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 19, 2012
Quest Software, Inc.
(Exact name of registrant as specified in charter)
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Delaware
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000-26937
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33-0231678
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(State or other jurisdiction
of incorporation or organization)
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(Commission
File Number)
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(I.R.S. Employer
Identification Number)
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5 Polaris Way
Aliso Viejo, California 92656
(Address, including zip code and telephone
number, including area code, of registrants principal executive offices)
Registrants telephone number,
including area code (949) 754-8000
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:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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x
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item 1.01 Entry into a Material Definitive Agreement.
Amendment No. 1 to Agreement and Plan of Merger
On June 19, 2012, Quest Software, Inc., a Delaware corporation (
Quest
or the
Company
), entered into an Amendment No. 1 (the
Merger Agreement
Amendment
) to that certain Agreement and Plan of Merger, dated March 8, 2012 (the
Merger Agreement
), by and among the Company, Expedition Holding Company, Inc., a Delaware corporation (
Parent
),
and Expedition Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Parent (
Merger Sub
). The Merger Agreement, as amended by the Merger Agreement Amendment, provides for the merger of Merger Sub with and into
the Company (the
Merger
), with the Company surviving the Merger as a wholly owned subsidiary of Parent. Parent and Merger Sub are beneficially owned by funds affiliated with Insight Venture Management, LLC, a Delaware limited
liability company (
Insight
).
Under the Merger Agreement Amendment, among other changes (i) Vector
Capital IV, L.P., a Delaware limited partnership (
Vector
), was added as a member of the buyout group and has committed to purchase an equity interest in Parent in connection with the transaction, (ii) the Merger Consideration
(as defined in the Merger Agreement) payable in cash upon conversion of the common stock of Quest, par value $0.001, was increased from $23.00 per share to $25.75 per share, (iii) the amount of the Termination Fee (as defined in the Merger
Agreement) payable by the Company under certain circumstances was increased from $6,300,000 to $25,000,000, (iv) the maximum amount of Parent Expenses (as defined in the Merger Agreement) payable by the Company under certain circumstances was
increased from $7,000,000 to $12,000,000, and (v) the Outside Date (as defined in the Merger Agreement) was extended from September 8, 2012 to October 8, 2012.
Other than as expressly modified pursuant to the Merger Agreement Amendment, the Merger Agreement, which was filed as Exhibit 2.1 to the Current Report on Form 8-K filed with the Securities and Exchange
Commission (the
SEC
) by the Company on March 9, 2012, remains in full force and effect as originally executed on March 8, 2012. The preceding summary is qualified in its entirety by reference to the Merger Agreement
Amendment, a copy of which is attached hereto as Exhibit 2.1 and is incorporated herein by reference.
Rollover Letter
Vincent C. Smith, Chairman and Chief Executive Officer of Quest, and the Vincent C. Smith Annuity Trust 2010-1, the Vincent C. Smith
Annuity Trust 2010-2, the Vincent C. Smith Annuity Trust 2011-1, and the Teach A Man to Fish Foundation (collectively, the
Rollover Investors
) entered into a commitment letter (the
Rollover Letter
) with Parent
pursuant to which the Rollover Investors will contribute, prior to the closing and subject to the terms and conditions therein, at least 84% of their shares of common stock, stock options and restricted stock units of Quest to Parent in exchange for
equity interests in Parent. Quest is not a party to the Rollover Letter. The Rollover Letter supersedes in its entirety that certain rollover letter by and among Mr. Smith, the Vincent C. Smith Annuity Trust 2010-1, the Vincent C. Smith Annuity
Trust 2010-2, the Vincent C. Smith Annuity Trust 2011-1 and Parent, dated as of March 8, 2012, a form of which was filed as Exhibit A to Exhibit 2.1 to the Current Report on Form 8-K filed with the SEC by the Company on March 9, 2012. The
Rollover Letter is attached hereto as Exhibit 10.1 and is incorporated herein by reference.
Limited Guaranty
The Rollover Investors and funds affiliated with Insight and Vector have delivered to Quest a limited guaranty with respect to their
respective specified percentage of Parents obligation to pay any Parent Termination Fee (as defined in the Merger Agreement), Damages Remedy (as defined in the Merger Agreement) and certain expenses of Quest, as applicable, due pursuant to the
Merger Agreement, as amended by the Merger Agreement Amendment, (the
Guaranty
). The Guaranty supersedes in its entirety that certain limited guaranty by and among Mr. Smith, the Vincent C. Smith Annuity Trust 2010-1, the
Vincent C. Smith Annuity Trust 2010-2, the Vincent C. Smith Annuity Trust 2011-1, the funds affiliated with Insight named therein and the Company, dated as of March 8, 2012, which was filed as Exhibit 10.1 to the Current Report on Form 8-K
filed with the SEC by the Company on March 9, 2012. The Guaranty is attached hereto as Exhibit 10.2 and is incorporated herein by reference.
