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SEC Support of Including Proposal in
Proxy Statement (QSII 1999)
The SEC letter copied below, supporting the shareholder's
right to have the sample proposal included in the company's proxy statement, was
included as "Exhibit E" in a
June 24, 1999 SEC Form 13D/A filing for Quality Systems, Inc..
EXHIBIT E
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C 20549
[LOGO]
June 9, 1999
Thomas J. Crane
Rutan & Tucker, LLP
611 Anton Boulevard, Suite 1400
Costa Mesa, California 92626-1998
Re: Quality Systems, Inc.
Incoming letter dated May 5, 1999
Dear Mr. Crane:
This is in response to your letters dated May 5, 1999
and May 17, 1999
concerning the shareholder proposal submitted by Diamond A Partners, L.P. to
Quality Systems. We also have received letters from the proponent's counsel
dated May 7, 1999 and May 14, 1999. Our response is attached to the enclosed
photocopy of your correspondence. By doing this, we avoid having to recite
or
summarize the facts set forth in the correspondence. Copies of all of the
correspondence also will be provided to the proponent.
In connection with this matter, your attention is
directed to the
enclosure, which sets forth a brief discussion of the Division's informal
procedures regarding shareholder proposals.
Sincerely,
/s/ Catherine T. Dixon
Catherine T. Dixon
Chief Counsel
Enclosures
cc: David J. Berger
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304-1050
<PAGE>
June 9, 1999
Response of the Office of Chief Counsel
Division of Corporation Finance
-------------------------------
Re: Quality Systems, Inc.
Incoming letter dated May 5, 1999
The proposal amends Quality Systems' bylaws to
require an independent
board of directors.
We are unable to concur in your view that Quality
Systems may exclude the
proposal under rule 14a-8(f). In our view, Quality Systems has not met its
burden of establishing that the proposal exceeds the one proposal limitation
in
rule 14a-8(c). Accordingly, we do not believe that Quality Systems may omit
the
proposal from its proxy materials in reliance on rules 14a-8(c) and
14a-8(f).
We are unable to concur in your view that Quality
Systems may exclude the
proposal under rule 14a-8(i)(1). In our view, Quality Systems has not met
its
burden of establishing that the proposal is an improper subject for
shareholder
action under applicable state law. Accordingly, we do not believe that
Quality
Systems may omit the proposal from its proxy materials in reliance on rule
14a-
8(i)(1).
We are unable to concur in your view that Quality
Systems may exclude the
proposal under rule 14a-8(i)(7). Accordingly, we do not believe that Quality
Systems may omit the proposal from its proxy materials in reliance on rule
14a-
8(i)(7).
We are unable to concur in your view that Quality
Systems may exclude the
proposal under rule 14a-8(i)(8). Accordingly, we do not believe that Quality
Systems may omit the proposal from its proxy materials in reliance on rule
14a-
8(i)(8).
We are unable to concur in your view that Quality
Systems may exclude the
proposal under rule 14a-8(i)(9). Accordingly, we do not believe that Quality
Systems may omit the proposal from its proxy materials in reliance on rule
14a-
8(i)(9).
We are unable to concur in your view that Quality
Systems may exclude the
proposal under rule 14a-8(i)(10). Accordingly, we do not believe that
Quality
Systems may omit the proposal from its proxy materials in reliance on rule
14a-
8(i)(10).
Sincerely,
/s/ Carolyn Sherman
Carolyn Sherman
Special Counsel
<PAGE>
DIVISION OF CORPORATION FINANCE
INFORMAL PROCEDURES REGARDING SHAREHOLDER PROPOSALS
The Division of Corporation Finance believes that its
responsibility with
respect to matters arising under Rule 14a-8 [17 CFR 240.14a-8], as with
other
matters under the proxy rules, is to aid those who must comply with the rule
by
offering informal advice and suggestions and to determine, initially,
whether or
not it may be appropriate in a particular matter to recommend enforcement
action
to the Commission. In connection with a shareholder proposal under Rule
14a-8,
the Division's staff considers the information furnished to it by the
Company in
support of its intention to exclude the proposals from the Company's proxy
materials, as well as any information furnished by the proponent or the
proponent's representative.
Although Rule 14a-8(k) does not require any
communications from
shareholders to the Commission's staff, the staff will always consider
information concerning alleged violations of the statutes administered by
the
Commission, including argument as to whether or not activities proposed to
be
taken would be violative of the statute or ru le involved. The receipt by
the
staff of such information, however, should not be construed as changing the
staff's informal procedures and proxy review into a formal or adversary
procedure.
It is important to note that the staff's and
Commission's no-action
responses to Rule 14a-8(j) submissions reflect only informal views. The
determinations reached in these no-action letters do not and cannot
adjudicate
the merits of a company's position with respect to the proposal. Only a
court
such as a U.S. District Court can decide whether a company is obligated to
include shareholder proposals in its proxy materials. Accordingly a
discretionary determination not to recommend or take Commission enforcement
action, does not preclude a proponent, or any shareholder of a company, from
pursuing any rights he or she may have against the company in court, should
the
management omit the proposal from the company's proxy material.
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