Document:

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                       COMPUTER PROGRAMS AND SYSTEMS, INC.

                             2002 STOCK OPTION PLAN

                         Dated as of             , 2002
                                     ------------

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                                                                    Exhibit 10.3

                       COMPUTER PROGRAMS AND SYSTEMS, INC.

                             2002 STOCK OPTION PLAN

                          Dated as of           , 2002
                                      ----------

                                    ARTICLE 1
                                     PURPOSE
                                     -------

     The purpose of this Plan is to promote the interests of the Company and its
stockholders by granting Options to purchase Stock to Employees in order (1) to
provide an additional incentive to each Employee to work to increase the value
of the Company's Stock, and (2) to provide each Employee with a stake in the
future of the Company which corresponds to the stake of each of the Company's
stockholders.

                                    ARTICLE 2
                                   DEFINITIONS
                                   -----------

     Each term set forth in this Article 2 shall have the meaning set forth
opposite such term for purposes of this Plan and, for purposes of such
definitions, the singular shall include the plural and the plural shall include
the singular.

     "Affiliate" means any corporation, partnership, joint venture or any other
      ---------
entity (i) that, directly or indirectly, is controlled by the Company or (ii) in
which the Company owns, directly or indirectly, a significant equity interest,
in either case as determined by the Board.

     "Board" means the Board of Directors of the Company.
      -----

     "Cause" means a felony conviction of an Employee or the failure of an
      -----
Employee to contest prosecution for a felony, or an Employee's willful
misconduct or dishonesty which is harmful to the business or reputation of the
Company or any Subsidiary, as determined by the Board in its sole discretion.

     "Change in Control" shall be deemed to have occurred if (i) any "person"
      -----------------
(as such term is used in Sections 13(d) and 14(d) of the Exchange Act) or any
two or more persons acting as a partnership, syndicate or other such group
(other than the Company, any trustee or other fiduciary holding securities under
any employee benefit plan of the Company, any company owned, directly or
indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of Stock of the Company, or one or more of the
individual stockholders who sold stock in the Company's initial public offering
of Stock which was completed on the effective date of the Plan, either acting
alone or with one or more of the other such selling stockholders) is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 50% or more of
the combined voting power of the Company's then outstanding securities; (ii)
during any period of two consecutive years (not including any period prior to
the adoption of the Plan), individuals who at the beginning of such period
constitute the Board, and any new director (other than a director designated by
a person who has entered into an agreement with the Company to

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effect a transaction described in clause (i), (iii), or (iv) of this paragraph)
whose election by the Board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds of the directors then
still in office who either were directors at the beginning of the two-year
period or whose election or nomination for election was previously so approved,
cease for any reason to constitute at least a majority of the Board; (iii) the
stockholders of the Company approve a merger or consolidation of the Company
with any other corporation, other than a merger or consolidation that would
result in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than 50% of the
combined voting power of the voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation; or (iv) the
stockholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets. If any of the events enumerated in
clauses (i) through (iv) occur, the Board shall determine the effective date of
the Change in Control resulting therefrom, for purposes of the Plan.

     "Code" means the Internal Revenue Code of 1986, as amended.
      ----

     "Committee" means a committee appointed by the Board to administer this
      ---------
Plan which at all times shall consist of two or more members of the Board. To
the extent the Board considers it necessary or desirable for purposes of
complying with or qualifying under Rule 16b-3 of the Exchange Act, each member
of the Committee shall be a "non-employee director" within the meaning of Rule
16b-3. The Board may from time to time remove members from, or add members to,
the Committee. Vacancies on the Committee shall be filled by the Board. The
Committee shall select one of its members as Chairman and shall hold meetings at
such times and places as it may determine.

     "Company" means Computer Programs and Systems, Inc., a Delaware
      -------
corporation, or any successor to such corporation, and its Affiliates.

     "Disability" means a permanent and total disability as defined in the
      ----------
Company's long term disability insurance program; provided, however, that in the
event no such program is in effect, Disability shall mean a total and permanent
disability or incapacity resulting from medically demonstrable bodily injury or
disease (i) which prevents the Employee from engaging in any regular occupation
for compensation or profit, (ii) which has continuously existed for a period of
at least six months and (iii) for which the Employee would be eligible for or is
in receipt of disability benefits under the Federal Social Security Act.
Disability will be determined by the Board who may reasonably require the
Employee to undergo examination by a qualified physician selected by the Board
at any time or times for the purposes of determining whether the Employee
incurred and continues to have a Disability.

     "Employee" means any full-time or part-time employee of the Company or any
      --------
Subsidiary of the Company who the Board, acting in its absolute discretion, has
determined to be eligible for the grant of an Option under this Plan.

