EXHIBIT 10.2

AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT

        This Amended and Restated Registration Rights Agreement, dated as of
November 9, 2000, is among DAOU Systems, Inc., a Delaware corporation (the
“Company”), and the investors listed on Schedule 1 to this Agreement, each of
which is referred to in this Agreement as an “Investor.”

RECITALS

        WHEREAS, the Company and the Investors are parties to the Series A Stock
Purchase Agreement, dated July 26, 1999 (the “Series A Agreement”), and the
Investment Agreement dated of even date herewith (the “Investment Agreement”);

        WHEREAS, the Company and the Investors previously entered into a
Registration Rights Agreement, dated July 26, 1999 (the “Registration Rights
Agreement”), to cause the Company to register the shares of the Company’s common
stock, par value $0.001 per share (the “Common Stock”), issuable upon the
conversion of shares of Series A Preferred Stock, par value $0.001 per share
(the “ Series A Preferred Stock”), as set forth therein; and

        WHEREAS, in order to induce the Investors to enter into the Investment
Agreement pursuant to which the Company granted certain warrants exercisable for
shares of Common Stock (the “Warrants”) to the Investors and in return the
Investors waived certain redemption rights associated with the Series A
Preferred Stock, the Company and Investors hereby agree to amend and restate the
Registration Rights Agreement to cause the Company to register shares of the
Common Stock issuable to the Investors upon conversion of the Series A Preferred
Stock and upon the exercise the Warrants.

        NOW, THEREFORE, the parties hereby agree as follows:

ARTICLE I
REGISTRATION RIGHTS

1.1.  Definitions. For Purposes of this Agreement:

        (a)  the term “Register,” “Registered,” and “Registration” refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act of 1933, as amended (the
“Act”), and the declaration or ordering of effectiveness of such registration
statement or document;

        (b)  the term “Registrable Securities” means (i) the Common Stock
issuable or issued upon conversion of the Series A Preferred Stock whether or
not sold pursuant to the Series A Agreement or upon exercise of the Warrants and
(ii) any Common Stock issued as (or issuable upon the conversion or exercise of
any warrant, right or other security which is issued as) a dividend or other
distribution with respect to, or in exchange for or in replacement of, such
Series A Preferred Stock, the Warrants or Common Stock, as applicable, excluding
in all cases, however, any Registrable Securities sold by a person in a
transaction in which such person’s rights under this Article I are not assigned;

        (c)  the number of shares of “Registrable Securities then outstanding”
will be determined by the number of shares of Common Stock outstanding which
are, and the number of shares of Common Stock issuable pursuant to then
exercisable or convertible securities which are, Registrable Securities;

        (d)  the term “Holder” means any person owning or having the right to
acquire Registrable Securities or any permitted assignee thereof; and

        (e)  the term “Form S-3” means such form under the Act as in effect on
the date of this Agreement or any registration form under the Act subsequently
adopted by the Securities and Exchange Commission (“SEC”) which permits
inclusion or incorporation of substantial information by reference to other
documents filed by the Company with the SEC.

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1.2.  Form S-3 Registration.

        As soon as reasonably practicable after the date hereof (currently
anticipated to be approximately 45 days), the Company shall file with the SEC
one or more Registration Statements on Form S-3 (or other similar form) covering
the continuous sale of the Registrable Securities pursuant to Rule 415 under the
Securities Act or any successor thereto (each, a “Shelf Registration
Statement”), in the manner specified therein. The Company shall use all
reasonable efforts to cause each Shelf Registration Statement to be declared
effective by the SEC as soon as reasonably practicable after its filing with the
SEC, and to remain effective until the earlier of (x) such time as all of the
Registrable Securities are sold pursuant to such Shelf Registration Statement or
(y) each Holder is able to sell within any 90-day period all Registrable
Securities owned by such Holder pursuant to SEC Rules as then in effect,
including Rule 144 und er the Securities Act, or any successor thereto (“SEC
Rule 144”) (the “Effective Period”); provided that in the event that Company
determines in good faith that, because it has under consideration a significant
(as defined under Regulation S-X of the SEC) acquisition or disposition or other
material transaction or corporate event that has not been publicly disclosed or
that it is in the process of preparing for filing with the SEC a Current Report
on Form 8-K or other form, a Shelf Registration Statement may contain a material
misstatement or omission, Parent may cause such Shelf Registration Statement to
not be used during the period in question. The Company agrees it will use its
best efforts to ensure that such deferral will be for the shortest period of
time reasonably required not exceeding, in the aggregate, 90 days in any
12-month period.

