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)

May 31, 2007

QUALITY SYSTEMS, INC.

(Exact name of registrant as specified in its charter)

CALIFORNIA	0-13801	95-2888568
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification Number)

18191 Von Karman, Suite 450

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

On May 31, 2007, the Compensation Committee, comprised of all of the independent directors, and the independent directors of the Board of Directors (“Board”) acting in executive session, of Quality Systems, Inc. (the “Company”), approved a compensation program for the Company’s key personnel, including its named executive officers, for the fiscal year ending March 31, 2008. The compensation program includes new cash salary levels and both non-equity and equity incentive compensation components and is described in Exhibit 10.1 hereto, which exhibit is incorporated herein by reference.

In addition, on May 31, 2007, the Board approved standard forms of nonqualified and incentive stock option agreements for use under the Company’s 2005 Stock Incentive Plan. Copies of such forms are filed as Exhibits 10.2 and 10.3 hereto and incorporated herein by reference.

Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

On May 31, 2007, the Board amended the Corporate Governance Provisions set forth in Exhibit A to the Company’s Amended and Restated Bylaws to revise the definition of “independent director” so that it conforms to the recently revised independence standard contained in Nasdaq Marketplace Rule 4200(a)(15)(B), and to provide that the Audit Committee, rather than the Transaction Committee, has responsibility for reviewing all related-party transactions involving the Company. A copy of the bylaw amendment is attached to this Form 8-K as Exhibit 3.1 and incorporated herein by reference.

Item 8.01 Other Events.

Quarterly Dividend Policy

In January 2007, the Board adopted a policy whereby the Company stated its intention to pay a regular quarterly dividend of $0.25 per share on its outstanding common stock commencing with conclusion of the Company’s first fiscal quarter of 2008 (June 30, 2007) and continuing each fiscal quarter thereafter, 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. Pursuant to this policy, on May 31, 2007, the Board declared a quarterly cash dividend of $0.25 per share on the Company’s outstanding shares of common stock, payable to shareholders of record as of June 15, 2007 with an anticipated distribution date of July 5, 2007. The Company anticipates that future quarterly dividends, if and when declared by the Board pursuant to this policy, would likely be distributable on or about the fifth day of each of the months of October, January, April and July.

Annual Shareholders’ Meeting

The Company is preparing to hold its 2007 annual meeting of shareholders on August 8, 2007. All holders of record of the Company’s common stock outstanding as of the close of business on June 29, 2007 will be entitled to vote at the annual meeting. Because the date of this

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year’s annual meeting has been changed by more than 30 days from the date of last year’s annual meeting, the Company desires to inform its shareholders of the revised deadlines for shareholder proposals to be discussed and voted upon at the 2007 annual meeting.

Proposals by shareholders that are intended for inclusion in our proxy statement and proxy and to be presented at our 2007 annual meeting pursuant to Rule 14a-8 of the Securities and Exchange Commission must be received by us by June 14, 2007, in order to be considered for inclusion in our proxy materials. Such proposals should be addressed to our Secretary and may be included in next year’s proxy materials if they comply with certain rules and regulations of the Securities and Exchange Commission governing shareholder proposals.

For all other proposals by shareholders (including nominees for director) to be timely, a shareholders’ notice must be delivered to, or mailed and received at, our principal executive offices not later than the close of business on June 14, 2007. The shareholder notice must also comply with certain other requirements set forth in our Bylaws, a copy of which may be obtained by written request delivered to our Secretary.

A copy of the Company’s press release announcing the dividend and annual meeting date is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

(a)  Financial Statements of Businesses Acquired. Not applicable.

(b)  Pro Forma Financial Information. Not applicable.

(c)  Shell Company Transactions. Not applicable.

(d)  Exhibits.

