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)
January 27, 2010

QUALITY SYSTEMS, INC.

(Exact name of registrant as specified in its charter)

CALIFORNIA	001-12537	95-2888568
(State or other	(Commission File Number)	(IRS Employer
jurisdiction of incorporation)		Identification Number)

18111 Von Karman, Suite 600
Irvine, California 92612
(Address of Principal Executive Offices)

(949) 255-2600
(Registrant’s Telephone Number, Including Area Code)

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 ( see General Instruction A.2. below):

     o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

     o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

     o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

     o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01  Entry into Material Definitive Agreement.

Amendment of Outside Director Compensation Program and Restricted Stock Agreement.

     On January 27, 2010, the Company’s Board, upon recommendation of the Compensation Committee, approved an amendment to its 2010 Outside Director Compensation Program which permits the granting of shares of restricted stock to outside directors that serve for a partial year (generally, as a result of Board appointment to fill a vacancy on the Board) on a pro-rata basis based upon the percentage of the fiscal period for which service was rendered. The Program previously only permitted restricted stock grants to outside directors upon election or re-election to the Board. The amended Program, marked to show the amendment, is attached to this Current Report as Exhibit 10.1.

     On January 27, 2010, the Company’s Board, upon recommendation of the Compensation Committee, approved an amendment to the Company’s standard form of Restricted Stock Agreement which clarifies that the recipient of restricted stock has no dividend or voting rights in such shares until their vesting date. The amended Restricted Stock Agreement, marked to show the amendment, is attached to this Current Report as Exhibit 10.2.

Item 2.02  Results of Operations and Financial Condition.

     The information in this Form 8-K and the Exhibits attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

     On January 28, 2010, the Company issued a press release announcing its financial performance for the period ended December 31, 2009. On that same date, the Company conducted a conference call concerning its performance for the period ended December 31, 2009. A copy of the news release is attached to this Form 8-K as Exhibit 99.1, which is incorporated herein by this reference.

Item 5.02  Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

Amendment of Standard form of Indemnification Agreement; Indemnification Agreements between the Company and Certain Officers.

     On January 27, 2010, the Company’s Board approved (i) an amendment of the Company’s standard form of Indemnification Agreement to permit contribution rights, and (ii)

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entry into the Company’s standard form of Indemnification Agreement with its officers Scott Decker and Tim Eggena. The Company’s standard indemnification agreement and its articles of incorporation and bylaws require it to indemnify the Company’s directors and executive officers to the fullest extent permitted by California law. The amendment permits contribution rights between the Company and the other party to the Indemnification Agreement. The amended standard Indemnification Agreement, marked to show the amendment, is attached to this Current Report as Exhibit 10.3. It is anticipated that Mr. Decker and Mr. Eggena will enter into the standard form of Indemnification Agreement, as amended, shortly.

Item 8.01  Other Events.

Quarterly Dividend

     On January 27, 2010, the Company’s Board declared a quarterly cash dividend of $0.30 per share on the Company’s outstanding shares of common stock, payable to shareholders of record as of March 23, 2010 with an anticipated distribution date on or about April 5, 2010 pursuant to the Company’s current policy to pay a regular quarterly dividend on the Company’s outstanding shares of Common Stock each fiscal quarter subject to further Board review, approval and establishment of record and distribution dates by the Board prior to the declaration and payment of each such quarterly dividend.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.	Description
10.1	Outside Director Compensation Program as amended
10.2	Restricted Stock Agreement as amended
10.3	Indemnification Agreement
99.1	Press release dated January 28, 2010

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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.

Date: February 1, 2010

QUALITY SYSTEMS, INC.
By:	/s/ Paul Holt
	Paul Holt
	Chief Financial Officer

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EXHIBITS ATTACHED TO THIS REPORT ON FORM 8-K

Exhibit No.	Description
10.1	Outside Director Compensation Program as amended
10.2	Restricted Stock Agreement as amended
10.3	Indemnification Agreement
99.1	Press release dated January 28, 2010

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EX-10.1

Exhibit 10.1

Quality Systems, Inc.
Amended and Restated
Outside Director Compensation Program

							Audit
Category of	Employee		Independent		Committee		Committee/Board
Director	Director		Director		Chairman (3)		Chairman
Base Compensation	$	—	$	80,000	$	92,500	$	100,000
Meeting Fees (1)	$	—	$	—	$	—	$	—
Committee Memberships (2)	$	—	$	—	$	—	$	—
Subtotal Cash Compensation	$	—	$	80,000	$	92,500	$	100,000
Restricted Common Stock Grant Shares (4)		0		1,000		1,250		1,250

Each Director is to be awarded shares of restricted common stock upon election or re-election to the Board or, on a pro-rata basis, upon any interim appointment to the Board to fill a vacancy.The shares will (i) vest in two equal annual installments, and (ii) be nontransferable for a period of one year following the date of vesting, as more specifically set forth in the Outside Director’s Restricted Stock Agreement pursuant to which grants shall be made under this Program. In the event of a meeting of shareholders immediately following which a director that previously received restricted shares under the Program is no longer a member of the Company’s Board, then any unvested shares held by such director shall immediately vest and become transferrable. The grant of restricted shares shall be in lieu of the 5,000 options granted in prior years upon election or re-election to the Board.

