”) with affiliates of Insight Venture Partners (“Insight”) to provide for the addition of Vector Capital (“Vector”) as a member of the buyout group and for an increase in the merger consideration to be received by stockholders not affiliated with the buyout group from $23 per share in cash to $25.75 per share in cash. The increased purchase price represents a 33-percent premium to Quest’s closing stock price on the day prior to the announcement of the Insight Merger Agreement (March 8, 2012).

In connection with the increased purchase price, Quest has agreed in the Amended Agreement to increase the termination fee payable by the Company under certain circumstances, including in the event that the Company receives and accepts a proposal that the Company’s Board of Directors (the “Board”) determines to be superior to the Amended Agreement, from $6.3 million to $25 million, as well as an increase in the maximum amount of expense reimbursement payable by the Company under certain circumstances from $7 million to $12 million.

Following the unanimous recommendation of the special committee of independent directors established by the Board (the “Special Committee”), the Board, with the exception of Vinny Smith who recused himself from the vote, approved the Amended Agreement. In making its recommendation, the Special Committee consulted with its independent financial advisors and outside legal counsel. In connection with the Board’s approval of the Amended Agreement with Insight and Vector for a purchase price of $25.75 per share, and upon the recommendation of the Special Committee, the Board also determined that the previously announced proposal for $25.50 per share submitted by a strategic bidder no longer constituted a “Superior Proposal” as defined in the Insight Merger Agreement.

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