Exhibit No. Description

3.1 Amended Exhibit A to Amended and Restated Bylaws, adopted May 31, 2007

10.1 Description of Compensation Program for Named Executive Officers for Fiscal Year Ending March 31, 2008

10.2 Form of Nonqualified Stock Option Agreement for 2005 Stock Incentive Plan

10.3 Form of Incentive Stock Option Agreement for 2005 Stock Incentive Plan

99.1 Press Release dated June 4, 2007

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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: June 4, 2007

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

Number Description

  3.1 Amended Exhibit A to Amended and Restated Bylaws, adopted May 31, 2007

10.1 Description of Compensation Program for Named Executive Officers for Fiscal Year Ending March 31, 2008

10.2 Form of Nonqualified Stock Option Agreement for 2005 Stock Incentive Plan

10.3 Form of Incentive Stock Option Agreement for 2005 Stock Incentive Plan

99.1 Press Release dated June 4, 2007

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EX-3.1

Exhibit 3.1

EXHIBIT A

Quality Systems, Inc.

Corporate Governance Provisions

(as made part of Bylaws)

1. At least a majority of the members of the board of directors (the “Board”) shall be independent directors as defined below.

An “independent director” means a person other than an executive officer or employee of the Company or any other individual having a relationship which, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. The following persons shall not be considered independent:

(a) a director who is, or at any time during the past three years was, employed by the Company;

(b) a director who accepted or who has a family member who accepted any compensation from the Company in excess of $100,000 during any period of twelve consecutive months within the three years preceding the determination of independence, other than the following:

(i) compensation for Board or Board committee service;

(ii) compensation paid to a family member who is an employee (other than an executive officer) of the Company; or

(iii) benefits under a tax-qualified retirement plan, or non-discretionary compensation.

Provided, however, that in addition to the requirements contained in this paragraph (b), audit committee members are also subject to additional, more stringent requirements under Nasdaq Rule 4350(d).

(c) a director who is a family member of an individual who is, or at any time during the past three years was, employed by the Company as an executive officer;

(d) a director who is, or has a family member who is, a partner in, or a controlling shareholder or an executive officer of, any organization to which the Company made, or from which the Company received, payments for property or services in the current or any of the past three fiscal years that exceed 5% of the recipient’s consolidated gross revenues for that year, or $200,000, whichever is more, other than the following:

(i) payments arising solely from investments in the Company’s securities; or

(ii) payments under non-discretionary charitable contribution matching programs.

(e) a director of the Company who is, or has a family member who is, employed as an executive officer of another entity where at any time during the past three years any of the executive officers of the Company served on the compensation committee of such other entity; or

(f) a director who is, or has a family member who is, a current partner of the Company’s outside auditor, or was a partner or employee of the Company’s outside auditor who worked on the Company’s audit at any time during any of the past three years.

A “family member” for these purposes means a person’s spouse, parents, children and siblings, whether by blood, marriage or adoption, or anyone residing in such person’s home.

2. There shall be an Audit Committee of the Board, composed entirely of independent directors, which shall oversee the Company’s financial reporting process and internal controls, review compliance with laws and accounting standards, recommend the appointment of public accountants, and provide a direct channel of communication to the Board for public accountants, internal auditors and finance officers. The Audit Committee shall be responsible for reviewing all related-party transactions involving the Company.

3. There shall be a Nominating Committee of the Board, composed entirely of independent directors, which shall be responsible for the evaluation and nomination of Board members.

4. There shall be a Compensation Committee of the Board, composed entirely of independent directors, which shall be responsible for (i) ensuring that senior management will be accountable to the Board through the effective application of compensation policies, and (ii) monitoring the effectiveness of both senior management and the Board (including committees thereof). The Compensation Committee shall establish compensation policies applicable to the Company’s executive officers. A fair summary of such policies and the relationship of corporate performance to executive compensation, including the factors and criteria upon which the Chief Executive Officer’s compensation was based, shall be disclosed to shareholders in the Company’s proxy statement for the annual meeting.

5. There shall be a Transaction Committee of the Board, composed entirely of independent directors, which shall be responsible for considering and making recommendations to the full Board with respect to all proposals involving (i) a change in control, or (ii) the purchase or sale of assets constituting more than 10% of the Company’s total assets. Additionally, the Transaction Committee shall be responsible for reviewing all transactions or proposed transactions that trigger the Company’s Shareholder Rights Plan, if any.

