CORRESP 1 filename1.htm

Writer's Direct Number	Writer's E-mail Address
212.756.2208	david.rosewater@srz.com

July 15, 2013

VIA EDGAR AND ELECTRONIC MAIL

Ms. Peggy Kim
Special Counsel
Office of Mergers and Acquisitions
Securities and Exchange Commission
Washington D.C. 20549

Re:

Quality Systems, Inc. (“Quality Systems” or the "Company")
Preliminary Proxy Statement filed by Clinton Group et al.

Filed July 3, 2013

File No. 1-12537

Dear Ms. Kim:

On behalf of Clinton Relational Opportunity Master Fund, L.P. and its affiliates (“Clinton”), Scott Douglass Decker, Hadley C. Ford, Jonathan C. Javitt, James Christopher Malone, Peter M. Neupert, Morris Panner and Paul Leroy Ruflin (each, a “Filing Person” and collectively, with Clinton, the “Filing Persons”), we are responding to your letter dated July 11, 2013 (the “SEC Comment Letter”) in connection with the Preliminary Proxy Statement on Schedule 14A filed on July 3, 2013 (the "Preliminary Proxy Statement"). We have reviewed the comments of the staff (the “Staff”) of the Securities and Exchange Commission (the "Commission") and respond below. For your convenience, the comments are restated below in italics, with our responses following.

Concurrently with this letter, Clinton is filing a revised Preliminary Proxy Statement on Schedule 14A (the "Revised Proxy Statement"). The Revised Proxy Statement reflects revisions made to the Preliminary Proxy Statement in response to the comments of the Staff. Unless otherwise noted, the page numbers in the italicized headings below refer to pages in the Preliminary Proxy Statement, while the page numbers in the responses refer to pages in the Revised Proxy Statement. Capitalized terms used but not defined herein have the meaning ascribed to such terms in the Revised Proxy Statement.

For your convenience, we are emailing to your attention a copy of the Revised Proxy Statement, including a copy marked to show the changes from the Preliminary Proxy Statement.

Preliminary Proxy Statement

Reasons for Our Solicitation, page 5

Please supplementally provide support for the following statements on pages 5 and 6:

“The Company’s peers and companies…have increased their median earnings per share 48%....”

The Filing Persons respectfully note that they have revised the foregoing disclosure to state that the Company’s peers and competitors¹ have increased their median earnings per share 31% since the signing of the Health Information Technology for Economic and Clinical Health Act (the “HITECH Act”). Please see page 5 of the Revised Proxy Statement. In addition, the Filing Persons have provided supplemental support in Exhibit A demonstrating that the Company's peers and competitors increased their median earnings per share 31.5% over the period beginning February 17, 2009, the date the HITECH Act was signed, and ending March 31, 2013. The Filing Persons note that, over the period beginning December 31, 2008 and ending March 31, 2013, the Company's median earnings per share fell 11.7%.

“The stockholders of the Company’s peers and competitors have been rewarded with median total shareholder returns since the signing of ACA of 81%.”

The Filing Persons respectfully note that they have revised the foregoing disclosure to state that the stockholders of the Company’s peers and competitors have been rewarded with median total shareholder returns since the signing of the HITECH Act of 160%. Please see page 5 of the Revised Proxy Statement. In addition, the Filing Persons have provided supplemental support in Exhibit B demonstrating that over the period beginning February 17, 2009 and ending June 30, 2013, median total shareholder returns for the Company's peers and competitors were 160.4%.

“From the passage of the ACA through June 30, 2013, the Company’s stock (on a total return basis) is down 35%.”

___________________________________

¹As used throughout this response, the companies in the "peers and competitors" group are those companies listed in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2013, filed with the SEC on May 30, 2013 and the Company's preliminary proxy statement on Schedule 14A filed with the SEC on July 1, 2013. A copy of the supporting documentation providing the list of the companies constituting the peers and competitors group is attached hereto in Exhibit H.

The Filing Persons respectfully note that they have revised the foregoing disclosure to state that, since the passage of the HITECH Act, the Company’s stock on a total return basis has increased 6%. Please see page 5 of the Revised Proxy Statement. In addition, the Filing Persons have provided supplemental support in Exhibit C demonstrating that over the period beginning February 17, 2009 and ending June 30, 2013, the Company's stock on a total return basis has increased 6.3%.

“And from the day President Obama was first elected in 2008…the Company’s stock was essentially flat while the Russell 2000 Index increased by 79%, the S&P 500 increased by nearly 60%, and the peers and competitors produced total stockholder returns, on average, of 183%.”