Additionally, all board members must acquire a minimum of 1,000 shares of the Company’s Common Stock through the investment of their own funds (e.g. open market purchase or option exercise), which minimum amount must be retained as long as they are a director. New directors, and existing directors after the effective date of this policy (August 13, 2009), have 9 months in which to acquire such Common Stock.

Notes:

1.	Meeting attendance at a 100% or near-100% level is mandatory. Therefore, this plan eliminates meeting fees. Board and committee meeting attendance rates for each director should be reported annually internally and to the public.
2.	Board members are expected to serve as committee members as part of their compensation.

3.

Pay Tiers: Tier 0 pay for Directors who are full-time employees, Tier 1 for Directors who do not chair committees, Tier 2 for Nominating and Compensation Committee Chairmen, Tier 3 for Audit Committee and overall Board Chair. Chairmen of other committees are paid at the highest tier otherwise eligible, according to the specifically named functions above. All Directors are only paid at one tier, which is their highest eligible tier.

4.

Misc: Compensation shall be paid quarterly. Board member shall be paid at the highest eligible tier according to his role, but not on multiple tiers.

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EX-10.2

Exhibit 10.2

QUALITY SYSTEMS, INC.

OUTSIDE DIRECTOR’S

AMENDED AND RESTATED

RESTRICTED STOCK AGREEMENT

GRANTED UNDER THE QUALITY SYSTEMS, INC.
AMENDED AND RESTATED 2005 STOCK OPTION AND INCENTIVE PLAN

     THIS OUTSIDE DIRECTOR’S RESTRICTED STOCK AGREEMENT (this “Agreement”), dated and effective as of                     , 20___ (the “Grant Date”), by and between Quality Systems, Inc., a California corporation (the “Company”), and                                          (“Grantee”), is entered into as follows:

     WHEREAS, Grantee is an outside director of the Company; and

     WHEREAS, the Company has established the Quality Systems, Inc. Amended and Restated 2005 Stock Option and Incentive Plan (the “Plan”), a copy of which has previously been provided to Grantee; and

     WHEREAS, the Compensation Committee (the “Committee”) of the Board of Directors of the Company has established a compensation program (the “Program”) for the outside directors of the Company that includes the grant of restricted shares in the Company’s common stock (“Common Stock”); and

     WHEREAS, under the terms of the Program, Grantee shall be granted shares of the Common Stock, subject to the restrictions stated below.

     NOW, THEREFORE, the parties hereby agree as follows:

     1. Grant of Restricted Stock. Subject to the terms and conditions of this Agreement and the Plan, the Company hereby grants to Grantee                      shares of Common Stock (the “Restricted Stock”). As soon as practicable, the Company shall cause a certificate representing the Restricted Stock to be issued in Grantee’s name (the “Certificate”). The Restricted Stock shall be subject to, and the Certificate shall bear appropriate legends with respect to, the restrictions described herein.

     2. Vesting Schedule. The Restricted Stock shall vest in two equal annual installments, each on the anniversary of the Grant Date (and each referred to herein as a “Vesting Date”) subject to earlier vesting as set forth in Section 3, below.

     3. Restrictions. No portion of the Restricted Stock or rights granted hereunder may be sold, transferred, assigned, pledged or otherwise encumbered or disposed of by Grantee during the period beginning on the Vesting Date of that portion of Restricted Stock, and ending the day prior to the one year anniversary of the Vesting Date of that portion of Restricted Stock. In the event of a meeting of shareholders immediately following which a director that previously received restricted shares under the Program is no longer a member of the Company’s Board, then any unvested shares held by such director shall immediately vest and become transferrable.

     4. Shareholder Rights. Until the Vesting Date, Grantee shall not have the rights of a shareholder with respect to the Restricted Stock.

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     5. Taxes.

          (a) Grantee hereby acknowledges that he or she has reviewed with his or her own tax advisors the tax consequences of receiving the Restricted Stock. Grantee represents to the Company that he or she is relying solely on such advisors and not on any statements or representations of (i) the Company, (ii) its officers, directors or employees, or (iii) its or their respective agents or representatives.

          (b) Grantee shall be liable for any and all taxes, including withholding taxes, arising out of this grant of Restricted Stock. The Company shall not be required to deliver any Restricted Stock or to recognize any purported transfer of shares of the Restricted Stock until all applicable withholding obligations are satisfied. Grantee is ultimately liable and responsible for all taxes owed by Grantee in connection with the Restricted Stock, regardless of any action the Company takes with respect to any tax withholding obligations that arise in connection with the Restricted Stock. The Company makes no representation or undertaking regarding the treatment of any tax withholding in connection with the grant, issuance or settlement of the Restricted Stock or the subsequent sale or transfer of any of the shares of Restricted Stock. The Company does not commit and is under no obligation to structure the Restricted Stock award or program to reduce or eliminate Grantee’s tax liability.

