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):               July 23, 2009            

                           QUALITY SYSTEMS, INC.                             

(Exact name of registrant as specified in its charter)

             California              
(State or other jurisdiction
of incorporation)             001-12537        (Commission File Number)             95-2888568 (IRS Employer Identification No.)

18111 Von Karman Avenue, Suite 600	92612
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code    (949) 255-2600

 Not Applicable(Former name or former address, if changed since last report)

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 5.02.        Departure of Directors or Certain Officers; Election of Directors;

Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On July 23, 2009, the Board of Directors (“Board”) of Quality Systems, Inc. (the “Company”) acting upon recommendation of the Company’s Compensation Committee, approved:  

• modifications to the Company’s amended and restated Outside Director Compensation Program effective the date of the Company’s next annual meeting of shareholders, August 13, 2009, and described in Exhibit 10.1 hereto (with modifications marked), which exhibit is incorporated herein by reference. The modifications require (i) a two year vesting of each grant of restricted stock, and (ii) that vested shares shall not be transferrable for one year following vesting; and

	•	a form of Outside Director’s Restricted Stock Agreement consistent with the requirements of the Program, as modified, a copy of which is attached as Exhibit 10.2 hereto.
Item 8.01			Other Events.
			Quarterly Dividend
			On July 23, 2009, 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 September 25, 2009 with an anticipated distribution date on or about October 5, 2009 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.
	(a)	Financial statements of businesses acquired. Not applicable.

(b) Pro forma financial information. Not applicable.

(c) Shell company transactions. Not applicable.

(d) Exhibits.

10.1 Amended and restated Outside Director Compensation Program, marked to show modifications made July 23, 2009.

10.2 Form of Outside Directors Restricted Stock Agreement adopted July 23, 2009.

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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: July 24, 2009 QUALITY SYSTEMS, INC.

By:/s/ PAUL HOLT
      Paul Holt, Chief Financial Officer 

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EXHIBITS FILED WITH THIS REPORT

Number Description

10.1   Amended and restated Outside Director Compensation Program, marked to show modifications made July 23, 2009.

10.2 Form of Outside Directors Restricted Stock Agreement adopted July 23, 2009.  

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EX-10.1

Exhibit 10.1

Quality Systems, Inc.

Amended and Restated

Outside Director Compensation Program

Category of Director	Employee Director	Independent Director	Committee Chairman (3)	Audit Committee/Board 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. 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

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”).

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 (the “Restriction Period”).

4. Shareholder Rights. During the Restriction Period, Grantee shall have all the rights of a shareholder with respect to the Restricted Stock, except for the restrictions set forth in Section 3 of this Agreement. Accordingly, Grantee shall have the right to vote the Restricted Stock and to

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receive any dividends or distributions paid to or made with respect to the Restricted Stock; provided, however, that additional shares of Common Stock or other equity securities of the Company, if any, distributed to the Grantee during the Restriction Period in respect of the Restricted Stock, as dividends or otherwise, shall be subject to the restrictions set forth in Section 3 of this Agreement until the end of the Restriction Period.

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.

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(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.

(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.

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

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