form8-k.htm
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)
September
17, 2009
QUALITY
SYSTEMS, INC.
(Exact
name of registrant as specified in its charter)
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CALIFORNIA
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001-12537
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95-2888568
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(State
or other jurisdiction of incorporation)
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(Commission
File Number)
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(IRS Employer
Identification Number)
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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))
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Item
1.01
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Entry into a Material
Definitive Agreement.
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Employment
Arrangement between the Company and Philip Kaplan.
As
described in Item 5.02 below, Philip Kaplan was appointed as the Chief Operating
Officer of Quality Systems, Inc. (the “Company”) on September 17,
2009. In connection with Mr. Kaplan’s appointment, the Company and
Mr. Kaplan have entered in to an at-will employment arrangement, which
arrangement is described in an offer letter, a copy of which is attached to this
report as Exhibit 10.1 (“Employment Arrangement”). Under the terms of
the Employment Arrangement, Mr. Kaplan will report to the Company’s Chief
Executive Officer and Mr. Kaplan’s compensation will consist of the following
components:
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·
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A
base salary at an annualized rate of $400,000, payable in accordance with
the Company’s normal payroll practices, and subject to all
legally-required deductions.
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·
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An
annual bonus opportunity of up to $240,000, subject to the terms and
provisions of the Company’s 2010 Incentive Program, pro-rated for the
number of months of his employment during the Company’s fiscal year ending
March 31, 2010.
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·
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A
grant of options to purchase 30,000 shares of the Company’s common stock
on the first day of Mr. Kaplan’s employment, September 17, 2009, pursuant
to the terms and provisions of the Company’s Amended and Restated 2005
Stock Option Plan. The options pursuant to this grant will have
an eight (8) year term, and will vest in equal, annual 20% installments
over a five (5) year period beginning one (1) year following the date of
grant. In light of the immediate grant of options to purchase
30,000 shares of the Company’s common stock as set forth above, Mr. Kaplan
shall not be eligible for further options under the equity bonus portion
of the Company’s 2010 Incentive
Program.
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·
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Group
insurance coverage, together with all other employment benefits available
to employees of the Company on the same terms as for other executive
employees of the Company.
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Further,
under the terms of the Employment Arrangement, Mr. Kaplan is required to acquire
prior to March 31, 2010 (to the extent possible subject to the Company’s insider
trading policy and applicable securities laws) on the open market and hold
throughout his tenure as Chief Operating Officer of the Company, a minimum of
2,000 shares of the Company’s common stock.
Amendments
to 2010 Incentive Compensation Program.
On
September 17, 2009, in connection with, and as a result of, the appointment of
Philip Kaplan as Chief Operating Officer of the Company and following approval
and recommendation by the Compensation Committee of the Board of Directors of
the Company, the Company’s Board of Directors approved the following additions
to the Company’s 2010 Incentive Compensation Program:
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·
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Potential Cash Bonus Criteria
for Philip Kaplan: Phillip Kaplan may earn, cash
compensation of up to $240,000 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 the total $240,000 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 business performance,
structuring, growth, and operational requirements criteria as well as
profitability of the revenue cycle management business. This
cash compensation bonus opportunity shall be pro-rated based on the
portion of the fiscal year ending March 31, 2010 during which Mr. Kaplan
is employed as the Chief Operating Officer of the Company. For
example, if Mr. Kaplan is employed as the Chief Operating Officer for four
months during the Company’s fiscal year ending March 31, 2010, he shall be
eligible for 4/12 of the $240,000 amount (i.e.
$80,000).
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Indemnification
Agreement
As
described below, Mr. Craig Barbarosh was appointed to serve on the Company’s
Board of Directors on September 17, 2009 to fill the vacancy created by Mr.
Kaplan’s resignation. In connection therewith, Mr. Barbarosh and the
Company entered into the Company’s standard form of Indemnification Agreement, a
form of which is filed with the Securities and Exchange Commission as Exhibit
10.6.1 to the Company’s Annual Report on Form 10-K for the year ended March 31,
2005.
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Item
5.02
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Departure of Directors
or Certain Officers; Election of Directors; Appointment of Certain
Officers; Compensatory Arrangements of Certain
Officers.
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Appointment
of Chief Operating Officer.
On
September 17, 2009, the Board of Directors of the Company, upon
recommendation of the Compensation Committee of the Board of Directors of the
Company and review by the Audit Committee of the Board of Directors, appointed
Philip Kaplan as the Chief Operating Officer of the Company, effective September
17, 2009. Mr. Kaplan and the Company are party to an Indemnification
Agreement, a form of which is filed with the Securities and Exchange Commission
as Exhibit 10.6.1 to the Company’s Annual Report on Form 10-K for the year ended
March 31, 2005.