     6. Securities Law Compliance. The Company will use its reasonable commercial efforts to assure that the Restricted Stock is registered under federal securities laws. However, no Restricted Stock will be issued pursuant to Grantee’s award if such issuance would otherwise constitute a violation of any applicable federal or state securities laws or regulations or the requirements of The NASDAQ Global Select Market or any stock exchange or other market on which the Common Stock is then quoted or listed for trading. The inability of the Company to obtain approval from any regulatory body deemed necessary by the Company for the lawful issuance of any Restricted Stock hereunder shall defer the Company’s obligation with respect to the issuance of such Restricted Stock until such approval has been obtained. Grantee understands Grantee’s responsibilities to report the grant and future disposition of the Restricted Stock under the applicable provisions of the Securities Exchange Act of 1934, as amended.

     7. Miscellaneous.

     (a) The grant of Restricted Stock or another award to Grantee under the Plan in any one year, or at any time, does not obligate the Company to make a grant in any future year or in any given amount and should not create an expectation that the Company might make a grant in any future year or in any given amount.

     (b) The Company shall not be required (i) to transfer on its books any shares of Restricted Stock that have been sold or transferred in violation of any of the provisions set forth in this Agreement or in the Plan, or (ii) to treat as owner of such shares or to accord the right to vote as such owner or to pay dividends to any transferee to whom such shares shall have been so transferred.

     (c) The parties agree to execute such further instruments and to take such action as may reasonably be necessary to carry out the intent of this Agreement.

     (d) Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon delivery to Grantee at Grantee’s address then on file with the Company.

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     (e) This Agreement shall not be construed so as to grant Grantee any right to remain as a director of or consultant to the Company.

     (f) The parties agree that neither the Company nor any of its affiliates shall have any further obligation to Grantee relating to the grant of stock or other equity-based incentive compensation except as stated herein and under the terms of the Program.

     (g) This Agreement and the Plan constitute the entire agreement of the parties with respect to the subject matter hereof. This Agreement may not be amended except (i) with the consent of the Committee and the Board; and (ii) by a written instrument duly executed by the Company and Grantee.

     (h) This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their permitted heirs, personal representatives, successors and assigns. The terms of this Agreement shall in all respects be subject to the terms of the Plan and the Program. In the event of a conflict between the terms of this Agreement and the Plan and/or Program, the terms of the Plan and/or Program (as the case may be) shall control. In the event of a conflict between the terms of the Plan and the Program, the terms of the Plan shall control. In accordance with the Plan, Grantee hereby agrees to accept as binding, conclusive and final all decisions and interpretations of the Committee or the Board of Directors upon any questions arising under the Plan or this Agreement.

     (i) The interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of California without resort or reference to the conflicts-of-laws rules of that or any other state.

     (j) This Agreement shall not in any way affect the right of the Company to adjust, reclassify, reorganize or otherwise make changes in its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.

     8. Remaining Terms. The remaining terms and conditions of Grantee’s award are governed by the Plan, and Grantee’s award is also subject to all interpretations, amendments, rules, regulations and decisions that may from time to time be adopted under the Plan.

[signature page follows]

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     IN WITNESS WHEREOF, the undersigned have executed this Outside Director’s Restricted Stock Agreement effective as of the date first set above.

COMPANY:	QUALITY SYSTEMS, INC., a California corporation
	By:
	Its:

     I, the undersigned Grantee, hereby acknowledge and accept the foregoing terms and conditions of the Restricted Stock award evidenced hereby. I also acknowledge and agree that the foregoing sets forth the entire understanding between the Company and me regarding my entitlement to receive the shares of Restricted Stock subject to such award and supersedes all prior oral and written agreements on that subject.

	(signature of Grantee)
GRANTEE:
	[printed name of Grantee]

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EX-10.3

Exhibit 10.3

QUALITY SYSTEMS, INC.

second amended and restated
indemnification Agreement

     This Second Amended and Restated Indemnification Agreement (this “Agreement”) is made as of ___, 2009, by and between QUALITY SYSTEMS, INC., a California corporation (the “Company”), and ___(“Indemnitee”).

R E C I T A L S

     WHEREAS, the Company and Indemnitee recognize the increasing difficulty in obtaining quality directors’ and officers’ liability insurance, the significant increases in the cost of such insurance and the general reductions in the coverage of such insurance;

     WHEREAS, the Company and Indemnitee further recognize the substantial increase in corporate litigation in general, subjecting officers and directors to expensive litigation risks at the same time as the availability and coverage of cost effective liability insurance has been severely limited; and

     WHEREAS, the Company desires to attract and retain the services of highly qualified individuals, such as Indemnitee, to serve as officers and directors of the Company and to indemnify its officers and directors so as to provide them with the maximum protection permitted by law.

     NOW, THEREFORE, in consideration for Indemnitee’s services as an officer or director of the Company (as the case may be), the Company and Indemnitee hereby agree as follows:

     1. Indemnification.

          (a) Third Party Proceedings. The Company shall indemnify Indemnitee if Indemnitee is or was a party or is threatened to be made a party to any threatened, pending or completed action, suit, proceeding or any alternative dispute resolution mechanism, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Company) by reason of the fact that Indemnitee is or was a director, officer, employee or agent of the Company, or any subsidiary of the Company, or by reason of the fact that Indemnitee is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including reasonable attorneys’ fees and costs), judgments, fines and amounts paid in settlement (if such settlement is approved in advance by the Company, which approval shall not be unreasonably withheld) actually and reasonably incurred by Indemnitee in connection with such action, suit or proceeding if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe Indemnitee’s conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that Indemnitee did not act

in good faith and in a manner which Indemnitee reasonably believed to be in the best interests of the Company, and, with respect to any criminal action or proceeding, had reasonable cause to believe that Indemnitee’s conduct was unlawful.