     "Exchange Act" means the Securities Exchange Act of 1934, as amended.
      ------------

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     "Fair Market Value" means, unless otherwise determined by the Board, the
      -----------------
closing price on the date of determination for a share of Stock, or if there
were no sales on such date, the most recent prior date on which there were
sales, as reported by The Wall Street Journal or, if The Wall Street Journal
does not report such closing price, such closing price as reported by a
newspaper or trade journal selected by the Board.

     "ISO" means an option granted under this Plan to purchase Stock which is
      ---
intended by the Company to satisfy the requirements of Code Section 422.

     "Non-ISO" means an option granted under this Plan to purchase Stock which
      -------
is not intended by the Company to satisfy the requirements of Code Section 422.

     "Option" means an ISO or a Non-ISO.
      ------

     "Option Agreement" means the written agreement or instrument which sets
      ----------------
forth the terms of an Option granted to an Employee under this Plan.

     "Option Price" means the price which shall be paid to purchase one share of
      ------------
Stock upon the exercise of an Option granted under this Plan.

     "Plan" means this Computer Programs and Systems, Inc. 2002 Stock Option
      ----
Plan, as amended from time to time.

     "Retirement" means retirement from active employment with the Company or
      ----------
any Subsidiary on or after the earlier of the date on which an Employee reaches
the age of fifty-five (55), or such earlier date determined by the Board on a
case by case basis for an Employee who has not reached the age of fifty-five
(55) but who has at least fifteen (15) continuous years of service with the
Company.

     "Rule 16b-3" means the exemption under Rule 16b-3 to Section 16(b) of the
      ----------
Exchange Act or any successor to such rule.

     "Stock" means the $.001 par value common stock of the Company.
      -----

     "Subsidiary" means a corporation which is a subsidiary corporation (within
      ----------
the meaning of Section 242(f) of the Code) of the Company.

                                    ARTICLE 3
                         SHARES AVAILABLE UNDER THE PLAN
                         -------------------------------

     Section 3.1 Shares Reserved Under the Plan. There shall be 1,165,333 shares
                 ------------------------------
of Stock reserved for issuance under this Plan, and such shares of Stock shall
be reserved to the extent that the Company deems appropriate from authorized but
unissued shares of Stock and from shares of Stock which have been reacquired by
the Company. Furthermore, any shares of Stock subject to an Option which remain
unissued after the cancellation, expiration or exchange of such Option
thereafter shall again become available for use under this Plan.

                                       3

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     Section 3.2 Annual Limit. Subject to adjustment under Article 13, the
                 ------------
maximum number of shares of Stock with respect to which Options may be granted
to any Employee under the Plan shall be 100,000 shares per calendar year. The
per-Employee limit described in this Article 13 shall be construed and applied
consistently with Section 162(m) of the Code ("Section 162(m)").

                                    ARTICLE 4
                                 EFFECTIVE DATE
                                 --------------

     The effective date of this Plan shall be the date that the Company
completes its initial public offering of Stock.

                                    ARTICLE 5
                                 ADMINISTRATION
                                 --------------

     Section 5.1 Authority of Board. The Plan shall be administered by the
                 ------------------
Board. Subject to the terms of the Plan and applicable law, and in addition to
other express powers and authorizations conferred on the Board by the Plan, the
Board shall have full power and authority to: (i) designate Employees to
participate in the Plan; (ii) determine the type of Options to be granted to an
eligible Employee; (iii) determine the number of shares of Stock to be covered
by an Option; (iv) determine the terms and conditions of any Option; (v)
determine whether, to what extent, and under what circumstances an Option may be
exercised in cash, shares of Stock, other securities, or other property, or
canceled, forfeited, or suspended and the method or methods by which Options may
be exercised, canceled, forfeited, or suspended; (vi) interpret and administer
the Plan and any instrument or agreement relating to, or grant made under, the
Plan; (vii) establish, amend, suspend, or waive such rules and regulations and
appoint such agents as it shall deem appropriate for the proper administration
of the Plan; and (viii) make any other determination and take any other action
that the Board deems necessary to or desirable for the administration of the
Plan.

     Section 5.2 Board Discretion Binding. Unless otherwise expressly provided
                 ------------------------
in the Plan, all designations, determinations, interpretations, and other
decisions under or with respect to the Plan or any Option shall be within the
sole discretion of the Board, may be made at any time, and shall be final,
conclusive, and binding upon all persons, including the Company, any Employee,
any holder or beneficiary of any Option and any stockholder.

     Section 5.3 Appointment of Committee. To the extent permitted by applicable
                 ------------------------
law, the Board may delegate any or all of its powers under the Plan to a
Committee. All references in the Plan or any Option Agreement to the "Board"
shall mean the Board or a Committee of the Board, to the extent that the Board's
powers or authority under the Plan have been delegated to such Committee.