6. If at any time the Chairman of the Board shall be an executive officer of the Company, or for any other reason shall not be an independent director, a non-executive Lead Director

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shall be selected by the independent directors. The Lead Director shall be one of the independent directors, shall be a member of the Audit Committee and of the Executive Committee, if there is such a committee, and shall be responsible for coordinating the activities of the independent directors. He shall assist the Board in assuring compliance with these corporate governance procedures and policies, and shall coordinate, develop the agenda for, and moderate executive sessions of the Board’s independent directors. Such executive sessions shall be held immediately following each regular meeting of the Board, and may be held at other times as designated by the Lead Director. The Lead Director shall approve, in consultation with the other Independent Directors, the retention of consultants who report directly to the Board. If at any time the Chairman of the Board is one of the independent directors, then he or she shall perform the duties of the Lead Director.

7. The foregoing provisions are adopted as part of the Bylaws of the Company and cannot be amended or repealed without either (a) approval by the shareholders of the Company, or (b) approval by a two-thirds majority of all the authorized number of directors of the Company including two-thirds of the independent directors. Any inconsistent provisions of the Bylaws are hereby modified to be consistent with these provisions. The foregoing provisions, insofar as they establish eligibility to serve as a director or as a committee member, shall not have the effect of removing any director or committee member from office but shall be given effect at the next election of directors and the next selection of committee members, as the case may be. The foregoing provisions shall not be construed to limit or restrict the effective exercise of statutory cumulative voting rights by any shareholder, but the Nominating Committee shall not nominate candidates for election to the Board except as may be consistent with such provisions, and no corporate funds may be expended for the solicitation of proxies which are inconsistent with the foregoing provisions.

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EX-10.1

Exhibit 10.1

DESCRIPTION OF COMPENSATION PROGRAM FOR

NAMED EXECUTIVE OFFICERS FOR

FISCAL YEAR ENDING MARCH 31, 2008

On May 31, 2007, a committee comprised of all of the independent directors of Quality Systems, Inc. (the “Company”), approved a compensation program for the Company’s key personnel, including its named executive officers, for the fiscal year ending March 31, 2008. The compensation program includes cash salary levels and both non-equity and equity incentive compensation components as described below.

Future cash salary levels for the Company’s named executive officers were set as follows:

• Lou Silverman – $440,000 (to increase from $400,000), effective November 1, 2007;

• Pat Cline - $495,000 (to increase from $450,000), effective November 1, 2007;

• Greg Flynn - $250,000 (to increase from $230,000), effective November 1, 2007; and

• Paul Holt - $250,000 (to increase from $230,000), effective July 23, 2007.

The non-equity incentive compensation component for named executive officers provides as follows:

(i) for Lou Silverman, the Company’s President and Chief Executive Officer, cash compensation of up to $475,000 may be earned based on meeting certain target increases in earnings per share (“EPS”) performance and revenue growth during the fiscal year as well as meeting certain operational requirements established by the Board of Directors; of the total $475,000 potential cash compensation, 40% is allocated to the EPS performance criteria, 40% is allocated to the revenue growth criteria and the remaining 20% is discretionary and is allocated in part to the operational requirements criteria.

(ii) for Pat Cline, the President of the Company’s NextGen Healthcare Information Systems Division, cash compensation of up to $550,000 may be earned based on meeting certain target increases in EPS performance and revenue growth during the fiscal year as well as meeting certain operational requirements established by the Board of Directors; of the total $550,000 potential cash compensation, 40% is allocated to the EPS performance criteria, 40% is allocated to the revenue growth criteria and the remaining 20% is discretionary and is allocated in part to the operational requirements criteria.

(iii) for Greg Flynn, the Executive Vice President/General Manager of the Company’s QSI Division, cash compensation of up to $80,000 may be earned based upon the achievement of certain qualitative and quantitative goals related to both QSI Division performance and other corporate objectives as approved by the Compensation Committee of the Board of Directors and the Board of Directors; and

(iv) for Paul Holt, the Company’s Chief Financial Officer and Secretary, cash compensation of up to $80,000 may be earned based upon the achievement of certain qualitative goals as approved by the Compensation Committee and the Board of Directors.