          (b) Proceedings By or in the Right of the Company. The Company shall indemnify Indemnitee if Indemnitee is or was a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Company or any subsidiary of the Company to procure a judgment in its favor by reason of the fact that Indemnitee is or was a director, officer, employee or agent of the Company, or any subsidiary of the Company, or by reason of the fact that Indemnitee is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including reasonable attorneys’ fees and costs) and, to the fullest extent permitted by law, amounts paid in settlement actually and reasonably incurred by Indemnitee in connection with the defense or settlement of such action or suit if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in the best interests of the Company, except that no indemnification shall be made in respect of any claim, issue or matter as to which Indemnitee shall have been adjudged to be liable to the Company unless and only to the extent that the Superior Court of the State of California or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnity for such expenses which the Superior Court of the State of California or such other court shall deem proper.

          (c) Mandatory Payment of Expenses. To the extent that Indemnitee has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in subsections (a) and (b) of this Section 1, or in defense of any claim, issue or matter therein, Indemnitee shall be indemnified against expenses (including reasonable attorneys’ fees and costs) actually and reasonably incurred by Indemnitee in connection therewith. For purposes of this Agreement, and without limitation, the termination of any claim, issue or matter in any action, suit or proceeding by dismissal with prejudice shall be deemed to be a successful result as to such claim, issue or matter.

     2. Agreement to Serve. In consideration of the protection afforded by this Agreement, if Indemnitee is a director of the Company he agrees to serve at least for the 90 days after the effective date of this Agreement as a director and not to resign voluntarily during such period without the written consent of a majority of the Board of Directors. If Indemnitee is an officer of the Company not serving under an employment contract, he agrees to serve in such capacity at least for the 90 days after the effective date of this Agreement and not to resign voluntarily during such period without the written consent of a majority of the Board of Directors. Following the applicable period set forth above, Indemnitee agrees to continue to serve in such capacity at the will of the Company (or under separate agreement, if such agreement exists) so long as he is duly appointed or elected and qualified in accordance with the applicable provisions of the Bylaws of the Company or any subsidiary of the Company or until such time as he tenders his resignation in writing. Nothing contained in this Agreement is intended to create in Indemnitee any right to continued employment.

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     3. Expenses; Indemnification Procedure.

          (a) Advancement of Expenses. The Company shall advance all expenses incurred by Indemnitee in connection with the investigation, defense, settlement or appeal of any civil or criminal action, suit or proceeding referenced in Section 1(a) or (b) hereof (but not amounts actually paid in settlement of any such action, suit or proceeding). Indemnitee hereby undertakes to repay such amounts advanced only if, and to the extent that, it shall ultimately be determined that Indemnitee is not entitled to be indemnified by the Company as authorized hereby. The advances to be made hereunder shall be paid by the Company to Indemnitee within thirty (30) days following delivery of a written request therefor by Indemnitee to the Company.

          (b) Notice/Cooperation by Indemnitee. Indemnitee shall, as a condition precedent to his or her right to be indemnified under this Agreement, give the Company written notice as soon as practicable of any claim for which Indemnitee will or could seek indemnification under this Agreement. In addition, Indemnitee shall give the Company such information and cooperation as it may reasonably require and as shall be within Indemnitee’s power.

          (c) Procedure. Any indemnification and advances provided for in Section 1 and this Section 3 shall be made no later than thirty (30) days after receipt of the written request of Indemnitee. If a claim under this Agreement, under any statute, or under any provision of the Company’s Articles of Incorporation or Bylaws providing for indemnification, is not paid in full by the Company within thirty (30) days after a written request for payment thereof has first been received by the Company, Indemnitee may, but need not, at any time thereafter bring an action against the Company to recover the unpaid amount of the claim and, subject to Section 8 and 10(g) of this Agreement, Indemnitee shall also be entitled to be paid for the expenses (including reasonable attorneys’ fees and costs) of bringing such action. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in connection with any action, suit or proceeding in advance of its final disposition) that Indemnitee has not met the standards of conduct which make it permissible under applicable law for the Company to indemnify Indemnitee for the amount claimed. However, Indemnitee shall be entitled to receive interim payments of expenses pursuant to Section 3(a) unless and until such defense may be finally adjudicated by court order or judgment from which no further right of appeal exists. It is the parties’ intention that if the Company contests Indemnitee’s right to indemnification, the question of Indemnitee’s right to indemnification shall be for a court of competent jurisdiction to decide, and neither the failure of the Company (including its Board of Directors, any committee or subgroup of the Board of Directors, independent legal counsel, or its stockholders) to have made a determination that indemnification of Indemnitee is proper in the circumstances because Indemnitee has met the applicable standard of conduct required by applicable law, nor an actual determination by the Company (including it Board of Directors, any committee or subgroup of the Board of Directors, independent legal counsel, or its stockholders) that Indemnitee has not met such applicable standard of conduct, shall create a presumption that Indemnitee has or has not met the applicable standard of conduct.

