TRIZETTO GROUP INC, 10-K405, 2000-03-30

TRIZETTO GROUP INC
10-K405, 2000-03-30
COMPUTER PROCESSING & DATA PREPARATION

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

COMMISSION FILE NUMBER 0-27501

THE TRIZETTO GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

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DELAWARE 33-0761159
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
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567 SAN NICOLAS DRIVE, SUITE 360
NEWPORT BEACH, CALIFORNIA 92660
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES AND ZIP CODE)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (949) 719-2200

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: COMMON STOCK, $.001
PAR VALUE
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934,
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes X No ___

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

As of February 29, 2000, 21,185,407 shares of common stock were outstanding and
the aggregate market value of such common stock held by non-affiliates (based
upon the closing price as reported by the Nasdaq National Market) was
approximately $848.4 million.
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FORM 10-K

For the Fiscal Year Ended December 31, 1999

INDEX

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PAGE
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PART I
Item 1 Business.................................................... 2
Item 2 Properties.................................................. 22
Item 3 Legal Proceedings........................................... 22
Item 4 Submission of Matters to a Vote of Security Holders......... 22
PART II
Market for Registrant's Common Equity and Related
Item 5 Stockholder Matters......................................... 23
Item 6 Selected Financial Data..................................... 26
Management's Discussion and Analysis of Financial Condition
Item 7 and Results of Operations................................... 28
Quantitative and Qualitative Disclosures About Market
Item 7A Risk........................................................ 36
Item 8 Financial Statements and Supplementary Data................. 36
Item 9 Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.................................... 36
PART III
Item 10 Directors and Executive Officers of the Registrant.......... 37
Item 11 Executive Compensation...................................... 40
Security Ownership of Certain Beneficial Owners and
Item 12 Management.................................................. 45
Item 13 Certain Relationships and Related Transactions.............. 46
PART IV
Exhibits, Financial Statement Schedules and Reports on Form
Item 14 8-K......................................................... 48
SIGNATURES........................................................... 53
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PART I

THIS REPORT CONTAINS FORWARD-LOOKING STATEMENTS THAT HAVE BEEN MADE
PURSUANT TO THE PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995. THESE STATEMENTS RELATE TO FUTURE EVENTS OR OUR FUTURE FINANCIAL
PERFORMANCE. IN SOME CASES, YOU CAN IDENTIFY FORWARD-LOOKING STATEMENTS BY
TERMINOLOGY SUCH AS "MAY", "WILL", "SHOULD", "FORECASTS", "EXPECTS", "PLANS",
"ANTICIPATES", "BELIEVES", "ESTIMATES", "PREDICTS", "POTENTIAL", OR "CONTINUE"
OR THE NEGATIVE OF SUCH TERMS AND OTHER COMPARABLE TERMINOLOGY. THESE STATEMENTS
ARE ONLY PREDICTIONS. ACTUAL EVENTS OR RESULTS MAY DIFFER MATERIALLY. IN
EVALUATING THESE STATEMENTS, YOU SHOULD SPECIFICALLY CONSIDER VARIOUS FACTORS,
INCLUDING THE RISKS OUTLINED BELOW UNDER THE CAPTION "RISK FACTORS." THESE
FACTORS MAY CAUSE OUR ACTUAL EVENTS TO DIFFER MATERIALLY FROM ANY FORWARD-
LOOKING STATEMENT. WE DO NOT UNDERTAKE TO UPDATE ANY FORWARD-LOOKING STATEMENT.

ITEM 1 -- BUSINESS

COMPANY OVERVIEW

We enable electronic business for the healthcare industry as a software
application services provider and a healthcare Internet portal, supported by our
transformation services unit, which provides professional consulting services.
By combining hosted software applications with the Internet, we provide a
complete technology solution for our customers in the healthcare industry. Our
customers primarily include healthcare provider groups, physician practice
management companies and managed care organizations such as health maintenance
organizations, preferred provider organizations and third party administrators.
By offering our software and services on a hosted basis, we are able to provide
our customers with comprehensive and cost predictable services with guaranteed
service quality, typically through multi-year contracts. By supplying and
managing our customers' information technology environments, we eliminate their
need to manage and support their own computer systems, networks and software,
thus allowing them to concentrate on their primary business.

We are a leading provider of remotely hosted third party packaged and
proprietary software applications and related services for use in the healthcare
industry. Through our Customer Connectivity Centers, we remotely operate and
maintain applications for our customers on most of the widely used computing,
networking and operating platforms. We provide access to our hosted applications
either across the Internet or across traditional networks. Our proprietary
solutions and methods enable our customers to access our hosted applications
using leading internet browsers. We have acquired rights to license and/or
deploy numerous commercially available software applications from a variety of
healthcare software vendors, including Epic Systems, Inc., Medic Computer
Systems, Inc., Medical Manager Corporation, Raintree Systems, Inc.,
InfoMedtrics, Inc., CTR Business Systems, Inc., McKesson HBOC, Inc., Penchart,
and QCSI.

HealthWeb, our branded healthcare business to business Internet portal and
e-Business Applications, is currently being used by providers and a number of
payors, is designed to facilitate the exchange of information and to enable
e-commerce among all constituents of the healthcare industry. HealthWeb is also
designed to integrate and deliver the software applications that we host for our
customers though an easy-to-use common Internet browser interface. We are
promoting our HealthWeb brand in order to establish its reputation as a leading
healthcare e-commerce portal.

HealthWeb is architected to specifically address the requirements of
individual users that we expect will include most types of healthcare
professionals and administrative staff. Currently, providers use HealthWeb for
day to day office administration activities, access to health plans and
communications with patients. Currently, payors use HealthWeb for information
exchange with providers and members. We are working on the development of
additional features and functionality that will be offered in 2000 and deployed
as developed.

Our Transformation Services Group helps our customers become more efficient
in applying and using their information technology. We use our proprietary
methodologies to identify information technology solutions that are suitable for
our customers. In many cases, these solutions include software applications
hosted in our Customer Connectivity Centers as well as our HealthWeb portal and
e-applications. Our Transformation Services Group implements selected solutions
for which we provide ongoing application services and support.

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Our senior management team averages approximately 14 years of healthcare
industry experience. In addition, many members of our board of directors and
management team have been responsible for comprehensive execution of information
technology functions at leading healthcare entities representing millions of
covered-lives and thousands of physicians. Our comprehensive understanding of
healthcare business processes, and our experience in the use and delivery of
information technologies, enables us to deliver reliable complex hosted software
applications and information technology services while maintaining customer
satisfaction.

As of December 31, 1999, we served approximately 129 customers in over 400
sites located throughout the United States. These customers represent over
250,000 healthcare providers and make their services available to over 40
million individuals.

RECENT DEVELOPMENTS

On March 28, 2000, we entered into an Agreement and Plan of Reorganization
with IMS Health Incorporated, a Delaware corporation, under which IMS will merge
with and into us. At the closing, we will issue .4655 shares of our common stock
for each share of outstanding common stock of IMS. On the date of signing, the
transaction was valued at approximately $8.6 billion. Consummation of the merger
is subject to the approval of each company's stockholders as well as various
third parties and federal agencies.

On January 11, 2000, we acquired Healthcare Media Enterprises, Inc., a
software development business which focuses on web design and business to
business portals. The purchase price of approximately $5.8 million consisted of
approximately $1.6 million cash and 87,359 shares of our common stock.

OUR SOLUTIONS

Our solutions are capable of providing our customers with a complete,
professionally managed information technology system that includes end-to-end
desktop and network connections, primary software applications that help run
their day-to-day business, and information access and reporting capabilities to
aid in data analysis and decision support. Our solutions allow our customers to
integrate different applications and technologies, manage risk and control
costs. Our solutions, further enable our customers to take advantage of the high
speed, universal access and ease of use of the Internet. Our products and
services provide our customers with the following benefits:

- RAPID DEPLOYMENT AND FLEXIBILITY. By offering hosted software
applications that are typically already installed in our Customer
Connectivity Center, we are able to rapidly deploy solutions for our
customers. Most competing solutions require customers to purchase and
install complex and costly desktop, application and networking systems,
as well as load and test application software. This conventional approach
can be a highly time-consuming process. Rapid deployment of our products
and services is intended to allow customers to realize very rapid returns
on their information technology expenditures. We offer our customers a
large variety of widely used proprietary and non-proprietary software
applications without bias to any particular vendor's products, allowing
us to configure unique solutions tailored to each customer's needs.

- REASONABLE, PREDICTABLE COSTS. Our hosted software applications and
electronic communication infrastructure services are subscription-based,
and are billed monthly over the course of contracts that are generally
three to five years in length. The amount paid is based on easily
measurable and predictable units of volume such as number of physicians
or number of members. Most competitive software and systems sales require
customers to budget and incur significant capital expenditures to acquire
hardware, operating systems and application software, integration
consulting, communication services and training. In addition, customers
using in-house solutions are often required to purchase separate ongoing
maintenance contracts for all hardware and software, while also incurring
unpredictable costs for equipment repairs and upgrades. In contrast, our
solutions are typically allocated to operating rather than capital
budgets, allowing customers to receive a specified suite of services at a
predetermined monthly cost. Our solutions thereby afford customers
predictable costs that are consistent with their recognition of revenue.

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- RELIABILITY AND SCALABILITY. We operate our Customer Connectivity
Centers on behalf of our customers on a 24 hours a day, seven days a week
basis and we employ an information technology management team and staff
of over 300 people who are experienced in high-volume production
healthcare environments. For many of our customers, the creation and
maintenance of a complete, professionally managed information technology
system is cost prohibitive. Our solutions and approach bring the benefits
enjoyed by the largest healthcare organizations to the remaining majority
of healthcare entities. Our centralized Customer Connectivity Centers
allow us to rapidly expand our capacity as customer demands increase.

- LOWER IMPLEMENTATION RISK. In addition to employing a team experienced
in operating and supporting applications on a day-to-day basis, we employ
approximately 200 professionals who are skilled in implementing,
integrating, transforming and testing software applications using our
proven methods. These methods have been learned and refined from our
extensive experience in systems integration.

- EASE OF COMMUNICATION AND CONNECTIVITY. We engineer desktop, networking
and communication solutions that enable our customers to run modern and
legacy applications from a single desktop device, across a common
networking environment. Many of our customers do not employ technology
professionals experienced in the setup and networking of modern end-user
devices like personal computers, network computers and personal digital
assistants. We maintain a laboratory to continuously engineer and test
third party end-user devices, network servers and application servers,
along with desktop and network software releases, to ensure reliable
access to and connection with required data and applications.

- INTERNET ACCESS. Our customers are continuously connected to our
Customer Connectivity Centers via high-speed, high-bandwidth electronic
communications channels. This enables us to conveniently provide fast
and continuous Internet access to each connected desktop that utilizes
our Internet browser-based HealthWeb portal over that same
communications channel. Because our Customer Connectivity Centers
maintain secure high-speed connections to the Internet, we can offer our
customers access to informational and commercial transactions on a
business-to-business and business-to-person basis.

- PRESERVATION OF EXISTING INVESTMENT IN LEGACY SYSTEMS. Our solutions
allow for the integration of different legacy systems and make such
systems more accessible to more users through common browser-based user
interfaces. Our solutions therefore allow customers to continue, and in
many cases enhance, the use of installed systems rather than replacing
them with costly new systems. This benefit is particularly attractive to
healthcare entities with significant capital already committed to legacy
information technology systems and lack the resources to commit
incremental capital.

- HEALTHCARE AND MANAGED CARE INDUSTRY EXPERTISE. Healthcare software
applications and their associated transactions and business processes
tend to be complex. Our operational management team is highly
experienced in implementing and efficiently operating the information
technology and business functions necessary to allow our customers to be
competitive in today's dynamic healthcare industry.

OUR PRODUCTS AND SERVICES

APPLICATION SERVICES PROVIDER

Our application services represent a subscription-based method for
customers to access all or any of the three required information technology
components (primary software applications, information access and reporting and
electronic communications infrastructure), along with supporting business
services. Our customers choose a combination of our product and service
offerings that best meet their business requirements, technical needs and
pricing requirements, and pay for the delivery of those services on a monthly
basis. Our software applications and information technology services provide our
customers with a simpler alternative as compared to the creation and on-going
operation of an in-house information technology function. Customers may use our
applications and services for all or a portion of their information technology
and related business service needs.

We expect to expand our product and service offerings as we continue to
develop relationships with additional software application vendors and
information technology service partners. The following chart depicts

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our current software applications and services offered on an application
services basis, or in some cases pursuant to a license agreement, classified by
the primary information technology component that is being delivered.

Our licenses for the use of the third party software applications that are
included in the following chart are essential to the technology solutions we
provide for our customers. The material licenses we currently rely upon vary in
duration. Our Medic license is perpetual, subject to prospective termination in
the event of a material breach. Our Medical Manager and Great Plains licenses
are perpetual unless and until terminated by either party with proper notice.
Although the initial three-year term of our Epic license expires on April 30,
2002, the license then becomes automatically renewable for one-year terms. The
Epic license may be prospectively terminated during any renewal term with 150
days notice prior to the end of the renewable term. We believe that the
durational terms of our software licenses are adequate for our current users of
these software applications and that additional licenses can be obtained if
needed.

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CURRENT OFFERINGS

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PRODUCT/VENDOR KEY FUNCTIONS DELIVERED
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ELECTRONIC COMMUNICATIONS INFRASTRUCTURE
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Access Manager A combination of hardware and software that allows the
customer to access and use numerous software applications.
Exchange Manager Provides an interface that effectively translates data from
different software applications and enables them to
communicate electronically.
HealthWeb Enablement Provides the customer with an Internet browser-based overlay
on software applications which gives the customer ease of
use through point and click capabilities.
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PRIMARY APPLICATIONS AND SERVICES
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PROVIDER APPLICATIONS
Enterprise Manager Software application that facilitates appointment
scheduling, patient registration, visitation tracking,
insurance processing, patient bill processing and includes a
financial accounting module.
Epic (various) Multiple software applications related to physician practice
management and financial control, including scheduling,
collection of co-payments, tracking of referrals and
eligibility, billing and collections, medical records,
claims adjudication, accounting and others.
+ Medic A practice management system that provides a solution for
physicians and group practices. It includes software
applications that automate and integrate financial,
administrative, claims processing and electronic medical
records functions.
Medical Manager Fully integrated physician practice management solution
which offers support for financial, administrative and
clinical needs of physician groups and other providers.
Raintree Systems Software application that provides practice management
solutions including appointment scheduling, registration,
accounts receivable, management and reporting. Application
is customizable according to provider's specialty.
PenChart Suite Application tool set provides medium and large ambulatory
care facilities with an electronic patient record, enabling
rapid data entry by clinicians on hand-held wireless tablet
computers, with documentation of all aspects of patient
encounters, including patient visits, lab results, X-rays,
consult notes and prescriptions.
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PROVIDER BUSINESS SERVICES
Billing & Collections Through personnel located in our facilities, we perform
billing and collection functions on an outsourced basis.
Claims Review Through personnel located in our facilities, we reconcile
capitation payments from insurance companies to medical
groups and review claims paid for appropriateness and
contract terms on an outsourced basis.
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PAYOR APPLICATIONS
aQDEN(TM) Software application that facilitates relationship
management between the dental plan, its members, and the
dental providers which manages every line of business in
dental care. Features include member management, claims
processing, referrals and more.
Epic Tapestry Software application that automates the fundamental
operations of managed care by providing the following
capabilities: enrollment, eligibility, membership
management, benefits tracking and inquiry, customer service,
referral authorization, provider credentialing, case
management and others.
HBOC Amisys A solution that addresses the information management needs
of payor- and provider-based organizations that have assumed
the financial risk for delivery of healthcare services. This
application automates the critical business functions
necessary to operate or administer a variety of managed care
products.
HBOC Claimcheck A comprehensive auditing software system that automatically
edits and corrects billing errors to ensure claims are paid
appropriately.
HBOC Code Review An auditing tool which detects, corrects and documents
improper coding of claims by applying the American Medical
Association's code criteria to all physician services.
Health Claims Processing Software application that includes benefit plan
System administration, enrollment and eligibility, provider
contracting, utilization/case management, claims processing,
billing and accounts receivable, and customer service.
MedEVENT(R) System that supports provider or payer initiated medical
management activities including: referral, utilization and
case management, health management program tracking, health
risk assessment, cost savings analysis, time tracking,
quality improvement process, medical review tracking and
production data aggregation and reporting.
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CURRENT OFFERINGS

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HEALTHWEB INTERNET PORTAL

HealthWeb, our healthcare Internet portal and E-Business Applications, is
currently being used by providers and a number of payors. HealthWeb serves as a
gateway for the exchange of healthcare information and services across the
Internet. HealthWeb is designed to enhance single-point desktop access to a
variety of application and information resources required to run a healthcare
entity. HealthWeb is architecturally designed primarily for use by
administrative support personnel who conduct the day-to-day business and
clinical operations of healthcare entities. These personnel represent the vast
majority of employees in healthcare entities.

After contracting with a new customer, members of our Transformation
Services Group install HealthWeb on the user's computer desktop and customize it
per the user's specific requests. The user can choose to have HealthWeb as its
default screen that appears when the computer is turned on or if the user
continues using its own default screen, HealthWeb appears as an icon that will
be activated when the icon is pointed and clicked. Once activated, HealthWeb
provides the user with a single screen view of the software applications and
information needed to perform daily tasks.

When using HealthWeb, the user sees various "point and click" choices on
the screen grouped under specific categories. For example, providers see
categories such as "Services," "Resources," "Facilities" and "Payors." Under
"Services," the provider can click a button labeled "Practice Management System"
which opens software applications such as Epic or Medic, and allows the user to
make appointments, process claims or review other administrative data. Under
"Resources," the provider can click a button labeled "Medical Journals" which
would take the user to an Internet site containing medical information. Under
"Facilities," the provider can click a button labeled "Hospitals" which would
produce a list of the hospitals, including phone numbers or directions, which
can be distributed to a patient. Under "Payors," the user can click a button
that contains the names of insurance carriers. This would link the provider to
the insurance carrier's systems over the Internet, which would allow the
provider to verify eligibility, benefits, referrals, claim status and other
information, as well as messaging with the health plan.

HealthWeb is designed to work with legacy healthcare applications which do
not have "point and click" view screens. We provide our users "point and click"
connection to software applications, whether they operate on new or legacy
platforms, using any standard Internet browser. We believe that the abandonment
of legacy systems will generally not serve the best interests of our customers,
especially in light of significant capital outlays customers have recently made
in addressing the Year 2000 issues. HealthWeb's proprietary enabling technology
to access and connect to these legacy systems allows us to maximize value to our
customers while minimizing risks of business interruption.

HealthWeb also allows customers unlimited Internet access to other
healthcare trading partners such as pharmacy and supply companies, to other
healthcare entities, to online healthcare data and information content services,
to healthcare organizations and associations, to education and training
resources and to individuals.

For those customers who utilize our software applications and information
technology services, HealthWeb is designed to be the primary access method to
receive those services. For customers who do not utilize our applications and
services, HealthWeb is designed to co-exist with their existing software
applications and technology environments.

We plan that the number of offerings available through our HealthWeb
healthcare Internet portal will grow, as we continue to develop relationships
with additional Internet-capable service and content partners.

TRANSFORMATION SERVICES GROUP

Our Transformation Services Group consists of approximately 84 individuals
who are available to communicate with our customers on a daily basis to ensure
that our customers' information technology systems correspond with their
strategic business objectives. Our professional services personnel consult with
our customers from our office or work directly with them at their own
facilities. Our non-recurring engagements may range from several days to many
months. Our services are either billed on a time and materials basis or upon a
fixed rate negotiated for a specific project.

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We hire and develop professional services personnel from across the nation
to provide non-recurring services to our customers in the major population
centers of the United States, as well as to ensure that we have expertise in
each of the major segments of the healthcare industry. We anticipate that the
number of professional services personnel that we employ, and the number of
geographic office locations that we maintain will continue to grow as we expand
our Transformation Services Group.

Since we actively recruit qualified information technology professionals
from the healthcare industry, our professional services personnel provide a
depth of knowledge and experience specifically focused to address our customers'
business and technology needs. The following chart describes the types of
professional services we provide.
TRANSFORMATION SERVICES

TYPE Description
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INFORMATION TECHNOLOGY
ASSESSMENT AND STRATEGY
SERVICES We help our customers effectively use information
technology by analyzing their business strategies,
technical competence, business management
processes and abilities to support existing
information technology. Based upon the results of
our analysis, we help our clients understand their
existing level of information technology
capability and provide direction to help them
achieve competitive advantage by managing their
information and data electronically.
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VIO(SM) -- VIRTUAL
INFORMATION
OFFICER SERVICES We provide executive-level information technology
professionals for our customers who either do not
employ their own information technology management
or wish to supplement it. Drawing upon our
consultants' considerable experience and depth of
knowledge, we provide information technology
management services with a greater breadth of
expertise than our customers can achieve using
their own management resources. These services
include the use of our CIO Workbench(SM) products,
a collection of our proven information technology
management tools and techniques.
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INTEGRATION CONSULTING
SERVICES We help our customers install and implement
software applications and technology products.
Based upon years of project experience, we provide
integration non-recurring services that include
systems planning, analysis, selection, design,
construction, implementation, data conversion,
testing, business process development, training
development and delivery and systems support. This
helps our customers succeed in implementing
difficult systems projects.
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STAFFING SERVICES We provide temporary staffing for customers who
lack qualified information technology personnel.
By utilizing both our own professional services
personnel and a national network of contracted,
technical specialists, we provide access to
specialized technical personnel on both short-term
and long-term basis. Personnel placement services
are also available through a variety of fee
arrangements.
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E-COMMERCE SOLUTIONS
SERVICES We assist our customers in developing, deploying
and maintaining customized e-commerce
applications. Services include systems planning,
analysis, design, construction, implementation,
data conversion, testing, business process
development, training development and delivery and
systems support.

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SALES AND MARKETING

We take a consultative approach to selling our services. Our Transformation
Services Group, consisting of approximately 84 members, is trained in a
proprietary assessment methodology that allows them to quickly and
comprehensively analyze our customers' information technology capabilities and
requirements. In conjunction with their consulting responsibilities, our
Transformation Services Group identifies opportunities to introduce our
customers to the broad range of applications and technology solutions available
to them. In many cases, these will include applications hosted in our Customer
Connectivity Centers as well as HealthWeb and Exchange Manager.

Our 15 person professional sales force, which is led by a veteran
healthcare executive, uses traditional marketing, lead generation and customer
qualification techniques to directly sell our hosted products and services to
prospective and existing customers. This sales force concentrates specifically
on solutions for provider and payor organizations. Our marketing and business
development organization focuses on building our corporate brands, including our
software applications and information technology services and our healthcare
Internet portal. This organization is also responsible for developing and
refining our business strategies. In addition, our marketing and business
development organization is responsible for the following programs:

- LEAD GENERATION PROGRAM. This program identifies and qualifies
prospective customers through seminars, telemarketing, audio and web
casting, direct mail and annual conferences.

- INDUSTRY MARKETING AND BRAND DEVELOPMENT PROGRAM. This program includes
participation in and sponsorship of industry tradeshows and trade media
advertising.

- STRATEGIC BUSINESS ALLIANCES PROGRAM. This program initiates and
develops strategic partnerships to implement co-branding, cooperative
marketing and distribution relationships.

CUSTOMER SERVICE

We believe that a high level of support is necessary to maintain long-term
relationships with our customers. Our service desk staff provides a wide range
of customer support functions. Our customers may contact the service desk via a
toll-free number 24 hours a day, seven days a week. The account manager assigned
to each of our customers is responsible for proactively monitoring customer
satisfaction, exposing customers to additional training and process-improvement
opportunities and coordinating issue resolution. We employ functional and
technical support personnel who work directly with our account management team
and customers to resolve technical, operational and application problems or
questions.

Because we support multiple applications and technology solutions, our
functional and technical support staff are grouped and trained by specific
application and by application type. These focused staff groups have
concentrated expertise that we can deploy as needed to address customer needs.
We cross-train employees to support multiple application solutions to create
economies-of-scale in our support staff. We further leverage the capabilities of
our support staff through the use of sophisticated computer software that keeps
track of solutions to common computer and software-related problems. This allows
our support staff to learn from the experience of other people within the
organization and it reduces the time it takes to solve problems. We have
implemented Remedy, a third party software application for tracking the status,
and subsequent resolution, of problems that have been reported to our help desk.
This allows us to cost-effectively distribute our knowledge base of application
problem resolutions to employees and customers. All changes to computer software
are coordinated centrally and new versions of software, containing updates and
enhancements are released on a regular basis with strict testing and controls.
This ensures that the new software functions correctly in the customer's
environment. As of December 31, 1999, we had approximately 225 employees and
independent contractors providing technical support functions for our customers.

In addition, we provide business services support for our customers in the
areas of claims processing, billing and enrollment, membership services,
provider contracting and provider credential verification services. As of
December 31, 1999, we had approximately 180 employees and independent
contractors providing such support services.

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VENDOR PARTNER RELATIONSHIPS

We maintain relationships with a large and increasing number of software
vendors in the healthcare information technology market. These relationships
range from perpetual, reusable software licenses and contracts to preferred
installer agreements to informal co-marketing arrangements. We enter into
relationships with software vendors in order to be able to offer our customers
the widest possible variety of solutions tailored to their unique information
technology needs. Our relationships with our vendor partners are designed to
provide both parties with numerous mutual benefits.

The benefits for our vendor partners include:

- web-enablement of their products;

- professional installation and operation of their products;

- ease of integration with other third party products and services;

- easier software version control;

- easier add-on product capability;

- lower implementation risk;

- enhanced distribution channels;

- shorter sales cycle;

- lower maintenance and support costs; and

- potentially higher margins.

The benefits for us include:

- access to market leading products and technology solutions;

- ability to focus on service delivery rather than software development;

- co-marketing with industry leading brands;

- enhanced distribution channels; and

- competitive pricing.

We are committed to delivering cost-predictable proven solutions to our
customers. We evaluate and recommend applications or technologies that most
closely match the business requirements, technical needs and price requirements
of our customers. We are capable of hosting the leading commercially available
healthcare applications on a broad range of operating platforms, and we are able
to deploy these applications as required by our customers. Some of our
healthcare vendor partners include:

- Epic Systems, Inc.;

- Medic Computer Systems, Inc.;

- Quality Care Solutions, Inc.;

- Raintree Systems, Inc.;

- CTR Business Systems, Inc.; and

- InfoMedtrics, Inc.

- McKesson HBOC, Inc.

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COMPETITION

The market for healthcare information services is intensely competitive,
rapidly evolving, highly fragmented and subject to rapid technological change.
By using proprietary technologies and methodologies, we integrate and deliver
packaged software applications, Internet connections, electronic communication
infrastructure and information technology consulting services. Our competitors
provide some or all of the services that we provide. Our competitors can be
categorized as follows:

- application services providers, such as USinternetworking, Inc. and
Exodus Communications, Inc.;

- healthcare e-commerce and portal companies, such as Healtheon/WebMD
Corporation and CareInsite, Inc.;

- information technology outsourcing companies, such as Perot Systems
Corporation, Computer Sciences Corporation and Electronic Data Systems
Corporation;

- information technology consulting firms, such as Superior Consultant
Holdings Corporation, First Consulting Group, Inc. and the consulting
divisions of the major accounting firms; and

- healthcare information software vendors selling products, such as IDX
Systems Corporation, McKesson HBOC, Inc., and Cerner Corporation.

Each of these types of companies can be expected to compete with us within
various segments of the healthcare information technology market. Furthermore,
major software information systems companies and other entities, including those
specializing in the healthcare industry that are not presently offering
applications that compete with our products and services, may enter our markets.
In addition, some of our third party software vendors with whom we have
licensing agreements may compete with us from time to time by selling software
on a stand-alone basis.

We believe companies in our industry primarily compete based on
performance, price, software functionality, customer awareness, ease of
implementation and level of service. Although our position in the market as
compared to our competitors is difficult to characterize due principally to the
variety of current and potential competitors and the evolving nature of our
market, we believe that we presently compete favorably with respect to all of
these factors. While our competition comes from many industry segments, we
believe no single segment offers the integrated, single-source solution that we
provide to our customers.

To be competitive, we must continue to enhance our products and services,
as well as our sales, marketing and distribution channels to respond promptly
and effectively to:

- changes in the healthcare industry;

- constantly evolving standards affecting healthcare transactions;

- the challenges of technological innovation and adoption;

- evolving business practices of our customers;

- our competitors' new products and services;

- new products and services developed by our vendor partners and
suppliers; and

- challenges in hiring and retaining information technology professionals.

INTELLECTUAL PROPERTY

Our intellectual property is important to our business. We rely on certain
developed software assets and internal methodologies for performing customer
services. Our Transformation Services Group develops and utilizes information
technology life-cycle methodology and related paper-based and software-based
toolsets to perform customer assessments, planning, design, development,
implementation and support services. We rely on a combination of copyright,
trademark and trade secret laws, confidentiality procedures and contractual
provisions to protect our intellectual property. We have no patented technology.

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Our efforts to protect our intellectual property may not be adequate. Our
competitors may independently develop similar technology or duplicate our
products or services. Unauthorized parties may infringe upon or misappropriate
our products, services or proprietary information. In addition, the laws of some
foreign countries do not protect proprietary rights as well as the laws of the
United States. In the future, litigation may be necessary to enforce our
intellectual property rights or to determine the validity and scope of the
proprietary rights of others. Any such litigation could be time-consuming and
costly.

We could be subject to intellectual property infringement claims as we
expand our product and service offerings and the number of our competitors
increases. Defending against these claims, even if not meritorious, could be
expensive and divert our attention from operating our company. If we become
liable to third parties for infringing upon their intellectual property rights,
we could be required to pay a substantial damage award and be forced to develop
noninfringing technology, obtain a license or cease using the applications that
contain the infringing technology or content. We may be unable to develop
noninfringing technology or content or obtain a license on commercially
reasonable terms, or at all.

We also rely on a variety of technologies that are licensed from third
parties to perform key functions. These third party licenses are an essential
element of our business as an application services provider. These third party
licenses may not be available to us on commercially reasonable terms in the
future. The loss of or inability to maintain any of these licenses could delay
the introduction of software enhancements and other features until equivalent
technology can be licensed or developed. Any such delay could materially
adversely affect our ability to attract and retain customers.

TECHNOLOGY

We operate Customer Connectivity Centers in Englewood, Colorado,
Birmingham, Alabama, and Albany, New York. Each center operates with
state-of-the-art environmental protection systems to maintain high availability
to host systems and wide area network access. Connection to our host application
servers and services is provided using the industry-standard TCP/IP protocol. We
believe this provides the most efficient and cost-effective transport for
information systems services, as well as simplified support and management. Our
network connectivity infrastructure eliminates our customers' need to manage and
support their own computer systems, network and software. We provide active
management for all infrastructure components and server platforms from our
Customer Connectivity Center in Englewood, Colorado.