Commitment Letters
To support its and Merger Subs obligations under
the Merger Agreement, as amended by the Merger Agreement Amendment, Parent has obtained equity financing commitments in an amount of $187 million from funds affiliated with Insight and $187 million from funds affiliated with Vector, as well as
approximately $1.2 billion of debt financing commitments from J.P. Morgan Chase Bank N.A., RBC Capital Markets and Barclays Capital. Quest is not a party to any of these commitment letters. The equity and debt financing commitment letters referenced
herein supersede in their entirety those certain equity and debt financing commitment letters entered into on March 8, 2012 in connection with the Merger Agreement.
Amendment No. 1 to Voting Agreement
Concurrently with the execution of the Merger Agreement Amendment and in their capacities as stockholders of the Company, the Rollover
Investors have entered into an Amendment No. 1 to Voting Agreement (the
Voting Agreement Amendment
) to that certain Voting Agreement, dated March 8, 2012, by and among the Company, Mr. Smith, the Vincent C. Smith
Annuity Trust 2010-1, the Vincent C. Smith Annuity Trust 2010-2 and the Vincent C. Smith Annuity Trust 2011-1 (the
Voting Agreement
). Pursuant to the Voting Agreement, as amended by the Voting Agreement Amendment, the Rollover
Investors have agreed to, among other things, vote their shares in favor of the approval of the Merger Agreement and other proposals necessary to consummate the Merger unless such Voting Agreement is terminated pursuant to its terms.
Other than as expressly modified pursuant to the Voting Agreement Amendment, the Voting Agreement, which was filed as Exhibit 10.2 to the
Current Report on Form 8-K filed with the SEC by the Company on March 9, 2012, remains in full force and effect as originally executed on March 8, 2012. The Voting Agreement Amendment is attached hereto as Exhibit 10.3 and is incorporated herein by
reference.
Press Release
On June 19, 2012, Quest issued a press release. A copy of the press release is attached as Exhibit 99.1 hereto and is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
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2.1
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Amendment No. 1 to Agreement and Plan of Merger, dated as of June 19, 2012, by and among Expedition Holding Company, Inc., Expedition Merger Sub, Inc. and Quest Software,
Inc.
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10.1
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Letter Agreement, dated as of June 19, 2012, by Expedition Holding Company, Inc., Vincent C. Smith, the Vincent C. Smith Annuity Trust 2010-1, the Vincent C. Smith Annuity
Trust 2010-2, the Vincent C. Smith Annuity Trust 2011-1 and the Teach A Man to Fish Foundation.
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10.2
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Limited Guaranty, dated as of June 19, 2012, by Insight Venture Partners VII, L.P., Insight Venture Partners (Cayman) VII, L.P., Insight Venture Partners VII (Co-Investors),
L.P., Insight Venture Partners (Delaware) VII, L.P., Insight Venture Partners Coinvestment Fund II, L.P., Vector Capital IV, L.P., Vincent C. Smith, the Vincent C. Smith Annuity Trust 2010-1, the Vincent C. Smith Annuity Trust 2010-2, the Vincent C.
Smith Annuity Trust 2011-1 and the Teach A Man to Fish Foundation in favor of Quest Software, Inc.
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10.3
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Amendment No. 1 to Voting Agreement, dated as of June 19, 2012, among Vincent C. Smith, the Vincent C. Smith Annuity Trust 2010-1, the Vincent C. Smith Annuity Trust
2010-2, the Vincent C. Smith Annuity Trust 2011-1 and the Teach A Man to Fish Foundation and Quest Software, Inc.