          (d) Notice to Insurers. If, at the time of the receipt of a notice of a claim pursuant to Section 3(b) hereof, the Company has director and officer liability insurance in effect, the Company shall give prompt notice of the commencement of such proceeding to the

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insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of such policies.

          (e) Selection of Counsel. In the event the Company shall be obligated under Section 3(a) hereof to pay the expenses of any proceeding against Indemnitee, the Company, if appropriate, shall be entitled to assume the defense of such proceeding, with counsel approved by Indemnitee (which approval shall not be unreasonably withheld), upon the delivery to Indemnitee of written notice of its election to do so. After delivery of such notice, approval of such counsel by Indemnitee and the retention of such counsel by the Company, the Company will not be liable to Indemnitee under this Agreement for any fees of counsel subsequently incurred by Indemnitee with respect to the same proceeding, provided that (i) Indemnitee shall have the right to employ his counsel in any such proceeding at Indemnitee’s expense; and (ii) if (A) the employment of counsel by Indemnitee has been previously authorized by the Company, (B) Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Company and Indemnitee in the conduct of any such defense, or (C) the Company shall not, in fact, have employed counsel to assume the defense of such proceeding, then the fees and expenses of Indemnitee’s counsel shall be at the expense of the Company.

     4. Additional Indemnification Rights; Nonexclusivity; Contribution.

          (a) Scope. Notwithstanding any other provision of this Agreement, the Company hereby agrees to indemnify the Indemnitee to the fullest extent permitted by the California General Corporation Law (the “CGCL”), notwithstanding that such indemnification is not specifically authorized by the other provisions of this Agreement, the Company’s Articles of Incorporation, the Company’s Bylaws or by statute. In the event of any change, after the date of this Agreement, in any applicable law, statute, or rule which expands the right of a California corporation to indemnify a member of its board of directors or an officer, such changes shall be, ipso facto, within the purview of Indemnitee’s rights and Company’s obligations, under this Agreement. In the event of any change in any applicable law, statute or rule which narrows the right of a California corporation to indemnify a member of its board of directors or an officer, such changes, to the extent not otherwise required by such law, statute or rule to be applied to this Agreement shall have no effect on this Agreement or the parties’ rights and obligations hereunder.

          (b) Nonexclusivity. The indemnification provided by this Agreement shall not be deemed exclusive of any rights to which Indemnitee may be entitled under the Company’s Articles of Incorporation, its Bylaws, any agreement, any vote of stockholders or disinterested Directors, the CGCL, or otherwise, both as to action in Indemnitee’s official capacity and as to action in another capacity while holding such office. The indemnification provided under this Agreement shall continue as to Indemnitee for any action taken or not taken while serving in an indemnified capacity even though he may have ceased to serve in such capacity at the time of any action, suit or other covered proceeding.

          (c) Contribution. To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason

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whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute (“Contribution”) to the amount incurred by Indemnitee, whether for liabilities and/or for expenses, in connection with any proceeding relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such proceeding in order to reflect (1) the relative benefits received by the Company and Indemnitee as a result of the event(s) and/or transaction(s) giving rise to such proceeding; and (2) the relative fault of the Company (and its directors, officers, employees and agents) and Indemnitee in connection with such event(s) and/or transaction(s), provided, however, that no such Contribution shall be made pursuant to this Section 4(c) with respect to any of the matters set forth in Section 8.

     5. Partial Indemnification. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of the expenses, judgments, fines or penalties actually and reasonably incurred by him in the investigation, defense, appeal or settlement of any civil or criminal action, suit or proceeding, but not, however, for the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion of such expenses, judgments, fines or penalties to which Indemnitee is entitled.

     6. Mutual Acknowledgement. Both the Company and Indemnitee acknowledge that in certain instances, Federal law or applicable public policy may prohibit the Company from indemnifying its directors and officers under this Agreement or otherwise. Indemnitee understands and acknowledges that the Company has undertaken or may be required in the future to undertake with the Securities and Exchange Commission to submit the question of indemnification to a court in certain circumstances for a determination of the Company’s right under public policy to indemnify Indemnitee.

     7. Officer and Director Liability Insurance. The Company shall, from time to time, make the good faith determination whether or not it is practicable for the Company to obtain and maintain a policy or policies of insurance with reputable insurance companies providing the officers and directors of the Company with coverage for losses from wrongful acts, or to ensure the Company’s performance of its indemnification obligations under this Agreement. Among other considerations, the Company will weigh the costs of obtaining such insurance coverage against the protection afforded by such coverage. In all policies of director and officer liability insurance, Indemnitee shall be named as an insured in such a manner as to provide Indemnitee the same rights and benefits as are accorded to the most favorably insured of the Company’s directors, if Indemnitee is a director; or of the Company’s officers, if Indemnitee is not a director of the Company but is an officer. Notwithstanding the foregoing, the Company shall have no obligation to obtain or maintain such insurance if the Company determines in good faith that such insurance is not reasonably available, if the premium costs for such insurance are disproportionate to the amount of coverage provided, if the coverage provided by such insurance is limited by exclusions so as to provide an insufficient benefit, or if Indemnitee is covered by similar insurance maintained by a subsidiary or parent of the Company.