In response to your comment, the Filing Persons note that over the period beginning November 4, 2008, the date on which President Obama was elected, and ending June 30, 2013, the value of the Company's stock increased by only 4.59% while the Russell 2000 Index increased by 79.04%, the S&P 500 increased by 59.71% and the Company's peers and competitors produced median total stockholder returns of 183%. A copy of the supporting documentation is attached hereto in Exhibit D.

“The Company’s stock has performed worse than every one of the peers and competitors since President Obama’s election.”

The Filing Persons respectfully note that they have revised the foregoing disclosure to state that the Company’s stock has performed worse than every one of the peers and competitors since President Obama’s election and since the signing of the HITECH Act. The Filing Persons note that over the period beginning November 4, 2008 and ending June 30, 2013, the percentage increase of the total stockholder returns of the Company's peers and competitors ranged from 23% to 895% while the Company's total stockholder returns over the same period increased by only 4.6% Over the period beginning February 17, 2009 and ending June 30, 2013 the percentage increase of the total stockholder returns of the Company's peers and competitors ranged from 13.7% to 891.8% while the Company's total stockholder returns over the same period increased by only 6.3%. A copy of the supporting documentation is attached hereto in Exhibit E.

“In fact, the Company’s stock has underperformed an index of its peers and competitors for the one-, two-, three-, four-, five-, six-, seven-, eight-, and nine-year periods and the year-to-date period, ended on June 30, 2013.”

In response to your comment, the Filing Persons have provided supplemental support in Exhibit F attached hereto showing the performance of the Company's stock versus an index comprised of its peers and competitors over each of the foregoing periods.

“Moreover, some investors are actively betting against the Company’s stock, with the so-called ‘short-interest’ in the stock 75% higher than the median among the peers and competitors, measured either as a percentage of shares outstanding or of average daily volume for the thirty days ended June 30, 2013.”

In response to your comment, the Filing Persons note that, for the thirty days ended June 30, 2013, the 'short interest' in the stock of the Company was 75.3% higher than the median among the Company's peers and competitors based on an average daily volume of 6.15 for the Company's peers and competitors and 10.78 for the Company. In addition, for the thirty days ended June 30, 2013, the 'short interest' in the stock of the Company was 77.2% higher than the median among the Company's peers and competitors based on a percentage of shares outstanding of 7.0% for the Company's peers and competitors and 4.0% for the Company. A copy of the supporting documentation is attached hereto in Exhibit G.

In order to facilitate our review, where the bases are other documents, such as prior proxy statements, Forms 10-K and 10-Q, annual reports, analysts’ reports and newspaper articles, provide either complete copies of the documents or sufficient pages of information so that we can assess the context of the information upon which you rely. Please also mark or highlight the supporting documents provided to identify the specific information upon which you rely.

Please revise footnote (1) on page 5 to identify the companies in the “peer and competitors” group.

In response to your comment, the Filing Persons have revised footnote 1 to identify the companies in the "peers and competitors" group. Please see footnote 1 on page 5 of the Revised Proxy Statement.

Regarding the analyst report excerpts that appear as bullet points on page 5 and the management statements that appear as bullet points on page 6, please revise to provide additional context for these statements. Please also supplementally provide copies of the analyst reports and transcripts or sufficient pages of information so that we can assess the context of the information upon which you rely.

In response to your comment, the Filing Persons have revised the disclosure on pages 5 and 6 of the Revised Proxy Statement to provide additional context for the analyst report excerpts and management statements. Relevant excerpts from the analyst reports and transcripts cited on pages 5 and 6 are attached hereto as Exhibit I.

Please revise to reconcile the first sentence of the third paragraph on page 7 which refers to independent nominees with disclosure elsewhere which states that Mr. Decker is not independent.

In response to your comment, the Filing Persons have revised the foregoing disclosure to indicate that six of the seven Nominees will be independent directors if elected to the Board. Please see page 7 of the Revised Proxy Statement.

Background of the Proxy Solicitation, page 8

Please revise to describe the substance of the discussions on June 24 and 26, 2013.

In response to your comment, the Filing Persons have revised the disclosure to describe the substance of the discussions between Clinton and two members of the Board. Please see page 8 of the Revised Proxy Statement.

Proposal 1—Election of Directors, page 9

We note the participants reserve the right to vote for unidentified substitute nominees. Advise us, with a view toward revised disclosure, whether the participants are required to identify or nominate such substitute nominees in order to comply with any applicable company advance notice bylaw. In addition, please confirm for us that should the participants lawfully identify or nominate substitute nominees before the meeting, the participants will file an amended proxy statement that (1) identifies the substitute nominees, (2) discloses whether such nominees have consented to being named in the revised proxy statement and to serve if elected and (3) includes the disclosure required by Items 5(b) and 7 of Schedule 14A with respect to such nominees.