GOVERNMENT REGULATION

INTERNET REGULATION. There are increasing numbers of laws and regulations
pertaining to the Internet. In addition, a number of legislative and regulatory
proposals are under consideration by federal, state, local and foreign
governments and agencies. Laws or regulations may be adopted with respect to the
Internet relating to liability for information retrieved from or transmitted
over the Internet, on-line content regulation, user privacy, taxation and
quality of products and services. Moreover, it may take years to determine
whether and how existing laws such as those governing issues such as
intellectual property ownership and infringement, privacy, libel, copyright,
trademark, trade secret, obscenity, personal privacy, taxation, regulation of
professional services, regulation of medical devices and the regulation of the
sale of other specified goods and services apply to the Internet and Internet
advertising. The requirement that we comply with any new legislation or
regulation, or any unanticipated application or interpretation of existing laws,
may decrease the growth in the use of the Internet, which could in turn decrease
the demand for our service, increase our cost of doing business or otherwise
have a material adverse effect on our business, results of operations and
financial condition.

INTERNET TAXATION. A number of legislative proposals have been made at the
federal, state and local level, and by foreign governments, that would impose
additional taxes on the sale of goods and services over the Internet and certain
states have taken measures to tax Internet-related activities. Although in
October 1998 Congress placed a three-year moratorium on state and local taxes on
Internet access or on discriminatory taxes on electronic commerce, existing
state or local laws were expressly excepted from this moratorium. Once this
moratorium is lifted, some type of federal and/or state taxes may be imposed
upon Internet commerce. Such legislation or other attempts at regulating
commerce over the Internet may substantially impair the growth of

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commerce on the Internet and, as a result, adversely affect our opportunity to
derive financial benefit from such activities.

PRIVACY CONCERNS. The confidentiality of patient records and the
circumstances under which records may be released for inclusion in the databases
we host are subject to substantial regulation by state governments. These state
laws and regulations govern both the disclosure and the use of confidential
patient medical record information. Although compliance with these laws and
regulations is at present principally the responsibility of the hospital,
physician or other healthcare provider, regulations governing patient
confidentiality rights are evolving rapidly. Additional legislation governing
the dissemination of medical record information has been proposed at both the
state and federal level. This legislation may require holders of this
information to implement security measures that may require substantial
expenditures by us. For example, the proposed Health Information Modernization
and Security Act would establish standards and requirements for the electronic
transmission of health information. There can be no assurance that changes to
state or federal laws will not materially restrict the ability of healthcare
providers to submit information from patient records using our applications.

FEDERAL AND STATE HEALTHCARE REGULATION. Our software applications,
information technology services and healthcare Internet portal are designed to
function within the current healthcare financing and reimbursement system.
During the past several years, the healthcare industry has been subject to
increasing levels of government regulation of, among other things, reimbursement
rates and certain capital expenditures. In addition, proposals to reform the
healthcare system have been considered by Congress. These proposals, if enacted,
may further increase government involvement in healthcare, lower reimbursement
rates and otherwise change the operating environment for our customers. As in
the past, healthcare organizations may react to these proposals and the
uncertainty surrounding such proposals in ways that could result in a reduction
or deferral in the use of our technologies and services. We cannot predict with
any certainty what impact, if any, such proposals or healthcare reforms might
have on our business, financial condition or results of operations.

We perform billing and claims services that are governed by numerous
federal and state civil and criminal laws. The federal government in recent
years has placed increased scrutiny on billing and collection practices of
healthcare providers and related entities and particularly on potential
fraudulent billing practices such as submissions of inflated claims for payment
and upcoding. Violations of the laws regarding billing and coding may lead to
civil monetary penalties, criminal fines, imprisonment or exclusion from
participation in Medicare, Medicaid and other federally funded healthcare
programs for us and our customers. Any of these results could have a material
adverse impact on our business, financial condition or results of operations.

Legislation currently being considered at the federal level could impact
the manner in which we conduct our business. The Health Insurance Portability &
Accountability Act (HIPAA) of 1996 mandates the use of standard transaction
formats, codes sets, identifiers and privacy and security requirements.
Publication of transaction standards is currently scheduled for June 2000 and
compliance will be required by August 2002. Other regulations will be published
in stages after June 2000.

TriZetto must deliver HIPAA-compliant systems and our clients must be
responsible for their overall HIPAA compliance. Our ability to provide
HIPAA-compliant applications to our customers through the ASP model could
relieve customers of significant application remediation requirements. This
potentially represents a significant competitive advantage. Conversely, any
failure to become HIPAA-compliant could negatively impact our competitive
advantage and involve financial and/or criminal penalties.

CONSUMER PROTECTION LAWS. In addition, federal and state consumer
protection laws may apply to us when we bill patients directly for the cost of
physician services provided. Failure to comply with any of these laws or
regulations could result in a loss of licensure, or other fines and penalties.
Any of these results could have a material adverse impact on our business,
financial condition or results of operations.

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RISK FACTORS

BECAUSE WE HAVE A LIMITED OPERATING HISTORY, IT IS DIFFICULT TO EVALUATE OUR
BUSINESS.

We were incorporated in May 1997 and had revenue of $2.5 million for the
period from May 27, 1997 (date of inception) to December 31, 1997, $11.4 million
for the year ended December 31, 1998 and $32.9 million for the year ended
December 31, 1999. Accordingly, we have a limited operating history. Our
stockholders must consider the risks, uncertainties, expenses and difficulties
frequently encountered by companies in their early stages of development,
particularly companies in rapidly evolving markets. These risks and difficulties
include our ability to:

- respond effectively to the offerings of competitive providers of
healthcare information technology and services;

- increase awareness and market penetration of our brand;

- maintain our existing, and develop new, affiliate relationships;

- continue to develop and upgrade our technology; and

- attract, retain and motivate qualified personnel.

We depend on the continued demand for outsourcing of health information
technology services, on the growing use of the Internet for advertising,
commerce and communication and on favorable general economic conditions. We
cannot assure you that our business strategy will be successful or that we will
successfully address these risks or difficulties. If we should fail to
adequately address any of these risks or difficulties, our business would likely
suffer.

WE DEPEND ON OUR SOFTWARE APPLICATION VENDOR RELATIONSHIPS, AND IF OUR SOFTWARE
APPLICATION VENDORS TERMINATE OR MODIFY EXISTING CONTRACTS OR EXPERIENCE
BUSINESS DIFFICULTIES, OR IF WE ARE UNABLE TO ESTABLISH NEW RELATIONSHIPS WITH
ADDITIONAL SOFTWARE APPLICATION VENDORS, IT COULD HARM OUR BUSINESS.

We depend, and will continue to depend, on our licensing and business
relationships with our third party software application vendors. Our success
depends significantly on our ability to maintain our existing relationships with
our vendors and to build new relationships with other vendors in order to
enhance our services and application offerings and remain competitive. Although
most of our licensing agreements are perpetual or automatically renewable, they
are subject to termination in the event that we materially breach such
agreements. We cannot assure you that we will be able to maintain relationships
with our vendors or establish relationships with new vendors. Our customer
satisfaction is also dependent upon the functional uses and reliability of the
software, products and services of our application vendors. We cannot assure you
that the software, products or services of our third party vendors will achieve
market acceptance or commercial success. Accordingly, we cannot assure you that
our existing relationships will result in sustained business partnerships,
successful product or service offerings or the generation of significant
revenues for us.

Our arrangements with third party software application vendors are not
exclusive. We cannot assure you that these third party vendors regard our
relationships with them as important to their own respective businesses and
operations. They may reassess their commitment to us at any time and may choose
to develop or enhance their own competing distribution channels and product
support services. If we do not maintain our existing relationships or if the
economic terms of our business relationships change, we may not be able to
license and offer these services and products on commercially reasonable terms
or at all. Our inability to obtain any of these licenses could delay service
development or timely introduction of new services and divert our resources. Any
such delays could materially adversely affect our business, financial condition
and operating results.

There are a variety of additional reasons why our relationships with our
software application vendors or our ability to establish relationships with
additional vendors may be impaired. Vendors may experience business difficulties
or enter into bankruptcy. Additionally, they may discontinue service and support
of products that we currently offer to our customers. Our software application
vendors may participate in industry consolidation that may impact the products
they offer, their support services and their willingness to do business with us.
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<PAGE> 17

OUR BUSINESS IS CHANGING RAPIDLY, WHICH COULD CAUSE OUR QUARTERLY OPERATING
RESULTS TO VARY AND OUR STOCK PRICE TO FLUCTUATE.

Our quarterly operating results have varied in the past, and we expect that
they will continue to vary in future periods depending on a number of factors,
not all of which are within our control. The variation in our quarterly
operating results could affect the market price of our common stock in a manner
that may be unrelated to our long-term operating performance.

Our services revenue in any quarter depends on our mix of non-recurring and
recurring revenue and our ability to meet project milestones and customer
expectations. To increase our revenue in any operating period, we must penetrate
new markets, expand within existing markets and develop new application and
service offerings required by our customers. Our operating results will be
harmed if we experience delays in developing new applications and services for
our customers or defects in our current applications.

We expect to increase activities and spending in substantially all of our
operational areas. We base our expense levels in part upon our expectations
concerning future revenues, and these expense levels are relatively fixed in the
short-term. If we have lower revenue, we may not be able to reduce our
short-term spending in response. Any shortfall in revenue would have a direct
impact on our results of operations. For these and other reasons, we may not
meet the earnings estimates of securities analysts or investors, and our stock
price could suffer.

WE HAVE A LIMITED NUMBER OF CUSTOMERS AND RELATIVELY FIXED OPERATING COSTS, AND
IF OUR CUSTOMERS TERMINATE OR MODIFY EXISTING CONTRACTS OR EXPERIENCE BUSINESS
DIFFICULTIES, IT COULD ADVERSELY AFFECT OUR EARNINGS.

Our operating expenses are relatively fixed and cannot be reduced on short
notice to compensate for unanticipated contract cancellations or reductions. As
a result, any termination, significant reduction or modification of our business
relationships with any of our significant customers or with a number of smaller
customers could have a material adverse effect on our business, financial
condition and operating results.

As of December 31, 1999, we were providing services to approximately 129
customers. Two of our customers, Qualchoice of Arkansas and Preferred Health
Network of Maryland represent 38% of our total revenue for the month of December
1999.

We believe that our long-term success largely depends upon our ability to
retain our customers and generate recurring revenues from contracts. Although we
typically enter into multi-year customer agreements, a majority of our customers
are able to reduce or cancel their use of our services before the end of the
contract term, subject to monetary penalties. We also provide services to some
customers without long-term contracts.

Many of our contracts are structured so that we generate revenue based on
units of volume, which include the number of physicians, number of patients,
number of members or number of users. If our customers experience business
difficulties and the units of volume decline or if that customer ceases
operations for any reason, we will generate less revenue under these contracts
and our operating results may be materially and adversely impacted.

OUR SUCCESS DEPENDS ON OUR ABILITY TO ATTRACT, RETAIN AND MOTIVATE MANAGEMENT
AND OTHER SKILLED EMPLOYEES.

Our success will depend in large part on the continued services of key
management and skilled personnel. Competition for personnel in the healthcare
information technology market is intense, and there are a limited number of
persons with knowledge of, and experience in, this industry. We do not have
employment agreements with most of our executive officers, so any of these
individuals may terminate his or her employment with us at any time. We
currently maintain a $5,000,000 key man life insurance policy on Jeffrey H.
Margolis, our Chief Executive Officer. The loss of services of one or more of
our key management employees, or the inability to hire additional key management
personnel as needed, could have a material adverse effect on our business,
financial condition and operating results. Although we currently experience
relatively low rates of turnover for our skilled employees, the rate of turnover
may increase in the future. In addition, we expect to further grow our
operations,
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and our needs for additional skilled employees will increase. Our continued
ability to compete effectively in our business depends on our ability to
attract, retain and motivate these individuals.

WE ARE GROWING RAPIDLY, AND OUR INABILITY TO MANAGE THIS GROWTH COULD HARM OUR
BUSINESS.

We have rapidly and significantly expanded our operations and expect to
continue to do so. This growth has placed, and is expected to continue to place,
a significant strain on our managerial, operational, financial, information
systems and other resources. As of December 1999, we had grown to approximately
648 employees and independent contractors, from approximately 75 employees and
independent contractors in December 1997. We expect to hire a significant number
of new employees to support our business. If we are unable to manage our growth
effectively, it could have a material adverse effect on our business, financial
condition and operating results.

OUR ACQUISITION STRATEGY MAY DISRUPT OUR BUSINESS AND REQUIRE ADDITIONAL
FINANCING.

Since inception, we have made numerous acquisitions and expect to continue
to acquire companies as part of our growth strategy. We compete with other
companies to acquire businesses. We expect this competition to continue to
increase, making it more difficult in the future to acquire suitable companies
on favorable terms.

Although we may acquire additional companies, we may be unable to
successfully integrate them in a timely manner. If we are unable to successfully
integrate acquired businesses, we may incur substantial costs and delays or
other operational, technical or financial problems. In addition, the failure to
successfully integrate acquisitions may divert management's attention from our
existing business and may damage our relationships with our key customers and
employees.

To finance future acquisitions, we may issue equity securities that could
be dilutive to our stockholders. We may also incur debt and additional
amortization expenses related to goodwill and other intangible assets in future
acquisitions. The interest expense related to this debt and additional
amortization expense may significantly reduce our profitability and have a
material adverse effect on our business, financial condition and operating
results.

WE EXPECT OUR LOSSES AND FLUCTUATIONS IN OPERATING RESULTS TO CONTINUE, WHICH
MAY ADVERSELY IMPACT OUR BUSINESS AND OUR STOCKHOLDERS.

We have lost money in four of our past 11 fiscal quarters (through December
31, 1999). Although our revenue has grown in recent periods, we cannot assure
you that our revenues will continue at their current level or increase in the
future. We cannot assure you that we will be consistently profitable on either a
quarterly or annual basis.

We currently derive our revenue primarily from providing application
services and non-recurring services. We plan to invest heavily in acquisitions,
infrastructure development, applications development and sales and marketing. As
a result, we expect that we will lose money through the fiscal year ending
December 31, 2000, and we may never achieve or sustain profitability.

IF OUR ABILITY TO EXPAND OUR NETWORK INFRASTRUCTURE IS CONSTRAINED IN ANY WAY,
WE COULD LOSE CUSTOMERS AND DAMAGE OUR OPERATING RESULTS.

We must continue to expand and adapt our network and technology
infrastructure to accommodate additional users, increase transaction volumes and
changing customer requirements. We may not be able to accurately project the
rate or timing of increases, if any, in the use of our application services or
our portal or be able to expand and upgrade our systems and infrastructure to
accommodate such increases. We may be unable to expand or adapt our network
infrastructure to meet additional demand or our customers' changing needs on a
timely basis, at a commercially reasonable cost or at all. Our current
information systems, procedures and controls may not continue to support our
operations while maintaining acceptable overall performance and may hinder our
ability to exploit the market for healthcare applications and services. Service
lapses could cause our users to switch to the services of our competitors.

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WE COULD LOSE CUSTOMERS AND REVENUE IF WE FAIL TO MEET THE PERFORMANCE STANDARDS
IN OUR CONTRACTS.

Many of our service agreements, including our agreement with Caremark Rx,
contain performance standards. If we fail to meet these standards, our customers
could terminate their agreements with us or require that we refund part or all
of the fees charged under those agreements. The termination of any of our
material services agreements and/or associated revenue could have a material
adverse effect on our business, financial condition and operating results.

ANY FAILURE OR INABILITY TO PROTECT OUR TECHNOLOGY AND CONFIDENTIAL INFORMATION
COULD ADVERSELY AFFECT OUR BUSINESS.

Our success depends in part upon proprietary software and other
confidential information. The software and information technology industries
have experienced widespread unauthorized reproduction of software products and
other proprietary technology. We do not own any patents. We rely on a
combination of copyright, trademark and trade secret laws, confidentiality
procedures and contractual provisions to protect our intellectual property.
However, these protections may not be sufficient, and they do not prevent
independent third party development of competitive products or services.

We believe that our proprietary rights do not infringe upon the proprietary
rights of third parties. However, third parties may assert infringement claims
against us in the future, and we could be required to enter into a license
agreement or royalty arrangement with the party asserting the claim. We may also
be required to indemnify customers for claims made against them.

PERFORMANCE OR SECURITY PROBLEMS WITH OUR SYSTEMS COULD DAMAGE OUR BUSINESS.

Our customers' satisfaction and our business could be harmed if our
customers or we experience any system delays, failures or loss of data. We
currently process substantially all our customers' transactions and data at our
facilities in Englewood, Colorado, Albany, New York, and Birmingham, Alabama.
Although we have safeguards for emergencies and we have contracted backup
processing for a portion of our customers' critical functions, we do not have
sufficient backup facilities to process information if either or both of these
facilities are not functioning. The occurrence of a major catastrophic event or
other system failure at any of our facilities could interrupt data processing or
result in the loss of stored data. In addition, we depend on the efficient
operation of Internet connections from customers to our systems. These
connections, in turn, depend on the efficient operation of web browsers,
Internet service providers and Internet backbone service providers, all of which
have had periodic operational problems or experienced outages.

A material security breach could damage our reputation or result in
liability to us. We retain confidential customer and patient information in our
Customer Connectivity Centers. Therefore, it is critical that our facilities and
infrastructure remain secure and that our facilities and infrastructure are
perceived by the marketplace to be secure. Despite the implementation of
security measures, our infrastructure may be vulnerable to physical break-ins,
computer viruses, programming errors, attacks by third parties or similar
disruptive problems.

DEFECTIVE PRODUCTS, ERRORS OR IMPROPER HANDLING OF CUSTOMER DATA MAY CAUSE US TO
LOSE CUSTOMERS OR SUBJECT US TO LIABILITY.

Our customers demand reliability in the delivery of application services
and quality when their transactions are processed. Although we devote
substantial resources to meeting these demands, errors may occur. Errors and
mistakes in the processing of customer data may result in loss of data,
inaccurate information and delays. Such errors could cause us to lose customers
and could result in liability and penalties. Our services agreements generally
contain limitations on liability, and we maintain insurance with coverage limits
of $24 million to protect against claims associated with the use of our products
and services. However, the contractual provisions and insurance coverage may not
provide adequate coverage against all possible claims that may be asserted. In
addition, appropriate insurance may be unavailable in the future at commercially
reasonable rates. A successful claim in excess of our insurance coverage could
have a material adverse effect on our business, financial condition and
operating results. Even unsuccessful claims could result in litigation or
arbitration costs and may divert management's attention from our existing
business.
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WE ARE SUBJECT TO ANTI-TAKEOVER PROVISIONS IN OUR CHARTER AND IN OUR CONTRACTS
THAT COULD DELAY OR PREVENT AN ACQUISITION OF OUR COMPANY, EVEN IF SUCH AN
ACQUISITION WOULD BE BENEFICIAL TO OUR STOCKHOLDERS.

Certain provisions of our certificate of incorporation, our bylaws,
Delaware law and our contracts could delay or prevent a third party from
acquiring us, even if doing so might be beneficial to our stockholders. Some of
these provisions:

- authorize the issuance of preferred stock which can be created and
issued by the board of directors without prior stockholder approval,
commonly referred to as "blank check" preferred stock, with rights senior
to those of common stock;

- prohibit stockholder action by written consent;

- establish a classified board of directors; and

- require advance notice for submitting nominations for election to the
board of directors and for proposing matters that can be acted upon by
stockholders at a meeting.

OUR BUSINESS WILL SUFFER IF COMMERCIAL USERS DO NOT ACCEPT INTERNET SOLUTIONS.

Our success depends in part on the adoption of Internet solutions by
commercial users. Our business could suffer dramatically if Internet solutions
are not accepted or not perceived to be effective. The Internet may not prove to
be a viable commercial marketplace for a number of reasons, including:

- inadequate development of the necessary infrastructure for communication
speed, access and server reliability;

- security and confidentiality concerns;

- lack of development of complementary products, such as high-speed modems
and high-speed communication lines;

- implementation of competing technologies;

- delays in the development or adoption of new standards and protocols
required to handle increased levels of Internet activity; and

- governmental regulation.

We expect Internet use to grow in number of users and volume of traffic.
The Internet infrastructure may be unable to support the demands placed on it by
this continued growth.

Growth in the demand for our application and portal services depends on the
adoption of Internet solutions by healthcare participants, which requires the
acceptance of a new way of conducting business and exchanging information. To
maximize the benefits of our solutions, our customers must be willing to allow
their applications and data to be hosted in our Customer Connectivity Centers.

IF WE FAIL TO MEET THE CHANGING DEMANDS OF TECHNOLOGY, WE MAY NOT CONTINUE TO BE
ABLE TO COMPETE SUCCESSFULLY WITH OTHER PROVIDERS OF SOFTWARE APPLICATIONS AND
HEALTHCARE PORTALS.

The market for our technology and services is highly competitive and
rapidly changing and requires potentially expensive technological advances. We
believe our ability to compete in this market will depend in part upon our
ability to:

- maintain and continue to develop partnerships with vendors;

- enhance our current technology and services;

- respond effectively to technological changes;

- sell additional services to our existing customer base;

- introduce new technologies; and

- meet the increasingly sophisticated needs of our customers.

Competitors may develop products or technologies that are better or more
attractive than those offered by us or that may render our technology and
services obsolete. Many of our current and potential competitors are larger

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and offer broader services and have significantly greater financial, marketing
and other competitive resources than us.

THE INTENSIFYING COMPETITION WE FACE FROM BOTH ESTABLISHED ENTITIES AND NEW
ENTRIES IN THE MARKET MAY ADVERSELY AFFECT OUR REVENUES AND PROFITABILITY.

We face intense competition. Many of our competitors and potential
competitors have significantly greater financial, technical, product
development, marketing and other resources and greater market recognition than
we have. Many of our competitors also have, or may develop or acquire,
substantial installed customer bases in the healthcare industry. As a result,
our competitors may be able to respond more quickly to new or emerging
technologies and changes in customer requirements or to devote greater resources
to the development, promotion and sale of their applications or services than we
can devote.

Our competitors can be categorized as follows:

- application service providers;

- healthcare e-commerce and portal companies;

- information technology outsourcing companies;

- information technology consulting firms; and

- healthcare information software vendors.

Each of these types of companies can be expected to compete with us within
the various segments of the healthcare information technology market.
Furthermore, major software information systems companies and other entities,
including those specializing in the healthcare industry that are not presently
offering applications that compete with our technology and services, may enter
these markets. In addition, some of our third party software vendors with whom
we have licensing agreements, may compete with us from time to time by selling
software on a stand-alone basis.

We cannot assure you that we will be able to compete successfully against
current and future competitors or that competitive pressures faced by us will
not have a material adverse effect on our business, financial condition and
operating results.

CHANGES IN GOVERNMENT REGULATION OF THE HEALTHCARE INDUSTRY COULD ADVERSELY
AFFECT OUR BUSINESS.

During the past several years, the healthcare industry has been subject to
increasing levels of government regulation of, among other things, reimbursement
rates and certain capital expenditures. In addition, proposals to reform the
healthcare system have been considered by Congress. These proposals, if enacted,
may further increase government involvement in healthcare, lower reimbursement
rates and otherwise adversely affect the healthcare industry which could
adversely impact our business.

Healthcare organizations may react to these proposals and the uncertainty
surrounding such proposals in ways that could result in a reduction or deferral
in the use of our technologies and services. We cannot predict with any
certainty what impact, if any, such proposals or healthcare reforms might have
on our business, financial condition and operating results.

The United States Department of Health and Human Services has proposed
regulations regarding electronic signatures and the maintenance and transmission
of computer medical records. These regulations establish certain standards for
electronic record-keeping. We do not know if these regulations will be adopted
in their present form or a different form or at all. However, if these
regulations are adopted, they may require modifications to our computer software
and record-keeping practices. These changes may require us to make substantial
capital investments.

may lead to civil monetary penalties, criminal fines, imprisonment or exclusion
from participation in Medicare, Medicaid and other federally funded healthcare
programs for us and our customers. Any of these results could have a material
adverse effect on our business, financial condition and operating results.

Federal and state consumer protection laws may apply to us when we bill
patients directly for the cost of physician services provided. Failure to comply
with any of these laws or regulations could result in a loss of licensure or
other fines and penalties. Any of these results could have a material adverse
effect on our business, financial condition and operating results.

The confidentiality of patient records is subject to substantial regulation
by state governments. These state laws and regulations govern both the
disclosure and the use of confidential patient medical record information.
Although compliance with these laws and regulations is at present principally
the responsibility of the physician or other healthcare providers, regulations
governing patient confidentiality rights are evolving rapidly. Additional
legislation governing the dissemination of medical record information has been
proposed at both the state and federal level. This legislation may require
holders of medical information to implement security measures and impose
restrictions on the ability of third party processors, like us, to transmit
certain patient data without specific patient consent. Any change in legislation
could restrict healthcare providers from using our services.

SINCE WE OPERATE AN INTERNET-BASED NETWORK, OUR BUSINESS IS SUBJECT TO
GOVERNMENT REGULATION RELATING TO THE INTERNET THAT COULD IMPAIR OUR OPERATIONS.

Because of the increasing use of the Internet as a communication and
commercial medium, the government has adopted and may adopt additional laws and
regulations with respect to the Internet covering such areas as user privacy,
pricing, content, taxation, copyright protection, distribution and
characteristics and quality of production and services. Any of these regulations
could have a material adverse effect on our business, financial condition and
operating results.

PROSPECTIVE CHANGES IN APPLICABLE ACCOUNTING STANDARDS COULD CHANGE THE WAYS WE
RECOGNIZE REVENUE AND COULD ADVERSELY AFFECT OUR FINANCIAL RESULTS.

Prospective changes in the generally accepted accounting standards that
apply to our business, including revenue recognition policies and amortization
of charges associated with goodwill in acquisitions, could alter the way we
recognize revenue and have an adverse effect on our financial results.

WE MAY BE UNABLE TO RAISE ADEQUATE CAPITAL.

We expect to pay for future acquisitions by issuing additional common
stock, and if necessary by using cash. We cannot assure you that we will be able
to raise additional funds through public and private financings. We cannot
assure you that we will be able to raise additional funds at any particular
point in the future or on favorable terms.

THE TRADING PRICES AND VOLUMES OF OUR STOCK HAVE BEEN VOLATILE AND WE EXPECT
THAT THIS VOLATILITY WILL CONTINUE.

Our stock price and trading volumes have been highly volatile since our
initial public offering on October 8, 1999. We expect that this volatility will
continue in the future due to factors such as:

- Actual or anticipated fluctuations in results of operations;

- Changes in or failure to meet securities analysts' expectations;

- Announcements of technological innovations and acquisitions;

- Introduction of new services by us or our competitors;

- Developments with respect to intellectual property rights;

- Conditions and trends in the Internet, technology and healthcare
industries; and

- General market conditions.

21
<PAGE> 23

In addition, the stock market has from time to time experienced significant
price and volume fluctuations that have affected the market prices for the
common stocks of technology companies. These broad market fluctuations may
result in a material decline in the market price of our common stock. In the
past, following periods of volatility in the market price of a particular
company's securities, securities class action litigation has often been brought
against that company. We may become involved in this type of litigation in the
future. Litigation is often expensive and diverts management's attention and
resources, which could have a material adverse effect on our business and
operating results.

FUTURE SALES OF OUR COMMON STOCK MAY DEPRESS THE PRICE OF OUR COMMON STOCK.

As of March 24, 2000, we had approximately 21.2 million shares of common
stock outstanding. Sales of a substantial number of shares of common stock in
the public market could cause the market price of our common stock to decline.
In the near future, 12.3 million shares will become eligible for sale upon the
expiration of our lockup period on April 4, 2000. Certain of our stockholders
have registration rights with respect to the common stock. The exercise of these
registration rights and subsequent sale of the securities could depress the
price of our common stock.

EMPLOYEES

As of December 31, 1999, we had approximately 648 employees. Our employees
are not subject to any collective bargaining agreements, and we generally have
good relations with our employees.

ITEM 2 -- PROPERTIES

FACILITIES

As of December 31, 1999, we leased 15 facilities, all located within the
United States. Our principal executive and corporate offices are located in
Newport Beach, California. Our Customer Connectivity Centers are located in
Englewood, Colorado, Birmingham, Alabama and Albany, New York and our billing
service centers are located in Shelton, Nebraska, Louisville, Kentucky and
Cohoes, New York. We also have offices for our support staff, development and
network operations in Englewood, Colorado, Provo, Utah, Moorestown, New Jersey,
Glastonbury, Connecticut, Irving, Texas, Elmwood, New Jersey, Costa Mesa,
California, Baltimore, Maryland and Albany, New York. We also maintain sales
offices in New York, New York, and Atlanta, Georgia. Our leases have expiration
dates ranging from 2000 to 2006. We believe that our facilities are adequate for
our current operations and that additional leased space can be obtained if
needed.

ITEM 3 -- LEGAL PROCEEDINGS

From time to time, we may be involved in litigation relating to claims
arising out of its operations in the normal course of business. As of the date
of this report, we are not a party to any legal proceedings. The adverse outcome
of which, in management's opinion, individually or in the aggregate, would have
a material adverse effect on our results of operations or financial position.

ITEM 4 -- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of our stockholders during the fourth
quarter of 1999.

22
<PAGE> 24

PART II

ITEM 5 -- MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

We completed our initial public offering of common stock on October 14,
1999. The initial public offering price per share of common stock was $9.00. On
March 24, 2000, the closing price of the common stock on the Nasdaq National
Market was $65.25. Our common stock has been traded on the Nasdaq National
Market under the symbol "TZIX" since October 8, 1999. Prior to that date, there
was no public market for our common stock and, therefore, no quoted market
prices for our common stock are available.

As of March 24, 2000, there were 125 holders of record based on the records
of our Transfer Agent which do not include beneficial owners of common stock
whose shares are held in the names of various securities brokers, dealers and
registered clearing agencies.

The table below establishes the high and low closing sales prices for the
period from October 8, 1999, the date of our initial public offering, through
December 31, 1999, (as reported on the Nasdaq National Market).

<TABLE>
<CAPTION>
QUARTER ENDED HIGH LOW
------------- ---- -----
<S> <C> <C>
December 31, 1999 $48.25 $7.00
</TABLE>

We did not pay any dividends during the year ended December 31, 1999. We
intend to retain all of our earnings to finance the expansion of our business
and for general corporate purposes, including future acquisitions, and do not
anticipate paying any cash dividends on our common stock in the foreseeable
future. The payment of cash dividends by us is restricted by our current bank
credit facilities, which contain restrictions prohibiting us from paying any
cash dividends without the bank's prior approval.