     8. Exceptions. Any other provision herein to the contrary notwithstanding, the Company shall not be obligated pursuant to the terms of this Agreement:

          (a) Claims Initiated by Indemnitee. To indemnify, provide Contribution or advance expenses to Indemnitee with respect to proceedings or claims initiated or brought

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voluntarily by Indemnitee and not by way of defense, except with respect to proceedings brought to establish or enforce a right to indemnification under this Agreement or any other statute or law or otherwise as required under Section 317 of the CGCL, but such indemnification, Contribution or advancement of expenses may be provided by the Company in specific cases if the Board of Directors has approved the initiation or bringing of such suit; or

          (b) Lack of Good Faith. To indemnify or provide Contribution to Indemnitee for any expenses incurred by the Indemnitee with respect to any proceeding instituted by Indemnitee to enforce or interpret this Agreement, if a court of competent jurisdiction determines that each of the material assertions made by the Indemnitee in such proceeding was not made in good faith or was frivolous; or

          (c) Insured Claims. To indemnify or provide Contribution to Indemnitee for expenses or liabilities of any type whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes or penalties, and amounts paid in settlement) which have been paid directly to Indemnitee by an insurance carrier under a policy of officers’ and directors’ liability insurance maintained by the Company; or

          (d) Claims Under Section 16(b). To indemnify or provide Contribution to Indemnitee for expenses and the payment of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 16(b) of the Securities Exchange Act of 1934, as amended, or any similar successor statute.

     9. Construction of Certain Phrases.

          (a) For purposes of this Agreement, references to the “Company” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that if Indemnitee is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, Indemnitee shall stand in the same position under the provisions of this Agreement with respect to the resulting or surviving corporation as Indemnitee would have with respect to such constituent corporation if its separate existence had continued.

          (b) For purposes of this Agreement, references to “other enterprises” shall include employee benefit plans; references to “fines” shall include any excise taxes assessed on Indemnitee with respect to an employee benefit plan; and references to “serving at the request of the Company” shall include any service as a director, officer, employee or agent of the Company which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants, or beneficiaries.

     10. Miscellaneous.

          (a) Choice of Law. This Agreement shall be governed by and its provisions construed in accordance with the laws of the State of California , as applied to contracts between

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California residents entered into and to be performed entirely within California without regard to the conflict of law principles thereof.

          (b) Consent to Jurisdiction. The Company and Indemnitee each hereby irrevocably consent to the jurisdiction of the courts of the State of California for all purposes in connection with any action or proceeding which arises out of or relates to this Agreement and agree that any action instituted under this Agreement shall be brought only in the state courts of the State of California .

          (c) Amendment and Termination. No amendment, modification, termination or cancellation of this Agreement shall be effective unless it is in writing signed by both the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

          (d) Entire Agreement. This Agreement sets forth the entire understanding between the parties hereto and supersedes and merges all previous written and oral negotiations, commitments, understandings and agreements relating to the subject matter hereof between the parties hereto.

          (e) Successors and Assigns. This Agreement shall be binding upon the Company and its successors and assigns, and shall inure to the benefit of Indemnitee and Indemnitee’s estate, heirs and legal representatives.

          (f) Severability. Nothing in this Agreement is intended to require or shall be construed as requiring the Company to do or fail to do any act in violation of applicable law. The Company’s inability, pursuant to court order, to perform its obligations under this Agreement shall not constitute a breach of this Agreement. If this Agreement or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Company shall nevertheless indemnify Indemnitee to the full extent permitted by any applicable portion of this Agreement that shall not have been invalidated, and the balance of this Agreement not so invalidated shall be enforceable in accordance with its terms.

          (g) Attorneys’ Fees. In the event that any action is instituted by Indemnitee under this Agreement to enforce or interpret any of the terms hereof, Indemnitee shall be entitled to be paid all court costs and expenses, including reasonable attorneys’ fees, incurred by Indemnitee with respect to such action, unless as a part of such action, the court of competent jurisdiction determines that each of the material assertions made by Indemnitee as a basis for such action were not made in good faith or were frivolous. In the event of an action instituted by or in the name of the Company under this Agreement or to enforce or interpret any of the terms of this Agreement, Indemnitee shall be entitled to be paid all court costs and expenses, including reasonable attorneys’ fees, incurred by Indemnitee in defense of such action (including with respect to Indemnitee’s counterclaims and cross-claims made in such action), unless as a part of such action the court determines that each of Indemnitee’s material defenses to such action were made in bad faith or were frivolous.

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          (h) Notice. All notices, requests, demands and other communications required or permitted under this Agreement shall be in writing and shall be delivered personally by hand or by courier, mailed by United States first-class mail, postage prepaid, sent by facsimile or sent by electronic mail directed to the party to be notified at the address, facsimile number or electronic mail address indicated for such person on the signature page hereof, or at such other address, facsimile number or electronic mail address as such party may designate by ten (10) days’ advance written notice to the other parties hereto. All such notices and other communications shall be deemed given upon personal delivery, on the date of mailing, upon confirmation of facsimile transfer or when directed to the electronic mail address set forth on signature page hereof.