Mr.
Kaplan, age 42, is presently Chief Executive Officer of Deer Valley Ventures,
LLC, a managed hosting and virtualization technology company. Mr.
Kaplan served as a director of the Company from June 27, 2008 until his
resignation on September 17, 2009, in connection with his appointment as the
Company’s Chief Operating Officer. From February 2007 to June 2008,
Mr. Kaplan served as Chief Strategy Officer of Internap Network Services
Corporation (NASDAQ: INAP), which acquired VitalStream Holdings, Inc (NASDAQ:
VSTH) in February 2007. Mr. Kaplan co-founded VitalStream in 2000 and served as
its initial Chief Operating Officer until 2004 and as a member of its Board of
Directors until its acquisition by Internap. In 2004, he was named President of
VitalStream and held that position until the February 2007 acquisition.
Previously, Mr. Kaplan co-founded AnaServe, Inc. in 1995, an early e-commerce
web hosting company, which was acquired by Concentric Network Corp. in 1998. Mr.
Kaplan attended the University of California, Davis, from which he received a
Bachelor of Arts in Economics, with a minor in Russian
language.
The
disclosure in Item 1.01 regarding the Employment Arrangement between Mr. Kaplan
and the Company and the amendments to the Company’s 2010 Incentive Compensation
Program are incorporated herein by reference.
Resignation
of Director
In
connection with his appointment as the Company’s Chief Operating Officer, Mr.
Kaplan resigned from his position as a member of the Company’s Board of
Directors and from all the committees (Audit, Nominating and Transaction) of the
Board of Directors on which he served. On September 17, 2009, the
Board of Directors of the Company appointed Russell Pflueger, a current member
of the Board of Directors and a former member of the Audit Committee, as a
member of the Audit Committee to fill the vacancy created by Mr. Kaplan’s
resignation from the Audit Committee.
Appointment
of Director
On
September 17, 2009, the Board of Directors elected Craig Barbarosh to fill the
vacancy on the Board created by Mr. Kaplan’s resignation from the Board of
Directors, and appointed Mr. Barbarosh, upon his joining the Board, to the
Board’s Nominating Committee and Transaction Committee to fill the vacancy
created by Mr. Kaplan’s resignation from such committees. The Board
of Directors determined that Mr. Barbarosh was “independent” under the
applicable rules of the Securities and Exchange Commission and the NASDAQ
Marketplace. As a non-employee director, Mr. Barbarosh shall participate in the
Company’s outside director compensation program. As described in Item
1.01, above, Mr. Barbarosh and the Company entered into the Company’s standard
Indemnification Agreement in connection with Mr. Barbarosh’s appointment to the
Board of Directors.
Mr.
Barbarosh, age 42, has been a partner of the international law firm of Pillsbury
Winthrop Shaw Pittman LLP since 1999. Mr. Barbarosh is a nationally
recognized restructuring expert and has served in several leadership positions
while a partner at Pillsbury including serving on the firm’s Board of Directors,
as the Chair of the firm’s Board's Strategy Committee, as a co-leader of the
firm's national Insolvency & Restructuring practice section and as the
Managing Partner of the firm's Orange County office. Mr. Barbarosh
received a Juris Doctorate from the University of the Pacific, McGeorge School
of Law in 1992 and a Bachelor of Arts in Business Economics from the University
of California at Santa Barbara in 1989. In 2007, Mr. Barbarosh
received a certificate from Harvard Business School for completing an executive
education course on Private Equity and Venture Capital.
A copy of
the news release announcing the appointment of Mr. Kaplan as Chief Operating
Officer and Mr. Barbarosh as a director is attached to this Form 8-K as
Exhibit 99.1, which is incorporated herein by this
reference.
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Item
9.01
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Financial Statements
and Exhibits.
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Exhibit
10.1
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Offer
Letter from Quality Systems, Inc. to Philip Kaplan dated September 17,
2009.
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Exhibit
99.1
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Press
release dated September
21, 2009 of Quality Systems,
Inc.
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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.
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Date:
September
21, 2009
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QUALITY SYSTEMS,
INC. |
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By:
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/s/ Paul Holt
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Paul
Holt
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Chief
Financial Officer
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INDEX
TO EXHIBITS
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Exhibit
Number
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Description
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Offer
Letter from Quality Systems, Inc. to Philip Kaplan dated September 17,
2009.
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Press
release dated September
21, 2009 of Quality Systems,
Inc.
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