1.3.  Company Registration.

        In the event that (i) the Company fails to satisfy its obligations
pursuant to Section 1.2 or (ii) for any period of not less than 30 consecutive
days a Shelf Registration Statement may not be used for any reason, and if (but
without any obligation to do so) the Company proposes to register (including for
this purpose a registration effected by the Company for shareholders other than
the Holders) any of its stock or other securities under the Act in connection
with the public offering of such securities solely for cash (other than a
registration relating solely to the sale of securities to participants in a
Company stock plan, or a registration on any form which does not include
substantially the same information as would be required to be included in a
registration statement covering the sale of the Registrable Securities), the
Company will, at such time, promptly give each Holder written notice of such
registration. Upon the wr itten request of each Holder given within 20 days
after mailing of such notice by the Company in accordance with Section 2.5, the
Company will, subject to the provisions of Section 1.7, cause to be registered
under the Act all of the Registrable Securities that each such Holder has
requested to be registered.

1.4.  Obligations of the Company.

        Except as otherwise expressly specified in this Agreement, whenever
required under this Article I to effect the registration of any Registrable
Securities, the Company will, as expeditiously as reasonably practicable:

        (a)  Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Act with respect to the disposition of all securities covered by such
registration statement.

        (b)  Furnish to the Holders such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Act, and such other documents as they may reasonably request in order to
facilitate the disposition of Registrable Securities owned by them.

        (c)  Use its best efforts to register and qualify the securities covered
by such registration statement under such other securities or Blue Sky laws of
such jurisdictions as will be reasonably requested by the Holders, provided that
the Company will not be required in connection therewith or as a condition
thereto to qualify to do business or to file a general consent to service of
process in any such states or jurisdictions.

        (d)  In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering. Each Holder participating
in such underwriting will also enter into and perform its obligations under such
an agreement.

        (e)  Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Act of the happening of any event as a result
of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing.

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1.5.  Furnish Information.

        It will be a condition precedent to the obligations of the Company to
take any action pursuant to this Article I with respect to the Registrable
Securities of any selling Holder that such Holder will furnish to the Company
such information regarding itself, the Registrable Securities held by it, the
intended method of disposition of such securities and all of the other pertinent
information as will be required to effect the registration of such Holder’s
Registrable Securities.

1.6.  Expenses of Registration.

        Subject to restrictions under applicable state securities laws, all
expenses other than underwriting discounts and commissions incurred in
connection with registrations, filings or qualifications pursuant to Sections
1.2 and 1.3, including (without limitation) all registration, filing and
qualification fees, printers’ and accounting fees, and fees and disbursements of
counsel for the Company and the reasonable fees and disbursements of one counsel
representing the Holders will be borne by the Company.