RECENT SALES OF UNREGISTERED SECURITIES

The following is a summary of transactions by us from January 1, 1999
through the date hereof involving sales of our securities that were not
registered with the Securities and Exchange Commission:

- On February 15, 1999, we issued 572,000 shares of our common stock to
former shareholders of Creative Business Solutions, Inc. in exchange for
all of the issued and outstanding shares of capital stock of Creative
Business Solutions. 114,400 of these shares are being held in escrow
through February 15, 2001 to secure the indemnification obligations of
the former shareholders of Creative Business Solutions.

- On February 15, 1999, we issued 83,000 shares of our common stock to
former partners of HealthWeb in exchange for the entire partnership
interest of HealthWeb. 16,600 of these shares are being held in escrow
through February 15, 2001 to secure the indemnification obligations of
the former partners of HealthWeb.

- On April 12, 1999, we sold 1,730,770 shares of our Series B preferred
stock to five accredited investors for an aggregate offering price of
$4,500,000.

- On April 19, 1999, we issued 60,000 shares of our common stock to the
former majority shareholder of Management and Technology Solutions in
exchange for certain assets and liabilities of Management and Technology
Solutions.

- On August 2, 1999, we issued 162,595 shares of our common stock pursuant
to the exercise of warrants held by KFS Management, Inc.

- On November 29, 1999, we issued 549,786 shares of our common stock to
former shareholders of Novalis Corporation in exchange for all of the
issued and outstanding shares of capital stock of Novalis. 366,524 of
these shares are being held in escrow through November 29, 2000 to secure
the indemnification obligations of the former shareholders of Novalis.

- On December 22, 1999, we issued 48,998 shares of our common stock to
former shareholders of Finserv Health Care Systems, Inc. in exchange for
all of the issued and outstanding shares of capital stock of Finserv.
20,000 of these shares are being held in escrow through December 22, 2000
to secure the indemnification obligations of the former shareholders of
Finserv.

23
<PAGE> 25

- On January 11, 2000, we issued 87,359 shares of our common stock to
former shareholders of Healthcare Media Enterprises, Inc. in exchange for
all of the issued and outstanding shares of capital stock of Healthcare
Media Enterprises, Inc. 17,472 of these shares are being held in escrow
through January 11, 2001 to secure the indemnification obligations of the
former shareholders of Healthcare Media Enterprises.

- From January 1, 1999 through December 14, 1999, the date on which our
Registration Statement on Form S-8 was filed with the Securities and
Exchange Commission with respect to our 1998 Stock Option Plan, we
granted options to purchase an aggregate of 2,479,200 shares of common
stock to employees and directors pursuant to our 1998 Stock Option Plan.

- From January 1, 1999 through December 14, 1999, the date on which our
Registration Statement on Form S-8 was filed with the Securities and
Exchange Commission with respect to our 1998 Stock Option Plan, we issued
56,250 shares of common stock upon the exercise of options.

We used any proceeds of the stock sales for working capital and other
general corporate purposes.

We did not employ any underwriters, brokers or finders in connection with
any of the transactions set forth above.

The sales of the securities listed above were deemed to be exempt from
registration under the Securities Act in reliance on Section 4(2) of the
Securities Act, or Regulation D promulgated thereunder, or, with respect to
issuances to employees, Rule 701 promulgated under Section 3(b) of the
Securities Act as transactions by an issuer not involving a public offering or
transactions pursuant to compensatory benefit plans and contracts relating to
compensation as provided under Rule 701. The recipients of securities in each
such transaction represented their intentions to acquire the securities for
investment only and not with a view to or for sale in connection with any
distribution thereof and appropriate legends were affixed to the instruments
representing such securities issued in such transactions. All recipients had
adequate access, through their relationships with us, to information about us.

USE OF PROCEEDS

As of February 29, 2000, we have used a total of approximately $17.0
million of the net proceeds from our initial public offering, of which
approximately $6.4 million was used for working capital and other general
corporate purposes, approximately $7.6 million was used to acquire new
businesses, approximately $1.4 million was used to pay down debt, and
approximately $1.6 million was used for the purchase of property and equipment.

We generally intend to use the remaining proceeds for the following:

- expansion of our sales and marketing activities;

- further development of application services and Internet technologies;

- acquisition of additional software;

- expansion into additional geographic markets;

- enhancements of existing Customer Connectivity Centers; and

- working capital and other general corporate purposes.

We have not yet performed studies or determined how the remaining proceeds
will be used, and thus cannot estimate the amounts to be used for each purpose
discussed above. The amounts and timing of these expenditures will vary
significantly depending on a number of factors, including, but not limited to,
the amount of cash generated by our operations and the market response to the
introduction of any new service offerings.

In addition, we may continue to use a portion of the remaining net proceeds
of this offering to acquire or invest in businesses, products, services or
technologies complementary to our current business, through mergers,
acquisitions, joint ventures or otherwise. Management will continue to retain
broad discretion as to the allocation of the remaining net proceeds.

24
<PAGE> 26

ITEM 6 -- SELECTED FINANCIAL DATA

The following selected consolidated financial data, except as noted herein,
has been taken or derived from our audited consolidated financial statements and
should be read in conjunction with the full consolidated financial statements
included herein. The consolidated financial statements for the year ended
December 31, 1996 and 1997 have not been included herein.

<TABLE>
<CAPTION>
SELECTED CONSOLIDATED FINANCIAL DATA
--------------------------------------------------- CROGHAN & ASSOCIATES, INC.
FOR THE PERIOD ----------------------------
FOR THE YEAR ENDED FROM MAY 27, 1997 NINE MONTHS
--------------------------- (DATE OF INCEPTION) ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, TO DECEMBER 31, SEPTEMBER 30, DECEMBER 31,
1999 1998 1997 1997 1996
------------ ------------ --------------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Revenues:

Recurring revenue......................... $19,448 $ 5,300 $1,191 $ 3,881 $ 5,088
Non-recurring revenue..................... 13,478 6,131 1,328 -- --
------- ------- ------ ------- -------
Total revenues.............................. 32,926 11,431 2,519 3,881 5,088
------- ------- ------ ------- -------
Cost of revenues:
Recurring revenue......................... 17,057 3,967 1,250 3,609 4,068
Non-recurring revenue..................... 9,751 3,490 422 -- --
------- ------- ------ ------- -------
Total cost of revenues...................... 26,808 7,457 1,672 3,609 4,068
------- ------- ------ ------- -------
Gross profit................................ 6,118 3,974 847 272 1,020
------- ------- ------ ------- -------
Operating expenses:
Research and development.................. 2,371 1,083 -- -- --
Selling, general and administrative....... 9,694 2,885 672 2,415 2,142
Amortization of deferred stock
compensation............................ 1,057 22 -- -- --
Write-off of acquired in-process
technology.............................. 1,407 -- -- -- --
------- ------- ------ ------- -------
Total operating expenses................ 14,529 3,990 672 2,415 2,142
------- ------- ------ ------- -------
Income (loss) from operations............... (8,411) (16) 175 (2,143) (1,122)
Interest income............................. 527 210 15 15 21
Interest expense............................ (256) (52) (13) (84) (1,341)
------- ------- ------ ------- -------
Income (loss) before provision for income
taxes and extraordinary item............ (8,140) 142 177 (2,212) (2,442)
Provision for (benefit of) income taxes..... (213) 82 74 -- --
------- ------- ------ ------- -------
Income (loss) before extraordinary item..... (7,927) 60 103 (2,212) (2,442)
Extraordinary item:
Gain on forgiveness of debt............... -- -- -- 1,000 --
------- ------- ------ ------- -------
Net income (loss)......................... $(7,927) $ 60 $ 103 $(1,212) $(2,442)
======= ======= ====== ======= =======
Net income (loss) per share:
Basic..................................... $ (0.85) $ 0.01 $ 0.05
======= ======= ======
Diluted................................... $ (0.85) $ 0.00 $ 0.03
======= ======= ======
Shares used in computing net income (loss)
per share:
Basic..................................... 9,376 4,937 2,065
======= ======= ======
Diluted................................... 9,376 12,783 4,074
======= ======= ======
</TABLE>

<TABLE>
<CAPTION>
THE TRIZETTO GROUP, INC. CROGHAN & INC.
------------------------- ASSOCIATES
DECEMBER 31, YEAR ENDED
------------------------- DECEMBER 31,
1999 1998 1997 1996
------- ------ ------ --------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>

CONSOLIDATED BALANCE SHEET DATA:

Cash, cash equivalents, and short-term investments.......... $24,806 $3,681 $ 773 $ 1,757
Total assets................................................ 68,418 8,720 2,634 11,174
Total long-term debt and capital lease obligations.......... 2,728 645 520 1,400
Mandatorily redeemable convertible preferred stock.......... -- 6,449 -- --
Total stockholders' equity (deficit)........................ 51,296 (741) 563 7,819
</TABLE>

25
<PAGE> 27

ITEM 7 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

OVERVIEW

We are the leading application services provider of remotely hosted third
party and proprietary software applications and related services for use in the
healthcare industry. We host software applications from leading software
vendors, including Epic Systems, Inc., Medic Computer Systems, Inc., Raintree
Systems, Inc., InfoMedtrics, Inc., CTR Business Systems, Inc., and McKesson
HBOC, Inc., by operating and maintaining such applications at our Customer
Connectivity Centers. We also offer HealthWeb, an Internet-browser based
application that serves as a portal for the exchange of information and services
over the Internet. HealthWeb is designed to facilitate the exchange of
information and to enable e-commerce among all constituents of the healthcare
industry. Through our Transformation Services Group, we offer business
operations and applications integration non-recurring services, including
information technology assessment and software implementation design and
development. Our customers primarily consist of provider groups, physician
practice management companies, and managed care organizations such as health
maintenance organizations, preferred provider organizations and third party
administrators.

We were incorporated in Delaware in May 1997. In October 1997, we acquired
all of the outstanding shares of common stock of Margolis Health Enterprises,
Inc., an entity under our common control, in exchange for 3,716,667 shares of
our common stock. In October 1997, we also acquired all of the outstanding
shares of common stock of Croghan & Associates, Inc., an application services
provider, in exchange for 5,800,895 shares of our common stock.

In April 1998, we raised $6.0 million in gross proceeds by issuing
4,195,804 shares of our mandatorily redeemable convertible preferred stock to
two venture capital firms. In October 1998, we raised an additional $500,000 in
gross proceeds by issuing another 349,650 shares of our mandatorily redeemable
convertible preferred stock.

In February 1999, we simultaneously acquired Creative Business Solutions,
Inc., an Internet solutions development company, specializing in the integration
of healthcare information technology and contract programming solutions and
HealthWeb Systems, Ltd., an Internet software and portal development company,
specializing in customized healthcare applications, for a total consideration of
approximately $3.3 million, consisting of approximately $1.4 million of cash,
655,000 shares of our common stock, a two year note of $270,000 bearing interest
at 8%, assumed liabilities of $527,000 and acquisition costs of approximately
$100,000.

The acquisition of Creative Business Solutions and HealthWeb Systems was
accounted for using the purchase method of accounting. The excess of the
purchase price over the fair market value of the assets purchased and
liabilities assumed was $2.6 million, of which $484,000 was allocated to
acquired in-process technology, based upon an independent appraisal, and was
written-off in the year ended December 31, 1999, and $2.1 million was allocated
to goodwill and intangible assets consisting of assembled workforce and Creative
Business Solutions customer lists. The HealthWeb product is designed to solve
problems for hospitals, health plan administrators and insurance providers, such
as office administration activities, connectivity to health plans and
communications with patients. Payers will use HealthWeb for information exchange
with providers and members, such as eligibility, authorizations, referrals,
benefit verification, claims status and patient record information. At the date
of acquisition, we determined the technological feasibility of HealthWeb's
product was not established. Approximately $650,000 in research and development
had been spent up to the date of acquisition in an effort to develop the
technology to produce a commercially viable product. The future research and
development expense associated with the in-process product was estimated to be
approximately $975,000 between July 1999 and the first quarter of 2000. We
expected to introduce the final product by year-end 1999. As of December 31,
1999, the in-process product was completed and released during the fourth
quarter of 1999 at a cost of approximately $950,000. Risks which may affect the
commercialization of this product include new technologies or new products which
may make our product obsolete. At the date of acquisition, the only identifiable
intangible assets acquired were the technology under development, the acquired
workforce and the customer lists.

26
<PAGE> 28

The valuation methodology used in the Creative Business Solutions and
HealthWeb Systems acquisitions included an analysis and estimation of the fair
market value and remaining economic life of both the core and in-process
technologies on a going concern basis. The valuation of the business enterprise
and the acquired in-process technology were developed by discounting projected
future net cash flows at a 35% discount rate; this reflects both the return
requirements of the market and risks inherent in the investment.

In April 1999, we acquired certain assets and liabilities of Management and
Technology Solutions, Inc., a physician services organization, in exchange for
60,000 shares of our common stock. The assets acquired from Management and
Technology Solutions included property and equipment, intellectual property,
consisting of patents, trademarks and licenses, computer software and software
licenses. The liabilities assumed included lease obligations, a note payable for
a software license and other accrued liabilities.

In April 1999, we raised $4.5 million in gross proceeds by issuing
1,730,770 shares of mandatorily redeemable convertible preferred stock to three
venture capital firms.

In May 1999, we entered into an agreement with Caremark Rx, Inc. (formerly
known as MedPartners, Inc.) to provide hosted information technology services to
Caremark Rx with respect to approximately 1,800 physicians while Caremark Rx
terminates its relationships with these groups. In addition, we purchased
hardware, furniture and fixtures and a software license for $2.4 million from
Caremark Rx and paid a software license transfer fee of $280,000. The initial
term of the agreement expired on December 31, 1999. However, Caremark Rx did not
complete the disassociation process by December 31, 1999 and subsequently the
term of the agreement was extended through June 30, 2000. As Caremark Rx
terminates its relationships with each remaining group, we have the opportunity
to enter into a new multi-year contract with the group, specifically tailored to
address its information technology needs. We cannot assure you that, as the
disassociation process continues, we will succeed in doing so.

As of December 31, 1999, 25% of the physicians we initially serviced under
the Caremark Rx agreement had chosen alternative providers of information
technology services. As of December 31, 1999, we had negotiated multi-year
contracts with 14 disassociated groups, representing approximately 1,211
physicians, or 67% of the total physicians available at the time the Caremark Rx
agreement was signed. We are pursuing the opportunity to provide customized
application services to three groups on an ongoing basis, representing
approximately 140 physicians, or 8% of the total physicians available at the
time the Caremark Rx agreement was signed. We will lose revenue if we are not
successful in entering into service contracts directly with these three groups
replacing the information technology services previously provided by Caremark Rx
or if we are requested to provide a reduced scope of services.

In October 1999, we completed our initial public offering of 4,480,000
shares of common stock, including 630,000 shares in connection with the exercise
of underwriters' over-allotment option, at a price of $9.00 per share, that
raised approximately $36.0 million, net of underwriting discounts, commissions
and other offering costs. In addition, in connection with the offering, 350,000
shares of common stock of were sold by a selling stockholder at $9.00 per share,
for which we received no proceeds. Upon the closing of the offering, all of our
mandatorily redeemable convertible preferred stock converted into approximately
6,276,000 shares of common stock.

In November 1999, we acquired all the outstanding shares of Novalis
Corporation. The purchase price of approximately $18.7 million consisted of cash
in the amount of approximately $5.0 million, 549,786 shares of common stock with
a value of $16.37 per share, assumed liabilities of $1.9 million and acquisition
costs of approximately $2.8 million. Of the total purchase price, $923,000 was
allocated to in-process technology and the remainder of the purchase price was
allocated to assets acquired and liabilities assumed.

27
<PAGE> 29

and development had been spent up to the date of the acquisition in an effort to
develop the next releases of the in-process and core technology. The future
research and development expense associated with the in-process and core
technology was estimated to be approximately $490,000. The in-process and core
technology was scheduled to be released by June 30, 2000. The proprietary
software products of Novalis includes systems which manage the following:

- claims processing -- patient profiles, claims processing, provider
contracts and other core data processing and storage functions

- medical management -- allows clients to track utilization management,
patient referrals, authorizations and case management

- provider credentialing management -- allows clients to verify a
physician's credentials

- data warehousing -- produces standardized ad hoc reports that allow
in-depth analysis of a business

In valuing Novalis' developed, in-process and core technologies, we
utilized the relief from royalty method. The relief from royalty method assumes
that the value of the intangible asset is estimated by quantifying the royalties
saved due to our ownership of the software. A revenue stream for the asset was
estimated based on Novalis' total revenue projections over its estimated life.
An appropriate royalty rate is then applied to the forecasted revenue to
estimate the pre-tax income associated with the asset. This income stream was
tax effected and discounted to its present value to estimate the value of the
developed, in-process and core technologies. For purposes of this analysis, we
used 15%, 20% and 25% discount rates for the developed, in-process and core
technologies, respectively. These discount rates are consistent with the risks
inherent in achieving the projected cash flows.

In December 1999, we acquired all of the outstanding shares of Finserv
Health Care Systems, Inc. Finserv is a billing and accounts receivable
management company focusing on the outpatient sector of the healthcare industry.
The purchase price of approximately $4.8 million consisted of cash in the amount
of approximately $1.8 million, 48,998 shares of common stock with a value of
$30.61 per share, assumed liabilities of $1.1 million, and acquisition costs of
approximately $0.4 million.

Our revenues are classified into two categories: recurring or multi-year
contractually based revenue, and revenue generated via non-recurring agreements.
Since inception, the relative percentages of non-recurring revenue and recurring
revenue were 45% and 55%, respectively. For the year ended December 31, 1999,
the relative percentages of recurring revenue and non-recurring revenue were 59%
and 41%, respectively. As we sign additional multi-year application services
contracts, we expect the relative percentage of recurring revenue to continue to
increase.

Recurring revenue is subscription based and billed on a monthly basis over
a contract term of typically three to five years. The amount billed monthly is
based on units of volume, such as numbers of physicians, members or desktops
covered by each contract. Recurring revenue is recognized ratably over the term
of the contract, and cash received in excess of revenue recognized is recorded
as deferred revenue. Non-recurring revenue is billed on either a time and
materials or a fixed fee basis, and is recognized as the non-recurring services
are performed.

Cost of revenues are those costs related to the products and services we
provide to our customers, and costs associated with the operation and
maintenance of our Customer Connectivity Centers. These costs include salaries
and related expenses for consulting personnel, Customer Connectivity Centers
personnel, customer support personnel, application software license fees,
telecommunications and maintenance costs.

Research and development expenses are salaries and related expenses
associated with the development of technologies, applications and services and
include compensation paid to engineering personnel and fees to outside
contractors and consultants.

Selling, general and administrative expenses consist primarily of salaries
and related expenses for sales, account management, marketing, administrative,
finance, legal, human resources and executive personnel, commissions, expenses
for marketing programs and trade shows and fees for professional services. We
anticipate that sales, general and administrative costs will continue to
increase in absolute dollars as we add sales, marketing

28
<PAGE> 30

and administrative personnel, increase our marketing and promotional activities
and incur costs related to being a public company, such as directors' and
officers' insurance premiums and professional fees.

As of December 31, 1999, we had recorded deferred compensation related to
options granted to employees in the total amount of $6.9 million, representing
the difference between the deemed fair value of our common stock, as determined
for accounting purposes, and the exercise price of the options at the date of
grant. Of this amount, $22,000 had been amortized in 1998, and approximately
$1.1 million had been amortized in 1999. Future amortization of expenses arising
out of options granted through the date hereof is estimated to be $1.7 million
for the year ended December 31, 2000, $1.7 million for the year ended December
31, 2001, $1.7 million for the year ended December 31, 2002, and $672,000 for
the year ended December 31, 2003. We amortize the deferred compensation charge
over the vesting period of the underlying option.

29
<PAGE> 31

OPERATING DATA

The following table combines the operating data of Croghan & Associates,
Inc. (now known as TriZetto Application Services, Inc.) for the nine months
ended September 30, 1997 and TriZetto for the period from May 27, 1997 (date of
inception) to December 31, 1997 in order to facilitate management's discussion
of financial results. Certain costs and expenses presented in the statement of
operations data of Croghan & Associates represents allocations and management
estimates. As a result, the statement of operations data presented for Croghan &
Associates is not strictly comparable to those of subsequent periods and may not
be indicative of the results of operations that would have been achieved had the
Croghan & Associates business operated as a non-affiliated entity during such
period.

OPERATING DATA

(IN THOUSANDS)

<TABLE>
<CAPTION>
HISTORICAL
-------------------------------------------------
TRIZETTO
CROGHAN & ASSOCIATES, INC. MAY 27, 1997
NINE MONTHS ENDED (DATE OF INCEPTION)
SEPTEMBER 30, 1997 TO DECEMBER 31, 1997 COMBINED
-------------------------- -------------------- --------
<S> <C> <C> <C>
Revenues:
Recurring revenue......................... $ 3,881 $1,191 $ 5,072
Non-recurring revenue..................... -- 1,328 1,328
------- ------ -------
Total revenues.............................. 3,881 2,519 6,400
------- ------ -------
Cost of revenues:
Recurring revenue......................... 3,609 1,250 4,859
Non-recurring revenue..................... -- 422 422
------- ------ -------
Total cost of revenues...................... 3,609 1,672 5,281
------- ------ -------
Gross profit................................ 272 847 1,119
------- ------ -------
Operating expenses:
Selling, general and administrative....... 2,415 672 3,087
------- ------ -------
Income (loss) from operations............... (2,143) 175 (1,968)
Interest income............................. 15 15 30
Interest expense............................ (84) (13) (97)
------- ------ -------
Income (loss) before provision for income
taxes and extraordinary item........... (2,212) 177 (2,035)
Provision for income taxes.................. -- 74 74
------- ------ -------
Income (loss) before extraordinary item..... (2,212) 103 (2,109)
Extraordinary item:
Gain on forgiveness of debt............... 1,000 -- 1,000
------- ------ -------
Net income (loss)........................... $(1,212) $ 103 $(1,109)
======= ====== =======
</TABLE>

RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 1999 COMPARED TO THE YEAR ENDED DECEMBER 31, 1998.

REVENUES. Total revenues in 1999 increased $21.5 million, or 188%, to
$32.9 million from $11.4 million in 1998. The majority of this increase was due
to the overall growth in both recurring revenue and non-recurring revenue
throughout the year ended December 31, 1999. Additionally, the acquisitions of
Creative Business Solutions and HealthWeb Systems in February 1999 and Novalis
in November 1999 generated approximately $3.5 million and $1.9 million,
respectively of incremental revenue in 1999.

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<PAGE> 32

Recurring revenue in 1999 increased $14.1 million, or 267%, to $19.4
million from $5.3 million in 1998. Incremental revenue generated as a result of
our May 1999 agreement to provide hosted information technology services to
Caremark Rx with respect to approximately 1,800 physicians represented $7.4
million of the increased revenue. Additionally, the acquisition of Novalis in
November 1999 generated approximately $1.2 million of recurring revenue in 1999.

Non-recurring revenue in 1999 increased $7.4 million, or 120%, to $13.5
million from $6.1 million in 1998. This increase reflected an overall increase
in demand for our non-recurring services throughout the year. Additionally, the
acquisition of Novalis in November 1999 generated approximately $700,000 of the
increased revenue.

COST OF REVENUES. Cost of revenues in 1999 increased $19.3 million, or
260%, to $26.8 million from $7.5 million in 1998. This increase was due to the
costs incurred to support the overall expansion of our business. As a percentage
of total revenues, cost of revenues approximated 81% in 1999 and 65% in 1998.

Cost of recurring revenue in 1999 increased $13.1 million, or 330%, to
$17.1 million from $4.0 million in 1998. This increase represented the
incremental expenses for personnel and facilities costs incurred to support the
growing application services provider business, including the incremental costs
associated with the Caremark Rx contract signed in May 1999. Additionally,
incremental infrastructure costs were required in 1999 to support our transition
from our former data center to our new Customer Connectivity Center in
Englewood, Colorado. As a percentage of recurring revenue, cost of recurring
revenue approximated 88% in 1999 and 75% in 1998.

Cost of non-recurring revenue in 1999 increased $6.3 million, or 179%, to
$9.8 million from $3.5 million in 1998. This increase was due to incremental
costs required to support increasing demand for our non-recurring services in
1999. As a percentage of non-recurring revenue, cost of non-recurring revenue
approximated 72% in 1999 and 57% in 1998.

RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses
increased $1.3 million, or 119%, to $2.4 million from $1.1 million in 1998. The
majority of this increase relates to the development of our HealthWeb Business
to Business portal and its e-applications. Expenses relating to system
enhancements from which we derive revenue are not classified as research and
development and are included in cost of revenues. As a percentage of total
revenues, research and development expenses approximated 7% in 1999 and 9% in
1998.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses in 1999 increased $6.8 million, or 236%, to $9.7 million
from $2.9 million in 1998. This increase was due primarily to expansion of the
sales force, staff growth in management and administrative support areas, and
expansion of related office space. As a percentage of total revenues, selling,
general and administrative expenses approximated 29% in 1999 and 25% in 1998.

AMORTIZATION OF DEFERRED STOCK COMPENSATION. Amortization of deferred
stock compensation was $1.1 million in 1999 from $0 in 1998. Deferred stock
compensation represents the allocated portion of the difference between the
deemed fair value of our common stock and the exercise price of stock options
granted by us to employees.

WRITE OFF OF ACQUIRED IN-PROCESS TECHNOLOGY. Our acquisitions of Creative
Business Solutions and HealthWeb Systems in February 1999 resulted in an excess
of purchase price over the fair market value of the assets purchased and
liabilities assumed of $2.5 million. Of this amount, $484,000 was allocated to
acquired in-process technology, based upon an independent appraisal, and was
written-off in 1999. In addition, our acquisition of Novalis Corporation in
November 1999 resulted in an excess purchase price over the fair market value of
the assets purchased and liabilities assumed of $13.6 million. Of this amount,
$923,000 was allocated to acquired in process technology, based on an
independent appraisal and was written off in 1999.

INTEREST INCOME. Interest income in 1999 increased $317,000, or 151%, to
$527,000 from $210,000 in 1998. The increase was due to the incremental cash
invested in 1999 resulting from $4.5 million in gross proceeds we raised in
April 1999, and the full year impact of our investing approximately $6.0 million
in gross proceeds we raised in April 1998. The increase is also a result of the
investment of the net proceeds of $36.0 million raised during the Company's
Initial Public Offering in October 1999.

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<PAGE> 33

INTEREST EXPENSE. Interest expense in 1999 increased $204,000, or 392%, to
$256,000 from $52,000 in 1998. The increase is due to interest paid on notes
payable issued in February 1999 in connection with our purchase of HealthWeb and
Creative Business Solutions, notes payable in connection with our purchase of
software applications licenses, and capital lease obligations for the purchase
of computer and other office equipment.

PROVISION FOR INCOME TAXES. Provision for income tax in 1999 decreased
$295,000 to a tax benefit of $213,000 from a tax expense of $82,000 in 1998. The
benefit was primarily generated from the pre-tax loss, partially offset by the
recording of a valuation allowance on the deferred tax assets.

YEAR ENDED DECEMBER 31, 1998 COMPARED TO THE COMBINED YEAR ENDED DECEMBER 31,
1997

REVENUES. Total revenues in 1998 increased $5.0 million, or 79%, to $11.4
million from $6.4 million in 1997. This increase was primarily due to a full
year of non-recurring service revenue in 1998 as compared to seven months of
non-recurring service revenue in 1997.

Recurring revenue in 1998 increased $200,000, or 4%, to $5.3 million from
$5.1 million in 1997. Non-recurring revenue in 1998 increased $4.8 million, or
362%, to $6.1 million from $1.3 million in 1997. This increase was primarily the
result of the recognition of a full year of non-recurring revenue in 1998, with
approximately seven months of non-recurring revenue recognized in 1997, 1998
non-recurring revenues also reflected the growth and demand for our
non-recurring services from our inception in May 1997 through the year ended
December 31, 1998.

COST OF REVENUES. Cost of revenues in 1998 increased $2.2 million, or 41%,
to $7.5 million from $5.3 million in 1997. As a percentage of total revenues,
cost of revenues approximated 65% in 1998 and 83% in 1997.

Cost of recurring revenue in 1998 decreased $900,000, or 18%, to $4.0
million from $4.9 million in 1997. This decrease was primarily the result of the
elimination of amortization of internally developed software as of the date of
the acquisition of Croghan & Associates on October 1, 1997. As a percentage of
recurring revenue, cost of recurring revenue approximated 75% in 1998 and 96% in
1997.

Cost of non-recurring revenue in 1998 increased $3.1 million, or 727%, to
$3.5 million from $422,000 in 1997. This increase was primarily the result of a
full year of non-recurring operations occurring in 1998 with approximately seven
months of non-recurring operations occurring in 1997. The 1998 increase also
reflected the costs required to support the growing business demands for our
non-recurring services during that period. As a percentage of non-recurring
revenue, cost of non-recurring revenue approximated 57% in 1998 and 32% in 1997.

RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses,
which excluded development expenses that were included in cost of revenues, in
1998 increased to $1.1 million from $0 in 1997. The increase was primarily due
to Year 2000 remediation of our owned software that is used in the provision of
application services to our customers. As a percentage of total revenues,
research and development expense approximated 9% in 1998.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses in 1998 decreased $202,000, or 7%, to $2.9 million from
$3.1 million in 1997. During 1997, Croghan & Associates had recognized
approximately $350,000 of amortization expense related to goodwill. This expense
was eliminated as of the acquisition of Croghan & Associates on October 1, 1997.
As a percentage of total revenues, selling, general and administrative expenses
approximated 25% in 1998 and 48% in 1997.

AMORTIZATION OF DEFERRED STOCK COMPENSATION. Amortization of deferred
stock compensation increased $22,000 in 1998 from $0 in 1997. This amount
represents the allocated portion of the difference between the deemed fair value
of our common stock and the exercise price of stock options granted by us to
employees.

INTEREST INCOME. Interest income in 1998 increased $180,000, to $210,000
from $30,000 in 1997. The increase was due to incremental cash available for
investments resulting from approximately $6,000,000 in gross proceeds raised in
the April 1998 private financing.

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<PAGE> 34

INTEREST EXPENSE. Interest expense in 1998 decreased $45,000, or 46%, to
$52,000 from $97,000 in 1997. The decrease was due to the forgiveness of $1.0
million of debt in 1997.

PROVISION FOR INCOME TAXES. Provision for income tax in 1998 increased
$8,000, or 11%, to $82,000 from $74,000 in 1997. The increase was primarily due
to an increase in tax deductions for book purposes in 1998 not recognizable for
tax purposes.