     Section 5.4 Delegation of Authority. The Board may delegate to one or more
                 -----------------------
of its members, or to one or more agents, such administrative duties as it may
deem advisable; provided, however, that any such delegation shall be in writing.
In addition, the Board, or any person to whom it has delegated duties under this
Section 5.4, may employ one or more persons to render advice with respect to any
responsibility the Board or such person may have under the

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Plan. The Board may employ such legal or other counsel, consultants and agents
as it may deem desirable for the administration of the Plan and may rely upon
any opinion or computation received from any such counsel, consultant or agent.
Expenses incurred by the Board in the engagement of such counsel, consultant or
agent shall be paid by the Company.

     Section 5.5 Liability. No member of the Board and no Employee shall be
                 ---------
liable for any act or failure to act hereunder, except in circumstances
involving his or her bad faith, gross negligence or willful misconduct, or for
any act or failure to act hereunder by any other member or Employee or by any
agent to whom duties in connection with the administration of the Plan have been
delegated.

     Section 5.6 Indemnification. The Company shall indemnify members of the
                 ---------------
Board and any agent of the Board who is an Employee, against any and all
liabilities or expenses to which they may be subjected by reason of any act or
failure to act with respect to their duties on behalf of the Plan, except in
circumstances involving such person's bad faith, gross negligence or willful
misconduct.

                                    ARTICLE 6
                                   ELIGIBILITY
                                   -----------

     Only Employees shall be eligible for the grant of Options under this Plan.

                                    ARTICLE 7
                                GRANT OF OPTIONS
                                ----------------

     Subject to the provisions of the Plan, the Board shall have sole and
complete authority to determine the Employees to whom Options shall be granted,
the number of shares of Stock to be covered by each Option, the Option Price
therefor, and the conditions and limitations applicable to the exercise of the
Option. The Board shall have the authority to grant ISOs, or to grant Non-ISOs,
or to grant both types of Options. In the case of ISOs, the terms and conditions
of such grants shall be subject to and comply with such rules as may be
prescribed by Section 422 of the Code, as from time to time amended, and any
regulations implementing such statute.

                                    ARTICLE 8
                        OPTION PRICE; EXERCISE OF OPTION
                        --------------------------------

     Section 8.1 Option Price. The Option Price for each share of Stock subject
                 ------------
to an Option shall be determined by the Board in its discretion, but in no event
shall the Option Price be less than the Fair Market Value of a share of Stock on
the date the Option is granted.

     Section 8.2 Exercise of Stock Options. The Options shall be exercised as
                 -------------------------
set forth in the Employee's Option Agreement. The Option Price may be paid in
cash. In the sole discretion of the Board, payment may also be made (i) by the
delivery or presentation of Stock then owned by the Employee for not less than
six (6) months or (ii) by the delivery of a properly executed exercise notice to
the Company together with a copy of irrevocable instructions to a broker to
effect the immediate sale of some or all of the Stock purchased pursuant to the
exercise of the Option and to remit promptly to the Company, out of the sale or
loan proceeds available on the

                                       5

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settlement date, the aggregate exercise price payable for the purchased Stock (a
"Cashless Exercise"). To facilitate the foregoing Cashless Exercise, the Company
may enter into agreements for coordinated procedures with one or more brokerage
firms. The Board may prescribe any other method of paying the exercise price
that it determines to be consistent with applicable law and the purpose of the
Plan, including without limitation, in lieu of the exercise of an Option by
delivery of Stock then owned by an Employee, providing the Company with a
notarized statement attesting to the number of shares of Stock owned by the
Employee for not less than six (6) months, where upon verification by the
Company, the Company would issue to the Employee only the number of incremental
shares of Stock to which the Employee is entitled upon exercise of the Option.

                                    ARTICLE 9
                     EXERCISE PERIOD; TERMINATION OF OPTIONS
                     ---------------------------------------

     Section 9.1 Exercise Period. Each Option granted under this Plan to an
                 ---------------
Employee shall be exercisable in whole or in part at such time or times as set
forth in the related Option Agreement, but, unless otherwise provided for by the
Board, no Option Agreement shall make an Option granted to an Employee
exercisable after the date which is the tenth anniversary of the date the Option
is granted.

     Section 9.2 Termination of Employment by Reason of Death. Unless otherwise
                 --------------------------------------------
determined by the Board, if any Employee's employment with the Company or any
Subsidiary terminates by reason of death, the Option may thereafter be
immediately exercised, to the extent then exercisable (or on such accelerated
basis as the Board shall determine at or after grant), by the legal
representative of the estate or by the legatee of the Employee under the will of
the Employee, for a period of one (1) year from the date of death (or such
shorter period as may be determined by the Board at the time of grant) or until
the expiration of the stated term of such Option, whichever period is the
shorter.

