<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
Amendment No. 1
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission file number 0-13801
QUALITY SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
California 95-2888568
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
17822 East 17th Street, Tustin, California 92780
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (714) 731-7171
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Name of each exchange on
Title of each class which registered
--------------------------------------- ---------------------------
Common Stock, par value $.01 per share NA
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes [ X ] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
State the aggregate market value of the voting stock held by non-affiliates
of the registrant as of May 28, 1999: $18,986,000
Indicate the number of shares outstanding of each of the registrant's
classes of common stock as of May 28, 1999: 6,213,666.
DOCUMENTS INCORPORATED BY REFERENCE: None
<PAGE> 2
Quality Systems, Inc. ("Company") hereby amends Part III. and Part IV.,
Item 14.(a)(3), of the Company's Form 10-K for the Fiscal Year Ended March
31, 1999 as follows:
<PAGE> 3
PART III.
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
---------------------------------------------------
The information concerning the Company's executive officers is included
under the caption "Executive Officers of the Registrant." following Part
I., Item 4. of this report, and is incorporated by reference into this Item
10. The information concerning the Company's Directors is as follows:
<TABLE>
<CAPTION>
Name Age Principal Occupation
- ------------------- ----- --------------------------------------
<S> <C> <C>
Sheldon Razin 61 Chairman of the Board of Directors
and President and Chief Executive
Officer of the Company
John Bowers, M.D. 61 Founder of Heart Institute of Nevada
William Bowers 70 Co-founder of MSI Data Corporation
Patrick Cline 38 Executive Vice President of the
Company and President and Chief
Operating Officer of Clinitec
International, Inc., a wholly-owned
subsidiary of the Company.
Janet Razin 59 Vice President and Corporate
Secretary of the Company
Gordon Setran 77 Retired, Vice President of California
Federal Savings and Loan
Association
</TABLE>
Biographical information on Messrs. Razin and Cline and Mrs. Razin is
included under the caption "Executive Officers of the Registrant."
following Part I., Item 4. of this report, and is incorporated by reference
into this Item 10. Biographical information on the Company's non-employee
Directors is as follows:
John Bowers, M.D., has served as a Director since June 1987, and is the
founder of the Heart Institute of Nevada ("Heart Institute"), a major
freestanding cardiac catheterization and diagnostic center, and served as
the Heart Institute's Chief Executive Officer from 1975 until July 1997. In
1970, Dr. Bowers moved to Las Vegas, Nevada to associate with Dr. P.R.
Akre, who organized the first catheterization laboratory in Nevada. He
subsequently became Director of Cardiology at Sunrise Hospital and Valley
Hospital. On June 1, 1975, he founded Cardiology Associates of Nevada, John
A. Bowers, M.D., FACC, a professional corporation, and the forerunner of
the Heart Institute. Prior to 1970, Dr. Bowers practiced cardiology in
Santa Paula, California, after serving in the U.S. Air Force. Dr. Bowers
graduated from Indiana University School of Medicine.
William Bowers has served as a Director since June 1989. He was co-founder
and Chairman of MSI Data Corporation, a leading manufacturer of "on-the-
move" hand-held data collection systems, headquartered in Costa Mesa,
<PAGE> 4
California. Founded in 1967, MSI was a public company until it was acquired
by Symbol Technologies, Inc. in 1988. Mr. Bowers has two Bachelors degrees,
one in Advertising from the University of Southern California and another
in Electrical Engineering from the University of California, Los Angeles.
Gordon Setran has served as a Director since November 1982, and was a Vice
President of California Federal Savings & Loan Association from 1975 until
his retirement in December 1985. Mr. Setran was a co-founder, President and
Director of First Federal Savings & Loan Association of Corona which was
acquired by California Federal Savings & Loan Association in 1975.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under Section 16(a) of the Securities Exchange Act of 1934, as amended, the
directors and officers of the Company and any person who owns more than ten
percent of the Company's Common Stock are required to report their initial
ownership of the Company's Common Stock and any subsequent changes in that
ownership to the Securities and Exchange Commission ("SEC") and the Nasdaq
National Market. Officers, directors and greater than 10% shareholders are
required by SEC regulations to furnish the Company with copies of all forms
they file in accordance with Section 16(a).