LIQUIDITY AND CAPITAL RESOURCES

Since inception we have financed our operations primarily through a
combination of cash from operations, private financings and an initial public
offering of our common stock. As of December 31, 1999 we had approximately $26.0
million of cash, cash equivalents, short-term investments and long-term
investments.

Cash used in operating activities in 1999 was $3.0 million. Cash used
during this period was primarily attributable to net losses of $7.9 million,
which was offset in part by depreciation and amortization, amortization of
deferred stock compensation, and write off of in-process technology. These
losses were principally related to increased research and development expenses
and sales, general and administrative expenses. In addition, the losses were
generated by the expansion of our infrastructure to support growing demand of
our recurring line of business.

The increase in cash used in investing activities in the 12 months ended
December 31, 1999 was primarily the result of our purchase of $3.2 million in
property and equipment and software licenses; our purchase of $7.2 million in
short-term and long-term equity investments; our acquisition of $2.6 million of
hardware, furniture and fixtures and software licenses from Caremark Rx in May
1999; the $1.3 million cash portion (net of cash acquired) of our acquisition of
HealthWeb and Creative Business Solutions in February 1999; the $4.3 million
cash portion (net of cash acquired) of our acquisition of Novalis in November
1999; and the $1.8 million cash portion (net of cash acquired) of our
acquisition of Finserv in December 1999.

The increase in cash provided by financing activities in the 12 months
ended December 1999 was primarily the result of the net proceeds of $36.0
million raised in our October 1999 initial public offering, in addition to the
gross proceeds raised in our April 1999 private financing of $4.5 million. The
increase in cash from these proceeds was reduced by payments we made to
eliminate the line of credit assumed with the Creative Business Solutions
acquisition, as well as principal payments on notes payable and capital lease
obligations.

In March 1999, we entered into a revolving line of credit agreement with a
financial institution. In October 1999, we entered into a subsequent agreement
which increased the amount available under the line of credit. The total amount
available for borrowings under the line of credit is $3.0 million and expires in
November 2000. Borrowings under the line of credit bear interest at the bank's
prime rate plus 0.5% (9.0% as of December 31, 1999). Interest is payable monthly
as it accrues. The credit agreement contains certain covenants that we must
adhere to during the term of the agreement, including restrictions on the
payment of dividends. As of December 31, 1999, there were no outstanding
borrowings on the line of credit.

In December 1999, we entered into a line of credit with a financial
institution. This line of credit was specifically established to finance
computer equipment purchases. The line of credit has a total capacity of $2.0
million and expires in December 2000. Borrowings under the lease line of credit
at December 31, 1999 totaled approximately $973,000, and are collateralized by
substantially all of our assets.

We believe existing cash balances, cash generated from operations and
future borrowings under our line of credit will be sufficient to meet our
working capital and capital requirements for at least the next 12 months.

IMPACT OF THE YEAR 2000

We established and implemented a program to address the possibility of
computer failure upon entering the year 2000 (Year 2000). The program
encompassed the entire company and all aspects of Year 2000 compliance including
our internal information technology systems, non-information technology systems,
internally developed software, licensed software developed by third parties,
third party network infrastructure providers by which we gain access to the
internet, key suppliers, and development of contingency plans and year end
support plans. All

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<PAGE> 35

phases of the program were completed by the end of 1999. The total costs of
these efforts incurred through December 31, 1999 were approximately $650,000.

To date, we have not experienced any major system failures or other adverse
consequences due to Year 2000 noncompliance. While the possibility still exists
for future computer failures, internally or among our customers and suppliers,
we do not expect that these developments, should they occur, would have a
material adverse impact on our financial position, results of operations, or
cash flows.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, ("SFAS 133"), Accounting for Derivative
Instruments and Hedging activities. SFAS 133 establishes methods of accounting
and reporting for derivative instruments and hedging activities related to those
instruments as well as other hedging activities, and is effective for all fiscal
quarters for all fiscal years beginning after June 15, 2000, as amended by SFAS
137. It requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those instruments
at fair value. To date, we have not engaged in derivative and hedging
activities.

In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin No. 101 ("SAB 101"), Revenue Recognition, which
outlines the basic criteria that must be met to recognize revenue and provides
guidance for presentation of revenue and for disclosure related to revenue
recognition policies in financial statements filed with the SEC. We believe that
adopting SAB 101 will not have a material impact on our financial position or
results of operations.

ITEM 7A -- QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk represents the risk of loss that may impact our financial
position, operating results or cash flows due to adverse changes in financial
and commodity market prices and rates. We are exposed to market risk due to
changes in United States interest rates. This exposure is directly related to
our normal operating and funding activities. Historically and as of December 31,
1999, we have not used derivative instruments or engaged in hedging activities.

The interest payable on our $3.0 million credit facility is variable, based
on the prime rate, and, therefore, affected by changes in market interest rates.
Although as of December 31, 1999, the amount outstanding on our credit facility
was zero, letters of credit approximating $319,000 had been written against the
credit facility. The line of credit expires in November 2000. Changes in
interest rates have no impact on our other debt as all of our other notes are at
fixed interest rates between 8% and 10%. We manage interest rate risk by
investing excess funds in cash equivalents and short-term investments bearing
variable interest rates, which are tied to various market indices. As a result,
we do not believe that near-term changes in interest rates will result in a
material effect on our future earnings, fair values or cash flows.

ITEM 8 -- FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements and supplementary data required by this Item 8 are
set forth at the pages indicated at Item 14(a)(1).

ITEM 9 -- CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

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PART III

ITEM 10 -- DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

JEFFREY H. MARGOLIS, 36, co-founded TriZetto and has served as our Chief
Executive Officer, President and Director since inception. In August 1999, Mr.
Margolis was named Chairman of the Board. From July 1994 to February 1997, Mr.
Margolis served as Senior Vice President and Chief Information Officer of FHP
International Corporation, a managed care organization. From November 1992 to
June 1994, Mr. Margolis served as Vice President and Chief Information Officer
of TakeCare, Inc., a managed care organization. From September 1989 to October
1992, Mr. Margolis held various executive positions, including Vice President
and Chief Operating Officer of Comprecare, a managed care organization. From
June 1984 to September 1989, Mr. Margolis served in various positions with
Andersen Consulting, including his final position as Manager, Healthcare
Consulting. Mr. Margolis received his B.S. degree in Business Administration --
Management Information Systems from the University of Illinois at
Urbana-Champaign in 1984. Mr. Margolis earned his State of Illinois Certified
Public Accountant certification in 1984 and his State of Colorado Certified
Public Accountant certification in 1988.

DONALD J. LOTHROP, 40, has been a director since April 1998. Mr. Lothrop
has been a General Partner of Delphi Management Partners II, L.P. since July
1994, a General Partner of Delphi Management Partners III, L.L.C. since March
1995 and a General Partner of Delphi Management Partners IV, L.L.C. since
October 1997. From January 1991 to June 1994, Mr. Lothrop was a Partner of
Marquette Venture Partners, a venture capital firm, where he focused on the
healthcare area. From 1989 to 1990, he worked at Bain & Company, Inc., a
management consulting firm. Mr. Lothrop received his B.S. degree from
Pennsylvania State University in 1981 and his M.B.A. from Harvard Business
School in 1989.

PETER D. MANN, 32, has been a director since April 1998. Mr. Mann joined
Fidelity Ventures, the venture capital arm of Fidelity Investments in January
1994. Mr. Mann is currently a Vice President of Fidelity Ventures and he focuses
on investment opportunities in business services. Mr. Mann has been a Vice
President of Fidelity Capital Associates, Inc., the general partner of Fidelity
Venture Limited, since July 1998. Mr. Mann received his B.S. degree in Business
Administration from Bucknell University in 1989 and his M.B.A. degree from
Northeastern University in 1993.

PAUL F. LEFORT, 58, has been a director since April 1999. From October
1995, until he retired in January 2000, Mr. LeFort served as the Chief
Information Officer for United HealthCare Corporation, a health and well being
company. Mr. LeFort is currently performing consulting services to United
HealthCare Corporation. From November 1994 to October 1995, Mr. LeFort was the
Senior Vice President and Chief Information Officer for The MetraHealth
Companies, Inc., jointly owned by Travelers Insurance Company and Metropolitan
Life Insurance Company. From 1975 to 1994, Mr. LeFort served as a senior partner
at Deloitte & Touche Management Consulting for Health Care Information Systems.
Mr. LeFort received his B.S. degree in Physics/ Economics from Boston College in
1962.

WILLIAM E. FISHER, 53, has been a director since March 1999. Mr. Fisher has
served as Chairman of Transaction Systems Architects, Inc. since founding that
company in November 1993. Mr. Fisher was employed by Applied Communications,
Inc., the predecessor to Transaction Systems, from March 1987 to November 1993.
Prior to March 1987, Mr. Fisher was President of First Data Resources,
Government Services Division. Mr. Fisher is on the board of directors of two
public companies, Hypercom Corporation and West Teleservices, Inc. Mr. Fisher
received his B.S. degree from Indiana State University and his M.B.A. from the
University of Nebraska.

SHAWN P. BOWEN, 34, joined us in July 1997 as our Vice President, Desktop &
Network Services. Since June 1999, Mr. Bowen has served as Vice President and
Chief Technical Officer, Connectivity Services Group. Mr. Bowen served as
Director of Desktop Strategy for FHP Healthcare/PacifiCare, a managed care
organization from July 1994 to June 1997. Prior to July 1994, Mr. Bowen held
various information technology management positions at TakeCare, Inc., a managed
care organization, Comprecare, Inc., a managed care organization, and a
consulting position at Andersen Consulting. Mr. Bowen received his B.S. degree
in Business Administration and Management Information Systems from Colorado
State University in 1987.

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<PAGE> 37

LAWRENCE BRIDGE, 39, joined us in November 1999 as our Senior Vice
President, Payor ASP Services. From July 1997 to November 1999, Mr. Bridge
served as President of Novalis Services Corporation, an application services
provider for managed-care and provider-based organizations, which we acquired in
November 1999. From February 1997 to July 1997, Mr. Bridge served as a Regional
Vice President for PacifiCare, a managed care organization. From June 1996 to
February 1997, Mr. Bridge served as a Group President for FHP Healthcare, a
managed care organization. From July 1994 to June 1996, Mr. Bridge served as
President of FHP of Utah, a managed care organization. Mr. Bridge received his
Masters degree in B.A. in 1985 and his B.S. degree in Finance and Marketing in
1982, both from the University of Utah.

DEBRA A. BRIGHTON, 45, joined us in January 1998 as our Vice President of
Applications Development. In December 1999, Ms. Brighton title was changed to
Vice President, Applications. From May 1997 to December 1997, Ms. Brighton
served as a consultant at Andersen Consulting. From July 1994 to May 1997, Ms.
Brighton served as Associate Vice President, Information Services for
PacifiCare, a managed care organization. Prior to July 1994, Ms. Brighton held
various information technology management positions at TakeCare, Inc., a managed
care organization, United HealthCare Corporation, a health and well being
company, Lincoln National Employee Benefits, an insurance company, and CyCare
Systems, Inc., a practice management software vendor.

HARVEY GARTE, 50, joined us in June 1999 as Vice President, Corporate
Development. In October 1999, Mr. Garte was named as our Vice President,
Corporate Development and Investor Relations. From July 1996 to the present, Mr.
Garte has served as President of Garte & Associates, Inc., an investment banking
firm. From November 1994 to July 1996, Mr. Garte served as President of Garte
Torre Global Capital Markets, an investment banking firm. From 1983 to 1994, Mr.
Garte served as President of The Garte Company, Inc., an investment banking
firm. Mr. Garte earned his B.A. degree in Economics from Adelphi University in
1971, and his M.B.A. from Lehigh University in 1973.

LU KABIR, 43, joined us in June 1999 as our Vice President, Marketing and
Business Development. In August 1999, Mr. Kabir was named as our Senior Vice
President, Marketing and Business Development. From July 1997 to January 1999,
Mr. Kabir served as Vice President, Global Business Development for Crossworlds
Software, Inc., an enterprise applications integration software company. From
November 1991 to July 1997, Mr. Kabir served in various executive positions in
marketing and business development for Oracle Corporation's New Media and
Technologies, including Vice President of Worldwide Sales, Services and Business
Development for Oracle-Network Computers, Inc. (now known as Liberate
Technologies, Inc.), a majority-owned subsidiary of Oracle Corporation. Mr.
Kabir earned his Bachelor of Commerce degree from the University of Dhaka,
Bangladesh in 1975 and earned his M.B.A. degree from Sam Houston State
University, Texas in 1977.

D. BRIAN KARR, 33, joined us in August 1997 as Director of Finance and was
our Chief Financial Officer until May 1999. Mr. Karr was named as our Vice
President of Finance in August 1999. Mr. Karr served as our Director of Finance
from May 1999 to August 1999. Mr. Karr has served as our Treasurer since May
1999. Mr. Karr served as Director of Finance for Information Services for
PacifiCare Health Systems, Inc., a managed care organization, from February 1997
to July 1997. Mr. Karr served as Director of Finance for Information Systems for
FHP International Corporation, a managed care organization from October 1994 to
February 1997. Prior to October 1994, Mr. Karr held various management positions
in finance for TakeCare, Inc., a managed care organization, and Ernst & Young,
LLP. Mr. Karr received his B.S. degree in accounting from Biola University in
1989. Mr. Karr received his State of California Certified Public Accountant
Certification in 1992.

KERRY M. KEARNS, 50, joined us in January 1999 as our Senior Vice
President, Core Solutions. In December 1999, Mr. Kearns title was changed to
Senior Vice President, ASP Providers. From March 1996 to December 1998, Mr.
Kearns served as a Senior Manager at Andersen Consulting. From March 1991 to
February 1996, Mr. Kearns served as Vice President and General Manager of
Medaphis Physician Services Corporation, a physician practice management
services company. Mr. Kearns received his B.S. degree from University of
California at Davis in Biological Sciences and Chemistry in 1971 and earned his
M.S. degree in Computer Science from the University of Nevada at Reno in 1989.

GAIL H. KNOPF, 53, joined us in April 1999 and has served as our Vice
President of e-Commerce from June 1999 to December 1999. In January 2000, Ms.
Knopf was promoted to Senior Vice President, e-Business. From April 1997 to
March 1999, Ms. Knopf served as Executive Vice President, Chief Information
Officer and

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<PAGE> 38

a Director of Management and Technology Solutions, Inc., a physician services
provider. From 1993 to 1997, Ms. Knopf served as Vice President and Chief
Information Officer of Humana, Inc., a managed care organization. From 1969 to
1993, Ms. Knopf held various positions with Humana, both in the managed care and
the hospital divisions, including Vice President of Systems Development. Ms.
Knopf earned her B.A. degree in Mathematics from Vanderbilt University in 1968.

CHRISTINE A. MILLER, 35, joined us in January 2000 as our Vice President,
Legal Affairs and Assistant Secretary. From March 1997 to January 2000, Ms.
Miller was a corporate associate with Stradling Yocca Carlson & Rauth, our
outside counsel. From October 1995 to February 1997, Ms. Miller was a corporate
associate with Keesal, Young & Logan. In Spring 1995, Ms. Miller completed an
internship with the Securities and Exchange Commission. Ms. Miller received her
B.S. in Business Administration in May 1987 and her Juris Doctorate in May 1995,
both from the University of Southern California. Ms. Miller is admitted to
practice law in the state of California and is a member of various bar
associations.

DANIEL J. SPIREK, 33, joined us in May 1997 as our Vice President,
Supplemental Management Services. From June 1999 to January 2000, Mr. Spirek
served as our Senior Vice President, Transformation Services Group (now known as
Transformation Services). In February 2000, Mr. Spirek was promoted to Executive
Vice President, Transformation Services. From July 1994 to May 1997, Mr. Spirek
served as Vice President, Information Services for FHP/ PacifiCare, a managed
care organization. Prior to July 1994, Mr. Spirek held various information
technology management positions at TakeCare, Inc., a managed care organization,
Comprecare, Inc., a managed care organization, and a consulting position at
Andersen Consulting. Mr. Spirek received his B.S. degree in Information
Management Systems from the University of Colorado in 1988.

MICHAEL J. SUNDERLAND, 45, joined us as our Vice President of Finance,
Chief Financial Officer and Secretary in May 1999. In August 1999, Mr.
Sunderland was named as our Senior Vice President of Finance. From May 1998 to
April 1999, Mr. Sunderland was an independent healthcare consultant. From March
1996 to May 1998, Mr. Sunderland served as the Vice President and Chief
Financial Officer of Health Net, a California subsidiary of Foundation Health
Systems, Inc., a managed care organization. From April 1994 to March 1996, Mr.
Sunderland was the Chief Financial Officer of Diagnostic Imaging Systems, Inc.,
a publicly held medical imaging company. Prior to 1994, Mr. Sunderland held
various executive and management positions in finance for Paragon Ambulatory
Surgery, Inc., Care Enterprises, Inc., Shamrock Investments, American Medical
International, Inc. and Coopers & Lybrand. Mr. Sunderland earned his B.S. degree
in Accounting from Loyola Marymount University in 1977. Mr. Sunderland earned
his State of California Certified Public Accountant certification in 1980.

There are no family relationships between any director, executive officer
or person nominated or chosen to be a director or executive officer.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires our directors and executive officers, and persons who
own more than 10% of a registered class of our equity securities, to file
reports of ownership of, and transactions in, our securities with the Securities
and Exchange Commission. Such directors, executive officers and 10% stockholders
are also required to furnish us with copies of all Section 16(a) forms they
file.

Based solely upon our review of the copies of Forms 3, 4 and 5 and
amendments thereto furnished to us, or written representations that no annual
Form 5 reports were required, we believe that all filing requirements under
Section 16(a) of the Exchange Act applicable to our directors, officers and any
persons holding 10% or more of our common stock were made with respect to our
fiscal year ended December 31, 1999.

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ITEM 11 -- EXECUTIVE COMPENSATION

The following table sets forth compensation earned during the two fiscal
years ended December 31, 1998 and 1999 by our Chief Executive Officer, and our
four other most highly compensated executive officers who were serving as
executive officers at December 31, 1999 and whose total salary and bonus during
such year exceeded $100,000 (collectively, the "Named Executive Officers").
Although the table does not reflect certain personal benefits, which in the
aggregate are less than the lower of $50,000 or 10% of each Named Executive
Officer's annual salary and bonus, Mr. Margolis' compensation includes $26,625
of loan forgiveness in 1999.

<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
-------------------- UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS
- --------------------------- ---- -------- -------- ------------
<S> <C> <C> <C> <C>
Jeffrey H. Margolis........................... 1999 $242,625 $175,000 --
Chairman of the Board, Chief 1998 $179,324 $100,000 300,000
Executive Officer and President
Daniel J. Spirek.............................. 1999 $191,826 $105,000 --
Executive Vice President, 1998 $160,417 $101,000 100,000
Transformation Services
Michael J. Sunderland......................... 1999 $126,010 $ 90,000 130,000
Senior Vice President of Finance, 1998 -- -- --
Chief Financial Officer and Secretary
Kerry M. Kearns............................... 1999 $150,000 $ 20,000 170,000
Senior Vice President, ASP Providers 1998 -- -- --
Shawn P. Bowen................................ 1999 $127,952 $ 40,000 --
Vice President and Chief Technical 1998 $110,000 $ 20,000 12,500
Officer, Connectivity Services Group
</TABLE>

OPTION GRANTS

The following table sets forth certain information concerning grants of
options to each of our Named Executive Officers during the fiscal year ended
December 31, 1999.

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
NUMBER PERCENTAGE POTENTIAL REALIZABLE VALUE AT
OF OF TOTAL ASSUMED ANNUAL RATES OF
SECURITIES OPTIONS STOCK PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM
OPTIONS EMPLOYEES IN PRICE EXPIRATION -----------------------------
NAME GRANTED FISCAL YEAR ($/SHARE) DATE 5% 10%
- ---- ---------- ------------ --------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Jeffrey H. Margolis....... -- -- -- -- -- --
Daniel J. Spirek.......... -- -- -- -- -- --
Michael J. Sunderland..... 130,000 5% $0.50 4/30/09 $1,840,807 $2,969,679
Kerry M. Kearns........... 140,000 5% $0.25 1/04/09 $2,017,407 $3,233,115
30,000 1% $2.60 6/28/09 $ 361,802 $ 622,310
Shawn P. Bowen............ 12,500 <1% $6.50 8/20/09 $ 102,001 $ 210,546
</TABLE>

The figures above represent options granted pursuant to our 1998 Stock
Option Plan. We granted options to purchase 2,619,950 shares of common stock in
1999. All options were granted at an exercise price equal to the fair market
value of the common stock on the date of grant, as determined by our Board. The
options vest in 25% increments on each of the four annual anniversaries of the
date of grant. The options listed above expire 10 years from the date of grant.

38
<PAGE> 40

The potential realizable value represents amounts, net of exercise price
before taxes, that may be realized upon exercise of the options immediately
prior to the expiration of their terms assuming appreciation of 5% and 10% over
the option term. The 5% and 10% are calculated based on rules promulgated by the
SEC based upon the initial public offering price of $9 per share and do not
reflect our estimate of future stock price growth. The actual value realized may
be greater or less than the potential realizable value set forth in the table.

Options granted have a term of 10 years, except for the options granted to
Mr. Margolis, which have a term of 5 years. All options are subject to earlier
termination in certain events related to termination of employment. All of these
options vest in equal quarterly installments over four years, except for 30,000
of the options granted to Mr. Sunderland, which vest over a period of seven
years unless accelerated to a four year vesting schedule based upon the
attainment of certain goals.

Based on fair market value, in accordance with the rules and regulations of
the Securities and Exchange Commission, such gains are based on assumed rates of
annual compound stock appreciation of 5% and 10% from the date on which the
options were granted over the full term of the options. The rates do not
represent our estimate or projection of future common stock prices, and no
assurance can be given that the rates of annual compound stock appreciation
assumed will be achieved.

OPTIONS EXERCISED AND FISCAL YEAR-END OPTION VALUES

No options were exercised by any of the Named Executive Officers during the
year ended December 31, 1999. The following table sets forth the fiscal year end
options values for all options held by TriZetto's Named Executive Officers. The
values for "in the money" options represent the positive spread between the
exercise prices of any such existing stock options and the fiscal year end price
of TriZetto's Common Stock ($46.625 per share).

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-THE-
UNDERLYING UNEXERCISED MONEY OPTIONS AT
OPTIONS AT DECEMBER 31, 1999 DECEMBER 31, 1999
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Jeffrey H. Margolis.................... 75,000 225,000 $3,476,250 $10,428,750
Daniel J. Spirek....................... 25,000 75,000 $1,159,375 $ 3,478,125
Michael J. Sunderland.................. -- 130,000 -- $ 5,996,250
Kerry M. Kearns........................ -- 170,000 -- $ 7,813,250
Shawn P. Bowen......................... 3,125 21,875 $ 144,922 $ 936,328
</TABLE>

DIRECTORS' FEES

Our directors do not receive any payments for their services on the Board,
but they are reimbursed for various expenses incurred in connection with
attendance at Board meetings. In connection with their election to our Board,
Mr. LeFort and Mr. Fisher each received options to purchase 10,000 shares of our
common stock.

EMPLOYMENT AGREEMENTS

We have an employment contract with Jeffrey H. Margolis. We do not have any
other employment contracts with our named executive officers.

Mr. Margolis' three year employment agreement dated April 30, 1998,
provides for an annual base salary of $192,000 per year, which is to be reviewed
annually by the Board. Currently, Mr. Margolis' annual salary is $275,000. Mr.
Margolis is entitled to participate in a bonus plan as recommended by our
compensation committee and approved by the Board. Mr. Margolis may participate
in all employee benefit plans or programs generally available to our employees,
and we will pay or reimburse Mr. Margolis for all reasonable and necessary
out-of-pocket expenses he incurs in the performance of his duties. We loaned Mr.
Margolis $100,000 and agreed

39
<PAGE> 41

to forgive $25,000 of the principal amount, along with any accrued but unpaid
interest on such forgiven amount, on each anniversary of the employment
agreement if Mr. Margolis remains an employee. We granted this loan as a means
of providing additional compensation to Mr. Margolis, while also providing
incentive for his continued employment. If Mr. Margolis is terminated without
cause or he voluntarily terminates for good reason, he is entitled to severance
pay in the amount equal to his then current annual base salary.

CHANGE IN CONTROL AGREEMENTS

We have entered into Change in Control Agreements with each of our Section
16 executive officers. These agreements provide for severance and other benefits
if, following a Change in Control of TriZetto, the executive's employment
terminates in a way adverse to the executive. If a named executive officer's
employment ends within one to three years following a Change in Control (term
varies among executives) either because the Company terminates the executive
without cause or because the executive resigns under circumstances constituting
"good reason," the executive will be entitled to:

- Bi-weekly salary through the end of the employment period;

- medical, dental and life insurance coverage through the end of the
employment period;

- outplacement services consistent with the Company's outplacement policy,
if any;

- payment on the last day of the employment period in an amount equal to
the sum of the additional contributions that would have been allocated
to the Executive's 401(k) account, if any, if the Executive had remained
employed through the end of the employment period;

- payment within 30 days of the date of termination of all accrued
vacation, holiday and personal leave days as of the date of termination;

- payment of any unpaid incentive compensation that executive officer
earned through the date of termination in accordance with the terms of
any applicable incentive compensation plan;

- acceleration of unvested options held by executives with Change in
Control Agreements will accelerate, unless such acceleration will would
trigger the "golden parachute" excise tax imposed by the U.S. Internal
Revenue Code. In such case, the options will continue to vest as if the
executive officer remained employed by us.

A "Change in Control" is defined in the agreement to occur if a person
becomes the beneficial owner of 50% or more of the combined voting power of our
securities, if a majority of the Board changes without the specified approval of
incumbent directors, if we merge with another entity in a way that substantially
changes the ownership of existing stockholders, or if our stockholders approve a
complete liquidation or dissolution. "Change in control" is also deemed to have
occurred if executive's employment with us is terminated prior to the change in
control and it is demonstrated that (a) such termination was at the request of a
third party who has taken steps to effectuate the change in control; or (b) such
termination arose in connection with or anticipation of the change in control.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee consists of the following two non-employee
directors: Donald J. Lothrop and Peter D. Mann. No executive officer serves as a
member of the board of directors or compensation committee of any entity that
has one or more executive officers serving on our Board or our Compensation
Committee.

REPORT OF THE COMPENSATION COMMITTEE

The following report is submitted by the Compensation Committee with
respect to the executive compensation policies established by the Compensation
Committee for the fiscal year ended December 31, 1999. The Compensation
Committee determines the annual salary, bonus and other benefits, including
incentive compensation awards, of TriZetto's executive officers and key
employees and recommends new employee benefit

40
<PAGE> 42

plans and changes to existing plans to the Board. The salary of Mr. Margolis is
determined in accordance with his Employment Agreement.

During the year ended December 31, 1999, our Board, based upon the
recommendations of the Compensation Committee, established the levels of
compensation for our executive officers, provided, however, Mr. Margolis'
compensation is determined in accordance with the terms and conditions of his
Employment Agreement.

COMPENSATION POLICIES AND OBJECTIVES. Our executive compensation policy is
designed to attract and retain exceptional executives by offering compensation
for superior performance that is highly competitive with other well-managed
organizations. The Compensation Committee measures executive performance on an
individual and corporate basis. There are three components to our executive
compensation program, and each is consistent with the stated philosophy as
follows:

Base Salary. Base salaries for executives and other key employees are
determined by individual financial and non-financial performance, position
in salary range and general economic conditions of TriZetto. For purposes
of administering base pay, all executive positions are evaluated and placed
in appropriate salary grades. Salary range midpoint levels are reviewed on
an annual basis to ensure competitiveness with a peer group of comparable
companies. In recommending salaries for executive officers, the
Compensation Committee (i) reviews the historical performance of the
executives, and (ii) formally reviews specific information provided by its
accountants and other consultants, as necessary, with respect to the
competitiveness of salaries paid to our executives.

Annual Bonus. Annual bonuses for executives and other key employees
are tied directly to our financial performance as well as individual
performance. The purpose of annual cash bonuses are to reward executives
for achievements of corporate, financial and operational goals. Annual cash
bonuses are intended to reward the achievement of outstanding performance.
When certain objective and subjective performance goals are not met, annual
bonuses would be reduced or not paid. The bonuses paid in fiscal year 1999
were based upon our financial performance and each individual's performance
during the year.

Long-Term Incentives. The purpose of these plans is to create an
opportunity for executives and other key employees to share in the
enhancement of stockholder value through stock options. The overall goal of
this component of pay is to create a strong link between our management and
our stockholders through management stock ownership and the achievement of
specific corporate financial measures that result in the appreciation of
our share price. Stock options are awarded and in some instances, vesting
is accelerated, if our goals and individual goals are achieved or exceeded.
The Compensation Committee generally has followed the practice of granting
options on terms which provide that the options become exercisable in
cumulative annual installments over a four year period. The Compensation
Committee believes that this feature not only provides an employee
retention factor but also makes longer term growth in share prices
important for those receiving options.

FISCAL YEAR 1999 COMPENSATION. We are required to disclose our policy
regarding qualifying executive compensation deductibility under Section 162(m)
of the Internal Revenue Code of 1986, as amended, which provides that, for
purposes of the regular income tax and the alternative minimum tax, the
otherwise allowable deduction for compensation paid or accrued with respect to a
covered employee of a public corporation is limited to no more than $1 million
per year. It is not expected that the compensation to be paid to any of our
executive officers for fiscal 2000 will exceed the $1 million limit per officer.
Our 1998 Stock Option Plan is structured so that any compensation deemed paid to
an executive officer upon exercise of an outstanding option under the plan, with
an exercise price equal to the fair market value of the option shares on the
grant date, will qualify as performance-based compensation that will not be
subject to the $1 million limitation.

Respectfully submitted,

Donald J. Lothrop
Peter D. Mann

41
<PAGE> 43

STOCK PERFORMANCE GRAPH

Set forth below is a line graph comparing the cumulative stockholder return
on TriZetto's Common Stock with the cumulative total return of (i) the Nasdaq
Market Index, (ii) Media General Financial Services Industry Group Index 825 --
Healthcare Information Services, and (iii) Media General Financial Services
Industry Group Index 852 -- Internet Software and Services, for the period that
commenced October 8, 1999, the date on which TriZetto's Common Stock was first
publicly traded on the Nasdaq National Market, and ended on December 31, 1999.
The Performance Graph is not necessarily an indicator of future price
performance. The graph assumes the reinvestment of all dividends. This
information has been provided to TriZetto by Media General Financial Services.