1.7.  Underwriting Requirements.

        In connection with any offering involving an underwriting of shares of
the Company’s capital stock, the Company will not be required under Section 1.3
to include any of the Holders’ securities in such underwriting unless they
accept the terms of the underwriting as agreed upon between the Company and the
underwriters selected by it (or by other persons entitled to select the
underwriters), and then the Company will have a right to limit the number of
shares to such number as it will determine in good faith will not jeopardize the
success of the offering by the Company. If the total amount of securities,
including Registrable Securities, requested by shareholders to be included in
such offering exceeds the amount of securities sold other than by the Company
that the Company determines in good faith is compatible with the success of the
offering, then the Company will be required to include in the offering only that
number of such securities, including Registrable Securities, which the Company
determines in good faith will not jeopardize the success of the offering (the
securities so included to be apportioned pro rata first among selling
shareholders which are Holders of Registrable Securities according to the total
amount of securities entitled to be included therein owned by each such Holder
or holders until all securities desired by such Holders are included, then among
the other selling shareholders according to the total amount of securities
entitled to be included therein owned by each other selling shareholder or in
such other proportions as will mutually be agreed to by such selling
shareholder; provided that any Registrable Securities held by officers and
directors of the Company will be excluded from such registration to the extent
required by such limitations). For purposes of the preceding parenthetical
concerning apportionment, for any selling shareholder which is a Holder of
Registrable Securities and which is a pa rtnership or corporation, the partners,
retired partners and shareholders of such Holder, or the estates and family
members of any such partners and retired partners an any trusts for the benefit
of any of the foregoing persons will be deemed to be a single “Selling
Shareholder,” and any pro-rata reduction with respect to such “selling
shareholder” will be based upon the aggregate amount of shares carrying
registration rights owned by all entities and individuals included in such
“selling shareholder,” as defined in this sentence.

1.8.  Indemnification. If any Registrable Securities are included in a
registration statement under this Article I:

        (a)  To the extent permitted by law, the Company will indemnify and hold
harmless each Holder, each of its directors and each of its officers, any
underwriter (as defined in the Act) for such Holder and each person, if any, who
controls such Holder or underwriter within the meaning of the Act or the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), against any
losses, claims, damages, or liabilities (joint or several) to which they may
become subject under the Act, or the Exchange Act, insofar as such losses,
claims, damages, or liabilities (or actions in respect thereof) arise out of or
are based upon any of the following statements, omissions or violations
(collectively a “Violation”): (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement, including
any preliminary prospectus or final prospectus contained therein or any amendmen
ts or supplements thereto, (ii) the omission or alleged omission to state
therein a material fact required to be stated therein, or necessary to make the
statements therein not misleading, or (iii) any violation or alleged violation
by the Company of the Act, the Exchange Act, or any rule or regulation
promulgated under the Act, or the Exchange Act; and the Company will pay to each
such Holder, director, officer, underwriter or controlling person, any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability, or action; provided, however,
that the indemnity agreement contained in this Subsection 1.8(a) will not apply
to amounts paid in settlement of any such loss, claim, damage, liability, or
action if

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such settlement is effected without the consent of the Company (which consent
will not be unreasonably withheld), nor will the Company be liable in any such
case for any such loss, claim, damage, liability, or action to the extent that
it arises out of or is based upon a Violation which occurs in reliance upon and
in conformity with written information furnished expressly for use in connection
with such registration by any such Holder, director, officer, underwriter or
controlling person.

        (b)  To the extent permitted by law, each selling Holder will indemnify
and hold harmless the Company, each of its directors, each of its officers who
has signed the registration statement, each person, if any, who controls the
Company within the meaning of the Act, any underwriter, any other Holder selling
securities in such registration statement and any controlling person of any such
underwriter or other Holder, against any losses, claims, damages, or liabilities
(joint or several) to which any of the foregoing persons may become subject,
under the Act or the Exchange Act insofar as such losses, claims, damages, or
liabilities (or actions in respect thereto) arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by such Holder expressly for use in connection with such registration;
an d each such Holder will pay any legal or other expenses reasonably incurred
by any person intended to be indemnified pursuant to this Subsection 1.8(b), in
connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
in this Subsection 1.8(b) will not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such settlement is effected
without the consent of the Holder, which consent will not be unreasonably
withheld; provided, that, in no event will any indemnity under this
Subsection 1.8(b) exceed the proceeds from the offering net of sales commission,
if any, received by such Holder.

        (c)  Promptly after receipt by an indemnified party under this
Section 1.8 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 1.8, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party will have the right to participate in, and, to the extent the
indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel satisfactory to
the indemnified party (which shall not unreasonably withhold its approval);
provided, however, that an indemnified party (together with all other
indemnified parties which may be represented without conflict by one counsel)
will have the right to retain one separate counsel, with the reasonable fees and
expenses to be paid by the indemnifying party, if representation of such
indemnified party by the counsel retained by the indemnifying party is
inappropriate due to actual or potential differing interests between such
indemnified party and any other party represented by such counsel in such
proceeding. The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action, if prejudicial
to its ability to defend such action, will relieve such indemnifying party of
any liability to the indemnified party under this Section 1.8, but the omission
so to deliver written notice to the indemnifying party will not relieve it of
any liability that it may have to any indemnified party otherwise than under
this Section 1.8.