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that, during the fiscal
year ended March 31, 1999, its officers, directors and greater than 10%
shareholders complied with all filing requirements applicable to such
persons with the exception of the following report. Mr. David Razin, the
Company's Vice President Business Development, inadvertently filed his Form
4 thirty-one days late in connection with his exercise of certain stock
options.
<PAGE> 5
Item 11. EXECUTIVE COMPENSATION.
-----------------------
The following table sets forth certain compensation information for the
three fiscal years ended March 31, 1999, 1998 and 1997, respectively, by
the Chief Executive Officer and the four other highest paid executive
officers of the Company serving as such at the end of the 1999 fiscal year
whose aggregate total annual salary and bonus for such year exceeded
$100,000 (the "Named Executive Officers").
<TABLE>
<CAPTION>
Summary Compensation Table
Long-Term
Compensation
-------------
Annual Compensation Awards
--------------------- -------------
Securities
Underlying All
Name and Options/ Other
Principal SARs Compensation
Position Year Salary($) Bonus($) (#) ($)(1)
- ----------------- ---- --------- -------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Sheldon Razin 1999 241,667 -- -- 3,240
Chief Executive 1998 225,000 -- -- 3,073
Officer and 1997 225,000 -- -- 3,073
President
Patrick Cline(2) 1999 185,898 -- -- 1,832
Executive 1998 197,703 -- -- 1,977
Vice President 1997 145,576 -- -- 1,456
Greg Flynn 1999 160,000 22,500 -- 1,751
Executive Vice 1998 146,693 -- 5,100(3) 1,651
President 1997 130,000 38,333 30,000(3) 1,834
Corporate Sales
& Marketing
Robert McGraw 1999 125,000 18,750 -- 151
Vice President 1998 125,000 18,750 7,650(3) 151
Chief Financial 1997 125,000 18,750 40,000(3) 151
Officer
Donn Neufeld 1999 142,000 -- -- 1,551
Vice President 1998 132,502 -- 5,100(3) 1,551
Software & 1997 119,583 -- 30,000(3) 1,347
Operations
</TABLE>
(1) This column reflects amounts attributable to Company contributions
to the Company's Deferred Compensation Plan (in the case of Mr. Cline,
Clinitec's Retirement Plan with 401(k) features)and income
attributable to the provision of additional life insurance for the
named individuals. For fiscal year ended March 31, 1999 such
amounts were, respectively, as follows: Mr. Razin, $2,417 and $823; Mr.
Cline, $1,832 and none; Mr. Flynn, $1,600 and $151; Mr. McGraw, none
and $151; and Mr. Neufeld, $1,400 and $151.
<PAGE> 6
(2) Mr. Cline's employment with the Company commenced in May 1996.
(3) Certain options granted to the following individuals on June 12, 1996
with an exercise price of $27.50 per share were exchanged for new
options granted on August 11, 1997 with an exercise price of $7.01
per share: Mr. Flynn exchanged options representing 20,000 shares for
new options representing 5,100 shares; Mr. McGraw exchanged options
representing 30,000 shares for new options representing 7,650 shares;
and, Mr. Neufeld exchanged options representing 20,000 shares for new
options representing 5,100 shares.
Option / SAR Information
The Company did not grant stock options or stock appreciation rights to any
of the Named Executive Officers during fiscal 1999.
The following table provides information on option exercises in fiscal 1999
by the Named Executive Officers and unexercised options held by them at the
close of such fiscal year. No Named Executive Officer exercised any stock
appreciation rights during fiscal 1999 or held any stock appreciation
rights at the end of such fiscal year nor did any of the Named Executive
Officers hold any unexercised, in-the-money stock options or stock
appreciation rights at the end of such fiscal year.