<TABLE>
<CAPTION>
10/08/99 10/31/99 11/30/99 12/31/99
-------- -------- -------- --------
<S> <C> <C> <C> <C>
The Trizetto Group, Inc. 100.00 111.11 238.89 518.06

MG Healthcare Info Services Index 100.00 89.63 109.96 130.67

Nasdaq Market Index 100.00 107.74 120.49 147.32

MG Internet Software & Services Index 100.00 104.02 133.52 168.80
</TABLE>

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<PAGE> 44

ITEM 12 -- SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS

Set forth below is certain information as of February 29, 2000 regarding
the beneficial ownership of our Common Stock by (i) any person who was known by
us to own more than five percent of our the voting securities, (ii) all
directors and nominees, (iii) each of the Named Executive Officers identified in
the Summary Compensation Table, and (iv) all current directors and executive
officers as a group.

<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL
NAME AND ADDRESS BENEFICIAL OWNERS(1) OWNERSHIP(2) % OF CLASS
- ------------------------------------- ----------------- ----------
<S> <C> <C>
Raymond D. Croghan.......................................... 3,157,681(3) 15%
370 Interlocken Blvd.
4(th) Floor
Broomfield, CO 80021
Delphi Ventures IV, L.P..................................... 2,736,014 13%
Delphi BioInvestments IV, L.P.
3000 Sand Hill Road
Building One, Suite 135
Menlo Park, CA 94025
Fidelity Ventures Limited................................... 1,289,336 6%
82 Devonshire Street, R25C
Boston, MA 02109-3614
Fidelity Investors Limited Partnership...................... 1,289,336 6%
Fidelity Investors II Limited Partnership
82 Devonshire Street, R25C
Boston, MA 02109-3614
Jeffrey H. Margolis(4)...................................... 2,685,000 13%
Donald J. Lothrop (5)....................................... 2,736,014 13%
Peter D. Mann(6)............................................ 1,289,336 6%
William E. Fisher(7)........................................ 422,595 2%
Paul F. LeFort(8)........................................... 60,000 <1%
Daniel J. Spirek(9)......................................... 325,000 2%
Michael J. Sunderland....................................... 5,000 <1%
Kerry M. Kearns............................................. 38,000 <1%
Shawn Bowen(10)............................................. 253,125 1%
All executive officers and directors as a group
(16 persons)(11).......................................... 8,298,370 39%
</TABLE>

- ---------------

(1) Unless otherwise indicated, the business address of such stockholder is c/o
The TriZetto Group, Inc., 567 San Nicolas Drive, Suite 360, Newport Beach,
California 92660.

(2) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of Common Stock subject
to options, warrants and convertible notes currently exercisable or
convertible, or exercisable or convertible within 60 days of February 29,
2000, are deemed outstanding for computing the percentage of the person
holding such options but are not deemed outstanding for computing the
percentage of any other person. Except as indicated by footnote, and
subject to community property laws where applicable, the persons named in
the table have sole voting and investment power with respect to all shares
of Common Stock shown as beneficially owned by them.

(3) Includes 100,000 shares held by the Raymond D. Croghan Charitable Remainder
Trust, Raymond D. Croghan, Trustee. 550,000 of these shares are subject to
an option granted by Mr. Croghan to Mr. Margolis, with a term of five years
and an exercise price of $6.50 per share.

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<PAGE> 45

(4) 1,760,000 shares are held by Jeffrey H. Margolis and his wife, in their
capacities as trustees of the Margolis Family Trust, over which the
trustees have shared voting power. 300,000 shares are held in two
additional trusts over which Mr. Margolis has sole voting power and Mr.
Margolis disclaims beneficial ownership in 150,000 of such shares. Includes
options for 550,000 shares of common stock granted by Mr. Croghan to Mr.
Margolis, which are exercisable within 60 days of February 29, 2000. Also
includes Mr. Margolis' options for 75,000 shares of common stock, which are
exercisable within 60 days of February 29, 2000.

(5) Consists of 2,736,014 shares held by Delphi Ventures IV, L.P. and Delphi
BioInvestments IV, L.P. Mr. Lothrop is a Managing Member of Delphi
Management Partners IV, LLC, the general partner of Delphi Ventures IV,
L.P. and Delphi BioInvestments IV, L.P., and disclaims beneficial ownership
of the 2,736,014 shares except to the extent of his pecuniary interest. Mr.
Lothrop's business address is the same as that of Delphi.

(6) Consists of 1,289,336 shares held by Fidelity Ventures Limited. Mr. Mann is
a Vice President of the general partner of Fidelity Ventures and disclaims
beneficial ownership of the 1,289,336 shares. Mr. Mann's business address
is the same as that of Fidelity.

(7) Includes options for 10,000 shares of common stock which are exercisable
within 60 days of February 29, 2000. Also includes 162,595 shares of common
stock held by KFS Management, Inc. Mr. Fisher owns 50% of the issued and
outstanding stock of KFS and is an officer and director of KFS.

(8) Includes options for 10,000 shares of common stock, which are exercisable
within 60 days of February 29, 2000.

(9) Includes options for 25,000 shares of common stock, which are exercisable
within 60 days of February 29, 2000.

(10) Includes options for 3,125 shares of common stock, which are exercisable
within 60 days of February 29, 2000.

(11) Includes options for 130,625 shares of common stock, which are exercisable
within 60 days of February 29, 2000.

ITEM 13 -- CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

CERTAIN TRANSACTIONS

KFS WARRANTS. On September 1, 1997, Croghan & Associates issued a
promissory note in the principal amount of $520,000 to KFS Management, Inc. In
connection with this promissory note, Croghan & Associates issued KFS
Management, Inc. warrants to purchase 243,893 shares of Croghan & Associates
common stock at $0.53 per share. When we acquired Croghan & Associates, we
agreed to convert these warrants into warrants to purchase 162,595 shares of our
common stock at $0.80 per share. KFS exercised its warrants on August 2, 1999.
One of our directors, William Fisher, owns 50% of the issued and outstanding
stock of KFS and is an officer and director of KFS. The value of the warrants,
which was not deemed material, was determined using the Black Scholes valuation
model, a fair value option-pricing model.

SERIES B FINANCING. On April 12, 1999, we issued an aggregate of 1,730,770
shares of Series B Preferred Stock for $2.60 per share. Of the 1,730,770 shares
of preferred stock sold by us, 769,232 shares were sold to the following
principal stockholders for an aggregate purchase price of $2,000,003.

<TABLE>
<CAPTION>
NUMBER AGGREGATE
PURCHASER OF SHARES PURCHASE PRICE
- --------- --------- --------------
<S> <C> <C>
Delphi Ventures IV, L.P..................................... 282,635 $734,851
Delphi BioInvestments IV, L.P............................... 5,827 $ 15,150
Fidelity Ventures Limited................................... 240,385 $625,001
Fidelity Investors II Limited Partnership................... 240,385 $625,001
</TABLE>

In connection with the sale of these shares, the Delphi entities agreed to
vote their shares to elect a designee of the Fidelity entities to our Board and
the Fidelity entities agreed to vote their shares to elect a designee of the

44
<PAGE> 46

Delphi entities. Donald Lothrop currently serves as the Delphi entities'
designee and Peter Mann currently serves as the Fidelity entities' designee.

MARGOLIS $100,000 NOTE. In connection with Mr. Margolis' employment
agreement, dated April 30, 1998, we loaned Mr. Margolis $100,000 in exchange for
a promissory note in the principal sum of $100,000, bearing interest at 6.5% per
year. We forgave $25,000 of the principal amount of this note and the related
interest on April 30, 1999 and shall forgive an additional $25,000 and the
related interest on each of the next three anniversaries of Mr. Margolis'
employment agreement, so long as Mr. Margolis remains our employee. The entire
sum of principal and interest of the note is due on April 30, 2002, and is
immediately due if Mr. Margolis commits any act of default as described in the
note.

MARGOLIS $200,000 NOTE. In June 1998, we loaned Mr. Margolis $200,000 in
exchange for a promissory note in the principal sum of $200,000, bearing an
interest rate of 8% per year. The entire sum of principal and interest of the
note was due on June 15, 1999. The note was secured by 200,000 shares of our
common stock. On May 21, 1999, we repurchased 200,000 shares of common stock
owned by Mr. Margolis in exchange for the note.

CROGHAN $500,000 NOTE. In October 1998, we loaned Mr. Croghan $500,000 in
exchange for a promissory note in the principal sum of $500,000, bearing an
interest rate of 8% per year. The entire sum of principal and interest of the
note was due on October 26, 1999. The note was secured by 362,319 shares of our
common stock. On June 30, 1999, we repurchased 362,319 shares of common stock by
Mr. Croghan in exchange for the note.

GARTE & ASSOCIATES, INC. In 1999, we entered into an agreement with Garte
& Associates, Inc. pursuant to which we would pay Garte &Associates, Inc. an
investment banking fee for certain acquisitions. In 1999, we paid a total of
$256,000 to Garte & Associates, Inc. in connection with our acquisitions of
Novalis Corporation and Finserv Health Care Systems, Inc. in late 1999. Harvey
Garte, our Vice President of Corporate Development and Investor Relations, is
the sole stockholder of Garte & Associates, Inc.

FUTURE TRANSACTIONS. Any future transactions between TriZetto and its
officers, directors or affiliates will either be on terms no less favorable to
TriZetto than could be obtained from third parties, will be subject to approval
by a majority of TriZetto's outside directors or will be consistent with
policies approved by a majority of such outside directors.

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<PAGE> 47

PART IV

ITEM 14 -- EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(A) List of documents filed as part of this Form 10-K:

<TABLE>
<S> <C> <C>
1. FINANCIAL STATEMENTS

See Index to Financial Statements and Schedule on page F-1

2. FINANCIAL STATEMENT SCHEDULES

See Index to Financial Statements and Schedule on page F-1

3. EXHIBITS

The following exhibits are filed (or incorporated by reference
herein) as part of this Form 10-K:
</TABLE>

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<S> <C> <C>
2.1 Exchange Agreement, dated October 1, 1997, by and among M.C.
Health Holdings, Inc. and the stockholders of Croghan &
Associates, Inc. and stockholders of Margolis Health
Enterprises, Inc. (Incorporated by reference to Exhibit 2.1
of TriZetto's Registration Statement on Form S-1 as filed
with the Securities and Exchange Commission on August 5,
1999, File No. 333-84533)
2.2+ Stock Purchase Agreement, dated February 5, 1999 by and
among TriZetto, Creative Business Solutions, Inc. and the
stockholders of Creative Business Solutions, Inc.
(Incorporated by reference to Exhibit 2.2 of TriZetto's
Registration Statement on Form S-1/A, as filed with the
Securities and Exchange Commission on October 4, 1999, File
No. 333-84533)
2.3+ Partnership Interest Purchase Agreement, dated February 5,
1999, by and between TriZetto, TriZetto Acquisition Group,
LLC, HealthWeb Systems, Ltd, HealthWeb General Partner, Inc.
and the holders of partnership interests (Incorporated by
reference to Exhibit 2.3 of TriZetto's Registration
Statement on Form S-1/A, as filed with the Securities and
Exchange Commission on October 4, 1999, File No. 333-84533)
2.4 Asset Purchase Agreement, dated April 1,1999, between
TriZetto and Management Technology Solutions, Inc.
(Incorporated by reference to Exhibit 2.4 of TriZetto's
Registration Statement on Form S-1 as filed with the
Securities and Exchange Commission on August 5, 1999, File
No. 333-84533)
2.5+ Information Technology Services Agreement, dated May 1,
1999, between TriZetto and MedPartners, Inc. (Incorporated
by reference to Exhibit 2.5 of TriZetto's Registration
Statement on Form S-1/A, as filed with the Securities and
Exchange Commission on October 4, 1999, File No. 333-84533)
2.6 Escrow Agreement, dated February 15, 1999, by and among
TriZetto and the stockholders of Creative Business
Solutions, Inc. (Incorporated by reference to Exhibit 2.6 of
TriZetto's Registration Statement on Form S-1/A, as filed
with the Securities and Exchange Commission on October 6,
1999, File No. 333-84533)
2.7 Escrow Agreement, dated February 5, 1999, by and among
TriZetto and the holders of partnership interests in
HealthWeb (Incorporated by reference to Exhibit 2.7 of
TriZetto's Registration Statement on Form S-1/A, as filed
with the Securities and Exchange Commission on October 6,
1999, File No. 333-84533)
2.8 Stock Purchase Agreement, dated November 29, 1999, by and
among TriZetto, Novalis Corporation, the Novalis Noteholders
described therein, and the Novalis Stockholders described
therein (Incorporated by reference to Exhibit 2.1 of
TriZetto's Form 8-K as filed with the Securities and
Exchange Commission on December 14, 1999, File No.
000-27501)
</TABLE>

46
<PAGE> 48

47
<PAGE> 49
<TABLE>
<S> <C> <C>
3.1 Amended and Restated Certificate of Incorporation of
TriZetto, as filed with the Delaware Secretary of State
effective as of April 8, 1999 (Incorporated by reference to
Exhibit 3.1 of TriZetto's Registration Statement on Form S-1
as filed with the Securities and Exchange Commission on
August 5, 1999, File No. 333-84533)
3.2 Form of Amended and Restated Certificate of Incorporation of
TriZetto, as filed with the Delaware Secretary of State
effective as of October 14, 1999 (Incorporated by reference
to Exhibit 3.2 of TriZetto's Registration Statement on Form
S-1/A, as filed with the Securities and Exchange Commission
on September 14, 1999, File No. 333-84533)
3.3 Amended and Restated Bylaws of TriZetto, effective as of
April 29, 1998 (Incorporated by reference to Exhibit 3.3 of
TriZetto's Registration Statement on Form S-1 as filed with
the Securities and Exchange Commission on August 5, 1999,
File No. 333-84533)
3.4 Amended and Restated Bylaws of TriZetto effective as of
October 7, 1999 (Incorporated by reference to Exhibit 3.4 of
TriZetto's Registration Statement on Form S-1/A, as filed
with the Securities and Exchange Commission on August 18,
1999, File No. 333-84533)
4.1 Specimen common stock certificate (Incorporated by reference
to Exhibit 4.1 of TriZetto's Registration Statement on Form
S-1/A as filed with the Securities and Exchange Commission
on September 14, 1999, File No. 333-84533)
10.1* 1998 Stock Option Plan (Incorporated by reference to Exhibit
10.1 of TriZetto's Registration Statement on Form S-1 as
filed with the Securities and Exchange Commission on August
5, 1999, File No. 333-84533)
10.2* Form of 1998 Incentive Stock Option Agreement (Incorporated
by reference to Exhibit 10.2 of TriZetto's Registration
Statement on Form S-1 as filed with the Securities and
Exchange Commission on August 5, 1999, File No. 333-84533)
10.3* Form of 1998 Non-Qualified Stock Option Agreement
(Incorporated by reference to Exhibit 10.3 of TriZetto's
Registration Statement on Form S-1 as filed with the
Securities and Exchange Commission on August 5, 1999, File
No. 333-84533)
10.4* 1999 Employee Stock Purchase Plan (Incorporated by reference
to Exhibit 10.4 of TriZetto's Registration Statement on Form
S-1/A as filed with the Securities and Exchange Commission
on August 18, 1999, File No. 333-84533)
10.5* Employment Agreement, dated April 30, 1998, by and between
TriZetto and Jeffrey H. Margolis (Incorporated by reference
to Exhibit 10.5 of TriZetto's Registration Statement on Form
S-1 as filed with the Securities and Exchange Commission on
August 5, 1999, File No. 333-84533)
10.6 Promissory Note, dated April 30, 1998, by and between
TriZetto and Jeffrey H. Margolis (Incorporated by reference
to Exhibit 10.6 of TriZetto's Registration Statement on Form
S-1 as filed with the Securities and Exchange Commission on
August 5, 1999, File No. 333-84533)
10.7 Form of Indemnification Agreement (Incorporated by reference
to Exhibit 10.7 of TriZetto's Registration Statement on Form
S-1 as filed with the Securities and Exchange Commission on
August 5, 1999, File No. 333-84533)
10.8 First Amended and Restated Investor Rights Agreement, dated
April 9, 1999 by and among Raymond Croghan, Jeffrey
Margolis, TriZetto, and Series A and Series B Preferred
Stockholders (Incorporated by reference to Exhibit 10.8 of
TriZetto's Registration Statement on Form S-1/A, as filed
with the Securities and Exchange Commission on August 18,
1999, File No. 333-84533)
</TABLE>

48
<PAGE> 50
<TABLE>
<S> <C> <C>
10.9+ Professional Services Agreement, dated January 1, 1999, by
and between TriZetto and CCN Managed Care, Inc.
(Incorporated by reference to Exhibit 10.9 of TriZetto's
Registration Statement on Form S-1/A, as filed with the
Securities and Exchange Commission on October 4, 1999, File
No. 333-84533)
10.10 Office Lease Agreement, dated April 26, 1999, between St.
Paul Properties, Inc. and TriZetto (including addendum)
(Incorporated by reference to Exhibit 10.10 of TriZetto's
Registration Statement on Form S-1 as filed with the
Securities and Exchange Commission on August 5, 1999, File
No. 333-84533)
10.11 Sublease Agreement, dated December 18, 1998, between TPI
Petroleum, Inc. and TriZetto (including underlying Office
Lease Agreement by and between St. Paul Properties, Inc. and
Total, Inc.) (Incorporated by reference to Exhibit 10.11 of
TriZetto's Registration Statement on Form S-1 as filed with
the Securities and Exchange Commission on August 5, 1999,
File No. 333-84533)
10.12 Sublease Agreement, dated May 1, 1999, between MedPartners,
Inc. and TriZetto (including underlying Lease by and between
Riverchase Tower, Ltd. And MedPartners, Inc.) (Incorporated
by reference to Exhibit 10.12 of TriZetto's Registration
Statement on Form S-1 as filed with the Securities and
Exchange Commission on August 5, 1999, File No. 333-84533)
10.13+ Technical Support Agreement, dated May 15, 1995, between DHI
Computing Services, Inc. and Croghan & Associates, Inc.
(Incorporated by reference to Exhibit 10.13 of TriZetto's
Registration Statement on Form S-1/A, as filed with the
Securities and Exchange Commission on August 18, 1999, File
No. 333-84533)
10.14+ Standard Multi-Directory and Support Agreement, dated May
25, 1999, between TriZetto and Epic Systems Corporation
(Incorporated by reference to Exhibit 10.14 of TriZetto's
Registration Statement on Form S-1/A, as filed with the
Securities and Exchange Commission on October 4, 1999, File
No. 333-84533)
10.15+ Master Software License Agreement, dated May 1, 1999,
between Medic Computer Systems, Inc. and TriZetto
(Incorporated by reference to Exhibit 10.15 of TriZetto's
Registration Statement on Form S-1/A, as filed with the
Securities and Exchange Commission on October 6, 1999, File
No. 333-84533)
10.16+ Addendum to the Master License Agreement, dated April 15,
1999, between Medical Manager Midwest, Inc. and Management
and Technology Solutions, Inc. (including underlying Medical
Manager License Agreement between Medical Manager Midwest,
Inc. and Management and Technology Solutions, Inc.)
(Incorporated by reference to Exhibit 10.16 of TriZetto's
Registration Statement on Form S-1/A, as filed with the
Securities and Exchange Commission on August 18, 1999, File
No. 333-84533)
10.17+ Technical Infrastructure Maintenance Agreement, dated March
1, 1998, between Medical Manager Midwest, Inc. and
Management and Technology Solutions, Inc. (Incorporated by
reference to Exhibit 10.17 of TriZetto's Registration
Statement on Form S-1/A, as filed with the Securities and
Exchange Commission on August 18, 1999, File No. 333-84533)
10.18 North American Partner Agreement, dated May 26, 1999,
between Great Plains Software and TriZetto (Incorporated by
reference to Exhibit 10.18 of TriZetto's Registration
Statement on Form S-1 as filed with the Securities and
Exchange Commission on August 5, 1999, File No. 333-84533)
10.19 Form of Restricted Stock Purchase Agreement between TriZetto
and certain employees (Incorporated by reference to Exhibit
10.19 of TriZetto's Registration Statement on Form S-1 as
filed with the Securities and Exchange Commission on August
5, 1999, File No. 333-84533)
</TABLE>

49
<PAGE> 51
<TABLE>
<S> <C> <C>
10.20 Bank One Credit Facility (including Promissory Note, Loan
Agreement and Commercial Security Agreement) dated March 4,
1999 (Incorporated by reference to Exhibit 10.20 of
TriZetto's Registration Statement on Form S-1/A, as filed
with the Securities and Exchange Commission on August 18,
1999, File No. 333-84533)
10.21 Bank One Credit Facility (including Promissory Note, Loan
Agreement and Commercial Security Agreement), dated October
27, 1999
10.22 First Modification and Ratification of Lease, dated November
1, 1999, by and between TriZetto and St. Paul Properties,
Inc.
10.23 Second Modification and Ratification of Lease, dated
December 1999, by and between TriZetto and St. Paul
Properties, Inc.
10.24 Bank One Master Lease Agreement and related Security
Agreement, dated December 1999
21.1 Current Subsidiaries of TriZetto.
23.1 Consent of PricewaterhouseCoopers LLP with respect to the
financial statements of TriZetto.
27.1 Financial Data Schedule.
</TABLE>

* This exhibit is identified as a management contract or compensatory plan or
arrangement of TriZetto pursuant to Item 14(a) of Form 10-K.

+ Portions of this exhibit are omitted and were filed separately with the SEC
pursuant to TriZetto's confidential treatment requests under Rule 406 of the
Securities Act of 1933.

(B) REPORTS ON FORM 8-K.

On December 14, 1999, the registrant filed a Form 8-K (Item 2) relating to
its acquisition of all the issued and outstanding capital stock of Novalis
Corporation. The financial statements of the business acquired and the proforma
financial information were filed on Form 8-K/A in the first quarter of 2000.

50
<PAGE> 52

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized on March 30, 2000.

THE TRIZETTO GROUP, INC.

/s/ JEFFREY H. MARGOLIS
By:
--------------------------------------

Jeffrey H. Margolis
President, Chief Executive Officer
and
Chairman of the Board

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ JEFFREY H. MARGOLIS President, Chief Executive Officer and March 30, 2000
- --------------------------------------- Chairman
Jeffrey H. Margolis of the Board (Principal executive officer.)

/s/ MICHAEL J. SUNDERLAND Senior Vice President of Finance, Chief March 30, 2000
- --------------------------------------- Financial Officer and Secretary (Principal
Michael J. Sunderland financial and accounting officer.)

/s/ DONALD J. LOTHROP Director March 30, 2000
- ---------------------------------------
Donald J. Lothrop

/s/ PETER D. MANN Director March 30, 2000
- ---------------------------------------
Peter D. Mann

Director
- ---------------------------------------
William E. Fisher

/s/ PAUL F. LEFORT Director March 30, 2000
- ---------------------------------------
Paul F. LeFort
</TABLE>

51
<PAGE> 53

THE TRIZETTO GROUP, INC.
INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Accountants........................... F-2
Consolidated Balance Sheets -- December 31, 1999 and 1998... F-3
Consolidated Statements of Operations*...................... F-4
Consolidated Statement of Stockholders' Equity (Deficit)*... F-5
Consolidated Statements of Cash Flows*...................... F-6
Notes to Consolidated Financial Statements.................. F-7
Financial Statement Schedule -- Valuation and Qualifying
Accounts.................................................. F-22
</TABLE>

* For the years ended December 31, 1999 and 1998, and the period from May 27,
1997 (date of inception) to December 31, 1997.

F-1
<PAGE> 54

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders
of The TriZetto Group, Inc.

In our opinion, the consolidated financial statements listed in the index
appearing under Item 14 (a)(1) on page 48 present fairly, in all material
respects, the financial position of The TriZetto Group, Inc. and its
subsidiaries at December 31, 1999 and 1998 and the results of their operations
and their cash flows for the years ended December 31, 1999 and 1998 and for the
period from May 27, 1997 (date of inception) to December 31, 1997, in conformity
with accounting principles generally accepted in the United States. In addition,
in our opinion, the financial statement schedule listed in the index appearing
under Item 14(a)(2) on page 48 presents fairly, in all material respects, the
information set forth therein when read in conjunction with the related
consolidated financial statements. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with auditing standards generally
accepted in the United States which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.

PRICEWATERHOUSECOOPERS LLP

San Jose, California
February 16, 2000

F-2
<PAGE> 55

THE TRIZETTO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1999 1998
------- ------
<S> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents................................. $18,849 $3,681
Short-term investments.................................... 5,957 --
Accounts receivable, less allowance for doubtful accounts
of $597 and $204, respectively.......................... 8,228 3,083
Note receivable from related party........................ 25 25
Prepaid expenses and other current assets................. 1,776 194
Income tax receivable..................................... 440 406
Deferred taxes............................................ -- 191
------- ------
Total current assets.................................... 35,275 7,580
Property and equipment, net............................... 10,797 989
Long-term investments..................................... 1,230 --
Other assets.............................................. 265 40
Note receivable from related party........................ 525 75
Goodwill and other intangible assets, net................. 20,326 36
------- ------
Total assets............................................ $68,418 $8,720
======= ======
LIABILITIES, MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED
STOCK
AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Short-term note payable................................... $ 623 $ 52
Capital lease obligations, current........................ 1,234 28
Accounts payable.......................................... 3,102 95
Accrued liabilities....................................... 9,172 1,815
Income taxes payable...................................... 22 --
Deferred revenue.......................................... 241 --
------- ------
Total current liabilities............................... 14,394 1,990
Long-term notes payable................................... 504 --
Capital lease obligations................................. 2,224 125
Note payable to related party............................. -- 520
Deferred taxes............................................ -- 377
------- ------
Total liabilities....................................... 17,122 3,012
------- ------
Commitments (Note 6)
Mandatorily redeemable convertible preferred stock: $0.001
par value;
Shares authorized: 10,392
Shares issued and outstanding: none in 1999 and 4,545 in
1998.................................................... -- 6,449
------- ------
Stockholders' equity (deficit):
Common stock: $0.001 par value;
Shares authorized: 30,000
Shares issued and outstanding: 20,923 in 1999 and 9,217 in
1998.................................................... 20 9
Additional paid-in capital.................................. 66,215 940
Notes receivable from stockholders.......................... (41) (741)
Deferred stock compensation................................. (5,786) (460)
Accumulated deficit......................................... (9,112) (489)
------- ------
Total stockholders' equity (deficit)...................... 51,296 (741)
------- ------
Total liabilities, mandatorily redeemable convertible
preferred stock
and stockholders' equity (deficit)................. $68,418 $8,720
======= ======
</TABLE>

F-3
<PAGE> 56

THE TRIZETTO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR ENDED FROM MAY 27, 1997
---------------------------- (DATE OF INCEPTION)
DECEMBER 31, DECEMBER 31, TO DECEMBER 31,
1999 1998 1997
------------ ------------ -------------------
(IN THOUSANDS)
<S> <C> <C> <C>
Revenues:
Recurring revenue............................ $19,448 $ 5,300 $1,191
Non-recurring revenue........................ 13,478 6,131 1,328
------- ------- ------
Total revenues................................. 32,926 11,431 2,519
------- ------- ------
Cost of revenues:
Recurring revenue............................ 17,057 3,967 1,250
Non-recurring revenue........................ 9,751 3,490 422
------- ------- ------
Total cost of revenues......................... 26,808 7,457 1,672
------- ------- ------
Gross profit................................... 6,118 3,974 847
------- ------- ------
Operating expenses:
Research and development..................... 2,371 1,083 --
Selling, general and administrative.......... 9,694 2,885 672
Amortization of deferred stock
compensation.............................. 1,057 22 --
Write-off of acquired in-process
technology................................ 1,407 -- --
------- ------- ------
Total operating expenses.................. 14,529 3,990 672
------- ------- ------
Income (loss) from operations.................. (8,411) (16) 175
Interest income................................ 527 210 15
Interest expense............................... (256) (52) (13)
------- ------- ------
Income (loss) before provision for income
taxes..................................... (8,140) 142 177
Provision for (benefit of) income taxes........ (213) 82 74
------- ------- ------
Net income (loss)............................ $(7,927) $ 60 $ 103
======= ======= ======
Net income (loss) per share:
Basic........................................ $ (0.85) $ 0.01 $ 0.05
======= ======= ======
Diluted...................................... $ (0.85) $ 0.00 $ 0.03
======= ======= ======
Shares used in computing net income (loss) per
share:
Basic........................................ 9,376 4,937 2,065
======= ======= ======
Diluted...................................... 9,376 12,783 4,074
======= ======= ======
</TABLE>

F-4
<PAGE> 57

THE TRIZETTO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE PERIOD FROM MAY 27, 1997 (DATE OF INCEPTION) TO DECEMBER 31, 1999
(IN THOUSANDS)

<TABLE>
<CAPTION>
NOTES RETAINED TOTAL
COMMON STOCK ADDITIONAL RECEIVABLE DEFERRED EARNINGS STOCKHOLDERS'
--------------- PAID-IN FROM STOCK (ACCUMULATED EQUITY
SHARES AMOUNT CAPITAL STOCKHOLDERS COMPENSATION DEFICIT) (DEFICIT)
------ ------ ---------- ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Issuance of common stock.............. 2,500 $ 3 $ 13 $ -- $ -- $ -- $ 16
Issuance of common stock for services
rendered............................ 1,217 1 7 -- -- -- 8
Issuance of common stock for purchase
of Croghan & Associates, Inc........ 5,801 6 430 -- -- -- 436
Issuance of common stock for note
receivable.......................... 175 -- 13 (13) -- -- --
Net income............................ -- -- -- -- -- 103 103
------ --- ------- ---- ------- ------- -------
Balance, December 31, 1997............ 9,693 10 463 (13) -- 103 563
Issuance of common stock.............. 75 -- 9 -- -- -- 9
Issuance of common stock for note
receivable.......................... 390 -- 53 (53) -- -- --
Repurchase of common stock............ (941) (1) (67) -- -- (652) (720)
Payments on notes receivable.......... -- -- -- 25 -- -- 25
Notes issued to stockholders.......... -- -- -- (700) -- -- (700)
Deferred stock compensation........... -- -- 482 -- (482) -- --
Amortization of deferred stock
compensation........................ -- -- -- -- 22 -- 22
Net income............................ -- -- -- -- -- 60 60
------ --- ------- ---- ------- ------- -------
Balance, December 31, 1998............ 9,217 9 940 (741) (460) (489) (741)
Issuance of common stock to purchase
Creative Business Solutions, Inc.
and HealthWeb Systems, Ltd.......... 655 1 1,145 -- -- -- 1,146
Issuance of common stock to purchase
assets of Management & Technology
Solutions, Inc...................... 60 -- 140 -- -- -- 140
Issuance of common stock for purchase
of Novalis Corporation.............. 549 1 8,999 -- -- -- 9,000
Issuance of common stock for purchase
of Finserv Health Care Systems,
Inc................................. 49 -- 1,499 -- -- -- 1,499
Repurchase of common stock in exchange
of notes receivable from
stockholders........................ (563) (1) (3) 700 -- (696) --
Deferred stock compensation........... -- -- 6,383 -- (6,383) -- --
Amortization of deferred stock
compensation........................ -- -- -- -- 1,057 -- 1,057
Stock compensation.................... -- -- 53 -- -- -- 53
Repurchase common stock............... (6) -- -- -- -- -- --
Exercise of common stock options and
warrants............................ 206 -- 141 -- -- -- 141
Issuance of common stock related to
initial public offering, net........ 4,480 4 35,992 -- -- -- 35,996
Conversion of preferred stock to
common stock........................ 6,276 6 10,926 -- -- -- 10,932
Net loss.............................. -- -- -- -- -- (7,927) (7,927)
------ --- ------- ---- ------- ------- -------
Balance, December 31, 1999............ 20,923 $20 $66,215 $(41) $(5,786) $(9,112) $51,296
====== === ======= ==== ======= ======= =======
</TABLE>

F-5
<PAGE> 58

THE TRIZETTO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR ENDED FROM MAY 27, 1997
---------------------------- (DATE OF INCEPTION)
DECEMBER 31, DECEMBER 31, TO DECEMBER 31,
1999 1998 1997
------------ ------------ -------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)................................... $ (7,927) $ 60 $ 103
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Provision for doubtful accounts................... 505 203 204
Common stock issued for services rendered......... -- -- 8
Amortization of deferred stock compensation....... 1,057 22 --
Write-off of acquired in-process technology....... 1,407 -- --
Forgiveness of note receivable.................... 32 -- --
Stock compensation................................ 53 -- --
Deferred taxes.................................... (186) (83) (105)
Loss on disposal of property and equipment........ -- 187 130
Depreciation and amortization..................... 2,415 161 24
Changes in assets and liabilities:
Accounts receivable............................... (3,080) (2,127) (762)
Prepaid expenses and other current assets......... (1,271) (75) (99)
Income tax receivable............................. (34) (406) --
Accounts payable.................................. 1,364 32 (128)
Accrued liabilities............................... 2,604 976 614
Deferred revenue.................................. 241 (248) 247
Other long-term assets............................ (181) (16) --
-------- ------- -----
Net cash provided by (used in) operating
activities........................................ (3,001) (1,314) 236
-------- ------- -----
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of short-term and long-term investments.... (7,187) -- --
Purchase of property and equipment and software
licenses.......................................... (3,208) (750) (121)
Purchase of MedPartners' assets..................... (2,630) -- --
Acquisitions, net of cash acquired.................. (7,338) -- 614
-------- ------- -----
Net cash provided by (used in) investing
activities...................................... (20,363) (750) 493
-------- ------- -----
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock, net......... 35,996 9 16
Proceeds from issuance of mandatorily redeemable
convertible preferred stock, net.................. 4,483 6,449 --
Repurchases of common stock......................... -- (720) --
Proceeds from issuance of notes payable............. -- 56 86
Payments of notes payable........................... (1,275) (32) (58)
Payment on line of credit........................... (265) -- --
Principal payments on capital leases................ (448) (15) --
Issuance of notes receivable........................ -- (800) --
Repayment of notes receivable....................... 30 25 --
Employee exercise of stock options.................. 11 -- --
-------- ------- -----
Net cash provided by financing activities......... 38,532 4,972 44
-------- ------- -----
Net increase in cash and cash equivalents........... 15,168 2,908 773
Cash and cash equivalents at beginning of period.... 3,681 773 --
-------- ------- -----
Cash and cash equivalents at end of period.......... $ 18,849 $ 3,681 $ 773
======== ======= =====
</TABLE>

F-6
<PAGE> 59

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. FORMATION AND BUSINESS OF THE COMPANY

The TriZetto Group, Inc. (the "Company"), was incorporated in the state of
Delaware on May 27, 1997. The Company is a provider of remotely hosted software
applications, both third party packaged and proprietary software, and related
services used in the healthcare industry. The Company also offers an Internet
browser application that serves as a portal for the exchange of healthcare
information and services over the Internet. The Company provides access to its
hosted applications either through the Internet or through traditional networks.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of consolidation

The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries. All intercompany transactions have been
eliminated in consolidation.