        (d)  If the indemnification provided for in this Section 1.8 is held by
a court of competent jurisdiction to be unavailable to an indemnified party with
respect to any loss, liability, claim, damage, or expense referred to therein,
then the indemnifying party, in lieu of indemnifying such indemnified party to
this Agreement, will contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage, or expense
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other in
connection with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party will be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties’ relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.

        (e)  Notwithstanding the foregoing, to the extent that the provisions on
indemnification and contribution contained in the underwriting agreement entered
into in connection with the underwritten public offering are in conflict with
the foregoing provisions, the provisions in the underwriting agreement will
control.

        (f)  The obligations of the Company and Holders under this Section 1.8
will survive the completion of any offering of Registrable Securities in a
registration statement under this Article I, and otherwise.

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1.9.  Reports Under 1934 Act.

        With a view to making available to the Holders the benefits of Rule 144
promulgated under the Act and any other rule or regulation of the SEC that may
at any time permit a Holder to sell securities of the Company to the public
without registration or pursuant to a registration on Form S-3, the Company
will:

        (a)  make and keep public information available, as those terms are
understood and defined in SEC Rule 144, at all times;

        (b)  file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the Exchange Act; and

        (c)  furnish to any Holder, so long as the Holder owns any Registrable
Securities, forthwith upon request (i) a written statement by the Company that
it has complied with the reporting requirements of SEC Rule 144, the Act and the
Exchange Act, or that it qualifies as a registrant whose securities may be
resold pursuant to Form S-3 (at any time after it so qualifies), (ii) a copy of
the most recent annual or quarterly report of the Company and such other reports
and documents so filed by the Company, and (iii) such other information as may
be reasonably requested in availing any Holder of any rule or regulation of the
SEC which permits the selling of any such securities without registration or
pursuant to such form.

1.10.  “Market Stand-Off” Agreement.

        Notwithstanding the rights granted pursuant to Section 1.2, each
Investor hereby agrees that, during the period of duration (not to exceed 180
days) specified by the Company and an underwriter of Common Stock or other
securities of the Company, following the effective date of a registration
statement of the Company filed under the Act, it will not, to the extent
requested by the Company and such underwriter, directly or indirectly sell,
offer to sell, contract to sell (including, without limitation, any short sale),
grant any option to purchase or otherwise transfer or dispose of (other than to
donees who agree to be similarly bound) any securities of the Company held by it
at any time during such period except Common Stock included in such
registration; provided, however, that all executive officers and directors of
the Company and all other persons with registration rights (whether or not
pursuant to this Agreement) enter into simil ar agreements. The right of the
Company hereunder may be exercised by it not more than once in any one-year
period.

        In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Registrable Securities of each
Investor (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period.

1.11.  Rule 144 Availability.

        Notwithstanding anything to the contrary above in this Article I, prior
to exercising any right provided for in this Article I each Holder will (i)
evaluate in good faith whether such Holder is otherwise permitted to sell the
entire amount of Registrable Securities it is then seeking to register within
the time period it desires to sell pursuant to Rule 144 of the Exchange Act, or
any successor regulation thereto and (ii) exercise such rights only in the case
that it determines in good faith that such rights are necessary to sell such
Registrable Securities in a timely manner.

ARTICLE II
MISCELLANEOUS

2.1.  Successors and Assigns.

        Except as otherwise provided in this Agreement, the terms and conditions
of this Agreement will inure to the benefit of and be binding upon the
respective successors and assigns of the parties (including transferees of any
shares of Registrable Securities). Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties to this
Agreement or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.

2.2.  Governing Law.

        This Agreement will be governed by and construed under the laws of the
State of Delaware.

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2.3.  Counterparts.