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised
Options at March 31, 1999(#)
Shares Acquired Value ---------------------------
Name on Exercise(#) Realized($) Exercisable Unexercisable
- ------------- --------------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Sheldon Razin -- -- -- --
Patrick Cline -- -- -- --
Greg Flynn -- -- 6,275 8,825
Robert McGraw -- -- 6,912 10,738
Donn Neufeld 23,000 58,938 6,275 8,825
</TABLE>
Employment Contracts and Change in Control Arrangements
In connection with the May 1996 purchase of Clinitec, the Company entered
into an employment agreement with Mr. Cline, a co-founder, President and
the then Chairman of the Board of Clinitec. Under this employment
agreement, Mr. Cline became Executive Vice President of the Company and the
President and Chief Operating Officer of the Company's wholly-owned
subsidiary which was newly formed to conduct the Clinitec business. The
employment agreement commenced on May 17, 1996 and has a three-year term.
Mr. Cline receives a base annual salary of $153,000 over the agreement term
with additional annual salary based upon Clinitec's annual revenues and an
annual bonus based upon Clinitec's operating income in excess of certain
minimum specified levels. The maximum total salary and bonus that Mr. Cline
may earn for the period from April 1, 1999 through May 16, 1999 is $38,000.
<PAGE> 7
Other than the above described arrangements with Mr. Cline, the Company
does not have any employment or severance contracts in effect with the
Chief Executive Officer or any of the other Named Executive Officers.
The Board of Directors, as the administrator of the Company's 1989 Stock
Option Plan and 1998 Stock Option Plan, has the discretion to accelerate
any outstanding options held by the Named Executive Officers in the event
of an acquisition of the Company by a merger or asset sale in which the
outstanding options under each such plan are not to be assumed by the
successor corporation or substituted with options to purchase shares of
such corporation.
DIRECTOR COMPENSATION
Directors of the Company who are also employees of the Company are not
compensated for their services as directors or committee members.
Directors of the Company who are not also employees ("Non-employee
Directors") receive a fee of $2,500 per year for serving on the Board of
Directors. Non-employee Directors who serve on a committee of the Board of
Directors receive an additional annual fee of $1,000 and a fee of $250 for
each committee meeting attended, together with reasonable expenses of
attendance at committee meetings.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company did not have a compensation committee during its fiscal
year ended March 31, 1999 and the related functions carried out by such a
committee were performed by the entire Board of Directors. Sheldon Razin,
Janet Razin and Patrick Cline, who are officers and employees of the
Company, are also members of the Board of Directors. No director or
executive officer of the Company serves as an officer, director or member
of a compensation committee of any other entity for which an executive
officer or director thereof is also a member of the Company's Board of
Directors.
<PAGE> 8
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
---------------------------------------------------------------
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of July 15, 1999 by
(i) each person known by the Company to beneficially own more than 5% of
the outstanding shares of Common Stock, (ii) each of the Company's
Directors, (iii) each of the Named Executive Officers, and (iv) all
Directors and executive officers of the Company as a group:
<TABLE>
<CAPTION>
Number of Shares Percent of
of Common Stock Common Stock
Beneficially Beneficially
Name of Beneficial Owner(1) Owned Owned(2)
- ------------------------ ---------------- ------------
<S> <C> <C>
Janet Razin and
Sheldon Razin(3) 1,520,220 24.46%
Ahmed Hussein(4) 1,147,400 18.46%
Lawndale Capital
Management, LLC(5) 621,200 10.00%
Dimensional Fund
Advisors Inc.(6) 326,800 5.26%
Patrick Cline 113,325 1.82%
John Bowers, M.D. 51,230 *
Greg Flynn 33,580(7) *
Donn Neufeld 30,550(7) *
William Bowers 11,200 *
Robert McGraw 9,825(7) *
Gordon Setran 6,000 *
All Directors and executive
officers as a group (11 persons,
including those named above) 1,797,880(7) 28.77%
- --------------------------------
* Less than 1%.
</TABLE>
(1) Unless otherwise indicated, the address of each of these persons is
c/o Quality Systems, Inc., 17822 East 17th Street, Suite 210, Tustin,
California 92780. Unless otherwise indicated, to the Company's
knowledge, the persons named in the table have sole voting and sole
investment power with respect to all shares beneficially owned,
subject to community property laws where applicable.