In response to your comment, the Filing Persons note that the Bylaws of the Company do not specify any requirements for the nomination of substitute or additional nominees. In our notice to the Company of our intent to nominate persons for election to the Board and present proposals at the Company's Annual Meeting, dated June 13, 2013 (the "Notice"), Clinton indicated that it retained the right to nominate additional nominees if more than nine directors are to be elected at the Annual Meeting and alternate nominees as chosen by Clinton if, due to death or disability, any Nominee or additional nominee is unable to stand for election at the Annual Meeting or for good cause will not serve. The Company has not objected to our retention of such rights. The Filing Persons believe that they have satisfied any advance notice requirements of the Bylaws by reserving their rights to provide such additional or substitute nominees.

In addition, the Filing Persons confirm that, should the Filing Persons lawfully identify or nominate substitute nominees before the meeting, the participants will filed an amended proxy statement that (1) identifies the substitute nominees, (2) discloses whether such nominees have consented to being named in the revised proxy statement and to serve if elected and (3) includes the disclosure required by Items 5(b) and 7 of Schedule 14A with respect to such nominees.

Proposal 4—Approval of an Amendment to the Company’s Bylaws to Provide for Certain Term

Limits for Directors, page 17

Please revise to describe the effect of the amendment if approved and if Mr. Razin is re-elected.

In response to your comment, the Filing Persons have revised the foregoing disclosure to describe the effect of the amendment to the Bylaws to provide for certain term limits for directors of the Company, if approved, and if Sheldon Razin is re-elected. Please see page 17 of the Revised Proxy Statement.

Proposal 5—Approval of an Amendment to the Company’s Bylaws to Provide for a Term Limit

of Fifteen Years for the Position of Chairman of the Board, page 18

Please revise to describe the effect of the amendment including whether the amendment applies prospectively, includes prior service, and whether the 15 years must be consecutive or not.

In response to your comment, the Filing Persons have revised the foregoing disclosure to describe the effect of Proposal 5, if adopted. Such revisions clarify that the amendment applies immediately upon its adoption and that prior service is to be counted towards the 15 year limit, the terms of which are not required to be consecutive. Please see page 18 of the Revised Proxy Statement.

Voting and Proxy Procedures, page 20

We note that in the second paragraph on page 20 the disclosure states: “We intend to give notice to the Company of our intention to cumulate votes in the election of directors” but later states: “…we have provided notice of our intention to cumulate votes….” Please revise to clarify your intention and whether notice has been provided to the registrant.

In response to your comment, the Filing Persons have revised the foregoing disclosure to indicate that the Filing Persons intend to provide notice to the Company of their intent to cumulate votes in the election of directors to the Company. Please see page 20 of the Revised Proxy Statement.

10.

Please disclose the consequence that if a shareholder votes for seven nominees on the participants’ proxy card and cumulative voting is invoked, the use of discretionary authority to cumulate votes may result in a vote for fewer than seven nominees.

In response to your comment, the Filing Persons have revised the foregoing disclosure to state that, because cumulative voting has been invoked, if a shareholder votes for seven nominees on the Filing Person's proxy card, the use of discretionary authority to cumulate votes may result in a vote for fewer than seven nominees. Please see page 21 of the Revised Proxy Statement.

11.

Refer to the third paragraph on page 4 and the following statement: “You do not need to check the ‘FOR ALL’ box to allocate votes among all of our director nominees.” Please revise to affirmatively and clearly state how shareholders may provide allocation instructions to cumulate votes, if invoked, and how to withhold authority to cumulate votes with respect to one or more nominees.

In response to your comment, the Filing Persons have revised the foregoing disclosure to affirmatively and clearly state how shareholders may provide allocation instructions to cumulate votes and how to withhold authority to cumulate votes with respect to one or more Nominees. Please see page 20 of the Revised Proxy Statement.

Solicitation of Proxies, page 23

12.

We note your disclosure that proxies may be solicited by mail, facsimile, telephone, telegraph, Internet, in person and by advertisements. Please be advised that all written soliciting materials, including any scripts to be used in soliciting proxies over the telephone or any e-mail correspondence and any information posted on the Internet must be filed under the cover of Schedule 14A. Refer to Rule 14a-6(b) and (c). Please confirm your understanding in your response letter.

In response to your comment, the Filing Persons hereby confirm their understanding that all written soliciting materials, including any scripts to be used in soliciting proxies over the telephone, any e-mail correspondence and any information posted on the Internet must be filed under the cover of Schedule 14A on the date of first use.

13.

In your next amendment, please revise to fill in the costs of the solicitation incurred to date.