          (i) Period of Limitations. No legal action shall be brought and no cause of action shall be asserted by or in the right of the Company against Indemnitee, Indemnitee’s estate, spouse, heirs, executors or personal or legal representatives after the expiration of two years from the date of accrual of such cause of action, and any claim or cause of action of the Company shall be extinguished and deemed released unless asserted by the timely filing of a legal action within such two-year period; provided, however, that if any shorter period of limitations is otherwise applicable to any such cause of action, such shorter period shall govern.

          (j) Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all documents required and shall do all acts that may be necessary to secure such rights and to enable the Company effectively to bring suit to enforce such rights.

          (k) Counterparts. This Agreement may be executed in one or more counterparts, each of which shall constitute an original.

[signature page follows]

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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

QUALITY SYSTEMS, INC.
By:
	Paul Holt, Chief Financial Officer/Secretary
Address: 18111 Von Karman Avenue, Suite 600 Irvine, CA 92612 Facsimile #: 949-255-2610 Email: pholt@qsii.com (Corporate Secretary)

AGREED TO AND ACCEPTED:

“Indemnitee”

[printed name of Indemnitee]

Address:

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EX-99.1

Exhibit 99.1

For Further Information, Contact:
Quality Systems, Inc.	Susan J. Lewis
18111 Von Karman Avenue, Suite 600	Phone: (303) 804-0494
Irvine, CA 92612	slewis@qsii.com
Phone: (949) 255-2600
Paul Holt, CFO, pholt@qsii.com

FOR IMMEDIATE RELEASE

     January 28, 2010

QUALITY SYSTEMS REPORTS FISCAL 2010 THIRD QUARTER RESULTS

IRVINE, Calif. ... January 28, 2010 ... Quality Systems, Inc. (NASDAQ:QSII) today announced the results of operations for its fiscal 2010 third quarter ended December 31, 2009. The Company posted record net revenues of $75.0 million in the third quarter, an increase of 14 percent from $65.5 million for same period last year. The Company reported net income of $13.2 million in the third quarter, which remained unchanged from the comparable quarter last year. Fully diluted earnings per share were $0.46 in the quarter, which also remained unchanged when compared with $0.46 fully diluted earnings per share for the same quarter last year.

For the third quarter, the Company’s NextGen Healthcare Information Systems division posted record revenue of $70.6 million, up 15 percent from the same period a year ago and operating income of $24.5 million, an increase of 8 percent versus the comparable period last year.

“We are pleased with the results for the third quarter, which represent our team’s ability to grow the business to record levels. Time and again, we have stated that the Company continues to make the necessary investments in its infrastructure to ensure that we remain in a state of preparedness as the stimulus plan takes effect during the next three years,” noted Steven T. Plochocki, chief executive officer.

“We are well positioned to garner additional market share and fuel future growth as the healthcare industry shifts to an electronic-based medical records platform. We will continue to capitalize on the significant business opportunities that lie ahead from the implementation of the American Recovery and Reinvestment Act,” Plochocki concluded.

Quality Systems, Inc. will hold a conference call to discuss fiscal 2010 third quarter financial results on Thursday, January 28, 2010 at 10:00 AM ET (7:00 AM PT). All participants should dial 877-941-8609 at least ten minutes prior to the start of the call. International callers should dial 480-629-9031. To hear a live web simulcast or to listen to the archived web cast following completion of the call, please visit the company web site at www.qsii.com, click on the “Investor Relations” tab, then select “Conference Calls,” to access the link to the call. To listen to a telephone replay of the conference call, please dial 800-406-7325 and enter reservation identification number 4206115. The replay will be available from approximately 12:00 PM ET on Thursday, January 28, 2010, through 11:59 PM ET on Thursday, February 4, 2010.

A transcript of the conference call will be made available on the QSII website (www.qsii.com).

About Quality Systems, Inc.

Irvine, Calif.-based Quality Systems, Inc. and its NextGen Healthcare Information Systems subsidiary develop and market computer-based practice management, patient records and revenue cycle management applications as well as connectivity products and services for medical and dental group practices. Visit www.qsii.com and www.nextgen.com for additional information.