(2) Applicable percentage ownership is based on 6,214,916 shares of Common
Stock issued and outstanding as of July 15, 1999. Any securities not
outstanding but subject to options exercisable as of July 15, 1999 or
exercisable within 60 days after such date are deemed to be
outstanding for the purpose of computing the percentage of outstanding
Common Stock beneficially owned by the person holding such options,
but are not deemed to be outstanding for the purpose of computing the
percentage of Common Stock beneficially owned by any other person.
(3) Janet Razin and Sheldon Razin, each of whom is an officer and Director
of the Company, are married to each other and own their shares as
community property.
(4) As reflected in the Schedule 13D/A dated July 8, 1999. The address
for Mr. Hussein is 30 Rockefeller Center, Suite 1936, New York, New
York 10112.
<PAGE> 9
(5) As reflected in the Schedule 13D/A dated July 15, 1999. The Schedule
13D/A concerns beneficial ownership interests of Lawndale Capital
Management, LLC ("LCM"), Diamond A Partners, L.P. ("DAP"), Diamond A
Investors, L.P. ("DAI") and Andrew E. Shapiro ("Shapiro"). LCM is the
investment adviser to and general partner of DAP and DAI, which are
investment limited partnerships. Shapiro is the sole manager of LCM.
The Schedule 13D/A states that LCM, DAP, DAI and Shapiro have
beneficial ownership of 621,200 shares, 525,300 shares, 95,900 shares
and 621,200 shares, respectively. The address for LCM, DAP, DAI and
Shapiro is One Sansome Street, Suite 3900, San Francisco,
California 94104.
(6) As reflected in the Schedule 13G dated February 11, 1999. The Schedule
13G states that Dimensional Fund Advisors Inc. ("Dimensional")
furnishes investment advice to four investment companies and serves as
investment manager to certain other investment vehicles (the four
investment companies and the investment vehicles are collectively
referred to as "Portfolios"). In its role as investment advisor and
investment manager, Dimensional possesses both voting and investment
power over the securities of the Company that are owned by Portfolios.
The Schedule 13G further states that all of the 326,800 shares of the
Company's Common Stock reported thereon are owned by the Portfolios
and Dimensional disclaims beneficial ownership of all such securities.
The Schedule 13G also sets forth that none of the Portfolios to the
knowledge of Dimensional owns individually more than 5% of the
Company's outstanding Common Stock. The address for Dimensional is
1299 Ocean Avenue, 11th Floor, Santa Monica, California 90401.
(7) Includes shares of Common Stock subject to stock options which were
exercisable as of July 15, 1999 or exercisable within 60 days after
July 15, 1999, and are, respectively, as follows: Mr. Flynn, 7,550
shares; Mr. Neufeld, 7,550 shares; Mr. McGraw, 8,825 shares; and all
Directors and officers as a group, 33,475 shares.
<PAGE> 10
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
-----------------------------------------------
On May 15, 1997, the Company acquired substantially all of the assets
of MicroMed Healthcare Information Systems, Inc. ("MicroMed"), a developer
and marketer of proprietary information systems utilizing a graphical user
interface client/server platform for medical group practices, for $10.5
million. The purchase price consisted of an initial cash payment of $4.8
million paid upon the May 1997 closing of the transaction with an
additional payment of $5.7 million paid on June 29, 1998. The additional
payment consisted of $3.8 million in cash and 245,454 shares of the
Company's Common Stock valued at $1.8 million, or $7.48 per share. The
shares of Common Stock may not be sold or otherwise transferred in any
manner until June 1999. In connection with the May 1997 asset purchase
transaction, Mr. Stephen Puckett, a co-founder, President and Chairman of
the Board of MicroMed, became Executive Vice President of the Company. On
the closing date of the asset purchase transaction, Mr. Puckett had a 37.5%
ownership interest in MicroMed. Mr. Puckett resigned as an officer and
employee of the Company effective May 15, 1999.
David Razin, who is the Vice President Business Development of the Company,
is the son of Sheldon Razin and Janet Razin. The Company paid David Razin
$127,000 in salary during the fiscal year ended March 31, 1999. The Company
did not grant stock options or stock appreciation rights to David Razin
during fiscal 1999.
<PAGE> 11
PART IV.
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
------------------------------------------------------------------
Page
----------
(a) Documents filed as part of this report.
(3) Exhibits.