     Section 9.3 Termination of Employment by Reason of Disability. Unless
                 -------------------------------------------------
otherwise determined by the Board, if any Employee's employment with the Company
and any Subsidiary terminates by reason of Disability, any Option held by such
Employee may thereafter be exercised, to the extent it was exercisable at the
time of termination due to Disability (or on such accelerated basis as the Board
shall determine at or after grant), for a period of one (1) year (or such
shorter period as may be determined by the Board at the time of grant) from the
date of such termination of employment or the expiration of the stated term of
such Option, whichever period is the shorter; and if the Employee dies within
such period, any unexercised Option held by such Employee shall thereafter be
exercisable to the extent to which it was exercisable at the time of death, for
the remainder of such period.

     Section 9.4 Termination of Employment by Reason of Retirement. Unless
                 -------------------------------------------------
otherwise determined by the Board, if any Employee's employment with the Company
or any Subsidiary terminates by reason of Retirement (with Board consent), any
Option held by such Employee may thereafter be exercised, to the extent it was
exercisable at the time of such Retirement (or on such accelerated basis as the
Board shall determine at or after grant), for a period of one (1) year (or such
shorter period as may be determined by the Board at the time of grant) from the
date of such termination of employment or the expiration of the stated term of

                                       6

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such Option, whichever period is the shorter; and if the Employee dies within
such period, any unexercised Option held by such Employee shall thereafter be
exercisable, to the extent to which it was exercisable at the time of death, for
the remainder of such period.

     Section 9.5 Involuntary Termination of Employment for Cause. Unless
                 -----------------------------------------------
otherwise determined by the Board, if an Employee's employment with the Company
or any Subsidiary is involuntarily terminated for Cause, the Option shall
thereupon terminate.

     Section 9.6 Other Termination of Employment. Unless otherwise determined by
                 -------------------------------
the Board, if an Employee's employment with the Company or any Subsidiary
terminates for any reason other than death, Disability, Retirement or
involuntarily by the Company or any Subsidiary for Cause, the Option shall
thereupon terminate, except that such Option may be exercised, to the extent it
was exercisable at the time of termination, for the lesser of three (3) months
from the date of termination or the balance of such Option's term.

                                   ARTICLE 10
                                 TRANSFERABILITY
                                 ---------------

     Section 10.1 Transfer of Option. No Option granted under this Plan shall be
                  ------------------
transferable by an Employee other than by will or by the laws of descent and
distribution, and such Option shall be exercisable during the lifetime of an
Employee only by such Employee. The person or persons to whom an Option is
transferred by will or by the laws of descent and distribution thereafter shall
be treated as the Employee under this Plan. Notwithstanding the foregoing, the
Board, in its sole discretion, may permit the transferability of an Option by an
Employee solely to members of the Employee's immediate family or trusts or
family partnerships or other similar entities for the benefit of such persons
and subject to such terms, conditions, restrictions and/or limitations, if any,
as the Board may include in the Option Agreement.

     Section 10.2 Restrictions. The Board may impose such restrictions on any
                  ------------
shares of Stock acquired pursuant to Options under the Plan as it may deem
advisable, including, without limitation, restrictions under applicable federal
securities law, restrictions imposed by any stock exchange upon which such
shares of Stock may be listed, and restrictions under any blue sky or state
securities laws applicable to such shares.

                                   ARTICLE 11
                             SECURITIES REGISTRATION
                             -----------------------

     All certificates for shares of Stock or other securities of the Company
delivered under the Plan pursuant to any Option or the exercise thereof shall be
subject to such stop transfer orders and other restrictions as the Board may
deem advisable under the rules, regulations, and other requirements of the
Securities and Exchange Commission, any stock exchange upon which shares of
Stock or other securities are then listed, and any applicable Federal or state
securities law, and the Board may cause a legend or legends to be put on any
such certificates to make appropriate reference to such restrictions. If so
requested by the Company, the Employee shall make a written representation to
the Company that he or she will not sell or offer to sell any of such Stock
unless a registration statement shall be in effect with respect to such Stock
under the Securities Act of 1933, as amended ("1933 Act"), and any applicable
state securities law or

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unless he or she shall have furnished to the Company an opinion, in form and
substance satisfactory to the Company, of legal counsel acceptable to the
Company, that such registration is not required.

                                   ARTICLE 12
                                  LIFE OF PLAN
                                  ------------

     No Option shall be granted under this Plan on or after the earlier of (1)
the tenth anniversary of the effective date of this Plan (as determined under
Article 4 of this Plan), in which event this Plan thereafter shall continue in
effect until all outstanding Options have been exercised in full or no longer
are exercisable, or (2) the date on which all of the Stock reserved under
Article 3 of this Plan, subject to adjustment pursuant to Article 13 hereof or
amendment pursuant to Article 15 hereof, has (as a result of the exercise of
Options granted under this Plan) been issued or no longer is available for use
under this Plan, in which event this Plan also shall terminate on such date.