The equity incentive component of the compensation program provides that the named executive officers are eligible to receive an aggregate of up to 160,000 options to purchase the Company’s common stock based on meeting certain target increases in EPS performance and revenue growth during the fiscal year as follows: Louis Silverman - 40,000 options; Patrick Cline - 100,000 options; Greg Flynn - 10,000 options; and Paul Holt - 10,000 options. Of the total 160,000 potential options, 50% are allocated to the EPS performance criteria and 50% are allocated to the revenue growth criteria. If earned, the options would be issued pursuant to one of the Company’s shareholder-approved option plans, have an exercise price equal to the closing price of the Company’s shares on the Nasdaq Global Select Market (or such other market upon which such shares then trade) as of the date of grant, a term of five years, vest in four equal, annual installments commencing one year following the date of grant and be granted pursuant to the Company’s standard stock option agreement.

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EX-10.2

Exhibit 10.2

NONQUALIFIED STOCK OPTION AGREEMENT

THIS NONQUALIFIED STOCK OPTION AGREEMENT, dated this _____ day of __________, 200_, between QUALITY SYSTEMS, INC., a California corporation (hereinafter referred to as the “Company”), and _________________, an employee, director or consultant of the Company, its parent or one or more of its subsidiaries (hereinafter referred to as the “Optionee”), is made with reference to the following facts:

The Company desires, by affording the Optionee an opportunity to purchase shares of Common Stock, $0.01 par value, in the Company (hereinafter called “Common Stock”), as hereinafter provided, to carry out the purpose of the Company’s 2005 Stock Option and Incentive Plan (the “Plan”). Terms not otherwise defined herein shall have the meaning given them under the Plan.

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants hereinafter set forth, and for other good and valuable consideration, the parties hereto have agreed, and do hereby agree, as follows:

1. Grant of Option.

The Company hereby irrevocably grants to the Optionee the right and option (hereinafter called the “Option”) to purchase all or any part of an aggregate of _____________ shares (such number being subject to adjustment as provided in the Plan) on the terms and conditions herein set forth. The Option granted herein is not intended to be an “incentive option” within the meaning of the Plan and Section 422A of the Internal Revenue Code of 1986, as amended (the “Code”).

2. Purchase Price.

Subject to adjustment as provided in the Plan, the purchase price of the Common Stock covered by the Option shall be $____________ per share, representing one hundred percent (100%) of the Fair Market Value of a share as determined pursuant to Section 1.2(j) of the Plan as of the date hereof. The purchase price of stock acquired pursuant to an Option shall be paid at the time the Option is exercised either in cash or by tendering any other form of legal consideration that may be acceptable to the Board and permitted under the Plan.

3. Term of Option.

The term of the Option shall commence on the date hereof and all rights to purchase shares hereunder shall cease at 11:59 P.M. on the day before the ___________ anniversary of the date hereof, subject to earlier termination as provided herein. Except as may otherwise be provided in this Agreement, the Option granted hereunder shall become exercisable in cumulative installments as follows:

Date Installments First
Become Exercisable Number of Option Shares
Subject to Installment

Once an installment of the Option granted hereunder becomes exercisable for the first time, the shares subject thereto will be purchasable thereafter by the Optionee at any time in whole, or from time-to-time in part, prior to the expiration or earlier termination of the Option granted hereunder. Except as provided in Section 5 hereof, the Option may not be exercised at any time unless the Optionee shall have been continuously, from the date hereof to the date of the exercise of the Option, an employee, director or consultant of the Company, its parent, if any, or of one or more of its subsidiaries or a corporation or a parent or subsidiary of a corporation issuing or assuming an option to which Section 424(a) of the Code applies. The holder of the Option shall not have any of the rights of a shareholder with respect to the shares covered by the Option as to any shares of Common Stock not actually issued and delivered to such holder.

4. Non-Transferability.

The Option shall not be transferable otherwise than by will or the laws of descent and distribution, and the Option may be exercised, during the lifetime of the Optionee, only by the Optionee. More particularly (but without limiting the generality of the foregoing), the Option may not be assigned, transferred (except as provided in Section 5(c) hereof), pledged or hypothecated in any way, shall not be assignable by operation of law and shall not be subject to execution, attachment or similar process. Any attempted assignment, transfer, pledge, hypothecation or other disposition of the Option contrary to the provisions hereof, and the levy of any execution, attachment or similar process upon the Option, shall be null and void and without effect.