INDEX TO EXHIBITS
Sequential
Page
Exhibit No.
------- ----------
3.1 Articles of Incorporation of the Company, as
amended, are hereby incorporated by reference
to Exhibit 3.1 to the Registrant's Annual Report
on Form 10-K for the year ended March 31, 1984,
File No. 2-80056.
3.2 Bylaws of the Company, as amended, are hereby
incorporated by reference to Exhibit 3.3 to the
Company's Registration Statement on Form S-1,
File No. 2-80056.
3.2.1 Certificate of Amendment of Bylaws of the
Registrant is hereby incorporated by reference
to Exhibit 3.2.1 to the Registrant's
Registration Statement on Form S-1,
File No. 333-00161.
3.2.2 Text of Sections 2 and 3 of Article II of the
Bylaws of the Registrant is hereby incorporated
by reference to Exhibit 3.2.2 to the Registrant's
Quarterly report on Form 10-QSB for the period
ended December 31, 1996, File No. 0-13801.
3.2.3 Certificate of Amendment of Bylaws of the Registrant
(originally filed with Registrant's Annual Report on
Form 10-K for the year ended March 31, 1999,
File No. 0-13801).
10.2* 1989 Incentive Stock Option Plan is hereby
incorporated by reference to Exhibit 4.1 to the
Registrant's Registration Statement on Form S-8,
File No. 33-31949.
10.2.1* Form of Incentive Stock Option Agreement is hereby
incorporated by reference to Exhibit 10.2 to the
Registrant's Registration Statement on Form S-1,
File No. 333-00161.
10.2.2* Form of Non-Qualified Stock Option Agreement is
hereby incorporated by reference to Exhibit 10.3
to the Registrant's Registration Statement on
Form S-1, File No. 333-00161.
<PAGE> 12
INDEX TO EXHIBITS
(continued)
Sequential
Page
Exhibit No.
------- ----------
10.3* Form of Incentive Stock Option Agreement is hereby
incorporated by reference to Exhibit 10.2 to the
Company's Registration Statement on Form S-1,
File No. 2-80056.
10.4* 1993 Deferred Compensation Plan, is hereby
incorporated by reference to Exhibit 10.5 to the
Registrant's Annual Report on Form 10-KSB for the
year ended March 31, 1994, File No. 0-13801.
10.4.2* Profit Sharing and Retirement Plan, as amended, is
hereby incorporated by reference to Exhibit
10.4.2 to the Registrant's Annual Report on
Form 10-KSB for the year ended March 31, 1994,
File No. 0-13801.
10.4.3* Profit Sharing and Retirement Plan, as amended,
amendments No. 2 and 3, are hereby incorporated
by reference to Exhibit 10.4.3 to the
Registrant's Annual Report on Form 10-KSB for
the year ended March 31, 1996,File No. 0-13801.
10.5 Lease Agreement dated March 11, 1993 between the
Registrant and Craig Development Corporation, is
hereby incorporated by reference to Exhibit 10.35
to the Registrant's Annual Report on Form 10-K
for the year ended March 31, 1993,
File No. 0-13801.
10.6 Lease agreement dated September 12, 1994 between
the Registrant and Koll/Realty Orangewood
Business Center General Partnership, is hereby
Incorporated by reference to Exhibit 10.8 to the
Registrant's Annual Report on Form 10-KSB for the
year ended March 31, 1995, File No. 0-13801.
10.7 Series "A" Convertible Preferred Stock Purchase
Agreement, as amended, dated April 21, 1995
Between the Registrant and Clinitec
International, Inc., is hereby incorporated by
reference to Exhibit 10.11 to the Registrant's
Annual Report on Form 10-KSB for the year ended
March 31, 1995, File No. 0-13801.
10.8 Form of Indemnification Agreement is hereby
incorporated by reference to Exhibit 10.10 to the
Registrant's Registration Statement on Form S-1,
File No. 333-00161.
<PAGE> 13
INDEX TO EXHIBITS
(continued)
Sequential
Page
Exhibit No.
------- ----------
10.9 Marketing agreement, as amended, dated April 1,
1995 between the Registrant and Clinitec
International, Inc., is hereby incorporated
by reference to Exhibit 10.12 to the Registrant's
Annual Report on Form 10-KSB for the year ended
March 31, 1995, File No. 0-13801.