Use of estimates

The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.

Concentration of credit risk

Financial instruments that potentially subject the Company to a
concentration of credit risk consist of cash and cash equivalents and accounts
receivable. Cash and cash equivalents are deposited in demand and money market
accounts in three financial institutions. Deposits held with banks may exceed
the amount of insurance provided on such deposits. The Company has not
experienced any losses on its deposits of cash and cash equivalents. The
Company's accounts receivable are derived from revenue earned from customers
located in the United States. The Company performs ongoing credit evaluations of
its customers' financial condition and, generally, requires no collateral from
its customers. The Company maintains an allowance for doubtful accounts
receivable based upon the expected collectibility of individual accounts.

The following tables summarize the revenues and accounts receivable
balances from customers in excess of 10% of total revenues and total accounts
receivable balances, respectively:

<TABLE>
<CAPTION>
FOR THE PERIOD
YEAR ENDED FROM MAY 27, 1997
DECEMBER 31, (DATE OF INCEPTION)
------------ TO DECEMBER 31,
1999 1998 1997
---- ---- -------------------
<S> <C> <C> <C>
REVENUES:
Company A................................................ 16% 42% 40%
Company B................................................ 0% 11% 16%
Company C................................................ 19% 0% 0%
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
ACCOUNTS RECEIVABLE:
Company A................................................. 0% 56% 40%
Company B................................................. 0% 0% 20%
Company C................................................. 0% 0% 13%
Company D................................................. 13% 0% 0%
</TABLE>

F-7
<PAGE> 60
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

Fair value of financial instruments

Carrying amounts of certain of the Company's financial instruments
including cash and cash equivalents, accounts receivable and accounts payable
approximate fair value due to their short maturities. Based on borrowing rates
currently available to the Company for loans with similar terms, the carrying
value of its debt obligations approximates fair value.

Cash and cash equivalents

The Company considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents. Cash and cash
equivalents include money market funds and various deposit accounts.

Investments

At December 31, 1999, short-term investments consisted of debt securities
with original maturities between three months and one year when purchased.
Investments with original maturities greater then one year from the date of
purchase have been classified as long-term investments. The Company has
determined that all of its debt securities should be classified as
available-for-sale. The difference between the cost basis and the market value
of the Company's investments was not material at December 31, 1999. The
Company's investments at December 31, 1999 primarily consisted of corporate
bonds and debt. Long-term investments of $1.2 million mature during 2001.

Property and equipment

Property and equipment are stated at cost and are depreciated on a
straight-line basis over their estimated useful lives of five to seven years.
Leasehold improvements are amortized over their estimated useful lives, or the
lease term if shorter. Upon retirement or sale, the cost and related accumulated
depreciation are removed from the balance sheet and the resulting gain or loss
is reflected in operations. Maintenance and repairs are charged to operations as
incurred.

Goodwill and other intangible assets

Intangible assets arose from the Company's acquisitions. Goodwill is being
amortized on a straight-line basis over five to seven years. Other intangible
assets consist of acquired work force, customer lists and core technology which
are being amortized on a straight-line basis over their estimated useful lives
of two to four, five and three years, respectively. Software technology rights
are amortized on a straight-line basis over the lesser of the contract term or
five years.

Long-lived assets

Long-lived assets and certain intangible assets are reviewed for impairment
when events or changes in circumstances indicate the carrying amount of an asset
may not be recoverable. Recoverability is measured by comparison of the asset's
carrying amount to future net undiscounted cash flows the assets are expected to
generate. If such assets are considered to be impaired, the impairment to be
recognized is measured by the amount by which the carrying amount of the assets
exceeds the projected discounted future net cash flows arising from the asset.

Revenue recognition

Recurring revenue, or multi-year contractually based revenue, is recognized
monthly based upon volume of service transactions. Non-recurring revenue is
generally billed on a time and materials basis, and is recognized as the
non-recurring services are performed. Provisions for estimated losses on fixed
fee contracts are recorded when identified.

F-8
<PAGE> 61
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

Research and development

Research and development costs are charged to operations as incurred.

Income taxes

The Company accounts for income taxes under the liability method. Under
this method, deferred tax assets and liabilities are determined based on the
difference between the financial statement and tax bases of assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to affect taxable income. A valuation allowance is
established when necessary to reduce deferred tax assets to the amounts expected
to be realized.

Computation of income (loss) per share

Basic earnings per share ("EPS") is computed by dividing net income (loss)
by the weighted average number of common shares outstanding for the period.
Diluted EPS reflects the potential dilution that could occur from common shares
issuable through stock options, warrants and other convertible securities. The
following is a reconciliation of the numerator (net income (loss)) and the
denominator (number of shares) used in the basic and diluted EPS calculations
(in thousands, except per share data):

<TABLE>
<CAPTION>
FOR THE PERIOD
YEAR ENDED FROM MAY 27, 1997
DECEMBER 31, (DATE OF INCEPTION)
------------------ TO DECEMBER 31,
1999 1998 1997
------- ------- -------------------
<S> <C> <C> <C>
BASIC:
Net income (loss)................................... $(7,927) $ 60 $ 103
Weighted average common shares outstanding.......... 9,376 4,937 2,065
Net income (loss) per share......................... $ (0.85) $ 0.01 $ 0.05
======= ======= ======
DILUTED:
Net income (loss)................................... $(7,927) $ 60 $ 103
------- ------- ------
Weighted average common shares outstanding.......... 9,376 4,937 2,065
Preferred stock..................................... -- 2,888 --
Options to purchase common stock.................... -- 305 --
Common stock subject to repurchase.................. -- 4,640 2,009
Warrants............................................ -- 13 --
------- ------- ------
Total weighted common stock and common stock
equivalents...................................... 9,376 12,783 4,074
------- ------- ------
Net income (loss) per share......................... $ (0.85) $ 0.00 $ 0.03
======= ======= ======
ANTIDILUTIVE SECURITIES:
Contingently issuable shares........................ 518 -- --
Options to purchase common stock.................... 2,207 -- --
Common stock subject to repurchase.................. 1,698 -- --
Warrants............................................ -- -- 163
------- ------- ------
4,423 -- 163
======= ======= ======
</TABLE>

Comprehensive income

The Company has adopted the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 130, "Comprehensive Income." SFAS 130 establishes
standards for reporting and display of comprehensive

F-9
<PAGE> 62
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

income and its components for general-purpose financial statements.
Comprehensive income is defined as net income plus all revenues, expenses, gains
and losses from non-owner sources that are excluded from net income in
accordance with generally accepted accounting principles. For all periods
presented, there were no material differences between comprehensive and net
income.

Recent accounting pronouncements

3. BALANCE SHEET ACCOUNTS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1999 1998
--------- --------
<S> <C> <C>
PROPERTY AND EQUIPMENT
Computer equipment........................................ $ 7,166 $ 633
Furniture and fixtures.................................... 1,607 138
Equipment................................................. 841 191
Software.................................................. 2,401 142
Leasehold improvements.................................... 187 24
------- ------
12,202 1,128
Less: Accumulated depreciation and amortization............. (1,405) (139)
------- ------
$10,797 $ 989
======= ======
</TABLE>

Included in property and equipment at December 31, 1999 and December 31,
1998 is equipment acquired under capital leases totaling approximately $4.1
million and $167,000, respectively, and related accumulated amortization of
$538,000 and $17,000, respectively.

F-10
<PAGE> 63
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1999 1998
--------- --------
<S> <C> <C>
INTANGIBLE ASSETS
Software licenses......................................... $ 2,707 $ 54
Goodwill.................................................. 8,272 --
Acquired workforce........................................ 1,687 --
Customer lists............................................ 4,184 --
Core technology........................................... 4,527 --
------- ------
21,377 54
Less: Accumulated amortization.............................. (1,051) (18)
------- ------
$20,326 $ 36
======= ======
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1999 1998
-------- --------
<S> <C> <C>
ACCRUED LIABILITIES
Accrued payroll and benefits.............................. $4,080 $1,285
Accrued professional fees................................. 477 234
Accrued acquisition expenses.............................. 2,445 --
Other..................................................... 2,170 296
------ ------
$9,172 $1,815
====== ======
</TABLE>

4. NOTES PAYABLE AND LINE OF CREDIT

In December 1998, the Company entered into a financing agreement for
approximately $56,000 relating to premiums for business insurance. The amount is
due in nine monthly installments and bears interest at 9.75% per annum. The
financing company collateralized the loan by potential proceeds obtained from a
claim on the insurance (unearned insurance provisions, loss payments that reduce
the unearned premiums and any related interests arising from a state guarantee
fund). At December 31, 1999, there was no outstanding balance under this credit
facility.

In January 1999, the Company entered into a financing agreement for
$675,000 in order to acquire a software license. The non-interest bearing note
(imputed interest rate of 7.80%) is due in sixty equal monthly installments.
Borrowings under the financing agreement are collateralized by the software that
the Company purchased with the note proceeds. At December 31, 1999, there was
approximately $471,000 principal balance remaining on the note.

In connection with the acquisition of Creative Business Solutions, Inc. and
HealthWeb Systems, Ltd. in February 1999 (Note 10), the Company issued notes of
$270,000. The notes bear interest at 8.00% per annum and the interest is payable
annually in arrears. Fifty percent of the principal balance is payable on the
first anniversary and fifty percent is payable on the second anniversary of the
issue date. At December 31, 1999, there was $270,000 principal balance remaining
on the notes.

In March 1999, the Company entered into a revolving line of credit
agreement with a financial institution. In October 1999, we entered into a
subsequent agreement which increased the amount available under the line of
credit. The line of credit has a total capacity of $3.0 million and expires in
November 2000. Borrowings under the line of credit bear interest at prime plus
0.50% (9.0% at December 31, 1999) and are collateralized by substantially all of
the assets of the Company. Interest is payable monthly as it accrues. The line
of credit agreement contains certain covenants that the Company must adhere to
during the term of the agreement including restrictions on the payment of
dividends. As of December 31, 1999, there were no outstanding

F-11
<PAGE> 64
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

borrowings on the line of credit. The Company has outstanding four standby
letters of credit in the aggregate amount of $319,000 which serve as security
deposits for four of the Company's capital leases.

In May 1999, the Company entered into a financing agreement for
approximately $1,131,000. The amount is due in twelve equal monthly installments
and bears interest at 10% per annum. Borrowings under the financing agreement
are collateralized by the license that the Company purchased from the lender. At
December 31, 1999, there was approximately $386,000 principal balance remaining
on the note.

In December 1999, the Company entered into a lease line of credit with a
financial institution. The line of credit has a total capacity of $2.0 million
and expires in December 2000. Borrowings under the line of credit at December
31, 1999 were approximately $973,000, and are collateralized by substantially
all of the assets of the Company.

Future principal payments of notes payable at December 31, 1999 are as
follows:

<TABLE>
<CAPTION>
FOR THE PERIODS ENDING DECEMBER 31,
-----------------------------------
<S> <C>
2000................................................... $ 623
2001................................................... 245
2002................................................... 119
2003................................................... 129
2004................................................... 11
------
1,127
Less: Current portion....................................... (623)
------
$ 504
======
</TABLE>

5. RELATED PARTY TRANSACTIONS

In September 1997, the Company entered into a $520,000 financing agreement,
bearing interest at 9% and payable quarterly beginning January 1, 1998. The
principal amount is due October 1, 2002. In connection with the financing
agreement, the Company issued to the financing company warrants to purchase
162,595 shares of common stock with an exercise price of $0.80 per share (Note
7). A member of the Company's Board of Directors owns 50% of the financing
company. In August 1999, the warrant to purchase 162,595 shares of common stock
was exercised, reducing the principal amount by $130,000. In October 1999, the
Company paid off the remaining principal balance of $390,000.

The Company has a note receivable for $100,000 from an officer of the
Company. The note accrues interest at 6.5% per annum. The principal and accrued
interest will be forgiven annually over a four year period beginning April 30,
1999 provided the officer is an employee of the Company. In the event of
termination of the officer's employment with the Company the note and accrued
interest become due and payable immediately. At December 31, 1999, the note
receivable from related party was $75,000.

In June 1998 and October 1998, the Company issued full recourse promissory
notes to certain officers for $200,000 and $500,000, respectively. The
promissory notes are collateralized by 200,000 and 362,319 shares of common
stock, bear annual interest at 8% and are payable in 1999, or earlier upon
employee termination. In May and June 1999, the Company repurchased the common
stock in exchange for the notes.

In June 1999, the Company entered into an agreement with Garte &
Associates, Inc. pursuant to which the Company would pay Garte & Associates,
Inc. an investment banking fee for certain acquisitions. In 1999, the Company
paid a total of $256,000 to Garte & Associates, Inc. in connection with the
Company's acquisitions of Novalis Corporation and Finserv Health Care Systems,
Inc. in late 1999. Harvey Garte, the Company's Vice President of Corporate
Development and Investor Relations, is the sole stockholder of Garte &
Associates, Inc.

F-12
<PAGE> 65
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

In November 1999, in connection with the acquisition of Novalis, the
Company received notes receivable in the aggregate amount of $475,000 from eight
former stockholders of Novalis. The notes represent the former stockholders'
agreement to repay all legal, financial and accounting fees and expenses
incurred in connection with the acquisition. The note accrues interest at 8.0%
per annum, and is payable one year from the date of acquisition. At December 31,
1999, the note receivable from related parties was $475,000.

6. COMMITMENTS

The Company leases office space and equipment under noncancelable operating
and capital leases with various expiration dates through 2006. Capital lease
obligations are collateralized by the equipment subject to the leases. The
Company is responsible for maintenance costs and property taxes on certain of
the operating leases. Rent expense for the years ended December 31, 1999 and
1998 and for the period from May 27, 1997 (date of inception) to December 31,
1997, was $1.2 million , $192,000 and $71,000 respectively. These amounts are
net of sublease income of $25,000, $48,000 and $36,000, respectively.

Future minimum lease payments (exclusive of interest) under noncancelable
operating and capital leases at December 31, 1999 are as follows:

<TABLE>
<CAPTION>
FOR THE PERIODS ENDING DECEMBER 31, CAPITAL LEASES OPERATING LEASES
----------------------------------- -------------- ----------------
(IN THOUSANDS)
<S> <C> <C>
2000...................................................... $1,256 $ 2,729
2001...................................................... 1,150 2,735
2002...................................................... 676 2,452
2003...................................................... 212 1,822
2004...................................................... 164 1,410
Thereafter................................................ -- 1,391
------ -------
Total minimum lease payments................................ 3,458 $12,539
=======
Less: Current portion....................................... 1,234
------
$2,224
======
</TABLE>

7. STOCKHOLDERS' EQUITY

Common stock

In October 1999, the Company completed its initial public offering of
4,480,000 shares of common stock, including 630,000 shares in connection with
the exercise of underwriters' over-allotment option, at a price of $9.00 per
share, that raised approximately $36.0 million, net of underwriting discounts,
commissions and other offering costs. In addition, in connection with the
offering, 350,000 shares of common stock of the Company were sold by a selling
stockholder at $9.00 per share, for which the Company received no proceeds. Upon
the closing of the offering, all of the Company's mandatorily redeemable
convertible preferred stock converted into approximately 6,276,000 shares of
common stock.

At December 31, 1999, the Company had reserved sufficient shares of common
stock for issuance upon conversion of preferred stock and exercise of stock
options. Common stockholders are entitled to dividends as and when declared by
the Board of Directors subject to the prior rights of the preferred
stockholders. The holders of each share of common stock are entitled to one
vote. The Company issued shares of its common stock to certain employees under
restricted stock agreements. These restricted stock agreements grant the Company
repurchase rights which lapse upon attainment of full vesting by all
stockholders. Full vesting is scheduled to occur on or before April 20, 2000. At
December 31, 1999 and 1998, 1,698,441 and 4,405,602 shares of common stock are
subject to repurchase by the Company, respectively.

F-13
<PAGE> 66
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

Mandatorily redeemable convertible preferred stock

In April and October 1998, the Company issued an aggregate of 4,545,454
shares of Series A mandatorily redeemable convertible preferred stock
("convertible preferred stock") at $1.43 per share for gross proceeds of $6.5
million. In April 1999, the Company issued 1,730,770 shares of Series B
convertible preferred stock at $2.60 per share for gross proceeds of $4.5
million. Upon the closing of the Company's initial public offering, all of the
Company's mandatorily redeemable convertible preferred stock converted into
approximately 6,276,000 shares of common stock.

Stock option plan

In May 1998, the Company adopted the 1998 Stock Option Plan (the "Plan")
under which the Board of Directors may issue incentive and non-qualified stock
options to employees, directors and consultants. The Board of Directors has the
authority to determine to whom options will be granted, the number of shares,
the term and exercise price. Options are to be granted at an exercise price not
less than fair market value for incentive stock options or 85% of fair market
value for non-qualified stock options. For individuals holding more than 10% of
the voting rights of all classes of stock, the exercise price of incentive stock
options will not be less than 110% of fair market value. The options generally
vest and become exercisable annually at a rate of 25% of the option grant over a
four year period. The term of the options is no longer than five years for
incentive stock options for which the grantee owns greater than 10% of the
voting power of all classes of stock and no longer than ten years for all other
options.

Activity under the Plan is as follows (in thousands, except per share
data):

<TABLE>
<CAPTION>
OUTSTANDING OPTIONS
SHARES --------------------------- WEIGHTED
AVAILABLE NUMBER OF AGGREGATE AVERAGE
FOR GRANT SHARES EXERCISE PRICE PRICE EXERCISE PRICE
--------- --------- -------------- --------- --------------
<S> <C> <C> <C> <C> <C>
Options reserved at Plan inception......... 1,600 -- -- -- --
Granted.................................... (1,159) 1,159 $0.25 - $0.28 $ 297 $0.26
Cancelled.................................. 10 (10) $0.25 (2) 0.25
------ ----- -------------- ------- -----
Balances, December 31, 1998................ 451 1,149 $0.25 - $0.28 295 0.26
Additional options reserved................ 2,400
Granted.................................... (2,620) 2,620 $0.25 - $2.60 16,312 6.23
Exercised.................................. -- 60 0.25 (15) 0.25
Cancelled.................................. 204 (204) $0.25 - $1.00 (117) 0.57
------ ----- -------------- ------- -----
Balances, December 31, 1999................ 435 3,505 $0.25 - $29.75 $16,475 $4.70
====== ===== ============== ======= =====
</TABLE>

The options outstanding and currently exercisable by exercise price at
December 31, 1999 are as follows (in thousands, except per share data):

<TABLE>
<CAPTION>
OPTIONS EXERCISABLE AT
OPTIONS OUTSTANDING AT DECEMBER 31, 1999 DECEMBER 31, 1999
- -------------------------------------------------------------------------- ------------------------------
WEIGHTED AVERAGE WEIGHTED WEIGHTED
RANGE OF EXERCISE NUMBER REMAINING CONTRACTUAL AVERAGE EXERCISE NUMBER AVERAGE EXERCISE
PRICE OUTSTANDING LIFE (YEARS) PRICE EXERCISABLE PRICE
- ----------------- ----------- --------------------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
$ 0.25 -$2.60 .. 2,597 9.02 $ 0.79 239 $0.28
$ 6.50 - $6.50 .. 311 9.61 $ 6.50 2 7
$14.50 - $14.50.. 155 9.85 $14.50 1 15
$20.25 - $29.75.. 442 9.93 $23.01 -- --
----- ---
3,505 9.22 $ 4.72 222 $0.40
===== ===
</TABLE>

F-14
<PAGE> 67
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

Stock-based compensation

The Company has adopted the disclosure-only provisions of Statement of
Financial Accounting Standards No. 123 ("SFAS No. 123"), "Accounting for
Stock-Based Compensation." Had compensation cost for the Incentive Stock Plan
been determined based on the fair value at the grant date for awards during 1998
and the year ended December 31, 1999, consistent with the provisions of SFAS No.
123, the Company's net income would have been as follows (in thousands, except
per share amounts):

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
-----------------
1999 1998
------- ------
<S> <C> <C>
Net income (loss), as reported.............................. $(7,927) $ 60
Net income (loss), pro forma................................ $(8,695) $ 54
Net income (loss) per share, as reported:
Basic..................................................... ($ 0.85) $ 0.01
Diluted................................................... ($ 0.85) $ 0.00
Net income (loss) per share, pro forma:
Basic..................................................... ($ 0.93) $ 0.01
Diluted................................................... ($ 0.93) $ 0.00
</TABLE>

Such pro forma disclosures may not be representative of future compensation
cost because options vest over several years and additional grants are
anticipated to be made each year.

At December 31, 1999 and December 31, 1998, options exercisable under the
Plan were 241,921 and none, respectively. The weighted average fair values of
options granted during 1999 and the year ended December 31, 1998 were $29.86 and
$0.05, respectively.

The fair value of each option grant is estimated on the date of grant using
the minimum value method with the following weighted average assumptions:

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1998 1999
------------ ------------
<S> <C> <C>
Risk-free interest rate..................................... 5.18% 6.34%
Expected life............................................... 4 years 4 years
Expected dividends.......................................... -- --
</TABLE>

Employee Stock Purchase Plan

In July 1999, the board of directors adopted the Employee Stock Purchase
Plan ("Stock Purchase Plan"). A total of 600,000 shares of common stock have
been reserved for issuance under the Stock Purchase Plan. Employees are eligible
to participate if they are employed for at least 20 hours per week and for more
than five months in any calendar year. Employees who own more than 5% of the
Company's outstanding stock may not participate. The Stock Purchase Plan permits
eligible employees to purchase common stock through payroll deductions, which
may not exceed the lesser of 15% of an employee's compensation or $25,000.

The Stock Purchase Plan will be implemented by 12 month offerings with
purchases occurring at six month intervals commencing January 1, 2000. The
purchase price of the common stock under the Stock Purchase Plan will be equal
to 85% of the fair market value per share of common stock on either the start
date of the offering period or on the purchase date, whichever is less. In the
event of a proposed dissolution or liquidation of the Company, the offering
periods terminate immediately prior to the consummation of the proposed action,
unless otherwise provided by the Company's board of directors. The Employee
Stock Purchase Plan will terminate in 2009, unless terminated sooner by the
board of directors.

F-15
<PAGE> 68
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

Deferred stock compensation

As of December 31, 1999, the Company recorded deferred compensation related
to options granted to employees in the total amount of $6.9 million,
representing the difference between the deemed fair value of the common stock,
as determined for accounting purposes, and the exercise price of the options at
the date of grant. Of this amount, $1.1 million had been amortized in 1999, and
approximately $22,000 had been amortized in 1998. The Company amortizes deferred
compensation over the vesting period of the underlying option.

Warrants

In connection with the acquisition of Croghan & Associates (Note 10), the
Company issued a warrant to purchase 162,595 shares of the Company's common
stock an exercise price of $0.80 per share to replace an existing warrant to
purchase Croghan & Associates stock. The value of the warrant determined using
the Black Scholes model was not material. In August 1999, the warrant to
purchase 162,595 shares of common stock was exercised.

8. INCOME TAXES

The provision for income taxes consists of the following (in thousands):

<TABLE>
<CAPTION>
FOR THE PERIOD
YEAR ENDED FROM MAY 27, 1997
DECEMBER 31, (DATE OF INCEPTION)
------------- TO DECEMBER 31,
1999 1998 1997
----- ---- -------------------
<S> <C> <C> <C>
Current
Federal................................................. $ (48) $143 $ 156
State................................................... 22 22 23
----- ---- -----
Net income (loss) per share............................... (26) 165 179
----- ---- -----
Deferred
Federal................................................. (164) (71) (91)
State................................................... (23) (12) (14)
----- ---- -----
(187) (83) (105)
----- ---- -----
Total income tax provision (benefit)...................... $(213) $ 82 $ 74
===== ==== =====
</TABLE>

The Company's effective tax rate differs from the statutory rate as shown
in the following schedule (in thousands):

<TABLE>
<CAPTION>
FOR THE PERIOD
YEAR ENDED FROM MAY 27, 1997
DECEMBER 31, (DATE OF INCEPTION)
--------------- TO DECEMBER 31,
1999 1998 1997
------- ---- -------------------
<S> <C> <C> <C>
Tax provision at federal statutory rate.................. $(2,768) $48 $60
State income taxes, net of federal benefit............... (385) 7 10
Increase in valuation allowance.......................... 1,355 -- --
Goodwill amortization.................................... 699 -- --
Deferred stock amortization.............................. 412 -- --
Nondeductible items and other............................ 474 23 3
Other.................................................... -- 4 1
------- --- ---
Tax provision (benefit).................................. $ (213) $82 $74
======= === ===
</TABLE>

F-16
<PAGE> 69
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

Temporary differences which gave rise to significant portions of deferred
tax assets and liabilities are as follows (in thousands):

<TABLE>
<CAPTION>
FOR THE PERIOD
YEAR ENDED FROM MAY 27, 1997
DECEMBER 31, (DATE OF INCEPTION)
--------------- TO DECEMBER 31,
1999 1998 1997
------ ----- -------------------
<S> <C> <C> <C>
Deferred tax assets:
Net operating loss carryforwards...................... $1,433 $ -- $ --
Reserves and accruals................................. 425 191 96
Fixed assets.......................................... -- -- 9
Research credits...................................... 36 -- --
------ ----- -----
Deferred tax assets..................................... 1,894 191 105
------ ----- -----
Deferred tax liabilities:
Deferred revenue...................................... -- (374) (374)
Fixed assets.......................................... (446) (3) --
Other................................................. (93) -- --
------ ----- -----
Deferred tax liabilities................................ $ (539) $(377) $(374)
Valuation allowance..................................... (1,355) -- --
Net deferred taxes...................................... $ -- $(186) $(269)
====== ===== =====
</TABLE>

Tax loss carryforwards at December 31, 1999 are approximately $3.5 million
for federal purposes. The federal loss carryforward will expire in the fiscal
year ended 2019. Availability of the net operating loss carryforward may
potentially be reduced in the event of certain substantial changes in equity
ownership.

9. EMPLOYEE BENEFIT PLAN

In January 1998, the Company adopted a plan (the "Plan") which qualifies
under Section 401(k) of the Internal Revenue Code of 1986. Eligible employees
may make voluntary contributions to the Plan of up to 20% of their annual
compensation, not to exceed the statutory amount, and the Company may make
matching contributions. The Company has made no contributions since the Plan's
inception.

10. ACQUISITIONS

On October 1, 1997, the Company acquired all of the outstanding common
stock of Croghan & Associates, Inc. ("Croghan & Associates"). The total purchase
price was approximately $436,000, which consisted of 5,800,895 shares of the
Company's common stock. The acquisition has been accounted for as a purchase and
results of its operations have been included in the consolidated financial
statements from the date of acquisition.