5. Termination of Employment.

(a)Termination of Employment Other than by Disability, Death or Retirement. In the event that an Optionee’s Termination of Employment occurs at Optionee’s election for any reason other than by retirement (as described in Section 5(d) below) or at the Company’s election for Cause, the Option shall terminate immediately. In the event an Optionee’s Termination of Employment occurs at the election of the Company without Cause, the Optionee may exercise his or her Option (to the extent that the Optionee was entitled to exercise it at the date of termination) but only within such period of time ending on the earlier of (i) the date three (3) months after the Termination of Employment, or (ii) the expiration of the term of the Option as set forth herein. If, after termination, the Optionee does not exercise his or her Option as set forth in this Section 5(a), the Option shall terminate.

(b)Disability of Optionee. In the event an Optionee’s Termination of Employment occurs as a result of the Optionee’s Disability, the Optionee may exercise his or her Option (to the extent that the Optionee was entitled to exercise it at the date of termination), but only within

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such period of time ending on the earlier of (i) the date six (6) months following such Termination of Employment, or (ii) the expiration of the term of the Option as set forth herein. If, after termination, the Optionee does not exercise his or her Option as set forth in this Section 5(b), the Option shall terminate.

(c)Death of Optionee. In the event of the death of an Optionee during, or within a period specified in the Option after the Termination of Employment, the Option may be exercised (to the extent the Optionee was entitled to exercise the Option at the date of death) by executor or administrator of the Optionee’s estate or by a person who acquired the right to exercise the Option by bequest, but only within six (6) months following the date of death. If, after death, the Option is not exercised as set forth in this Section 5(c), the Option shall terminate.

(d)Retirement of Optionee. In the event an Optionee’s Termination of Employment occurs as a result of Optionee’s retirement pursuant to a Company retirement plan, as contemplated by Section 2.5(c) of the Plan, the Optionee may exercise his or her Option (to the extent that the Optionee was entitled to exercise it at the date of termination), but only within such period of time ending on the earlier of (i) the date three (3) years following such Termination of Employment, or (ii) the expiration of the term of the Option as set forth herein. If, after termination, the Optionee does not exercise his or her Option as set forth in this Section 5(d), the Option shall terminate.

6. Change in Control.

In the event of a Change in Control, Section 3.7 of the Plan shall control the vesting, exercisability and termination of the Option.

7. Method of Exercising Option.

Subject to the terms and conditions of this Agreement, the Option may be exercised by written notice to the Company, at its administrative office in the State of California (attention: Chief Financial Officer), which presently is located at 18191 Von Karman Avenue, Suite 450, Irvine, California 92612. Such notice shall state the election to exercise the Option and the number of shares in respect of which it is being exercised and shall be signed by the person so exercising the Option. Such notice shall be accompanied by payment of the exercise price of such shares, and the Company shall deliver a certificate or certificates representing the shares subject to such exercise as soon as practicable after the notice shall be received. The certificate or certificates for the shares as to which the Option shall have been so exercised shall be registered in the name of the person or persons so exercising the Option and shall be delivered to or upon the written order of the person or persons exercising the Option. In the event the Option shall be exercised by any person or persons other than the Optionee in accordance with the terms hereof, such notice shall be accompanied by appropriate proof of the right of such person or persons to exercise the Option. All shares that shall be purchased upon the exercise of the Option as provided herein shall be fully paid and non-assessable. The holder of the Option shall not be entitled to the privileges of share ownership as to any shares of Common Stock not actually issued and delivered to him.

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8. General.

(a)The Company shall at all times during the term of the Option use reasonable efforts to reserve and keep available such number of shares of Common Stock as will be sufficient to satisfy the requirements of this Agreement, shall pay all original issue and transfer taxes with respect to the issue and transfer of shares pursuant hereto and all other fees and expenses necessarily incurred by the Company in connection therewith, and will from time to time use reasonable efforts to comply with all laws and regulations, which, in the opinion of counsel for the Company, shall be applicable thereto.

(b)The granting of the Option hereunder shall not impose any obligation on the Company to continue using the services of the Optionee as an employee, director or consultant; nor shall it impose any obligation on the Optionee to exercise the Option.

(c)This Agreement and the Plan contain the entire agreement of the parties, and supersede any and all other prior or contemporaneous agreements, whether written or oral, between the parties hereto, with respect to the subject matter hereof. The Plan shall govern any Option granted hereunder. In the event of any conflict between the terms of this Agreement and the Plan, the terms of the Plan shall govern.