This news release may contain forward-looking statements within the meaning of the federal securities laws. Statements regarding future events, developments, the Company’s future performance, as well as management’s expectations, beliefs, intentions, plans, estimates or projections relating to the future (including, without limitation, statements concerning revenue and net income), are forward-looking statements within the meaning of these laws and involve a number of risks and uncertainties. Moreover, these forward-looking statements are subject to a number of risks and uncertainties, some of which are outlined below. As a result, actual results may vary materially from those anticipated by the forward-looking statements. Among the important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are: the volume and timing of systems sales and installations; length of sales cycles and the installation process; the possibility that products will not achieve or sustain market acceptance; seasonal patterns of sales and customer buying behavior; the timing, cost and success or failure of new product and service introductions, development and product upgrade releases; undetected errors or bugs in software; changing economic, political or regulatory influences in the health-care industry; changes in product-pricing policies; availability of third-party products and components; competitive pressures including product offerings, pricing and promotional activities; the Company’s ability or inability to attract and retain qualified personnel; possible regulation of the Company’s software by the U.S. Food and Drug Administration; uncertainties concerning threatened, pending and new litigation against the Company including related professional services fees; uncertainties concerning the amount and timing of professional fees incurred by the Company generally; changes of accounting estimates and assumptions used to prepare the prior periods’ financial statements; general economic conditions; and the risk factors detailed from time to time in Quality Systems’ periodic reports and registration statements filed with the Securities and Exchange Commission. A significant portion of the Company’s quarterly sales of software product licenses and computer hardware is concluded in the last month of the fiscal quarter, generally with a concentration of such revenues earned in the final ten business days of that month. Due to these and other factors, the Company’s revenues and operating results are very difficult to forecast. A major portion of the Company’s costs and expenses, such as personnel and facilities, are of a fixed nature and, accordingly, a shortfall or decline in quarterly and/or annual revenues typically results in lower profitability or losses. As a result, comparison of the Company’s period-to-period financial performance is not necessarily meaningful and should not be relied upon as an indicator of future performance. The Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

[financial highlights follow]

QUALITY SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)

	Three Months Ended				Nine Months Ended
	December 31,				December 31,
	2009		2008		2009		2008
Revenues:
Software, hardware and supplies	$	24,346	$	22,336	$	64,978	$	65,002
Implementation and training services		3,313		2,675		10,150		9,746
System sales		27,659		25,011		75,128		74,748
Maintenance		22,139		19,152		65,254		53,522
Electronic data interchange services		8,897		8,008		25,855		21,663
Revenue cycle management and related services		9,602		6,835		27,482		13,319
Other services		6,665		6,473		19,579		16,432
Maintenance, EDI, RCM and other services		47,303		40,468		138,170		104,936
Total revenues		74,962		65,479		213,298		179,684
Cost of revenue:
Software, hardware and supplies		2,810		3,030		9,251		9,912
Implementation and training services		2,898		2,143		9,075		7,783
Total cost of system sales		5,708		5,173		18,326		17,695
Maintenance		3,392		2,826		9,672		8,856
Electronic data interchange services		6,525		5,541		18,579		15,688
Revenue cycle management and related services		7,124		4,475		20,502		8,912
Other services		5,560		5,085		15,430		12,398
Total cost of maintenance, EDI, RCM and other services		22,601		17,927		64,183		45,854
Total cost of revenue		28,309		23,100		82,509		63,549
Gross profit		46,653		42,379		130,789		116,135
Operating expenses:
Selling, general and administrative		21,951		18,601		62,829		52,136
Research and development costs		3,954		3,624		12,277		10,085
Total operating expenses		25,905		22,225		75,106		62,221
Income from operations		20,748		20,154		55,683		53,914
Interest income		43		328		180		1,042
Other income		136		—		194		—
Income before provision for income taxes		20,927		20,482		56,057		54,956
Provision for income taxes		7,775		7,332		20,739		20,193
Net income	$	13,152	$	13,150	$	35,318	$	34,763
Net income per share:
Basic	$	0.46	$	0.46	$	1.24	$	1.25
Diluted	$	0.46	$	0.46	$	1.23	$	1.23
Weighted average shares outstanding:
Basic		28,667		28,340		28,586		27,913
Diluted		28,833		28,473		28,755		28,275
Dividends declared per common share	$	0.30	$	0.30	$	0.90	$	0.85

QUALITY SYSTEMS, INC.

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)

	December 31,		March 31,
	2009		2009
ASSETS
Current assets:
Cash and cash equivalents	$	79,111	$	70,180
Restricted cash		1,514		1,303
Marketable securities		7,454		—
Accounts receivable, net		101,660		90,070
Inventories, net		1,433		1,125
Income tax receivable		3,117		5,605
Net current deferred tax assets		4,848		3,994
Other current assets		6,603		6,312
Total current assets		205,740		178,589
Marketable securities		—		7,395
Equipment and improvements, net		7,962		6,756
Capitalized software costs, net		9,958		9,552
Intangibles, net		7,577		8,403
Goodwill		32,884		28,731
Other assets		4,100		2,675
Total assets	$	268,221	$	242,101
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	4,433	$	5,097
Deferred revenue		55,658		47,584
Accrued compensation and related benefits		7,254		9,511
Dividends payable		8,598		8,529
Other current liabilites		12,878		8,888
Total current liabilites		88,821		79,609
Deferred revenue, net of current		443		521
Net deferred tax liabilities		3,589		4,566
Deferred compensation		1,897		1,838
Total liabilites		94,750		86,534
Commitments and contingencies
Shareholders’ equity
Common Stock
$0.01 par value; authorized 50,000 shares; issued and outstanding 28,660 and 28,447 shares at December 31, 2009 and March 31, 2009, respectively		287		284
Additional paid-in capital		111,852		103,524
Retained earnings		61,332		51,759
Total shareholders’ equity		173,471		155,567
Total liabilities and shareholders’ equity	$	268,221	$	242,101