10.10 Agreement and Plan of Merger, dated May 16, 1996,
by and among Quality Systems, Inc., CII
Acquisition Corporation, Clinitec International,
Inc. and certain shareholders of Clinitec
International, Inc. and certain exhibits is
hereby incorporated by reference to Exhibit 2 to
the Registrant's Current Report on Form 8-K,
dated May 17, 1996 and filed May 30, 1996.
10.11* Employment agreement dated May 16, 1996 by and
between CII Acquisition Corporation and
Patrick Cline is hereby incorporated by reference
to Exhibit 10.1 to the Registrant's Current
Report on Form 8-K/A dated May 17, 1996 and filed
June 21, 1996.
10.12 Shareholder Rights Agreement, dated as of November
25, 1996, by and between Quality Systems, Inc.
and U.S. Stock Transfer Corp. is hereby
incorporated by reference to the Exhibit to the
Registrant's registration statement on Form 8-A,
File No. 001-12537.
10.12.1 Text of Amendment to Shareholder Rights Agreement,
dated November 26, 1996, by and between Quality
Systems, Inc. and U.S. Stock Transfer Corp. 16
10.13 Asset Purchase Agreement, dated May 15, 1997,
by and among MicroMed Healthcare Information
Systems, Inc., MHIS Acquisition Corp., Quality
Systems, Inc., and certain shareholders of
MicroMed Healthcare Information Systems, Inc.
is hereby incorporated by reference to Exhibit
2 of Registrant's Current Report on Form 8-K,
dated May 15, 1997 and filed May 29, 1997,
File No. 0-13801.
10.14* 1998 Employee Stock Contribution Plan is hereby
incorporated by reference to Exhibit 4.1 to
the Registrant's Registration Statement on
Form S-8, File No. 333-63131
10.15* 1998 Stock Option Plan is hereby incorporated by
reference to Exhibit 4.1 to the Registrant's
Registration Statement on Form S-8,
File No. 333-67115.
<PAGE> 14
INDEX TO EXHIBITS
(continued)
Sequential
Page
Exhibit No.
------- ----------
21 List of Subsidiaries (originally filed with the
Registrant's Annual Report on Form 10-K for the
year ended March 31, 1999, File No. 0-13801).
23.1 Independent Auditor's Consent - Deloitte & Touche
LLP (originally filed with the Registrant's Annual
Report on Form 10-K for the year ended March 31,
1999, File No. 0-13801).
27.1 Financial Data Schedule (orginally filed with the
Registrant's Annual Report on Form 10-K for the
year ended March 31, 1999, File No. 0-13801).
* This exhibit is a management contract or a
compensatory plan or arrangement.
<PAGE> 15
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.
QUALITY SYSTEMS, INC.
July 28, 1999 By: /s/ Robert G. McGraw
-------------------------------
Robert G. McGraw
Chief Financial Officer
<PAGE> 16
EXHIBIT 10.12.1
<PAGE> 17
EXHIBIT 10.12.1
AMENDMENT OF SHAREHOLDER RIGHTS AGREEMENT
The Shareholder Rights Agreement, dated November 25, 1996,
between Quality Systems, Inc. and U.S. Stock Transfer Corp. is hereby
amended in the following particulars:
1. Subsection (a) of Section 23 of the Agreement is amended
by deleting from the first sentence of said subsection the words "the
earlier of (i)" and further by deleting from said sentence the words "or
(ii) the time following the Stock Acquisition Date that a majority of the
directors of the Company are persons who were not directors immediately
prior to the Stock Acquisition Date".
2. Subsection (a) of Section 24 of the Agreement is amended
by deleting from the first sentence of said subsection the words "and prior
to the time that a majority of the directors of the Company are persons who
were not directors immediately prior to that Stock Acquisition Date".
3. Section 27 of the Agreement is amended by deleting from
the first sentence of said section the words "the earlier of (i)" and also
by deleting the words "or (ii) the time following the Stock Acquisition
Date that a majority of the directors of the Company are persons who were
not directors immediately prior to the Stock Acquisition Date".