In response to your comment, the Filing Persons have revised the disclosure on page 23 of the Revised Proxy Statement to provide the cost of the solicitation incurred to date.

Information Concerning Quality Systems, page 23

14.

We note that this filing refers to the company’s proxy statement for certain information. We presume that you intend to rely on Rule 14a-5(c) to fulfill certain disclosure obligations. Please note that we believe that reliance upon Rule 14a-5(c) before the company distributes the information to security holders would be inappropriate. If you determine to disseminate your proxy statement prior to the distribution of the company’s proxy statement, you must undertake to provide any omitted information to security holders in the form of a proxy supplement. Please advise as to your intent in this regard.

In response to your comment, the Filing Persons have indicated, at page 23 of the Revised Proxy Statement, an undertaking to distribute to the stockholders a supplement containing the required information if the Company does not distribute its proxy materials to the Company's stockholders at least ten days prior to the Annual Meeting and if any required information is omitted from the Company's definitive materials when filed (or if such materials are not filed).

15.

We note the disclaimer in the last sentence: “…we do not take responsibility, except to the extent imposed by law, for the accuracy or completeness of statements….” We refer to Exchange Act Rule 14a-9 and remind you that you are responsible for the accuracy of disclosure made in your soliciting materials. Please revise to remove this disclaimer.

In response to your comment, the Filing Persons confirm that they are responsible for the accuracy of disclosures made in their soliciting materials and have deleted the disclaimer included on page 23 of the Preliminary Proxy Statement.

Form of Proxy

16.

Please revise the proxy card to disclose that shareholders will be disenfranchised with respect to the two additional seats if they return your proxy card.

In response to your comment, the Filing Persons have revised the Form of Proxy to disclose that shareholders will not be able to vote for the two additional director seats if they return the Filing Persons' proxy card.

17.

Please revise to provide a means for security holders to specify how they would like their votes cumulated, if cumulative voting is invoked, and a means to withhold authority to cumulate votes with respect to one or more nominees.

In response to your comment, the Filing Persons have revised the Form of Proxy to provide on the back of the proxy card a means for security holders to specify how they would like their votes cumulated and a means to withhold authority to cumulate votes with respect to one or more Nominees.

18.

Please revise the description of proposal 4 to clearly and impartially identify the matter. Refer to Rule 14a-4(a)(3). In this regard, please revise proposal 4 to describe the length of the term limit.

In response to your comment, the Filing Persons have revised the description of Proposal 4 on the Form of Proxy Card to identify the length of the term limit.

***

Please do not hesitate to contact me at (212) 756-2208 or Marc Weingarten at (212) 756-2280 with any additional comments or questions.

Very truly yours,

/s/ David Rosewater
David Rosewater

Each of the undersigned (each a “participant”) hereby acknowledges that (i) the participant and/or filing person is responsible for the adequacy and accuracy of the disclosure in the filings on Schedule 14A; (ii) staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filings and (iii) the participant and/or filing person may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

Dated: July 15, 2013

CLINTON RELATIONAL OPPORTUNITY MASTER FUND, L.P.

CLINTON SPOTLIGHT MASTER FUND, L.p.

By:

Clinton Relational Opportunity, LLC, its investment manager

By:

Clinton Group, Inc., its investment manager

By:	/s/ John Hall	By:	/s/ Francis Ruchalski
	Name: John Hall		Name: Francis Ruchalski
	Title: Authorized Signatory		Title: Chief Financial Officer

CLINTON RELATIONAL OPPORTUNITY, LLC

CLINTON GROUP, INC.

By:	/s/ John Hall	By:	/s/ Francis Ruchalski
	Name: John Hall		Name: Francis Ruchalski
	Title: Authorized Signatory		Title: Chief Financial Officer

/s/ George E. Hall		/s/ Scott Douglas Decker
George E. Hall		Scott Douglas Decker

/s/ Hadley C. Ford		/s/ Jonathan C. Javitt
Hadley C. Ford		Jonathan C. Javitt

/s/ Peter M. Neupert		/s/ James Christopher Malone
Peter M. Neupert		James Christopher Malone

/s/ Paul Leroy Ruflin		/s/ Morris Panner
Paul Leroy Ruflin		Morris Panner

Exhibit A

Exhibit B

Exhibit C

Exhibit D

Exhibit E

Exhibit F

Exhibit G

Exhibit H

Exhibit I

¹ As used throughout this response, the companies in the "peers and competitors" group are those companies listed in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2013, filed with the SEC on May 30, 2013 and the Company's preliminary proxy statement on Schedule 14A filed with the SEC on July 1, 2013. A copy of the supporting documentation providing the list of the companies constituting the peers and competitors group is attached hereto in Exhibit H.