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                                                                   Exhibit 10.27

                     AMENDMENT NO. 2 TO EMPLOYMENT AGREEMENT

This Amendment No. 2 to Employment Agreement (this "Second Amended Agreement")
is made as of July 1, 2002 by and between Daou Systems, Inc., a Delaware
corporation ("Employer"), and Neil Cassidy ("Employee").

                                    RECITALS

A. Pursuant to Section 3 of the Employment Agreement dated October 2, 2000,
between Employer and Employee ( the "Employment Agreement"), Employee is
entitled to certain "Compensation";

B. Pursuant to Section 7.2 of the Employment Agreement, Employee is entitled to
certain severance benefits in the event of a Change in Control Termination as
that term is defined in the Employment Agreement.

C. By this Second Amended Agreement and according to its terms, Employer and
Employee agree to amend and revise the provisions of Section 3 and Section 7.2
of the Employment Agreement. In all other respects, the Employment Agreement,
along with any prior amendments, remains in full force and effect.

                                    AGREEMENT

1. Section 3 Amendment. Section 3 of the Employment Agreement is amended and
revised to include the following:

   3.1 Salary. Employee will be paid an annual salary of Two Hundred Thousand
Dollars ($200,000) (the "Salary"), less any applicable taxes or other payroll
deductions. The Salary will be payable in equal periodic installments according
to Employer's customary payroll practices. Any adjustment to the Salary is at
the sole discretion of Employer.

   3.3 Additional Compensation. As additional compensation for the services
rendered by Employee pursuant to this Agreement, Employee is eligible for an
annual bonus in accordance with Employer's Incentive Compensation Plan (the
"Additional Compensation") that will be created on behalf of the Company's
executive officers no later than December 31, 2002. The parties currently
anticipate that the Additional Compensation plan will provide for payment as
bonus a percentage of Salary upon achievement of stated Employee and Company
goals. In order to be eligible for the Additional Compensation, Employee shall
be employed by Employer on the date that the Additional Compensation, if any, is
customarily distributed by Employer.

           Signature Page to Amendment No. 2 to Employment Agreement,
                        Executed as of December 16, 2002,
               to be Effective as of the Date First Written Above

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2.   Section 7.2 Amendment. Section 7.2 of the Agreement is clarified as
follows:

     7.2 Termination of Employee without Cause or Resignation by Employee
for Good Reason following a Change in Control. In the event of a Change in
Control Termination (as defined below), Employee will receive any earned portion
of Salary and accrued but unused vacation through the Termination Date and
severance payments in an aggregate amount equal to (a) the Salary plus (b) an
amount equal to the Additional Compensation, if any, paid to Employee during the
twelve (12) month period preceding the Termination Date. All payments will be
less applicable state and federal taxes and/or other payroll deductions. Any
severance payments will be paid in a lump sum within 45 days of termination.
Further, if Employee elects to continue insurance coverage as afforded to
Employee according to COBRA, Employer (or its successor) will reimburse Employee
the amount of the premiums incurred by Employee during the period beginning on
the Termination Date and for twelve (12) months following the Termination Date.
Nothing in this Agreement will extend Employee's COBRA period beyond the period
allowed under COBRA, nor is the Company assuming any responsibility that
Employee has for formally electing to continue coverage.

     7.2 (d) Resignation by Employee for Good Reason. Employee shall have the
right to terminate his employment with Employer, and such termination shall, for
purposes of this Agreement, be considered a resignation by Employee for "Good
Reason" if Employer: (i) changes Employee's position and title from Executive
Vice President and Chief Financial Officer to a title and position of decreased
responsibility or salary; or (ii) Employee's place of employment is located more
than 50 miles from the current corporate location in Exton, Pennsylvania; or
(iii) any failure by Employer to pay Employee's Compensation in a timely manner;
and (iv) Employer does not remedy the circumstances giving rise to Good Reason
in a manner which is reasonably satisfactory to Employee within thirty (30)
day's of Employer's receipt of such written notice. Employee's resignation will
not be for Good Reason unless Employee communicates to Employer in writing his
intent to resign for Good Reason.

3.   Miscellaneous.

     3.1 Entire Agreement; Amendments. This Second Amended Agreement and the
Employment Agreement, along with any prior amendments, by and between Employer
and Employee, contain the entire agreement between the parties with respect to
the subject matter hereof and supersede all prior agreements and understandings,
oral or written, between the parties to this Second Amended Agreement with
respect to the subject matter of this Second Amended Agreement. This Second
Amended Agreement may not be amended orally, but only by an agreement in writing
signed by the parties.

           Signature Page to Amendment No. 2 to Employment Agreement,
                        Executed as of December 16, 2002,
               to be Effective as of the Date First Written Above

                                       2

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     3.2 Governing Law. This Amended Agreement will be governed by the laws of
the Commonwealth of Pennsylvania without regard to conflicts of laws principles.

     3.3 Drafting Ambiguities. Each party to this Second Amended Agreement has
had an opportunity to consult with counsel regarding this Second Amended
Agreement and its covenants. The rule of construction that any ambiguities are
to be resolved against the drafting party shall not be employed in the
interpretation of this Second Amended Agreement or any of the amendments to this
Second Amended Agreement.

     3.4 Section Headings, Construction. The section headings in this Second
Amended Agreement are provided for convenience only and will not affect its
construction or interpretation. All references to "section" or "sections" refer
to the corresponding section or sections of this Second Amended Agreement unless
otherwise specified. All words used in this Second Amended Agreement will be
construed to be of such gender or number as the circumstances require. Unless
otherwise expressly provided, the word "including" does not limit the preceding
words or terms.

     3.5 Severability. If any provision of this Second Amended Agreement is held
invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Second Amended Agreement will remain in full force and
effect. Any provision of this Second Amended Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.

     3.6 Counterparts. This Second Amended Agreement may be executed in one or
more counterparts, each of which will be deemed to be an original copy of this
Second Amended Agreement and all of which, when taken together, will be deemed
to constitute one and the same agreement.

EMPLOYER:                                        EMPLOYEE:

Daou Systems, Inc.

/s/ Daniel J. Malcolm                            By:  /s/ Neil Cassidy
--------------------------------                     ---------------------------
By: Daniel J. Malcolm                            Neil Cassidy
Its: President, Chief Executive Officer

           Signature Page to Amendment No. 2 to Employment Agreement,
                        Executed as of December 16, 2002,
               to be Effective as of the Date First Written Above

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