                                   ARTICLE 13
                                   ADJUSTMENT
                                   ----------

     In the event that the Board determines that any dividend or other
distribution (whether in the form of cash, shares of Stock, other securities or
other property), recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, or exchange of shares of Stock or other securities of the Company,
issuance of warrants or other rights to purchase shares of Stock or other
securities of the Company, or other similar corporate transaction or event
affects the shares of Stock such that an adjustment is determined by the Board
to be appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, then the Board
shall, in such manner as it may deem equitable, adjust any or all of (i) the
number of shares of Stock or other securities of the Company with respect to
which Options may be granted, (ii) the number of shares of Stock or other
securities of the Company subject to outstanding Options, and (iii) the Option
Price with respect to any Options, or, if deemed appropriate, make provision for
a cash payment to the holder of an outstanding Option; provided, in each case,
that with respect to ISOs no such adjustment shall be authorized to the extent
that such authority would cause the Plan to violate Section 422(b)(1) of the
Code, as from time to time amended.

                                   ARTICLE 14
                                CHANGE IN CONTROL
                                -----------------

     In the event that there is a Change in Control of the Company, the Board
shall have the right in anticipation of such event or thereafter to take such
action with respect to any outstanding Options granted to any Employee as the
Board deems appropriate under the circumstances to protect the interest of the
Company and to maintain the integrity of such grants under this Plan, including,
without limitation, (i) unilaterally canceling such Options in exchange for
cash, securities or other consideration, and (ii) making such adjustments in the
terms and conditions of outstanding Options, as the Board in its sole discretion
determines are equitably warranted under the circumstances, including
accelerating the date(s) on which the Options become exercisable. The Board
shall have the right to take different action under this Article 14

                                       8

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with respect to different Employees or different groups of Employees, as the
Board deems appropriate under the circumstances. In no event, however, shall the
Board take any action under this Article 14 which would impair the rights of an
Employee or which would impair the value of such Options, without such
Employee's consent.

                                   ARTICLE 15
                            AMENDMENT OR TERMINATION
                            ------------------------

     Section 15.1 Amendments to the Plan. This Plan may be amended, in whole or
                  ----------------------
in part, by the Board from time to time to the extent that the Board deems
necessary or appropriate; provided, however, that no amendment shall be made
which would impair the rights of an Employee with respect to Options theretofore
granted or which would impair the value of such Options, without such Employee's
consent; and, provided further, that no such amendment shall be made absent the
approval of the stockholders of the Company if such approval is necessary to
comply with any tax or regulatory requirement for which or with which the Board
deems it necessary or desirable to qualify or comply. The Board also may suspend
the granting of Options under this Plan at any time and may terminate this Plan,
in whole or in part, at any time; provided, however, the Board shall not have
the right unilaterally to modify, amend or cancel any Option granted before such
suspension or termination unless (1) the Employee consents in writing to such
modification, amendment or cancellation or (2) there is a dissolution or
liquidation of the Company or a transaction described in Article 13 or Article
14 of this Plan.

     Section 15.2 Amendments to Options. The Board may waive any conditions or
                  ---------------------
rights under, amend any terms of, or alter, suspend, discontinue, cancel or
terminate, any Option theretofore granted, prospectively or retroactively;
provided that any such waiver, amendment, alteration, suspension,
discontinuance, cancellation or termination that would adversely affect the
rights of any Employee or any holder or beneficiary of any Option theretofore
granted shall not to that extent be effective without the consent of the
affected Employee, holder or beneficiary.

     Section 15.3 Adjustment of Awards Upon the Occurrence of Certain Unusual or
                  --------------------------------------------------------------
Nonrecurring Events. The Board is hereby authorized to make adjustments in the
-------------------
terms and conditions of Options in recognition of unusual or nonrecurring events
affecting the Company or the financial statements of the Company, or of changes
in applicable laws, regulations, or accounting principles, whenever the Board
determines that such adjustments are appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under the Plan.

     Section 15.4 Cancellation. Any provision of this Plan or any Option
                  ------------
Agreement to the contrary notwithstanding, the Board may cause any Option
granted hereunder to be canceled in consideration of a cash payment or
alternative Option made to the holder of such canceled Option equal in value to
the difference between the Fair Market Value of Stock subject to such Option and
the Option Price for such cancelled Option.

                                       9

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                                   ARTICLE 16
                                  MISCELLANEOUS
                                  -------------

     Section 16.1 No Stockholder Rights. No Employee shall have any rights as a
                  ---------------------
stockholder of the Company as a result of the grant of an Option to him or to
her under this Plan or his or her exercise of such Option pending the actual
issuance of Stock subject to such Option to such Employee.

     Section 16.2 No Contract of Employment. The grant of an Option to an
                  -------------------------
Employee under this Plan shall not constitute a contract of employment and shall
not confer on any Employee any rights upon his or her termination of employment
in addition to those rights, if any, expressly set forth in the Option Agreement
which evidences his or her Option.