(d)This Agreement shall be governed by and construed in accordance with the internal laws of the State of California, without giving effect to principles of conflict of laws.

(e)The Company may require, as a condition precedent to the Company’s obligation to sell and issue, and the Optionee’s right to purchase, shares of common stock of the Company on exercise of the Option, that the Optionee shall certify, in writing, that he or she is acquiring such shares for investment and not with a view or the intent to sell or redistribute such shares.

IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by its officers thereunto duly authorized, and the Optionee has hereunto set his or her hand, all as of the day and year first above written.

QUALITY SYSTEMS, INC.

By:_______________________________________

Title: Chief Executive Officer

“Company”        

__________________________________________

[insert name of Optionee]

“Optionee”        

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EX-10.3

Exhibit 10.3

INCENTIVE STOCK OPTION AGREEMENT

THIS INCENTIVE STOCK OPTION AGREEMENT, dated this _____ day of __________, 200_, between QUALITY SYSTEMS, INC., a California corporation (hereinafter referred to as the “Company”), and _________________, an employee of the Company, its parent or one or more of its subsidiaries (hereinafter referred to as the “Optionee”), is made with reference to the following facts:

The Company desires, by affording the Optionee an opportunity to purchase shares of Common Stock, $0.01 par value, in the Company (hereinafter called “Common Stock”), as hereinafter provided, to carry out the purpose of the Company’s 2005 Stock Option and Incentive Plan (the “Plan”). Terms not otherwise defined herein shall have the meaning given them under the Plan.

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants hereinafter set forth, and for other good and valuable consideration, the parties hereto have agreed, and do hereby agree, as follows:

2. Grant of Option.

The Company hereby irrevocably grants to the Optionee the right and option (hereinafter called the “Option”) to purchase all or any part of an aggregate of _____________ shares (such number being subject to adjustment as provided in the Plan) on the terms and conditions herein set forth. The Option granted herein is intended to be an “incentive option” within the meaning of the Plan and Section 422A of the Internal Revenue Code of 1986, as amended (the “Code”).

3. Purchase Price.

Subject to adjustment as provided in the Plan, the purchase price of the Common Stock covered by the Option shall be $____________ per share, representing one hundred percent (100%) of the Fair Market Value of a share as determined pursuant to Section 2.3(f) of the Plan as of the date hereof. The purchase price of stock acquired pursuant to an Option shall be paid at the time the Option is exercised either in cash or by tendering any other form of legal consideration that may be acceptable to the Board and permitted under the Plan.

4. Term of Option.

The term of the Option shall commence on the date hereof and all rights to purchase shares hereunder shall cease at 11:59 P.M. on the day before the ___________ anniversary of the date hereof, subject to earlier termination as provided herein. Except as may otherwise be provided in this Agreement, the Option granted hereunder shall become exercisable in cumulative installments as follows:

Date Installments First
Become Exercisable Number of Option Shares
Subject to Installment

Once an installment of the Option granted hereunder becomes exercisable for the first time, the shares subject thereto will be purchasable thereafter by the Optionee at any time in whole, or from time-to-time in part, prior to the expiration or earlier termination of the Option granted hereunder. Except as provided in Section 5 hereof, the Option may not be exercised at any time unless the Optionee shall have been continuously, from the date hereof to the date of the exercise of the Option, an employee of the Company, its parent, if any, or of one or more of its subsidiaries or a corporation or a parent or subsidiary of a corporation issuing or assuming an option to which Section 424(a) of the Code applies. The holder of the Option shall not have any of the rights of a shareholder with respect to the shares covered by the Option as to any shares of Common Stock not actually issued and delivered to such holder.

5. Non-Transferability.

The Option shall not be transferable otherwise than by will or the laws of descent and distribution, and the Option may be exercised, during the lifetime of the Optionee, only by the Optionee. More particularly (but without limiting the generality of the foregoing), the Option may not be assigned, transferred (except as provided in Section 5(c) hereof), pledged or hypothecated in any way, shall not be assignable by operation of law and shall not be subject to execution, attachment or similar process. Any attempted assignment, transfer, pledge, hypothecation or other disposition of the Option contrary to the provisions hereof, and the levy of any execution, attachment or similar process upon the Option, shall be null and void and without effect.

