<PAGE>
                                                                    EXHIBIT 10.3

                                 PROXYMED, INC.

                              CONVERSION AGREEMENT

         This Conversion Agreement (this "Agreement") made as of this ___ day of
_________, _____ between ProxyMed, Inc., a Florida corporation with offices at
2555 Davie Road, Suite 110, Fort Lauderdale, Florida 33317 (the "Company"), and
the undersigned (the "Holder").

         A.       In June 2000, the Company completed a private placement to
                  accredited investors (the "Placement") through Commonwealth
                  Associates, L.P. ("Commonwealth") pursuant to which it issued
                  shares of Series C 7% Convertible Preferred Stock (the
                  "Preferred Stock"), convertible into shares of the Company's
                  common stock, par value $.001 per share (the "Common Stock").

         B.       The Holder is the owner of shares of the Preferred Stock.

         C.       The Company hereby offers, upon the terms and subject to the
                  conditions set forth in the Confidential Term Sheet dated
                  December 13, 2001 (the "Term Sheet"), to allow holders of the
                  Preferred Stock to convert their shares of Preferred Stock
                  (the "Preferred Shares") on terms different than those
                  contained the Certificate of Designation governing the
                  Preferred Stock (the "Designation") in consideration for the
                  holders' agreement to (i) amend certain provisions of the
                  Designation; (ii) amend certain provisions of the Subscription
                  Agreement dated as of June 15, 2000 (the "Subscription
                  Agreement"); and (iii) convert their Preferred Shares.

         D.       The Holder agrees to amend the Designation and the
                  Subscription Agreement in accordance with the provisions set
                  forth in the Term Sheet as evidenced by the Holder's execution
                  of this Agreement and the Designation and Subscription
                  Amendment Agreement (the "Amendment Agreement") enclosed
                  herewith.

         E.       The Holder desires to convert his/her/its ("his") Preferred
                  Shares for shares of Common Stock (the "Shares") on the terms
                  contained in the Term Sheet.

NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants hereinafter set forth, the parties hereto do hereby agree as follows:
<PAGE>

1.       CONVERSION; REPRESENTATIONS BY AND COVENANTS OF HOLDER.

1.1      Subject to the terms and conditions hereinafter set forth, the Holder
         hereby agrees to convert all of his Preferred Shares for Shares and the
         Company agrees to issue Shares to the Holder subject to the condition
         set forth in the penultimate sentence of this paragraph. The Holder, by
         signing this Agreement, authorizes Commonwealth to deliver his
         Preferred Share certificates, for conversion, to the Company. To the
         extent not held in an account at Commonwealth, the Holder shall deliver
         the certificates to the Company or Commonwealth at the addresses
         specified in the Term Sheet promptly after execution of this Agreement.
         The completion of this offering (the "Offering") is contingent upon
         Holders of not less than 66 2/3% of the outstanding Preferred Shares
         (the "Threshold Amount") executing and delivering this Agreement and
         the Amendment Agreement. The Shares, together with any check in payment
         of fractional shares, will be delivered to the Holder following the
         consummation of the Offering as set forth in Article 3 hereof.

1.2      The Holder recognizes that the acquisition of Shares pursuant to the
         Offering involves a high degree of risk in that (i) the Company has
         incurred substantial losses from operations in prior years and may
         incur losses in the future; (ii) an investment in the Company is highly
         speculative and only investors who can afford the loss of their entire
         investment should consider investing in the Company and the Shares; and
         (iii) Holders will be foregoing significant rights by converting their
         Preferred Shares for Common Stock. The Holder acknowledges and
         understands these and the other risk factors which are more fully set
         forth in the Term Sheet and in the Company's publicly available filings
         (the "SEC Filings") with the United States Securities and Exchange
         Commission (the "SEC") .

1.3      The Holder represents and warrants that he/she/it ("he") is an
         "accredited investor" as such term in defined in Rule 501 of Regulation
         D promulgated under the Securities Act of 1933, as amended (the "Act")
         (which definition is set forth in Appendix A hereto), and that he is
         able to bear the economic risk of an investment in the Shares. The
         Holder further represents and warrants that the information furnished
         herein is accurate and complete in all material respects.

1.4      The Holder acknowledges that he has prior investment experience and
         that he recognizes the highly speculative nature of this investment.