     Section 16.3 Other Conditions. Each Option Agreement may require that an
                  ----------------
Employee (as a condition to the exercise of an Option) enter into any agreement
or make such representations prepared by the Company, including any agreement
which restricts the transfer of Stock acquired pursuant to the exercise of such
Option.

     Section 16.4 Withholding. The exercise of any Option granted under this
                  -----------
Plan shall constitute full and complete consent by an Employee to whatever
action the Board deems necessary to satisfy the federal and state tax
withholding requirements, if any, which the Board acting in its discretion deems
applicable to such exercise. The Board also shall have the right to provide in
an Option Agreement that an Employee may elect to satisfy federal and state
withholding requirements through a reduction in the number of shares of Stock
actually transferred to him or her under this Plan, and if the Employee is
subject to the reporting requirements under Section 16 of the Exchange Act, any
such election and any such reduction shall be effected so as to satisfy the
conditions to the exemption under Rule 16b-3 under the Exchange Act.

     Section 16.5 No Rights to Awards. No Employee, or other person shall have
                  -------------------
any claim to be granted any Option, and there is no obligation for uniformity of
treatment of Employees, or holders or beneficiaries of Options. The terms and
conditions of Options need not be the same with respect to each recipient.

     Section 16.6 No Limit on Other Compensation Arrangements. Nothing contained
                  -------------------------------------------
in the Plan shall prevent the Company from adopting or continuing in effect
other compensation arrangements, which may, but need not, provide for the grant
of options, restricted stock, and other types of awards whether or not provided
for hereunder (subject to stockholder approval if such approval is required),
and such arrangements may be either generally applicable or applicable only in
specific cases.

     Section 16.7 Severability. If any provision of the Plan or any Option is or
                  ------------
becomes or is deemed to be invalid, illegal, or unenforceable in any
jurisdiction or as to any person or Option, or would disqualify the Plan or any
Option under any law deemed applicable by the Board, such provision shall be
construed or deemed amended to conform the applicable laws, or if it cannot be
construed or deemed amended without, in the determination of the Board,

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<PAGE>

materially altering the intent of the Plan or the Option, such provision shall
be stricken as to such jurisdiction, person or Option and the remainder of the
Plan and any such Option shall remain in full force and effect.

     Section 16.8 No Trust or Fund Created. Neither the Plan nor any Option
                  ------------------------
shall create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company and an Employee or any other person.
To the extent that any person acquires a right to receive payments from the
Company pursuant to an Option, such right shall be no greater than the right of
any unsecured general creditor of the Company.

     Section 16.9 Loans. If approved by the Board, the Company may lend money
                  -----
to, or guarantee loans made by a third party to, any Employee to finance all or
part of the exercise of any Option granted under this Plan, and the exercise of
an Option with the proceeds of any such loan shall be treated as an exercise for
cash under this Plan.

     Section 16.10 Other Laws. The Board may refuse to issue or transfer any
                   ----------
shares of Stock or other consideration under an Option if, acting in its sole
discretion, it determines that the issuance or transfer of such shares of Stock
or such other consideration might violate any applicable law or regulation or
entitle the Company to recover the same under Section 16(b) of the Exchange Act,
and any payment tendered to the Company by a holder or beneficiary of an Option
in connection with the exercise of such Option shall be promptly refunded to the
relevant holder or beneficiary. Without limiting the generality of the
foregoing, no Option granted hereunder shall be construed as an offer to sell
securities of the Company, and no such offer shall be outstanding, unless and
until the Board in its sole discretion has determined that any such offer, if
made, would be in compliance with all applicable requirements of the U.S.
federal securities laws and any other laws to which such offer, if made, would
be subject.

     Section 16.11 Headings. Headings are given to the Sections and subsections
                   --------
of the Plan solely as a convenience to facilitate reference. Such headings shall
not be deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.

     Section 16.12 Construction. This Plan shall be construed under the laws of
                   ------------
the State of Delaware.

                                       11<PAGE>

                                                                    Exhibit 10.4

                       COMPUTER PROGRAMS AND SYSTEMS, INC.
                             2002 STOCK OPTION PLAN

                  Form of Non-Qualified Stock Option Agreement

Date of Grant:              , 2002
               -------------

     This Non-Qualified Stock Option Agreement (this "Agreement") is entered
into as of                , 2002, by and between
           ---------------                       -------------------------------
("Optionee") and Computer Programs and Systems, Inc., a Delaware corporation
(the "Company").

                                    Recitals
                                    --------

     A. The Company has previously adopted the 2002 Stock Option Plan ("Plan");

     B. The Board (as defined in the Plan) has approved the grant of a
non-qualified stock option to Optionee pursuant to the Plan;

     C. Optionee desires to accept such option;

     D. Capitalized terms used in this Agreement but not otherwise defined shall
have the meanings given to such terms in the Plan.

