Document:

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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

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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

                                       3<PAGE>

                                                                   Exhibit 10.28

     THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
     SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR
     OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER
     SUCH ACT OR AN OPINION OF COUNSEL, SATISFACTORY TO THE CORPORATION AND
     ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.

                               Daou Systems, Inc.

                      NON-STATUTORY STOCK OPTION AGREEMENT
                                   (Director)

     This Non-Statutory Stock Option Agreement is made and entered as
of ____________, 2002. This option is being issued outside of the 1996 Stock
Option Plan (the "Plan") of Daou Systems, Inc., a Delaware corporation (the
"Corporation"), however, any terms not defined in this Agreement will have the
meanings ascribed to such terms in the Plan. The Committee administering the
Plan has selected _______________ (the "Optionee") to receive the following
grant of a non-statutory stock option ("Stock Option") to purchase shares of the
common stock of the Corporation on the terms and conditions set forth below to
which Optionee accepts and agrees:

1.   Stock Options Granted:

Number of Shares Subject to Option                                       ______
Date of Grant                                                 November __, 2002
Vesting Commencement Date                                     November __, 2002
Exercise Price Per Share                                                   $___
Expiration Date                                               November __, 2009

2.   The Stock Option is granted to purchase up to the number of shares of
authorized but unissued common stock of the Corporation specified in Section 1
(the "Shares"). The Stock Option will expire, and all rights to exercise it will
terminate on the earliest of: (a) the date provided below in Sections 5 and 6,
and (b) the Expiration Date. The number of shares subject to the Stock Option
granted pursuant to this Agreement will be adjusted as provided in the Plan.
This Stock Option is intended by the Corporation and the Optionee to be a
Non-statutory Stock Option and does not qualify for any special tax benefits to
the Optionee.

3.   Except as otherwise set forth herein, the Stock Option will be exercisable
in all respects in accordance with the terms of the Plan as they relate to
Non-Statutory Stock Options that are incorporated by this reference. Optionee
acknowledges having received and read a copy of the Plan.

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4.   Optionee will have the right to exercise the Stock Option in accordance
with the following schedule:

     (a) Optionee may exercise the Stock Option as to 1/36 of the Shares on each
monthly anniversary of the Vesting Commencement Date.

     (b) The right to exercise the Stock Option will be cumulative. Optionee may
buy all, or from time to time any part, of the maximum number of shares which
are exercisable under the Stock Option, but in no case may Optionee exercise the
Stock Option with regard to a fraction of a share, or for any share for which
the Stock Option is not exercisable.

     (c) If at any time on or after the end of the first full year following the
Vesting Commencement Date a change in control (as defined in the following
sentence) occurs, then Optionee may exercise the Stock Option as to one hundred
percent (100%) of the Shares which are not otherwise vested on the date of the
change in control. For purposes of this Section 4, "change in control" means
that:

         (i)   any individual, partnership, firm, corporation, association,
trust, unincorporated organization or other entity or person, or any syndicate
or group deemed to be a person under Section 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), is or becomes the "beneficial
owner" (as defined in Rule 13d-3 of the General Rules and Regulations under the
Exchange Act), directly or indirectly, of securities of the Corporation
representing fifty percent (50%) or more of the combined voting power of the
Corporation's then outstanding securities entitled to vote in the election of
directors of the Corporation; or

         (ii)  there occurs a reorganization, merger, consolidation or other
corporate transaction involving the Corporation ("Transaction"), in each case,
with respect to which the stockholders of the Corporation immediately prior to
such Transaction do not, immediately after the Transaction, own more than fifty
percent (50%) of the combined voting power of the Corporation or other
corporation resulting from such Transaction; or

         (iii) all or substantially all of the assets of the Corporation are
sold, liquidated or distributed.

5.   The Stock Option will lapse and becomes unexercisable in full on the
earliest of the following events:

     (a) the first anniversary of the Optionee's death, as provided below in
Section 6;

     (b) the first anniversary of the date on which Optionee ceases to be a
director of the Corporation (a "Director") due to total and permanent
disability, as provided in Section 6 below;

     (c) the date otherwise provided below in Section 6, unless the Committee
otherwise extends such period before the applicable expiration date;

     (d) the date provided in Section 9 of the Plan for a transaction described
in such Section; or

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     (e) the date the Optionee files or has filed against him a petition in
bankruptcy.

6.   Exercise of Stock Options

     (a) If Optionee ceases to be a Director for any reason other than his death
or disability, the Optionee will have the right, subject to the other provisions
of this Agreement, to exercise the Stock Option for the term of the Option but
only to the extent that on the date Optionee ceases to be a Director the
Optionee's right to exercise such Option had vested, and at the end of such
period the Stock Option will expire, and all rights to exercise it will
terminate.

     (b) If Optionee dies while a Director, or after ceasing to be an Director
but during the period while he could have exercised a Stock Option under the
preceding sub-Sections (a), the Option granted to the Optionee may be exercised,
to the extent it has vested at the time of death and subject to the Plan, at any
time within twelve (12) months after the Optionee's death, by the executors or
administrators of his estate or by any person or persons who acquire the Option
by will or the laws of descent and distribution, but not beyond the otherwise
applicable term of the Stock Option.

     (c) If Optionee ceases to be a Director due to becoming totally and
permanently disabled within the meaning of Section 22(e)(3) of the Internal
Revenue Code of 1986, the Stock Option may be exercised to the extent it has
vested at the time of cessation and, subject to the Plan, at any time within
twelve (12) months after Optionee ceases to be a Director, but not beyond the
otherwise applicable term of the Stock Option.

7.   The Optionee agrees to comply with all laws, rules, and regulations
applicable to the grant and exercise of the Stock Option and the sale or other
disposition of the common stock of the Corporation received pursuant to the
exercise of such Stock Option.

8.   The Corporation will not be under any obligation to issue any Shares upon
the exercise of this Stock Option unless and until the Corporation has
determined that:

     (a) it and Optionee have taken all actions required to register such Shares
under the Securities Act, or to perfect an exemption from the registration
requirements thereof;

     (b) any applicable listing requirement of any stock exchange on which such
Shares are listed has been satisfied; and

     (c) all other applicable provisions of state and federal law have been
satisfied.

9.   Optionee acknowledges that the tax effect of the exercise of this Stock
Option and the sale of the underlying Shares is complicated, that Optionee has
consulted with his own professional advisor which respect to all tax matters
relating to this Stock Option and the exercise and sale of the Shares and has
not relied on any assurances or representations of the Corporation as to such
matters.

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       IN WITNESS WHEREOF, each of the parties hereto has executed this Stock
Option Agreement, in the case of the Corporation by its duly authorized officer,
as of the date and year written above.

OPTIONEE                              DAOU SYSTEMS, INC.,
                                      a Delaware corporation

--------------------------            ------------------------------------------
                                      By:
                                      Its:

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