1.5      The Holder acknowledges receipt and careful review of the Term Sheet
         and all other documents furnished in connection with the Offering
         (collectively, the "Offering Documents") and hereby represents that he
         has been furnished by the Company during the course of this transaction
         with all information regarding the Company (including, but not limited
         to, the SEC Filings) which he has requested or desired to know; that he
         has been afforded the opportunity to ask questions of and receive
         answers from duly authorized officers or other representatives of the
         Company concerning the terms and conditions of the Offering, and any
         additional information which he had requested.

1.6      The Holder acknowledges that the Offering may involve tax consequences
         and that the contents of the Term Sheet do not contain tax advice or
         information. The Holder


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<PAGE>

         acknowledges that he must retain his own professional advisors to
         evaluate the tax and other consequences of converting his Preferred
         Shares.

1.7      The Holder acknowledges that the Offering has not been reviewed by the
         SEC because of the Company's representations that this is intended to
         be a nonpublic offering pursuant to Sections 4(2) or 3(b) of the Act.
         The Holder represents that the Shares are being acquired for his own
         account, for investment and not for distribution or resale to others.
         The Holder agrees that he will not sell or otherwise transfer the
         Shares unless they are registered under the Act or unless an exemption
         from such registration is available.

1.8      The Holder consents to the placement of a legend on any certificate or
         other document evidencing the Shares stating that they have not been
         registered under the Act and setting forth or referring to the
         restrictions on transferability and sale thereof, and to the issuance
         of stop transfer instructions with respect thereto.

1.9      If the undersigned Holder is a partnership, corporation, trust or other
         entity, such partnership, corporation, trust or other entity further
         represents and warrants that: (i) it is authorized and otherwise duly
         qualified to acquire and hold the Shares; and (ii) that this Agreement
         and the Amendment Agreement have been duly and validly authorized,
         executed and delivered and constitute the legal, binding and
         enforceable obligations of the undersigned.

1.10     The Holder hereby represents that the address furnished by him at the
         end of this Agreement is the undersigned's principal residence if he is
         an individual or its principal business address if it is a corporation
         or other entity.

1.11     The Holder hereby represents that, except as set forth in the Offering
         Documents, no representations or warranties have been made to the
         Holder by the Company or Commonwealth, or any agent, employee or
         affiliate of the Company or Commonwealth, and in entering into this
         transaction, the Holder is not relying on any information, other than
         that contained in the Offering Documents, the SEC Filings and the
         results of independent investigation by the Holder.

1.12     The Holder represents that his participation in the Offering has not
         been solicited by means of any general solicitation or general
         advertisement.

1.13     The Holder represents that he is the sole record and beneficial owner
         of the Preferred Shares being converted pursuant to this Agreement.

1.14     The Holder agrees that his conversion will not be revocable at any time
         prior to the Termination Date (as defined in Section 3.1 hereof).

2.       REPRESENTATIONS BY THE COMPANY.

2.1      The Company represents and warrants to the Holder that upon
         consummation of the Offering:


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2.1.1    The Company is a corporation duly organized, existing and in good
standing under the laws of the State of Florida and has the corporate power to
conduct the business which it conducts and proposes to conduct.

2.1.2    The execution, delivery and performance of this Agreement and the
Amendment Agreement by the Company will have been duly approved by the Board of
Directors of the Company and all other actions required to authorize and effect
the Offering will have been duly taken and approved.

2.1.3    The Shares have been duly and validly authorized and when issued and
paid for in accordance with the terms hereof, will be duly and validly issued
and fully paid and non-assessable.

2.1.4    The Company has, to the best of its knowledge, obtained, or is in the
process of obtaining, all licenses, permits and other governmental
authorizations necessary to the conduct of its business; such licenses, permits
and other governmental authorizations obtained are in full force and effect; and
the Company is in all material respects complying therewith; except where such
failure to obtain such licenses, permits and other governmental authorizations
necessary to the conduct of its business would not have a material adverse
effect on the Company's business or financial condition.

2.1.5    The Company knows of no pending or threatened legal or governmental
proceedings to which the Company is a party which could materially adversely
affect the business, property, financial condition or operations of the Company
not otherwise disclosed in the SEC Filings.

2.1.6    Other than as set forth in the Term Sheet, the Company is not in
violation of or default under, nor will the execution and delivery of this
Agreement or the Amendment Agreement, the issuance of the Shares, and the
incurrence of the obligations herein and therein set forth and the consummation
of the transactions herein or therein contemplated, result in a violation of, or
constitute a default under, the Company's articles of incorporation (as such
will be amended in accordance with the Term Sheet) or by-laws, any material
obligations, agreement, covenant or condition contained in any bond, debenture,
note or other evidence of indebtedness or in any material contract, indenture,
mortgage, loan agreement, lease, joint venture or other agreement or instrument
to which the Company is a party or by which it or any of its properties may be
bound or any material order, rule, regulation, writ, injunction, or decree of
any government, governmental instrumentality or court, domestic or foreign;
except where such violation or default would not have a material adverse effect
on the Company's business or financial condition.