                                    Agreement
                                    ---------

     NOW, THEREFORE, in consideration of the foregoing facts and the mutual
promises set forth herein, the parties agree as follows:

     1. Grant of Option. Subject to the terms and conditions hereinafter set
        ---------------
forth, the Company, with the approval and at the direction of the Board, hereby
grants to the Optionee, as of the date first written above (the "Date of
Grant"), an option to purchase up to                  shares of Stock (the
                                     ----------------
"Granted Shares") at a price of $        per share, the Fair Market Value of the
                                 -------
Stock on the Date of Grant. Such option is hereinafter referred to as the
"Option," and the shares of Stock purchased upon exercise of the Option are
hereinafter sometimes referred to as the "Option Shares." The Option is not
intended by the parties to be, and shall not be treated as, an incentive stock
option (as such term is defined under Section 422 of the Internal Revenue Code
of 1986, as amended).

     2. Vesting of Option. Subject to such further limitations as are provided
        -----------------
herein, the Option shall become exercisable by Optionee on the fifth anniversary
of the Date of Grant, provided that Optionee is employed by the Company as of
such date.

     3. Option Term. The Option shall remain exercisable through and until the
        -----------
seventh anniversary of the Date of Grant (the "Option Term").

<PAGE>

     4. Method of Exercise. Subject to Section 2 above and the other terms and
        ------------------
conditions of this Agreement, the Option may be exercised in whole or in part by
giving written notice of exercise to the Company specifying the number of Option
Shares to be purchased, accompanied by payment in full of the purchase price, in
cash, by check or such other instrument as may be acceptable to the Board.
Payment may also be made by the delivery of a properly executed exercise notice
to the Company together with (i) the delivery or presentation of Stock then
owned by the Employee for not less than six (6) months or (ii) a copy of
irrevocable instructions to a broker to effect the immediate sale of some or all
of the Option Shares and to remit promptly to the Company, out of the sale or
loan proceeds available on the settlement date, the aggregate exercise price
payable for the Option Shares purchased. No Option Shares shall be issued until
full payment therefor has been made. Optionee shall have the rights to dividends
or other rights of a stockholder with respect to Option Shares subject to the
Option when Optionee has given written notice of exercise and has paid in full
for such Option Shares.

     5. Transferability of Options. The Option shall not be transferable by
        --------------------------
Optionee other than by will or by the laws of descent and distribution and shall
be exercisable, during Optionee's lifetime, only by Optionee; provided, however,
that the Option shall be transferable to members of Optionee's immediate family
(which shall include Optionee's spouse, children and grandchildren, whether
natural or adopted) and to trusts for the benefit of such family members and
partnerships or limited liability companies in which such family members are the
only partners or members. For purposes of Sections 6, 7 and 8 of this Agreement,
a transferred Option may be exercised by the transferee only to the extent that
Optionee would have been entitled had the Option not been transferred.

     6. Termination of Employment by Reason of Death. If Optionee's employment
        --------------------------------------------
with the Company terminates by reason of death, then the Option shall
immediately become exercisable in full (notwithstanding Section 2 above), and
the Option may thereafter be exercised, in whole or in part, by the legal
representative of the estate or by the legatee of Optionee under the will of
Optionee, for a period of one (1) year from the date of death or until the
expiration of the Option Term, whichever period is the shorter.

     7. Termination of Employment by Reason of Disability. If Optionee's
        -------------------------------------------------
employment with the Company terminates by reason of Disability, then the Option
shall immediately become exercisable in full (notwithstanding Section 2 above),
and the Option may thereafter be exercised, in whole or in part, for a period of
one (1) year from the date of such termination of employment or until the
expiration of the Option Term, whichever period is the shorter; and if Optionee
dies within such period, any unexercised Option held by Optionee shall
thereafter be exercisable, in whole or in part, for the remainder of such
period.

     8. Termination of Employment by Reason of Retirement. If Optionee's
        -------------------------------------------------
employment with the Company terminates by reason of Retirement (with Board
consent), then the Option may thereafter be exercised for a period of one (1)
year from the date of such termination of employment or until the expiration of
the Option Term, whichever period is the shorter, to the extent, but only to the
extent, that Optionee could have exercised the Option as of the date of
Retirement; and if Optionee dies within such period, any unexercised Option that
was exercisable at the time of death shall thereafter be exercisable for the
remainder of such period.

                                       2

<PAGE>

Notwithstanding anything to the contrary herein, the Board may, in connection
with such Retirement, make such adjustments in the terms and conditions of the
Option as the Board in its sole discretion determines are equitably warranted
under the circumstances, including, without limitation, acceleration of exercise
terms.