6. Termination of Employment.

(a)Termination of Employment Other than by Disability, Death or Retirement. In the event that an Optionee’s Termination of Employment occurs at Optionee’s election for any reason other than by retirement (as described in Section 5(d) below) or at the Company’s election for Cause, the Option shall terminate immediately. In the event an Optionee’s Termination of Employment occurs at the election of the Company without Cause, the Optionee may exercise his or her Option (to the extent that the Optionee was entitled to exercise it at the date of termination) but only within such period of time ending on the earlier of (i) the date three (3) months after the Termination of Employment, or (ii) the expiration of the term of the Option as set forth herein. If, after termination, the Optionee does not exercise his or her Option as set forth in this Section 5(a), the Option shall terminate.

(b)Disability of Optionee. In the event an Optionee’s Termination of Employment occurs as a result of the Optionee’s Disability, the Optionee may exercise his or her Option (to the extent that the Optionee was entitled to exercise it at the date of termination), but only within

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such period of time ending on the earlier of (i) the date six (6) months following such Termination of Employment, or (ii) the expiration of the term of the Option as set forth herein. If, after termination, the Optionee does not exercise his or her Option as set forth in this Section 5(b), the Option shall terminate.

(c)Death of Optionee. In the event of the death of an Optionee during, or within a period specified in the Option after the Termination of Employment, the Option may be exercised (to the extent the Optionee was entitled to exercise the Option at the date of death) by executor or administrator of the Optionee’s estate or by a person who acquired the right to exercise the Option by bequest, but only within six (6) months following the date of death. If, after death, the Option is not exercised as set forth in this Section 5(c), the Option shall terminate.

(d)Retirement of Optionee. In the event an Optionee’s Termination of Employment occurs as a result of Optionee’s retirement pursuant to a Company retirement plan, as contemplated by Section 2.5(c) of the Plan, the Optionee may exercise his or her Option (to the extent that the Optionee was entitled to exercise it at the date of termination), but only within such period of time ending on the earlier of (i) the date three (3) years following such Termination of Employment, or (ii) the expiration of the term of the Option as set forth herein. If, after termination, the Optionee does not exercise his or her Option as set forth in this Section 5(d), the Option shall terminate.

7. Change in Control.

In the event of a Change in Control, Section 3.7 of the Plan shall control the vesting, exercisability and termination of the Option.

8. Method of Exercising Option.

Subject to the terms and conditions of this Agreement, the Option may be exercised by written notice to the Company, at its administrative office in the State of California (attention: Chief Financial Officer), which presently is located at 18191 Von Karman Avenue, Suite 450, Irvine, California 92612. Such notice shall state the election to exercise the Option and the number of shares in respect of which it is being exercised and shall be signed by the person so exercising the Option. Such notice shall be accompanied by payment of the exercise price of such shares, and the Company shall deliver a certificate or certificates representing the shares subject to such exercise as soon as practicable after the notice shall be received. The certificate or certificates for the shares as to which the Option shall have been so exercised shall be registered in the name of the person or persons so exercising the Option and shall be delivered to or upon the written order of the person or persons exercising the Option. In the event the Option shall be exercised by any person or persons other than the Optionee in accordance with the terms hereof, such notice shall be accompanied by appropriate proof of the right of such person or persons to exercise the Option. All shares that shall be purchased upon the exercise of the Option as provided herein shall be fully paid and non-assessable. The holder of the Option shall not be entitled to the privileges of share ownership as to any shares of Common Stock not actually issued and delivered to him.

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9. Tax Information and Notice of Disqualifying Disposition.

The Option is intended to be eligible for treatment as an incentive stock option under Section 422 of the Code. Whether the Option will receive that tax treatment will depend, in part, on the actions by the Optionee after exercise of the Option. For example, if the Optionee disposes of any of the Stock acquired under the Option within two years after the date of grant or within one year of the date of exercise of the Option, the Optionee may lose the benefits of Code Section 422. Accordingly, the Company makes no representations by way of the Plan, this Agreement, or otherwise, with respect to the actual tax consequences of the grant or exercise of the Option or the subsequent disposition of the shares acquired under the Option.