In February 1999, the Company acquired all of the outstanding shares of
Creative Business Solutions, Inc. ("Creative Business Solutions"), an Internet
solutions development company specializing in the integration of healthcare
information technology and contract programming solutions, and its majority
owned subsidiary, HealthWeb Systems, Ltd. ("HealthWeb"), an Internet software
and portal development company specializing in customized healthcare
applications. The Company also acquired the remaining minority interest in
HealthWeb. The acquisitions were accounted for using the purchase method of
accounting and accordingly, the purchase price was allocated to the tangible and
intangible assets acquired and liabilities assumed on the basis of their fair
market values on the acquisition date.

The purchase price of approximately $3.3 million consisted of approximately
$1.4 million in cash, 655,000 shares of common stock, notes payable of $270,000,
assumed liabilities of $527,000 and acquisition
F-17
<PAGE> 70
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

costs of approximately $100,000. Included in the 655,000 shares of common stock
issued in the acquisition were 131,000 shares held in escrow to secure
indemnification obligations of the Creative Business Solutions and HealthWeb
shareholders. Such shares, which will be held in escrow for a two-year period,
have been included in the purchase price allocation. Based upon an appraisal by
an independent valuation firm, the value of the 655,000 shares of common stock
issued in the acquisition was determined to be $1.1 million. The excess of the
purchase price over the fair market value of the net tangible assets acquired
aggregated approximately $2.5 million, of which $484,000 was allocated to
acquired in-process technology and $2.1 million was allocated to goodwill and
other intangible assets. An independent appraisal was performed to determine the
fair value of the identifiable assets, including the portion of the purchase
price attributed to the acquired in-process technology. The income approach was
used to value acquired in-process technology, which includes an analysis of the
completion costs, cash flows, other required assets and risks associated with
achieving such cash flows. At the date of acquisition, the Company determined
the technological feasibility of HealthWeb's product was not established, and
accordingly, wrote-off the corresponding amount to acquired in-process
technology. HealthWeb is expected to introduce the final product by the end of
1999. Approximately $650,000 in research and development had been spent up to
the date of the acquisition in an effort to develop the technology to produce a
commercially viable product. The future research and development expense
associated with the acquired in-process product was estimated to be
approximately $975,000 between July 1999 and the first quarter of 2000.
Currently, the Company knows of no developments that would lead it to change its
original assessment of the expected completion and commercial viability of this
project. At the date of acquisition, the only identifiable intangible assets
acquired were the technology under development, the acquired workforce and
customer list.

In April 1999, the Company acquired certain assets and liabilities from
Management and Technology Solutions, Inc. ("MTS") in exchange for 60,000 shares
of common stock. The assets included property and equipment, intellectual
property, trademarks and licenses, and computer software and software licenses.
As part of this transaction, the Company assumed liabilities consisting of lease
obligations, a note payable and certain other accrued liabilities.

In November 1999, the Company acquired all the outstanding shares of the
Novalis Corporation ("Novalis"). The purchase price of approximately $18.7
million consisted of cash in the amount of approximately $5.0 million, 549,786
shares of common stock with a value of $16.37 per share, assumed liabilities of
$1.9 million and acquisition costs of approximately $2.8 million. Of the total
purchase price, $923,000 was allocated to in-process technology and the
remainder of the purchase price was allocated to assets acquired and liabilities
assumed. Of the 549,786 shares of common stock which have been issued in
connection with this acquisition, 366,524 shares of the common stock have been
held in escrow until the resolution of certain pre-acquisition contingencies.

The acquisition of Novalis was accounted for using the purchase method of
accounting. The excess of the purchase price over the fair market value of the
assets purchased and liabilities assumed was $13.5 million, of which $923,000
was allocated to acquired in-process technology, based upon an independent
appraisal, and was written-off in the year ended December 31, 1999, and $12.6
million was allocated to goodwill and intangible assets consisting of assembled
workforce, core technology and customer lists. As of the acquisition date,
Novalis was developing several enhancements to its proprietary software
products. Approximately $535,000 in research and development had been spent up
to the date of the acquisition in an effort to develop the next releases of the
in-process and core technology. The future research and development expense
associated with the in-process and core technology was estimated to be
approximately $490,000. The in-process and core technology was scheduled to be
released by June 30, 2000.

In valuing Novalis' developed, in-process and core technologies, the
Company utilized the relief from royalty method. The relief from royalty method
assumes that the value of the intangible asset is estimated by quantifying the
royalties saved due to our ownership of the software. A revenue stream for the
asset was estimated based on Novalis' total revenue projections over its
estimated life. An appropriate royalty rate is then applied to the forecasted
revenue to estimate the pre-tax income associated with the asset. This income
stream was tax effected and discounted to its present value to estimate the
value of the developed, in-process and core
F-18
<PAGE> 71
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

technologies. For purposes of this analysis, the Company used 15%, 20% and 25%
discount rates for the developed, in-process and core technologies,
respectively. These discount rates are consistent with the risks inherent in
achieving the projected cash flows.

In December 1999, the Company acquired all of the outstanding shares of
Finserv HealthCare Systems, Inc. ("Finserv"). The acquisition was accounted for
using the purchase method of accounting and accordingly, the purchase price was
allocated to the tangible and intangible assets acquired and liabilities assumed
on the basis of their fair market values on the acquisition date. The purchase
price of approximately $4.8 million consisted of cash in the amount of
approximately $1.8 million, 48,998 shares of common stock with a value of $30.61
per share, assumed liabilities of $1.1 million, and acquisition costs of
approximately $0.4 million. The agreement also provides that an additional
amount of shares, up to $750,000 in shares (the "earnout consideration"), may be
issued to the Finserv Securityholders if certain milestones are achieved for the
fiscal years ending December 31, 2000 and 2001. Of the 48,998 shares of common
stock which have been issued in connection with this acquisition, 20,000 shares
of common stock have been held in escrow until the resolution of certain
pre-acquisition contingencies. The purchase price has been allocated to the
assets acquired and liabilities assumed and the remainder has been allocated to
unidentifiable goodwill.

The purchase price allocations were based on the estimated fair value of
the assets, less liabilities, on the date of purchases as follows (in
thousands):

<TABLE>
<CAPTION>
CREATIVE
CROGHAN & BUSINESS
ASSOCIATES SOLUTIONS NOVALIS FINSERV
---------- --------- ------- -------
<S> <C> <C> <C> <C>
Total current assets..................................... $ 1,236 $ 596 $ 2,251 $ 827
Property, plant, equipment and other noncurrent assets... 511 175 2,795 276
Goodwill................................................. -- 1,338 3,277 3,656
Other intangible assets.................................. -- 726 9,427 --
Acquired in-process technology........................... -- 484 923 --
Total liabilities........................................ (1,311) -- -- --
------- ------ ------- ------
Total purchase price................................ $ 436 $3,319 $18,673 $4,759
======= ====== ======= ======
</TABLE>

The following unaudited pro forma summary presents the consolidated results
of operations of the Company as if the acquisition of Croghan & Associates had
occurred on May 27, 1997, the date of inception for the Company (in thousands):

<TABLE>
<CAPTION>
FOR THE PERIOD
FROM MAY 27,
1997
(DATE OF INCEPTION)
TO DECEMBER 31,
1997
-------------------
<S> <C>
Net revenue................................................. $4,244
Net loss before extraordinary item.......................... $ (880)
Net income.................................................. $ 120
</TABLE>

The following unaudited pro forma summary presents the consolidated results
of operations of the Company as if the acquisition of Creative Business
Solutions, Novalis Corporation and Finserv occurred on January 1, 1998, giving
effect to an acquisition adjustment for amortization of goodwill and other
intangibles and the write-off of acquired in-process technology (in thousands):

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1998
-----------------
<S> <C>
Net revenue..................................... $ 39,312
Net loss........................................ $(10,510)
</TABLE>

F-19
<PAGE> 72
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1999
-----------------
<S> <C>
Net Revenue..................................... $ 58,706
Net loss........................................ $(15,177)
</TABLE>

The pro forma results are not necessarily indicative of what actually would
have occurred if the acquisitions had been in effect for the entire period
presented. In addition, they are not intended to be a projection of future
results.

11. SUPPLEMENTAL CASH FLOW DISCLOSURES

<TABLE>
<CAPTION>
FOR THE YEAR FOR THE PERIOD
ENDED FROM MAY 27, 1997
DECEMBER 31, (DATE OF INCEPTION)
------------- TO DECEMBER 31,
1999 1998 1997
----- ---- -------------------
<S> <C> <C> <C>
SUPPLEMENTAL DISCLOSURES FOR CASH FLOW INFORMATION
Cash paid for interest.................................... $ 120 $ 59 $ 2
Cash paid for income taxes................................ 42 705 43
NONCASH INVESTING AND FINANCING ACTIVITIES
Common stock issued for notes receivable.................. -- -- 13
Common stock issued for Croghan & Associates.............. -- -- 436
Assets acquired through capital lease..................... 3,550 167 --
Deferred stock compensation............................... 6,383 482 --
Common stock issued for notes receivable.................. -- 53 --
Issuance of notes payable to acquire software and software
license................................................. 1,690 -- --
Common stock issued for Creative Business Solutions....... 1,146 -- --
Notes payable issued for Creative Business Solutions...... 270 -- --
Repurchase of shares in exchange for stockholder notes
receivable.............................................. 700 -- --
Common stock issued to purchase assets of Management and
Technology Solutions, Inc. ............................. 140 -- --
Exercise of common stock warrants......................... 130
Common stock issued to purchase assets of Novalis
Corporation............................................. 8,999 -- --
Common stock issued to purchase assets of Finserv
Healthcare Systems, Inc. ............................... 1,499 -- --
</TABLE>

12. SEGMENT INFORMATION

The Company has adopted SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information." SFAS 131 requires enterprises to report
information about operating segments in annual financial statements and selected
information about reportable segments in interim financial reports issued to
shareholders. It also establishes standards for related disclosures about
products and services, geographic areas and major customers.

The Company operates in two business segments: recurring or multi-year
contractually based revenue, and revenue generated via non-recurring agreements.
The recurring business is subscription based and provides customers with a
portion, or all, of their information technology and related business service
needs. The consulting business provides customers with solutions to their
connectivity and integration needs as well as technical support on an as needed
basis.

F-20
<PAGE> 73
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

The Company evaluates performance and allocates resources based on gross
margin. The accounting policies of the reportable segments are the same as those
described in the summary of significant accounting policies.

The Company's reportable segments are business units that are organized
primarily by the nature of services provided. The reportable segments are
managed separately because of the difference in marketing strategies, customer
base, and client approach. Financial information about segments is reported in
the consolidated statements of operations.

The Company's assets are all located in the United States, and all sales
were to customers located in the United States.

13. SUBSEQUENT EVENTS

RECENT DEVELOPMENTS

On March 28, 2000, the Company entered into an Agreement and Plan of
Reorganization with IMS Health Incorporated, a Delaware corporation, under which
IMS will merge with and into the Company. At the closing, we will issue .4655
shares of the Company's Common Stock for each share of outstanding common stock
of IMS. On the date of signing, the transaction was valued at approximately $8.6
billion. Consummation of the merger is subject to the approval of each company's
stockholders as well as various third parties and federal agencies.

In January 2000, the Company acquired all of the outstanding shares of
Healthcare Media Enterprises, Inc. Healthcare Media Enterprises' primary
business focus is on software development, especially relating to the Internet,
web design, and business to business portals. The acquisition was accounted for
using the purchase method of accounting and accordingly, the purchase price was
allocated to the tangible and intangible assets acquired and liabilities assumed
on the basis of their fair market values on the acquisition date. The purchase
price of approximately $5.8 million consisted of cash in the amount of
approximately $1.6 million, 87,359 shares of common stock with a value of $40.06
per share, assumed liabilities of $625,000 and acquisition costs of
approximately $100,000.

F-21
<PAGE> 74

SCHEDULE II

VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)

<TABLE>
<CAPTION>
BALANCE AT ADDITIONS
BEGINNING OF CHARGED TO COSTS BALANCE AT
PERIOD AND EXPENSES DEDUCTIONS ENDING PERIOD
------------ ---------------- ---------- -------------
<S> <C> <C> <C> <C>
Period Ended December 31, 1997
Allowance for doubtful accounts............ $ -- $204 $ 50 $154
Year Ended December 31, 1998
Allowance for doubtful accounts............ $154 $203 $153 $204
Year Ended December 31, 1999
Allowance for doubtful accounts............ $204 $505 $112 $597
</TABLE>

F-22
<PAGE> 75

EXHIBIT INDEX

<TABLE>
<S> <C> <C>
2.9 Offset Escrow Agreement, dated as of November 29, 1999, by
and among TriZetto, the Novalis Securityholders described
therein, ABS Capital Partners, Inc., as Representative, and
Bankers Trust Company of California, N.A., as Escrow Agent
(Incorporated by reference to Exhibit 2.2 of TriZetto's Form
8-K as filed with the Securities and Exchange Commission on
December 14, 1999, File No. 000-27501)
2.10 Registration Rights Agreement, dated as of November 29,
1999, by and among TriZetto and certain TriZetto
stockholders (Incorporated by reference to Exhibit 2.3 of
TriZetto's Form 8-K as filed with the Securities and
Exchange Commission on December 14, 1999, File No.
000-27501)
2.11 Form of Promissory Note as executed by certain Novalis
Securityholders in favor of Novalis Corporation
(Incorporated by reference to Exhibit 2.4 of TriZetto's Form
8-K as filed with the Securities and Exchange Commission on
December 14, 1999, File No. 000-27501)
2.12 Warrant and Warrant Assignment, dated as of November 29,
1999, issued by QCA Health Plan, Inc. in favor of Silavon,
Inc. and assigned to TriZetto (Incorporated by reference to
Exhibit 2.5 of TriZetto's Form 8-K as filed with the
Securities and Exchange Commission on December 14, 1999,
File No. 000-27501)
2.13 Non-Competition Agreement, dated as of November 29, 1999, by
and between TriZetto and Chester E. Burrell (Incorporated by
reference to Exhibit 2.6 of TriZetto's Form 8-K as filed
with the Securities and Exchange Commission on December 14,
1999, File No. 000-27501)
2.14 Warrant Escrow Agreement, dated as of November 29, 1999, by
and among TriZetto, the Novalis Securityholders described
therein, Silavon, Inc., ABS Capital Partners, Inc., as
Representative, and Stradling Yocca Carlson & Rauth, as
Escrow Agent (Incorporated by reference to Exhibit 2.7 of
TriZetto's Form 8-K as filed with the Securities and
Exchange Commission on December 14, 1999, File No.
000-27501)
2.15 Form of Stock Pledge Agreement entered into by and between
Novalis Corporation and certain Novalis Securityholders
(Incorporated by reference to Exhibit 2.8 of TriZetto's Form
8-K as filed with the Securities and Exchange Commission on
December 14, 1999, File No. 000-27501)
2.16 Agreement and Plan of Merger, dated as of December 22, 1999,
by and among TriZetto, Finserv Acquisition Corp., Finserv
Health Care Systems, Inc., and the Finserv Securityholders
described therein (Incorporated by reference to Exhibit 2.1
of TriZetto's Form 8-K as filed with the Securities and
Exchange Commission on January 6, 2000, File No. 000-27501)
2.17 Escrow Agreement, dated as of December 22, 1999, by and
among TriZetto, the Finserv Securityholders described
therein, Stuart Schloss, as Representative, and Bankers
Trust Company of California, N.A., as Escrow Agent
(Incorporated by reference to Exhibit 2.2 of TriZetto's Form
8-K as filed with the Securities and Exchange Commission on
January 6, 2000, File No. 000-27501)
2.18 Form of Non-Competition Agreement, dated as of December 22,
1999, as entered into by and between TriZetto and certain
employees (Incorporated by reference to Exhibit 2.3 of
TriZetto's Form 8-K as filed with the Securities and
Exchange Commission on January 6, 2000, File No. 000-27501)
2.19 Registration Rights Agreement, dated as of December 22,
1999, by and among TriZetto and certain TriZetto
stockholders (Incorporated by reference to Exhibit 2.4 of
TriZetto's Form 8-K as filed with the Securities and
Exchange Commission on January 6, 2000, File No. 000-27501)
</TABLE>
<PAGE> 77
<TABLE>
<S> <C> <C>
3.1 Amended and Restated Certificate of Incorporation of
TriZetto, as filed with the Delaware Secretary of State
effective as of April 8, 1999 (Incorporated by reference to
Exhibit 3.1 of TriZetto's Registration Statement on Form S-1
as filed with the Securities and Exchange Commission on
August 5, 1999, File No. 333-84533)
3.2 Form of Amended and Restated Certificate of Incorporation of
TriZetto, as filed with the Delaware Secretary of State
effective as of October 14, 1999 (Incorporated by reference
to Exhibit 3.2 of TriZetto's Registration Statement on Form
S-1/A, as filed with the Securities and Exchange Commission
on September 14, 1999, File No. 333-84533)
3.3 Amended and Restated Bylaws of TriZetto, effective as of
April 29, 1998 (Incorporated by reference to Exhibit 3.3 of
TriZetto's Registration Statement on Form S-1 as filed with
the Securities and Exchange Commission on August 5, 1999,
File No. 333-84533)
3.4 Amended and Restated Bylaws of TriZetto effective as of
October 7, 1999 (Incorporated by reference to Exhibit 3.4 of
TriZetto's Registration Statement on Form S-1/A, as filed
with the Securities and Exchange Commission on August 18,
1999, File No. 333-84533)
4.1 Specimen common stock certificate (Incorporated by reference
to Exhibit 4.1 of TriZetto's Registration Statement on Form
S-1/A as filed with the Securities and Exchange Commission
on September 14, 1999, File No. 333-84533)
10.1* 1998 Stock Option Plan (Incorporated by reference to Exhibit
10.1 of TriZetto's Registration Statement on Form S-1 as
filed with the Securities and Exchange Commission on August
5, 1999, File No. 333-84533)
10.2* Form of 1998 Incentive Stock Option Agreement (Incorporated
by reference to Exhibit 10.2 of TriZetto's Registration
Statement on Form S-1 as filed with the Securities and
Exchange Commission on August 5, 1999, File No. 333-84533)
10.3* Form of 1998 Non-Qualified Stock Option Agreement
(Incorporated by reference to Exhibit 10.3 of TriZetto's
Registration Statement on Form S-1 as filed with the
Securities and Exchange Commission on August 5, 1999, File
No. 333-84533)
10.4* 1999 Employee Stock Purchase Plan (Incorporated by reference
to Exhibit 10.4 of TriZetto's Registration Statement on Form
S-1/A as filed with the Securities and Exchange Commission
on August 18, 1999, File No. 333-84533)
10.5* Employment Agreement, dated April 30, 1998, by and between
TriZetto and Jeffrey H. Margolis (Incorporated by reference
to Exhibit 10.5 of TriZetto's Registration Statement on Form
S-1 as filed with the Securities and Exchange Commission on
August 5, 1999, File No. 333-84533)
10.6 Promissory Note, dated April 30, 1998, by and between
TriZetto and Jeffrey H. Margolis (Incorporated by reference
to Exhibit 10.6 of TriZetto's Registration Statement on Form
S-1 as filed with the Securities and Exchange Commission on
August 5, 1999, File No. 333-84533)
10.7 Form of Indemnification Agreement (Incorporated by reference
to Exhibit 10.7 of TriZetto's Registration Statement on Form
S-1 as filed with the Securities and Exchange Commission on
August 5, 1999, File No. 333-84533)
10.8 First Amended and Restated Investor Rights Agreement, dated
April 9, 1999 by and among Raymond Croghan, Jeffrey
Margolis, TriZetto, and Series A and Series B Preferred
Stockholders (Incorporated by reference to Exhibit 10.8 of
TriZetto's Registration Statement on Form S-1/A, as filed
with the Securities and Exchange Commission on August 18,
1999, File No. 333-84533)
</TABLE>
<PAGE> 78
<TABLE>
<S> <C> <C>
10.9+ Professional Services Agreement, dated January 1, 1999, by
and between TriZetto and CCN Managed Care, Inc.
(Incorporated by reference to Exhibit 10.9 of TriZetto's
Registration Statement on Form S-1/A, as filed with the
Securities and Exchange Commission on October 4, 1999, File
No. 333-84533)
10.10 Office Lease Agreement, dated April 26, 1999, between St.
Paul Properties, Inc. and TriZetto (including addendum)
(Incorporated by reference to Exhibit 10.10 of TriZetto's
Registration Statement on Form S-1 as filed with the
Securities and Exchange Commission on August 5, 1999, File
No. 333-84533)
10.11 Sublease Agreement, dated December 18, 1998, between TPI
Petroleum, Inc. and TriZetto (including underlying Office
Lease Agreement by and between St. Paul Properties, Inc. and
Total, Inc.) (Incorporated by reference to Exhibit 10.11 of
TriZetto's Registration Statement on Form S-1 as filed with
the Securities and Exchange Commission on August 5, 1999,
File No. 333-84533)
10.12 Sublease Agreement, dated May 1, 1999, between MedPartners,
Inc. and TriZetto (including underlying Lease by and between
Riverchase Tower, Ltd. And MedPartners, Inc.) (Incorporated
by reference to Exhibit 10.12 of TriZetto's Registration
Statement on Form S-1 as filed with the Securities and
Exchange Commission on August 5, 1999, File No. 333-84533)
10.13+ Technical Support Agreement, dated May 15, 1995, between DHI
Computing Services, Inc. and Croghan & Associates, Inc.
(Incorporated by reference to Exhibit 10.13 of TriZetto's
Registration Statement on Form S-1/A, as filed with the
Securities and Exchange Commission on August 18, 1999, File
No. 333-84533)
10.14+ Standard Multi-Directory and Support Agreement, dated May
25, 1999, between TriZetto and Epic Systems Corporation
(Incorporated by reference to Exhibit 10.14 of TriZetto's
Registration Statement on Form S-1/A, as filed with the
Securities and Exchange Commission on October 4, 1999, File
No. 333-84533)
10.15+ Master Software License Agreement, dated May 1, 1999,
between Medic Computer Systems, Inc. and TriZetto
(Incorporated by reference to Exhibit 10.15 of TriZetto's
Registration Statement on Form S-1/A, as filed with the
Securities and Exchange Commission on October 6, 1999, File
No. 333-84533)
10.16+ Addendum to the Master License Agreement, dated April 15,
1999, between Medical Manager Midwest, Inc. and Management
and Technology Solutions, Inc. (including underlying Medical
Manager License Agreement between Medical Manager Midwest,
Inc. and Management and Technology Solutions, Inc.)
(Incorporated by reference to Exhibit 10.16 of TriZetto's
Registration Statement on Form S-1/A, as filed with the
Securities and Exchange Commission on August 18, 1999, File
No. 333-84533)
10.17+ Technical Infrastructure Maintenance Agreement, dated March
1, 1998, between Medical Manager Midwest, Inc. and
Management and Technology Solutions, Inc. (Incorporated by
reference to Exhibit 10.17 of TriZetto's Registration
Statement on Form S-1/A, as filed with the Securities and
Exchange Commission on August 18, 1999, File No. 333-84533)
10.18 North American Partner Agreement, dated May 26, 1999,
between Great Plains Software and TriZetto (Incorporated by
reference to Exhibit 10.18 of TriZetto's Registration
Statement on Form S-1 as filed with the Securities and
Exchange Commission on August 5, 1999, File No. 333-84533)
10.19 Form of Restricted Stock Purchase Agreement between TriZetto
and certain employees (Incorporated by reference to Exhibit
10.19 of TriZetto's Registration Statement on Form S-1 as
filed with the Securities and Exchange Commission on August
5, 1999, File No. 333-84533)
</TABLE>
<PAGE> 79
<TABLE>
<S> <C> <C>
10.20 Bank One Credit Facility (including Promissory Note, Loan
Agreement and Commercial Security Agreement) dated March 4,
1999 (Incorporated by reference to Exhibit 10.20 of
TriZetto's Registration Statement on Form S-1/A, as filed
with the Securities and Exchange Commission on August 18,
1999, File No. 333-84533)
10.21 Bank One Credit Facility (including Promissory Note, Loan
Agreement and Commercial Security Agreement), dated October
27, 1999
10.22 First Modification and Ratification of Lease, dated November
1, 1999, by and between TriZetto and St. Paul Properties,
Inc.
10.23 Second Modification and Ratification of Lease, dated
December 1999, by and between TriZetto and St. Paul
Properties, Inc.
10.24 Bank One Master Lease Agreement and related Security
Agreement, dated December 1999
21.1 Current Subsidiaries of TriZetto.
23.1 Consent of PricewaterhouseCoopers LLP with respect to the
financial statements of TriZetto.
27.1 Financial Data Schedule.
</TABLE>

* This exhibit is identified as a management contract or compensatory plan or
arrangement of TriZetto pursuant to Item 14(a) of Form 10-K.

+ Portions of this exhibit are omitted and were filed separately with the SEC
pursuant to TriZetto's confidential treatment requests under Rule 406 of the
Securities Act of 1933.

<PAGE> 1

EXHIBIT 10.21

[BANK-ONE LOGO]

PROMISSORY NOTE

<TABLE>
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PRINCIPAL LOAN DATE MATURITY LOAN NO CALL COLLATERAL ACCOUNT OFFICER INITIALS
$3,000,000.00 10-27-1999 11-04-2000 106525 328 2756603893 00480
- ------------------------------------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item.
- ------------------------------------------------------------------------------------------------------------------
</TABLE>

BORROWER: THE TRIZETTO GROUP, INC., A DELAWARE
CORPORATION
567 SAN NICOLAS DRIVE - SUITE 360
NEWPORT BEACH, CA 92660

LENDER: Bank One, Colorado, NA
Corporate Lending - Boulder
1125 17th Street
Denver, CO 80217

PRINCIPAL AMOUNT: $3,000,000.00 DATE OF NOTE: OCTOBER 27, 1999

PROMISE TO PAY. FOR VALUE RECEIVED, THE TRIZETTO GROUP, INC., A DELAWARE
CORPORATION ("BORROWER") PROMISES TO PAY TO BANK ONE, COLORADO, NA ("LENDER"),
OR ORDER, IN LAWFUL MONEY OF THE UNITED STATES OF AMERICA, THE PRINCIPAL AMOUNT
OF THREE MILLION & 00/100 DOLLARS ($3,000,000.00) ("TOTAL PRINCIPAL AMOUNT") OR
SO MUCH AS MAY BE OUTSTANDING, TOGETHER WITH INTEREST ON THE UNPAID OUTSTANDING
PRINCIPAL BALANCE FROM THE DATE ADVANCED UNTIL PAID IN FULL.

PAYMENT. THIS NOTE SHALL BE PAYABLE AS FOLLOWS: INTEREST SHALL BE DUE AND
PAYABLE MONTHLY AS IT ACCRUES, COMMENCING ON DECEMBER 4, 1999 AND CONTINUING ON
THE SAME DAY OF EACH MONTH THEREAFTER DURING THE TERM OF THIS NOTE, AND THE
OUTSTANDING PRINCIPAL BALANCE OF THIS NOTE, TOGETHER WITH ALL ACCRUED BUT UNPAID
INTEREST, SHALL BE DUE AND PAYABLE ON NOVEMBER 4, 2000. The annual interest rate
for this Note is computed on a 365/360 basis; that is, by applying the ratio of
the annual interest rate over a year of 360 days, multiplied by the outstanding
principal balance, multiplied by the actual number of days the principal balance
is outstanding. Borrower will pay Lender at the address designated by Lender
from time to time in writing. If any payment of principal of or interest on this
Note shall become due on a day which is not a Business Day, such payment shall
be made on the next succeeding Business Day. As used herein, the term "BUSINESS
DAY" shall mean any day other than a Saturday, Sunday or any other day on which
national banking associations are authorized to be closed. Unless otherwise
agreed to, in writing, or otherwise required by applicable law, payments will be
applied first to accrued, unpaid interest, then to principal, and any remaining
amount to any unpaid collection costs, late charges and other charges, provided,
however, upon delinquency or other default, Lender reserves the right to apply
payments among principal, interest, late charges, collection costs and other
charges at its discretion The books and records of Lender shall be prima facie
evidence of all outstanding principal of and accrued but unpaid interest on this
Note. This Note may be executed in connection with a loan agreement. Any such
loan agreement may contain additional rights, obligations and terms.

VARIABLE INTEREST RATE. THE INTEREST RATE ON THIS NOTE IS SUBJECT TO FLUCTUATION
BASED UPON THE PRIME RATE OF INTEREST IN EFFECT FROM TIME TO TIME (THE "INDEX")
(WHICH RATE MAY NOT BE THE LOWEST, BEST OR MOST FAVORABLE RATE OF INTEREST WHICH
LENDER MAY CHARGE ON LOANS TO ITS CUSTOMERS). "PRIME RATE" SHALL MEAN THE RATE
ANNOUNCED FROM TIME TO TIME BY LENDER AS ITS PRIME RATE. EACH CHANGE IN THE RATE
TO BE CHARGED ON THIS NOTE WILL BECOME EFFECTIVE WITHOUT NOTICE ON THE SAME DAY
AS THE INDEX CHANGES. EXCEPT AS OTHERWISE PROVIDED HEREIN, THE UNPAID PRINCIPAL
BALANCE OF THIS NOTE WILL ACCRUE INTEREST AT A RATE PER ANNUM WHICH WILL FROM
TIME TO TIME BE EQUAL TO THE SUM OF THE INDEX, PLUS 0.500%. NOTICE: UNDER NO
CIRCUMSTANCES WILL THE INTEREST RATE ON THIS NOTE BE MORE THAN THE MAXIMUM RATE
ALLOWED BY APPLICABLE LAW.

PREPAYMENT. Borrower agrees that all loan fees and other prepaid finance charges
are earned fully as of the date of the loan and will not be subject to refund
upon early payment (whether voluntary or as a result of default), except as
otherwise required by law. Except for the foregoing, Borrower may pay without
fee all or a portion of the principal amount owed hereunder earlier than it is
due. All prepayments shall be applied to the indebtedness owing hereunder in
such order and manner as Lender may from time to time determine in its sole
discretion.

LATE CHARGE. If a payment is 10 DAYS OR MORE LATE, Borrower will be charged
5.000% OF THE REGULARLY SCHEDULED PAYMENT OR $25.00, WHICHEVER IS GREATER.