        This Agreement may be executed in two or more counterparts, each of
which will be deemed an original, but all of which together will constitute one
and the same instrument.

2.4.  Titles and Subtitles.

        The titles and subtitles used in this Agreement are used for convenience
only and are not to be considered in construing or interpreting this Agreement.

2.5.  Notices.

        Unless otherwise provided, any notice required or permitted under this
Agreement will be given in writing and will be deemed effectively given upon
personal delivery to the party to be notified, by telecopy upon the appropriate
answer-back, or upon deposit with the United States Post Office, by registered
or certified mail, postage prepaid and addressed to the party to be notified at
the address indicated for such party on Schedule 1 or at such other address as
such party may designate by ten days’ advance written notice to the other
parties.

2.6.  Expenses.

        If any action at law or in equity is necessary to enforce or interpret
the terms of this Agreement, the prevailing party will be entitled to reasonable
attorneys’ fees, costs and necessary disbursements in addition to any other
relief to which such party may be entitled.

2.7.  Amendments and Waivers.

        Any term of this Agreement may be amended and the observance of any term
of this Agreement may be waived (either generally or in a particular instance
and either retroactively or prospectively), only with the written consent of the
Company and the Holders of a majority of the Registrable Securities then
outstanding. Any amendment or waiver effected in accordance with this paragraph
will be binding upon each Holder of any Registrable Securities then outstanding,
each future Holder of all such Registrable Securities, and the Company.

2.8.  Severability.

        If one or more provisions of this Agreement are held to be unenforceable
under applicable law, such provision will be excluded from this Agreement and
the balance of the Agreement will be interpreted as if such provision were so
excluded and will be enforceable in accordance with its terms.

2.9.  Aggregation of Stock.

        All shares of Registrable Securities held or acquired by affiliated
entities or persons will be aggregated together for the purpose of determining
the availability of any rights under this Agreement.

2.10.  Entire Agreement, Amendment, Waiver.

        This Agreement (including the Schedules to this Agreement, if any)
constitutes the full and entire understanding and agreement between the parties
with regard to the subjects of this Agreement and thereof.

2.11.  Adjustments for Stock Splits.

        Wherever in this Agreement there is a reference to a specific number of
shares of Common Stock or Preferred Stock of the Company of any class or series,
or a reference to any amount of dollars per any such share, then, upon the
occurrence of any subdivision, combination or stock dividend of such class or
series of stock, the specific number of shares or the specific dollar amount so
referenced in this Agreement will automatically be proportionately adjusted to
reflect the effect on the outstanding shares of such class of series of stock by
such subdivision, combination or stock dividend.

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        IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.

     THE COMPANY:

DAOU SYSTEMS, INC.

  By:   /s/  Neil R. Cassidy     

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       Name:   Neil R. Cassidy
Title:   Executive Vice President and
   Chief Financial Officer

     THE INVESTORS:

GALEN PARTNERS III, L.P.,
a Delaware Limited Partnership

  By:    Claudius, L.L.C.,
a Delaware Limited Liability Company            

    

  By:   /s/  Bruce F. Wesson     

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       Name:   Bruce F. Wesson
Title:   Senior Managing Member

     GALEN PARTNERS INTERNATIONAL III, L.P., a Delaware Limited Partnership

  By:   Claudius, L.L.C.,
a Delaware Limited Liability Company            

    

  By:   /s/  Bruce F. Wesson     

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       Name:   Bruce F. Wesson
Title:   Senior Managing Member

     GALEN EMPLOYEE FUND III, L.P.,
a Delaware Limited Partnership

  By:    Wesson Enterprises, Inc.            

    

  By:   /s/  Bruce F. Wesson     

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       Name:   Bruce F. Wesson
Title:   President

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SCHEDULE 1
INVESTORS

NAME AND ADDRESS

Galen Partners III, L.P. 610 Fifth Avenue 5th Floor New York, NY 10020

Galen Partners International III, L.P. 610 Fifth Avenue 5th Floor New York, NY
10020

Galen Employee Fund III, L.P. 610 Fifth Avenue 5th Floor New York, NY 10020

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