2.1.7    The financial information contained in the SEC Filings presents fairly
in all material respects the financial condition of the Company as of the dates
and for the periods indicated.


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3.       TERMS OF AGREEMENT.

3.1      This offering will terminate at 5:00 p.m. EST on February 11, 2002 (the
         "Termination Date").

3.2      Pending the issuance of the Shares, the Preferred Shares shall be held
         by the Company or Commonwealth. If the Company does not achieve the
         Threshold Amount on or before the Termination Date, then this Agreement
         shall be void and the Holder's Preferred Shares will be promptly
         returned to him, subject to paragraph 3.4 hereof. If the Threshold
         Amount is achieved, the Designation and the Subscription Agreement will
         be deemed amended, all of the Holder's Preferred Shares will be deemed
         converted and the Shares, together with any check in payment of
         fractional shares, will be delivered to the Holder in accordance with
         the terms of this Agreement.

3.3      The Holder hereby authorizes and directs the Company to deliver
         certificates representing the Shares to be issued to such Holder
         pursuant to this Agreement either (a) to the residential or business
         address indicated on the signature page or (b) directly to the Holder's
         account maintained with Commonwealth, if any.

3.4      The Holder hereby authorizes and directs the Company to return any
         Preferred Shares for unaccepted subscriptions to the same account from
         which such securities were drawn, including any customer account
         maintained with Commonwealth.

3.5      If the Holder is not a United States person, such Holder hereby
         represents that it has satisfied itself as to the full observance of
         the laws of its jurisdiction in connection with any invitation to
         subscribe for the Shares or any use of this Agreement, including (i)
         the legal requirements within its jurisdiction for the acquisition of
         the Shares, (ii) any foreign exchange restrictions applicable to such
         acquisition, (iii) any governmental or other consents that may need to
         be obtained, and (iv) the income tax and other tax consequences, if
         any, that may be relevant to the acquisition, holding, redemption, sale
         or transfer of the Shares. Such Holder's subscription and payment for,
         and his continued beneficial ownership of, the Shares will not violate
         any applicable securities or other laws of the Holder's jurisdiction.

4.       MISCELLANEOUS.

4.1      Any notice or other communication given hereunder shall be deemed
         sufficient if in writing and sent by registered or certified mail,
         return receipt requested, addressed to the Company, at its registered
         office, 2555 Davie Road, Suite 110, Fort Lauderdale, Florida 33317,
         Attention: In-House Counsel, and to the Holder at his address indicated
         on the last page of this Agreement. Notices shall be deemed to have
         been given on the date of mailing, except notices of change of address
         and notices sent from outside the continental United States, which
         shall be deemed to have been given when received.

4.2      This Agreement shall not be changed, modified or amended except by a
         writing signed by the parties to be charged, and this Agreement may not
         be discharged except by performance in accordance with its terms or by
         a writing signed by the party to be charged.


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<PAGE>

4.3      This Agreement shall be binding upon and inure to the benefit of the
         parties hereto and to their respective heirs, legal representatives,
         successors and assigns. This Agreement sets forth the entire agreement
         and understanding between the parties as to the subject matter thereof
         and merges and supersedes all prior discussions, agreements and
         understandings of any and every nature among them.

4.4      Notwithstanding the place where this Agreement may be executed by any
         of the parties hereto, the parties expressly agree that all the terms
         and provisions hereof shall be construed in accordance with and
         governed by the laws of the State of New York without regard to such
         states laws regarding conflicts of laws. The parties hereby agree that
         any dispute which may arise between them arising out of or in
         connection with this Agreement shall be adjudicated before a court
         located in New York City and they hereby submit to the exclusive
         jurisdiction of the courts of the State of New York located in New
         York, New York and of the federal courts in the Southern District of
         New York with respect to any action or legal proceeding commenced by
         any party, and irrevocably waive any objection they now or hereafter
         may have respecting the venue of any such action or proceeding brought
         in such a court or respecting the fact that such court is an
         inconvenient forum, relating to or arising out of this Agreement or any
         acts or omissions relating to the sale of the securities hereunder, and
         consent to the service of process in any such action or legal
         proceeding by means of registered or certified mail, return receipt
         requested, in care of the address set forth below or such other address
         as the undersigned shall furnish in writing to the other.