If the Optionee sells or makes a disposition (within the meaning of Section 422 of the Code) of any of the shares acquired under the Option prior to the later of (i) one year from the date of exercise of the Option, or (ii) two years from the date of grant, the Optionee agrees to give written notice to the Company of the disposition within ten (10) days of the disposition. The notice shall include the Optionee’s name, the number, exercise price and exercise date of the shares of Stock disposed of, and the date of disposition.

10. General.

(a)The Company shall at all times during the term of the Option use reasonable efforts to reserve and keep available such number of shares of Common Stock as will be sufficient to satisfy the requirements of this Agreement, shall pay all original issue and transfer taxes with respect to the issue and transfer of shares pursuant hereto and all other fees and expenses necessarily incurred by the Company in connection therewith, and will from time to time use reasonable efforts to comply with all laws and regulations, which, in the opinion of counsel for the Company, shall be applicable thereto.

(b)The granting of the Option hereunder shall not impose any obligation on the Company to continue the employment of the Optionee; nor shall it impose any obligation on the Optionee to exercise the Option.

(c)This Agreement and the Plan contain the entire agreement of the parties, and supersede any and all other prior or contemporaneous agreements, whether written or oral, between the parties hereto, with respect to the subject matter hereof. The Plan shall govern any Option granted hereunder. In the event of any conflict between the terms of this Agreement and the Plan, the terms of the Plan shall govern.

(d)This Agreement shall be governed by and construed in accordance with the internal laws of the State of California, without giving effect to principles of conflict of laws.

(e)The Company may require, as a condition precedent to the Company’s obligation to sell and issue, and the Optionee’s right to purchase, shares of common stock of the Company on exercise of the Option, that the Optionee shall certify, in writing, that he or she is acquiring such shares for investment and not with a view or the intent to sell or redistribute such shares.

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IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by its officers thereunto duly authorized, and the Optionee has hereunto set his or her hand, all as of the day and year first above written.

QUALITY SYSTEMS, INC.

By:_______________________________________

Title: Chief Executive Officer

“Company”        

__________________________________________

[insert name of Optionee]

“Optionee”        

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EX-99.1

Exhibit 99.1

PRESS RELEASE

DATED JUNE 4, 2007

Quality Systems, Inc. Announces Cash Dividend; Date of Annual Shareholders’ Meeting

IRVINE, Calif.--(BUSINESS WIRE)—June 4, 2007--Quality Systems, Inc. (NASDAQ:QSII - News) announced today that the Company’s Board of Directors declared a cash dividend of Twenty-Five Cents ($0.25) per share on the Company’s outstanding shares of Common Stock, payable to shareholders of record as of June 15, 2007 with an anticipated distribution date of July 5, 2007, pursuant to the Company’s current policy to pay a regular quarterly dividend of Twenty-Five Cents ($0.25) per share on the Company’s outstanding shares of Common Stock commencing with conclusion of the Company’s first fiscal quarter of 2008 (June 30, 2007) and continuing each fiscal quarter thereafter, 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. The Company anticipates that future quarterly dividends, if and when declared by the Board pursuant to this policy, would likely be distributable on or about the fifth day of each of the months of October, January, April and July. Questions concerning the cash dividend will be addressed during the next QSI earnings call.

The Company also announced that its 2007 Annual Shareholders’ Meeting will be held on August 8, 2007 for shareholders of record as of June 29, 2007. Details concerning the location and time of the meeting will be provided in the Company’s proxy materials.

About Quality Systems

Quality Systems, Inc. and its NextGen Healthcare Information Systems subsidiary develop and market computer-based practice management, patient records, and connectivity applications 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 future dividend payments), are forward-looking statements within the meaning of these laws and involve a number of risks and uncertainties, including, among others, a legally available source of funds for the payment of future dividends and the possibility that the Board of Directors in the exercise of its fiduciary duty may discontinue its dividend policy or cancel one or more future dividend payments following a determination that one or more dividend payments are not in the best interest of the Company and its shareholders. The Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

Contact:

Quality Systems, Inc.

Louis Silverman, 949-255-2600

www.qsii.com

or

CCG Investor Relations

William F. Coffin or Sean Collins, 818-789-0100

www.ccgir.com

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