     9. Other Termination of Employment. If Optionee's employment with the
        -------------------------------
Company terminates for any reason, whether voluntarily or involuntarily, other
than (a) death, (b) Disability, (c) Retirement or (d) by the Company for Cause,
the Option may thereafter be exercised , in whole or in part, for a period of
three (3) months following such termination of employment or until the
expiration of the Option Term, whichever period is the shorter, to the extent,
but only to the extent, that the Option was exercisable as of the date of
termination of employment and had not previously been exercised. In the event
that Optionee's employment with the Company is terminated by the Company for
Cause, the Option shall thereupon terminate.

     10. Stock Certificates. All certificates for Option Shares delivered under
         ------------------
this Agreement shall be subject to such stock transfer orders and other
restrictions as the Board may deem advisable under the rules, regulations and
other requirements of the Securities and Exchange Commission, any stock exchange
upon which the Stock is then listed, any applicable Federal or state securities
law, and the terms and conditions of this Agreement, and the Board may cause a
legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.

     11. Withholding Taxes.
         -----------------

          (a) Optionee shall, no later than the date as of which the value of
Option Shares first becomes includable in the gross income of Optionee for
Federal income tax purposes, pay to the Company, or make arrangements
satisfactory to the Board regarding payment of, any Federal, state or local
taxes of any kind required by law to be withheld with respect to the award. The
obligations of the Company under this Agreement and the Plan shall be
conditioned on such payment or arrangements, and the Company (and, where
applicable, its Subsidiaries), shall, to the extent permitted by law, have the
right to deduct any such taxes from any payment of any kind otherwise due to
Optionee.

          (b) Subject to applicable laws and regulations regarding transactions
in Stock by persons who are deemed insiders, Optionee may elect to have the
withholding tax obligations or, if the Board so determines, any additional tax
obligation with respect to any Option Shares acquired hereunder satisfied by (i)
having the Company withhold Option Shares otherwise deliverable to the
participant with respect to the Option or (ii) delivering to the Company shares
of unrestricted Stock owned by Optionee.

     12. Adjustment of and Changes in Common Stock of the Company. In the event
         --------------------------------------------------------
of a reorganization, recapitalization, change of shares, stock split, spin-off,
stock dividend, reclassification, subdivision or combination of shares, merger,
consolidation, rights offering, or any other change in the corporate structure
or shares of capital stock of the Company, the Board shall make such adjustment,
if any, as it deems appropriate in the number and kind of shares of

                                       3

<PAGE>

Stock subject to the Option or in the option price; provided, however, that no
such adjustment shall give the Optionee any additional benefits under the
Option. Upon the Board's determination of any such adjustments, the terms and
conditions of the Option and of this Agreement shall automatically, without any
further action on the part of any party, be deemed to have been amended to
incorporate such adjustments.

     13. Employment Not Affected. Neither the granting of the Option nor its
         -----------------------
exercise shall be construed as granting Optionee any right with respect to
continuance of employment by the Company. The right of the Company to terminate
at will the Optionee's employment with it at any time (whether by dismissal,
discharge, retirement or otherwise) is specifically reserved by the Company and
acknowledged by Optionee.

     14. Notice. Any notice to the Company provided for in this Agreement shall
         ------
be addressed to it in care of its Secretary at its executive offices at 6600
Wall Street, Mobile, Alabama 36695, and any notice to Optionee shall be
addressed to Optionee at the current address shown on the payroll records of the
Company. Any notice shall be deemed to be duly given if and when properly
addressed and posted by registered or certified mail, postage prepaid.

     15. Incorporation of Plan by Reference. The Option is granted pursuant to
         ----------------------------------
the terms of the Plan, the terms of which are incorporated herein by reference,
and the Option shall in all respects be subject to the terms of the Plan and be
interpreted in accordance with the Plan. The Board shall interpret and construe
the Plan and this instrument, and its interpretations and determinations shall
be conclusive and binding on the parties hereto and any other person claiming an
interest hereunder, with respect to any issue arising hereunder or thereunder.
Terms used herein not otherwise defined shall have the meaning assigned to them
in the Plan.

     16. Governing Law. The validity, construction, interpretation and effect of
         -------------
this instrument shall exclusively be governed by and determined in accordance
with the law of the State of Delaware without regard to principles of conflict
of laws.

                            [signature page follows]

                                       4

<PAGE>

     IN WITNESS WHEREOF, the Company has caused its duly authorized officer to
execute this Non-Qualified Stock Option Agreement, and Optionee has placed his
or her signature hereon, effective as of the Date of Grant.

                                          Computer Programs and Systems, Inc.

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

                                          AGREED TO AND ACCEPTED:

                                          By:
                                              ----------------------------------
                                                           Optionee

                                          --------------------------------------
                                          (Print Name)

                                          --------------------------------------
                                          (Address)

                                          --------------------------------------
                                          (City)     (State)     (Zip)

                                       5

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