4.5      This Agreement may be executed in counterparts. Upon the execution and
         delivery of this Agreement and the Amendment Agreement by the Holder,
         this Agreement shall become a binding obligation of the Holder with
         respect to the (i) amendments of the Designation; (ii) amendments to
         the Subscription Agreement; and (iii) conversion of the Preferred
         Shares as herein provided; subject, however, to the right hereby
         reserved to the Company to enter into the same agreements with other
         Holders. By executing this Agreement, the Holder understands that he
         shall be deemed designated a member of the committee referenced in the
         modification provisions of the Designation and the Subscription
         Agreement.

4.6      The holding of any provision of this Agreement to be invalid or
         unenforceable by a court of competent jurisdiction shall not affect any
         other provision of this Agreement, which shall remain in full force and
         effect.

4.7      It is agreed that a waiver by either party of a breach of any provision
         of this Agreement shall not operate, or be construed, as a waiver of
         any subsequent breach by that same party.

4.8      The parties agree to execute and deliver all such further documents,
         agreements and instruments and take such other and further action as
         may be necessary or appropriate to carry out the purposes and intent of
         this Agreement.

5.       BLUE SKY LEGENDS

FLORIDA RESIDENTS:

A HOLDER WHO IS A FLORIDA RESIDENT IS ENTITLED TO RESCIND HIS PURCHASE WITHIN
THREE (3) BUSINESS DAYS AFTER THE DATE OF PURCHASE (WHICH IS THE


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DATE OF TENDER OF CONSIDERATION OR THE DATE THE AVAILABILITY OF THIS PRIVILEGE
IS COMMUNICATED TO SUCH INVESTOR, WHICHEVER OCCURS LATER) WITHOUT ANY FURTHER
LIABILITY TO ANY PERSON. TO ACCOMPLISH SUCH RESCISSION, SUCH HOLDER MUST SEND A
CERTIFIED LETTER OR TELEGRAM TO PROXYMED, INC., 2555 DAVIE ROAD, SUITE 110, FORT
LAUDERDALE, FLORIDA 33317, INDICATING HIS INTENTION TO RESCIND. SUCH LETTER OR
TELEGRAM SHOULD BE SENT OR POSTMARKED PRIOR TO 5:00 P.M. ON THE THIRD (3RD) DAY
FOLLOWING PURCHASE. IF A LETTER IS SENT, IT SHOULD BE SENT BY CERTIFIED MAIL,
RETURN RECEIPT REQUESTED, TO ASSURE THAT IT IS RECEIVED AND ALSO TO EVIDENCE THE
TIME WHEN IT WAS MAILED.

NEW HAMPSHIRE RESIDENTS:

NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENSE
HAS BEEN FILED WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS
EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE
CONSTITUTES A FINDING BY THE DIRECTOR OF THE OFFICE OF SECURITIES REGULATION
THAT ANY DOCUMENT FILED UNDER RSA 421-b IS TRUE, COMPLETE AND NOT MISLEADING.
NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE
FOR A SECURITY OR A TRANSACTION MEANS THAT THE DIRECTOR OF THE OFFICE OR
SECURITIES REGULATION HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS
OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY, OR TRANSACTION.
IT IS UNLAWFUL TO MAKE OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER,
CUSTOMER OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS
PARAGRAPH.

PENNSYLVANIA RESIDENTS:

UNDER PROVISIONS OF THE PENNSYLVANIA SECURITIES ACT OF 1972, EACH INDIVIDUAL WHO
IS A PENNSYLVANIA RESIDENT HAS THE RIGHT TO WITHDRAW HIS OR HER ACCEPTANCE
WITHOUT INCURRING ANY LIABILITY TO THE SELLER, UNDERWRITER (IF ANY) OR ANY OTHER
PERSON, WITHIN TWO BUSINESS DAYS FROM THE DATE OF RECEIPT BY THE ISSUER OF HIS
OR HER WRITTEN BINDING CONTRACT OF PURCHASE OR, IN THE CASE OF A TRANSACTION IN
WHICH THERE IS NO WRITTEN BINDING CONTRACT OR PURCHASE, WITHIN TWO BUSINESS DAYS
AFTER HE OR SHE MAKES THE INITIAL PAYMENT FOR THE SECURITIES BEING OFFERED. TO
ACCOMPLISH THIS WITHDRAWAL A SUBSCRIBER NEED ONLY SEND A LETTER TO THE ISSUER AT
THE ADDRESS SET FORTH IN THE TEXT OF THE CONVERSION AGREEMENT, INDICATING HIS OR
HER INTENTION TO WITHDRAW. SUCH LETTER SHOULD BE SENT AND POSTMARKED PRIOR TO
THE END OF THE AFOREMENTIONED SECOND BUSINESS DAY. IT IS PRUDENT TO SEND SUCH
LETTER BY CERTIFIED MAIL RETURN RECEIPT REQUESTED, TO ENSURE THAT IT IS RECEIVED
AND TO EVIDENCE THE TIME WHEN IT WAS MAILED. IF THE REQUEST IS MADE ORALLY IN
PERSON OR BY TELEPHONE TO THE ISSUER AT THE NUMBER LISTED IN THE TEXT OF THE
CONVERSION AGREEMENT A WRITTEN CONFIRMATION THAT THE REQUEST HAS BEEN RECEIVED
SHOULD BE REQUESTED.