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99.1
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Press Release issued by Quest Software, Inc. on June 19, 2012
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Additional Information and Where to Find It
The Company has filed with the SEC a preliminary proxy statement and intends to furnish or file other materials with the SEC in connection
with the proposed transaction. The definitive proxy statement will be sent or given to the stockholders of the Company and will contain important information about the proposed transaction and related matters. BEFORE MAKING ANY VOTING DECISION,
QUESTS STOCKHOLDERS ARE URGED TO READ THE PROXY STATEMENT AND THOSE OTHER MATERIALS CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE COMPANY AND THE PROPOSED TRANSACTION. The proxy statement and other
relevant materials (when they become available), and any other documents filed by Quest with the SEC, may be obtained free of charge at the SECs website at www.sec.gov. In addition, security holders will be able to obtain free copies of the
proxy statement from Quest by contacting Quests Investor Relations by telephone at (949) 754-8000, or by mail at Quest Software, Inc., 5 Polaris Way, Aliso Viejo, California 92656, Attention: Investor Relations, or by going to
Quests Investor Relations page on its corporate web site at www.quest.com.
Participants in the Solicitation
Quest and its directors and executive officers may be deemed to be participants in the solicitation of proxies from the stockholders of
Quest in connection with the proposed merger. Information regarding the interests of these directors and executive officers in the transaction described herein has been included in the preliminary proxy statement described above and will be included
in the definitive proxy statement to be filed with the SEC. Additional information regarding these directors and executive officers is included in Quests amended Annual Report on Form 10-K/A, which was filed with the SEC on April 30,
2012.
Forward-Looking Statements
This filing may include predictions, estimates and other information that might be considered forward-looking statements, including, without limitation, statements relating to the completion of the
proposed transaction. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially from those anticipated as a result of various factors, including:
(1) the Company may be unable to obtain stockholder approval as required for the transaction; (2) conditions to the closing of the transaction may not be satisfied; (3) the transaction may involve unexpected costs, liabilities or
delays; (4) the business of the Company may suffer as a result of uncertainty surrounding the transaction; (5) the outcome of any
legal proceedings related to the transaction; (6) the Company may be adversely affected by other economic, business, and/or competitive factors; (7) the occurrence of any event, change
or other circumstances that could give rise to the termination of the transaction agreement; (8) the ability to recognize benefits of the transaction; (9) risks that the transaction disrupts current plans and operations and the potential
difficulties in employee retention as a result of the transaction; and (10) other risks to consummation of the transaction, including the risk that the transaction will not be consummated within the expected time period or at all. If the
transaction is consummated, our stockholders will cease to have any equity interest in the Company and will have no right to participate in its earnings and future growth. Additional factors that may affect the future results of the Company are set
forth in its filings with the SEC, including its Annual Report on Form 10-K for the year ended December 31, 2011 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2012, which are available on the SECs website at
www.sec.gov. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date thereof. The Company undertakes no obligation to update forward-looking statements to reflect events or circumstances
after the date thereof.
SIGNATURE
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.
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Quest Software, Inc.
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Date: June 20, 2012
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/s/ David P. Cramer
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David P. Cramer
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Vice President, General Counsel & Secretary
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Exhibit Index
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Exhibit No.
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Description
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2.1
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Amendment No. 1 to Agreement and Plan of Merger, dated as of June 19, 2012, by and among Expedition Holding Company, Inc., Expedition Merger Sub, Inc. and Quest Software,
Inc.
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10.1
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Letter Agreement, dated as of June 19, 2012, by Expedition Holding Company, Inc., Vincent C. Smith, the Vincent C. Smith Annuity Trust 2010-1, the Vincent C. Smith Annuity Trust
2010-2, the Vincent C. Smith Annuity Trust 2011-1 and the Teach A Man to Fish Foundation.
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10.2
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Limited Guaranty, dated as of June 19, 2012, by Insight Venture Partners VII, L.P., Insight Venture Partners (Cayman) VII, L.P., Insight Venture Partners VII (Co-Investors), L.P.,
Insight Venture Partners (Delaware) VII, L.P., Insight Venture Partners Coinvestment Fund II, L.P., Vector Capital IV, L.P., Vincent C. Smith, the Vincent C. Smith Annuity Trust 2010-1, the Vincent C. Smith Annuity Trust 2010-2, the Vincent C. Smith
Annuity Trust 2011-1 and the Teach A Man to Fish Foundation in favor of Quest Software, Inc.
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10.3
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Amendment No. 1 to Voting Agreement, dated as of June 19, 2012, among Vincent C. Smith, the Vincent C. Smith Annuity Trust 2010-1, the Vincent C. Smith Annuity Trust 2010-2, the
Vincent C. Smith Annuity Trust 2011-1 and the Teach A Man to Fish Foundation and Quest Software, Inc.
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99.1
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Press Release issued by Quest Software, Inc. on June 19, 2012
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