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<PAGE>

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


<TABLE>
<S>                                                          <C>
------------------------------------------                   ------------------------------------------
Signature of Holder                                          Signature of Co-Holder



------------------------------------------                   ------------------------------------------
Name of Holder                                               Name of Co-Holder
[please print]                                               [please print]



------------------------------------------                   ------------------------------------------
Address of Holder                                            Address of Co-Holder



------------------------------------------                   ------------------------------------------
Social Security or Taxpayer                                  Social Security or Taxpayer Identification
Identification Number of Holder                              Number of Co-Holder



------------------------------------------
Holder's Account Number
at Commonwealth Associates (if applicable)



------------------------------------------
Number of Preferred Shares Surrendered
For Conversion



                                                             Subscription Accepted:
                                                             PROXYMED, INC.
                                                             By:
                                                                ---------------------------------------
                                                                Name:
                                                                Title:
</TABLE>


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<PAGE>

                                   APPENDIX A

                        DEFINITION OF ACCREDITED INVESTOR

         The Shares will only be issued to investors who represent in writing in
the Conversion/Exercise Agreement that they are accredited investors, as defined
in Regulation D, Rule 501 under the Act which definition is set forth below:

1.       A natural person whose net worth, or joint net worth with spouse, at
the time of purchase exceeds $1 million (including home, home furnishings, and
automobiles); or

2.       A natural person whose individual gross income exceeded $200,000 or
whose joint income with that person's spouse exceeded $300,000 in each of the
last two years, and who reasonably expects to exceed such income level in the
current year; or

3.       A trust with total assets in excess of $5 million, not formed for the
specific purpose of acquiring the securities offered, whose purchase is directed
by a sophisticated person described in Regulation D; or

4.       A director or executive officer of the Company; or

5.       The investor is an entity, all of the owners of which are accredited
investors; or

6.       (a) bank as defined in Section 3(a)(2) of the Act, or any savings and
loan association or other institution as defined in Section 3(a)(5)(A) of the
Act, (b) any broker or dealer registered pursuant to Section 15 of the
Securities Exchange Act of 1934, (c) an insurance Company as defined in Section
2(13) of the Act, (d) an investment Company registered under the Investment
Company Act of 1940 or a business development Company as defined in Section
2(a)(48) of such Act, (e) a Small Business Investment Company licensed by the
United States Small Business Administration under Section 301(c) or (d) of the
Small Business Investment Act of 1958, (f) an employee benefit plan established
and maintained by a state, its political subdivisions, or any agency or
instrumentality of a state or its political subdivisions, if such plan has total
assets in excess of $5 million, (g) an employee benefit plan within the meaning
of Title I of the Employee Retirement Income Securities Act of 1974, and the
employee benefit plan has assets in excess of $5 million, or the investment
decision is made by a plan fiduciary, as defined in Section 3(21) of such act,
that is either a bank, savings and loan institution, insurance Company, or
registered investment advisor, or, if a self-directed plan, with an investment
decisions made solely by persons that are accredited investors, (h) a private
business development company as defined in Section 202(a)(22) of the Investment
Advisers Act of 1940, or (i) an organization described in Section 501(c)(3) of
the Internal Revenue code, corporation, Massachusetts or similar business trust,
or partnership, not formed for the specific purpose of acquiring the securities
offered, with assets in excess of $5 million.

         A prospective investor will be required to provide such evidence as may
be deemed necessary to substantiate the accuracy of representations. The above
suitability standards are minimum requirements for prospective investors, and
the satisfaction of these standards does not mean that the Shares are a suitable
investment for a prospective investor


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