DEFAULT. Borrower will be in default if any of the following happens (a)
Borrower fails to make any payment of principal or interest when due under this
Note or any other indebtedness owing now or hereafter by Borrower to Lender; (b)
failure of Borrower or any other party to comply with or perform any term,
obligation, covenant or condition contained in this Note or in any other
promissory note, credit agreement, loan agreement, guaranty, security agreement,
mortgage, deed of trust or any other instrument, agreement or document, whether
now or hereafter existing, executed in connection with this Note (the Note and
all such other instruments, agreements, and documents shall be collectively
known herein as the "RELATED DOCUMENTS"); (c) Any representation or statement
made or furnished to Lender herein, in any of the Related Documents or in
connection with any of the foregoing is false or misleading in any material
respect, (d) Borrower or any other party liable for the payment of this Note,
whether as maker, endorser, guarantor, surety or otherwise, becomes insolvent or
bankrupt, has a receiver or trustee appointed for any part of its property,
makes an assignment for the benefit of its creditors, or any proceeding is
commenced either by any such party or against it under any bankruptcy or
insolvency laws, (e) the occurrence of any event of default specified in any of
the other Related Documents or in any other agreement now or hereafter arising
between Borrower and Lender; (f) the occurrence of any event which permits the
acceleration of the maturity of any indebtedness owing now or hereafter by
Borrower to any third party; or (g) the liquidation, termination, dissolution,
death or legal incapacity of Borrower or any other party liable for the payment
of this Note, whether as maker, endorser, guarantor, surety, or otherwise.

LENDER'S RIGHTS. Upon default, Lender may at it option, without further notice
or demand (i) declare the entire unpaid principal balance on this Note, all
accrued unpaid interest and all other costs and expenses for which Borrower is
responsible for under this Note and any other Related Document immediately due,
(ii) refuse to advance any additional amounts under this Note, (n) foreclose all
liens securing payment hereof, (iv) pursue any other rights, remedies and
recourses available to the Lender, including without limitation, any such
rights, remedies or recourses under the Related Documents, at law or in equity,
or (v) pursue any combination of the foregoing. Upon default, including failure
to pay upon final maturity, Lender, at it option, may also, if permitted under
applicable law, do one or both of the following: (a) increase the variable
interest rate on this Note to 3.500 percentage points over the Index, and (b)
add any unpaid accrued interest to principal and such sum will bear interest
therefrom until paid at the rate provided in this Note (including any increased
rate). The interest rate will not exceed the maximum rate permitted by
applicable law. Lender may hire an attorney to help collect this Note if
Borrower does not pay and Borrower will pay Lender's reasonable attorneys' fees
and all other costs of collection, unless prohibited by applicable law. This
Note has been delivered to Lender and accepted by Lender in the State of
Colorado. Subject to the provisions on arbitration, this Note shall be governed
by and construed in accordance with the laws of the State of Colorado without
regard to any conflict of laws or provisions thereof.

PURPOSE. Borrower agrees that no advances under this Note shall be used for
personal, family, or household purposes and that all advances hereunder shall be
used solely for business, commercial, agricultural or other similar purposes.

JURY WAIVER. THE BORROWER AND LENDER (BY ITS ACCEPTANCE HEREOF) HEREBY
VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE
A JURY PARTICIPATE IN RESOLVING ANY DISPUTE (WHETHER BASED UPON CONTRACT, TORT
OR OTHERWISE) BETWEEN OR AMONG THE BORROWER AND LENDER ARISING OUT OF OR IN ANY
WAY RELATED TO THIS NOTE, ANY OTHER RELATED DOCUMENT, OR ANY RELATIONSHIP
BETWEEN LENDER AND BORROWER. THIS PROVISION IS A MATERIAL INDUCEMENT TO LENDER
TO PROVIDE THE FINANCING EVIDENCED BY THIS NOTE.

DISHONORED ITEM FEE. Borrower will pay a fee to Lender of $20.00 if Borrower
makes a payment on Borrower's loan and the check or preauthorized charge with
which Borrower pays is later dishonored.

RIGHT OF SETOFF. Unless a lien would be prohibited by law or would render a
nontaxable account taxable, Borrower grants to Lender a contractual security
interest in, and hereby assigns, conveys, delivers, pledges, and transfers to
Lender all Borrower's right, title and interest in and to, Borrower's accounts
with Lender (whether checking, savings, or any other account), including without
limitation all accounts held jointly with someone else and all accounts Borrower
may open in the future. Borrower authorizes Lender, to the extent permitted by
applicable law, to charge or setoff all sums owing on this Note against any and
all such accounts.

LINE OF CREDIT. This Note evidences a revolving line of credit. Borrower may
request advances and make payments hereunder from time to time, provided that it
is understood and agreed that the aggregate principal amount outstanding from
time to time hereunder shall not at any time exceed the Total Principal Amount.
The unpaid principal balance of this Note shall increase and decrease with each
new advance or payment hereunder, as the case may be. Subject to the terms
hereof, Borrower may borrow, repay and reborrow hereunder. Advances under this
Note, as well as directions for payment from Borrower's accounts, may be
requested orally or in writing by Borrower or by an authorized person. Lender
may, but need not, require that all oral requests be confirmed in writing.
Borrower agrees to be liable for all sums either (a) advanced in accordance with
the instructions of an authorized person or (b) credited to any of Borrower's
accounts with Lender.

<PAGE> 2
10-27-1999 PROMISSORY NOTE
LOAN NO. (CONTINUED) PAGE 2
- --------------------------------------------------------------------------------

waiver of this arbitration agreement or be prohibited by this arbitration
agreement. This arbitration provision shall not limit the right of either party
during any dispute, claim or controversy to seek, use, and employ ancillary, or
preliminary rights and/or remedies, judicial or otherwise, for the purposes of
realizing upon, preserving, protecting, foreclosing upon or proceeding under
forcible entry and detainer for possession of, any real or personal property,
and any such action shall not be deemed an election of remedies. Such remedies
include, without limitation, obtaining injunctive relief or a temporary
restraining order, invoking a power of sale under any deed of trust or mortgage,
obtaining a writ of attachment or imposition of a receivership, or exercising
any rights relating to personal property, including exercising the right of
set-off, or taking or disposing of such property with or without judicial
process pursuant to the Uniform Commercial Code. Any disputes, claims, or
controversies concerning the lawfulness or reasonableness of an act, or exercise
of any right or remedy, concerning any collateral, including any claim to
rescind, reform, or otherwise modify any agreement relating to the collateral,
shall also be arbitrated; provided, however that no arbitrator shall have the
right or the power to enjoin or restrain any act of either party. Judgment upon
any award rendered by any arbitrator may be entered in any court having
jurisdiction. The statute of limitations, estoppel, waiver, laches and similar
doctrines which would otherwise be applicable in an action brought by a party
shall be applicable in any arbitration proceeding, and the commencement of an
arbitration proceeding shall be deemed the commencement of any action for these
purposes. The Federal Arbitration Act (Title 9 of the United States Code) shall
apply to the construction, interpretation, and enforcement of this arbitration
provision.

RENEWAL AND EXTENSION. This Note is given in replacement, renewal and/or
extension of, but not extinguishing the indebtedness evidenced by, that
promissory note dated March 4, 1999 executed by Borrower in the original
principal amount of $1,500,000.00, and is not a novation thereof. All interest
evidenced by the note being replaced, renewed, and/or extended by this
instrument shall continue to be due and payable until paid.

ADDITIONAL PROVISION REGARDING LATE CHARGES. In the "Late Charge" provision set
forth above, the following language is hereby added after the word "greater":
"up to the maximum amount of One Thousand Five Hundred Dollars ($1500.00) per
late charge".

GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its rights or
remedies under this Note without losing them. Borrower and any other person who
signs, guarantees or endorses this Note, to the extent allowed by law, waive
presentment, demand for payment, protest and notice of dishonor. Upon any change
in the terms of this Note, and unless otherwise expressly stated in writing, no
party who signs this Note, whether as maker, guarantor, accommodation maker or
endorser, shall be released from liability. All such parties agree that Lender
may renew or extend (repeatedly and for any length of time) this Note, or
release any party or guarantor or collateral; or unjustifiably impair, fail to
realize upon or perfect Lender's security interest in the collateral; and take
any other action deemed necessary by Lender without the consent of or notice to
anyone. All such parties also agree that Lender may modify this Note without the
consent of or notice to anyone other than the party with whom the modification
is made.

PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO
THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THE NOTE.

BORROWER:

THE TRIZETTO GROUP, INC., A DELAWARE CORPORATION

By: /s/ JEFFREY H. MARGOLIS
--------------------------------------
JEFFREY H. MARGOLIS, PRESIDENT AND CEO

<PAGE> 3

[BANK-ONE LOGO]

COMMERCIAL SECURITY AGREEMENT
<TABLE>
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Principal Loan Date Maturity Loan No Call Collateral Account Officer Initials
$3,000,000.00 10-27-1999 11-04-2000 106525 328 2756603893 00480
- ------------------------------------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item
- ------------------------------------------------------------------------------------------------------------------
</TABLE>

BORROWER: THE TRIZETTO GROUP, INC., A DELAWARE
CORPORATION
567 SAN NICOLAS DRIVE - SUITE 360
NEWPORT BEACH, CA 92660

LENDER: Bank One, Colorado, NA
Corporate Lending - Boulder
1125 17th Street
Denver, CO 80217

THIS COMMERCIAL SECURITY AGREEMENT is entered into by THE TRIZETTO GROUP, INC.,
A DELAWARE CORPORATION (referred to below as "Grantor") for the benefit of Bank
One, Colorado, NA (referred to below as "Lender"). For valuable consideration,
Grantor grants to Lender a security interest in the Collateral to secure the
Indebtedness and agrees that Lender shall have the rights stated in this
Agreement with respect to the Collateral, in addition to all other rights which
Lender may have by law.

DEFINITIONS. The following words shall have the following meanings when used in
this Agreement. Terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code as adopted in
the State of Colorado ("Code") All references to dollar amounts shall mean
amounts in lawful money of the United States of America.

AGREEMENT. The word "Agreement" means this Commercial Security
Agreement, as this Commercial Security Agreement may be amended or
modified from time to time, together with all exhibits and schedules
attached to this Commercial Security Agreement from time to time.

COLLATERAL. The word "Collateral" means the following described property
of Grantor, whether now owned or hereafter acquired, whether now
existing or hereafter arising, and wherever located:

ALL INVENTORY, CHATTEL PAPER, ACCOUNTS, EQUIPMENT AND GENERAL
INTANGIBLES

In addition, the word "Collateral" includes all the following, whether
now owned or hereafter acquired, whether now existing or hereafter
arising, and wherever located:

(a) All attachments, accessions, accessories, tools, parts,
supplies, increases, and additions to and all replacements of and
substitutions for any property described above.

(b) All products and produce of any of the property described in
this Collateral section.

(c) All proceeds (including, without limitation, insurance
proceeds) from the sale, lease, destruction, loss, or other
disposition of any of the property described in this Collateral
section.

(d) All records and data relating to any of the property described
in this Collateral section, whether in the form of a writing,
photograph, microfilm, microfiche, or electronic media, together
with all of Grantor's right, title, and interest in and to all
computer software required to utilize, create, maintain, and
process any such records or data on electronic media.

EVENT OF DEFAULT. The words "Event of Default" mean and include any of
the Events of Default set forth below in the section titled "Events of
Default."

GRANTOR. The word "Grantor" means THE TRIZETTO GROUP, INC., A DELAWARE
CORPORATION, its successors and assigns (which is a debtor under the
Code).

GUARANTOR. The word "Guarantor" means and includes without limitation,
each and all of the guarantors, sureties, and accommodation parties in
connection with the Indebtedness.

INDEBTEDNESS. The word "Indebtedness" means the indebtedness evidenced
by the Note, including all principal and accrued interest thereon,
together with all other liabilities, costs and expenses for which
Grantor is responsible under this Agreement or under any of the Related
Documents. In addition, the word "Indebtedness" includes all other
obligations, debts and liabilities, plus any accrued interest thereon,
owing by Grantor, or any one or more of them, to Lender of any kind or
character, now existing or hereafter arising, as well as all present and
future claims by Lender against Grantor, or any one or more of them, and
all renewals, extensions, modifications, substitutions and
rearrangements of any of the foregoing, whether such Indebtedness arises
by note, draft, acceptance, guaranty, endorsement, letter of credit,
assignment, overdraft, indemnity agreement or otherwise; whether such
Indebtedness is voluntary or involuntary, due or not due, direct or
indirect, absolute or contingent, liquidated or unliquidated; whether
Grantor may be liable individually or jointly with others, whether
Grantor may be liable primarily or secondarily or as debtor, maker,
comaker, drawer, endorser, guarantor, surety, accommodation party or
otherwise.

LENDER. The word "Lender" means Bank One, Colorado, NA, its successors
and assigns (which is a secured party under the Code).

NOTE. The word "Note" means the promissory note dated October 27, 1999,
in the principal amount of $3,000,000.00 from THE TRIZETTO GROUP, INC.,
A DELAWARE CORPORATION to Lender, together with all renewals of,
extensions of, modifications of, refinancings of, consolidations of and
substitutions for such promissory note.

RELATED DOCUMENTS. The words "Related Documents" mean and include
without limitation the Note and all credit agreements, loan agreements,
environmental agreements, guaranties, security agreements, mortgages,
deeds of trust, and all other instruments, agreements and documents,
whether now or hereafter existing, executed in connection with the Note.

OBLIGATIONS OF GRANTOR. Grantor represents, warrants and covenants to Lender as
follows:

PERFECTION OF SECURITY INTEREST. Grantor agrees to execute such
financing statements and to take whatever other actions are requested by
Lender to perfect and continue Lender's security interest in the
Collateral. Upon request of Lender, Grantor will deliver to Lender any
and all of the documents evidencing or constituting the Collateral, and
Grantor will note Lender's interest upon any and all chattel paper if
not delivered to Lender for possession by Lender. Grantor hereby
irrevocably appoints Lender as its attorney-in-fact for the purpose of
executing any documents necessary to perfect or to continue the security
interest granted in this Agreement. Lender may at any time, and without
further authorization from Grantor, file a carbon, photographic or other
reproduction of any financing statement or of this Agreement for use as
a financing statement. Grantor will reimburse Lender for all expenses
for the perfection and the continuation of the perfection of Lender's
security interest in the Collateral. Grantor has disclosed to Lender all
tradenames and assumed names currently used by Grantor, all tradenames
and assumed names used by Grantor within the previous six (6) years and
all of Grantor's current business locations. Grantor will notify Lender
in writing at least thirty (30) days prior to the occurrence of any of
the following: (i) any changes in Grantor's name, tradename(s) or
assumed name(s), or (ii) any change in Grantor's business locations) or
the location of any of the Collateral.

NO VIOLATION. The execution and delivery of this Agreement will not
violate any law or agreement, governing Grantor or to which Grantor is a
party, and its certificate or articles of incorporation and bylaws do
not prohibit any term or condition of this Agreement.

ENFORCEABILITY OF COLLATERAL. To the extent the Collateral consists of
accounts, chattel paper, or general intangibles, the Collateral is
enforceable in accordance with its terms, is genuine, and complies with
applicable laws concerning form, content and manner of preparation and
execution, and all persons appearing to be obligated on the Collateral
have authority and capacity to contract and are in fact obligated as
they appear to be on the Collateral. At the time any account becomes
subject to a security interest in favor of Lender, the account shall be
a good and valid account representing an undisputed, bona fide
indebtedness incurred by the account debtor, for merchandise held
subject to delivery instructions or theretofore shipped or delivered
pursuant to a contract of sale, or for services theretofore performed by
Grantor with or for the account debtor; Grantor will not adjust, settle,
compromise, amend or modify any account, except in good faith and in the
ordinary course of business; provided, however, this exception shall
automatically terminate upon the occurrence of an Event of Default or
upon Lender's written request.

LOCATION OF THE COLLATERAL. Grantor, upon request of Lender, will
deliver to Lender in form satisfactory to Lender a schedule of real
properties and Collateral locations relating to Grantor's operations,
including without limitation the following: (a) all real property owned
or being purchased by Grantor; (b) all real property being rented or
leased by Grantor; (c) all storage facilities owned, rented, leased, or
being used by Grantor; and (d) all other properties where Collateral is
or may be located. Except in the ordinary course of its business,
Grantor shall not remove the Collateral from its existing locations
without the prior written consent of Lender.

REMOVAL OF COLLATERAL. Grantor shall keep the Collateral (or to the
extent the Collateral consists of intangible property such as accounts,
the records concerning the Collateral) at Grantor's address shown above,
or at such other locations as are acceptable to Lender. Except in the
ordinary course of its business, including the sales of inventory,
Grantor shall not remove the Collateral from its existing locations

<PAGE> 4

10-27-99 COMMERCIAL SECURITY AGREEMENT
Loan No. (Continued)

Page 2

without the prior written consent of Lender. To the extent that the
Collateral consists of vehicles, or other titled property, Grantor shall
not take or permit any action which would require application for
certificates of title for the vehicles outside the State of Colorado,
without the prior written consent of Lender.

TRANSACTIONS INVOLVING COLLATERAL. Except for inventory sold or accounts
collected in the ordinary course of Grantor's business, Grantor shall
not sell, offer to sell, or otherwise transfer or dispose of the
Collateral. While Grantor is not in default under this Agreement,
Grantor may sell inventory, but only in the ordinary course of its
business and only to buyers who qualify as a buyer in the ordinary
course of business. A sale in the ordinary course of Grantor's business
does not include a transfer in partial or total satisfaction of a debt
or any bulk sale. Grantor shall not pledge, mortgage, encumber or
otherwise permit the Collateral to be subject to any lien, security
interest, encumbrance, or charge, other than the security interest
provided for in this Agreement, without the prior written consent of
Lender This includes security interests even if junior in right to the
security interests granted under this Agreement. Unless waived by
Lender, all proceeds from any disposition of the Collateral (for
whatever reason) shall be held in trust for Lender and shall not be
commingled with any other funds; provided however, this requirement
shall not constitute consent by Lender to any sale or other disposition.
Upon receipt, Grantor shall immediately deliver any such proceeds to
Lender.

Title. Grantor represents and warrants to Lender that it is the owner of
the Collateral and holds good and marketable title to the Collateral,
free and clear of all liens and encumbrances except for the lien of this
Agreement. No financing statement covering any of the Collateral is on
file in any public office other than those which reflect the security
interest created by this Agreement or to which Lender has specifically
consented. Grantor shall defend Lender's rights in the Collateral
against the claims and demands of all other persons.

COLLATERAL SCHEDULES AND LOCATIONS. As often as Lender shall require,
and insofar as the Collateral consists of accounts and general
intangibles, Grantor shall deliver to Lender schedules of such
Collateral, including such information as Lender may require, including
without limitation names and addresses of account debtors and agings of
accounts and general intangibles. Insofar as the Collateral consists of
inventory and equipment, Grantor shall deliver to Lender, as often as
Lender shall require, such lists, descriptions, and designations of such
Collateral as Lender may require to identify the nature, extent, and
location of such Collateral.

MAINTENANCE AND INSPECTION OF COLLATERAL. Grantor shall maintain all
tangible Collateral in good condition and repair. Grantor will not
commit or permit damage to or destruction of the Collateral or any part
of the Collateral. Lender and its designated representatives and agents
shall have the right at all reasonable times to examine, inspect, and
audit the Collateral wherever located. Grantor shall immediately notify
Lender of all cases involving the return, rejection, repossession, loss
or damage of or to any Collateral; of any request for credit or
adjustment or of any other dispute arising with respect to the
Collateral; and generally of all happenings and events affecting the
Collateral or the value or the amount of the Collateral.

TAXES, ASSESSMENTS AND LIENS. Grantor will pay when due all taxes,
assessments and governmental charges or levies upon the Collateral and
provide Lender evidence of such payment upon its request. Grantor may
withhold any such payment or may elect to contest any lien if Grantor is
in good faith conducting an appropriate proceeding to contest the
obligation to pay and so long as Lender's interest in the Collateral is
not jeopardized in Lender's sole opinion. If the Collateral is subjected
to a lien which is not discharged within fifteen (15) days, Grantor
shall deposit with Lender cash, a sufficient corporate surety bond or
other security satisfactory to Lender in an amount adequate to provide
for the discharge of the lien plus any interest, costs, attorneys' fees
or other charges that could accrue as a result of foreclosure or sale of
the Collateral. In any contest Grantor shall defend itself and Lender
and shall satisfy any final adverse judgment before enforcement against
the Collateral. Grantor shall name Lender as an additional obligee under
any surety bond furnished in the contest proceedings.

COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. Grantor is conducting and
will continue to conduct Grantor's businesses in material compliance
with all federal, state and local laws, statutes, ordinances, rules,
regulations, orders, determinations and court decisions applicable to
Grantor's businesses and to the production, disposition or use of the
Collateral, including without limitation, those pertaining to health and
environmental matters such as the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986 (collectively, together with
any subsequent amendments, hereinafter called "CERCLA"), the Resource
Conservation and Recovery Act of 1976, as amended by the Used Oil
Recycling Act of 1980, the Solid Waste Disposal Act Amendments of 1980,
and the Hazardous Substance Waste Amendments of 1984 (collectively,
together with any subsequent amendments, hereinafter called "RCRA").
Grantor represents and warrants that (i) none of the operations of
Grantor is the subject of a federal, state or local investigation
evaluating whether any material remedial action is needed to respond to
a release or disposal of any toxic or hazardous substance or solid waste
into the environment; (ii) Grantor has not filed any notice under any
federal, state or local law indicating that Grantor is responsible for
the release into the environment, the disposal on any premises in which
Grantor is conducting its businesses or the improper storage, of any
material amount of any toxic or hazardous substance or solid waste or
that any such toxic or hazardous substance or solid waste has been
released, disposed of or is improperly stored, upon any premises on
which Grantor is conducting its businesses; and (iii) Grantor otherwise
does not have any known material contingent liability in connection with
the release into the environment, disposal or the improper storage, of
any such toxic or hazardous substance or solid waste. The terms
"hazardous substance" and "release", as used herein, shall have the
meanings specified in CERCLA, and the terms "solid waste" and
"disposal", as used herein, shall have the meanings specified in RCRA;
provided, however, that to the extent that the laws of the State of
Colorado establish meanings for such terms which are broader than that
specified in either CERCLA or RCRA, such broader meanings shall apply.
The representations and warranties contained herein are based on
Grantor's due diligence in investigating the Collateral for hazardous
wastes and substances. Grantor hereby (a) releases and waives any future
claims against Lender for indemnity or contribution in the event Grantor
becomes liable for cleanup or other costs under any such laws, and (b)
agrees to indemnify and hold harmless Lender against any and all claims
and losses resulting from a breach of this provision of this Agreement.
This obligation to indemnify shall survive the payment of the
Indebtedness and the termination of this Agreement.

MAINTENANCE OF CASUALTY INSURANCE. Grantor shall procure and maintain
all risk insurance, including without limitation fire, theft and
liability coverage together with such other insurance as Lender may
require with respect to the Collateral, in form, amounts, coverages and
basis reasonably acceptable to Lender and issued by a company or
companies reasonably acceptable to Lender. Grantor, upon request of
Lender, will deliver to Lender from time to time the policies or
certificates of insurance in form satisfactory to Lender, including
stipulations that coverages will not be cancelled or diminished without
at least thirty (30) days' prior written notice to Lender and not
including any disclaimer of the insurer's liability for failure to give
such a notice. Each insurance policy also shall include an endorsement
providing that coverage in favor of Lender will not be impaired in any
way by any act, omission or default of Grantor or any other person. In
connection with all policies covering assets in which Lender holds or is
offered a security interest, Grantor will provide Lender with such loss
payable or other endorsements as Lender may require. If Grantor at any
time fails to obtain or maintain any insurance as required under this
Agreement, Lender may (but shall not be obligated to) obtain such
insurance as Lender deems appropriate, including if it so chooses
"single interest insurance," which will cover only Lender's interest in
the Collateral.

APPLICATION OF INSURANCE PROCEEDS. Grantor shall promptly notify Lender
of any loss or damage to the Collateral. Lender may make proof of loss
if Grantor fails to do so within fifteen (15) days of the casualty. All
proceeds of any insurance on the Collateral, including accrued proceeds
thereon, shall be held by Lender as part of the Collateral. If Lender
consents to repair or replacement of the damaged or destroyed
Collateral, Lender shall, upon satisfactory proof of expenditure, pay or
reimburse Grantor from the proceeds for the reasonable cost of repair or
restoration. If Lender does not consent to repair or replacement of the
Collateral, Lender shall retain a sufficient amount of the proceeds to
pay all of the Indebtedness, and shall pay the balance to Grantor. Any
proceeds which have not been disbursed within six (6) months after their
receipt and which Grantor has not committed to the repair or restoration
of the Collateral shall be used to prepay the Indebtedness. Application
of insurance proceeds to the payment of the Indebtedness will not
extend, postpone or waive any payments otherwise due, or change the
amount of such payments to be made and proceeds may be applied in such
order and such amounts as Lender may elect.

SOLVENCY OF GRANTOR. As of the date hereof, and after giving effect to
this Agreement and the completion of all other transactions contemplated
by Grantor at the time of the execution of this Agreement, (i) Grantor
is and will be solvent, (ii) the fair salable value of Grantor's assets
exceeds and will continue to exceed Grantor's liabilities (both fixed
and contingent), (iii) Grantor is paying and will continue to be able to
pay its debts as they mature, and (iv) if Grantor is not an individual,
Grantor has and will have sufficient capital to carry on Grantor's
businesses and all businesses in which Grantor is about to engage.

LIEN NOT RELEASED. The lien, security interest and other security rights
of Lender hereunder shall not be impaired by any indulgence, moratorium
or release granted by Lender, including but not limited to, the
following: (a) any renewal, extension, increase or modification of any
of the Indebtedness; (b) any surrender, compromise, release, renewal,
extension, exchange or substitution granted in respect of any of the
Collateral; (c) any release or indulgence granted to any endorser,
guarantor or surety of any of the Indebtedness; (d) any release of any
other collateral for any of the Indebtedness; (e) any acquisition of any
additional collateral for any of the Indebtedness; and (f) any waiver or
failure to exercise any right, power or remedy granted herein, by law or
in any of the Related Documents.

REQUEST FOR ENVIRONMENTAL INSPECTIONS. Upon Lender's reasonable request
from time to time, Grantor will obtain at Grantor's expense an
inspection or audit report(s) addressed to Lender of Grantor's
operations from an engineering or consulting firm approved by Lender,
indicating the presence or absence of toxic and hazardous substances,
underground storage tanks and solid waste on any premises in which
Grantor is conducting a business; provided, however, Grantor will be
obligated to pay for the cost of any such inspection or audit no more
than one time in any twelve (12) month period unless Lender has reason
to believe that toxic or hazardous substance or solid

<PAGE> 5

10-27-99 COMMERCIAL SECURITY AGREEMENT
Loan No. (Continued)

Page 3

wastes have been dumped or released on any such premises. If Grantor
fails to order or obtain an inspection or audit within ten (10) days
after Lender's request, Lender may at its option order such inspection
or audit, and Grantor grants to Lender and its agents, employees,
contractors and consultants access to the premises in which it is
conducting its business and a license (which is coupled with an interest
and is irrevocable) to obtain inspections and audits. Grantor agrees to
promptly provide Lender with a copy of the results of any such
inspection or audit received by Grantor. The cost of such inspections
and audits by Lender shall be a part of the Indebtedness, secured by the
Collateral and payable by Grantor on demand.

CHATTEL PAPER. To the extent a security interest in the chattel paper of
Grantor is granted hereunder, Grantor represents and warrants that all
such chattel paper have only one original counterpart and no other party
other than Grantor or Lender is in actual or constructive possession of
any such chattel paper. Grantor agrees that at the option of and on the
request by Lender, Grantor will either deliver to Lender all originals
of the chattel paper which is included in the Collateral or will mark
all such chattel paper with a legend indicating that such chattel paper
is subject to the security interest granted hereunder.

LANDLORD'S WAIVERS. Grantor agrees that upon the request of Lender,
Grantor shall cause each landlord of real property leased by Grantor at
which any of the Collateral is located from time to time to execute and
deliver agreements satisfactory in form and substance to Lender by which
such landlord waives or subordinates any rights it may have in the
Collateral.

GRANTOR'S RIGHT TO POSSESSION AND TO COLLECT ACCOUNTS. Until default and except
as otherwise provided below with respect to accounts, Grantor may have
possession of the tangible personal property and beneficial use of all the
Collateral and may use it in any lawful manner not inconsistent with this
Agreement or the Related Documents, provided that Grantor's right to possession
and beneficial use shall not apply to any Collateral where possession of the
Collateral by Lender is required by law to perfect Lender's security interest in
such Collateral. Until otherwise notified by Lender, Grantor may collect any of
the Collateral consisting of accounts. At any time and even though no Event of
Default exists, Lender may collect the accounts, notify account debtors to make
payments directly to Lender for application to the Indebtedness and to verify
the accounts with such account debtors. Lender also has the right, at the
expense of Grantor, to enforce collection of such accounts and adjust, settle,
compromise, sue for or foreclose on the amount owing under any such account, in
the same manner and to the same extent as Grantor. If Lender at any time has
possession of any Collateral, whether before or after an Event of Default,
Lender shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral if Lender takes such action for that purpose as
Grantor shall request or as Lender, in Lender's sole discretion, shall deem
appropriate under the circumstances, but failure to honor any request by Grantor
shall not of itself be deemed to be a failure to exercise reasonable care.
Lender shall not be required to take any steps necessary to preserve any rights
in the Collateral against prior parties, nor to protect, preserve or maintain
any security interest given to secure the Indebtedness.

EXPENDITURES BY LENDER. If not discharged or paid when due, Lender may (but
shall not be obligated to) discharge or pay any amounts required to be
discharged or paid by Grantor under this Agreement, including without limitation
all taxes, liens, security interests, encumbrances, and other claims, at any
time levied or placed on the Collateral. Lender also may (but shall not be
obligated to) pay all costs for insuring, maintaining and preserving the
Collateral. All such expenditures incurred or paid by Lender for such purposes
will then bear interest at the rate charged under the Note from the date
incurred or paid by Lender to the date of repayment by Grantor. All such
expenses shall become a part of the Indebtedness and be payable on demand by
Lender. Such right shall be in addition to all other rights and remedies to
which Lender may be entitled upon the occurrence of an Event of Default.

EVENTS OF DEFAULT. Each of the following shall constitute an Event of Default
under this Agreement:

DEFAULT ON INDEBTEDNESS. Failure of Grantor to make any payment when due
on the Indebtedness.

OTHER DEFAULTS. Failure of Grantor to comply with or to perform any
other term, obligation, covenant or condition contained in this
Agreement, the Note, any of the other Related Documents or in any other
agreement now existing or hereafter arising between Lender and Grantor.

FALSE STATEMENTS. Any warranty, representation or statement made or
furnished to Lender under this Agreement, the Note or any of the other
Related Documents is false or misleading in any material respect.

DEFAULT TO THIRD PARTY. The occurrence of any event which permits the
acceleration of the maturity of any indebtedness owing by Grantor or any
Guarantor to any third party under any agreement or undertaking.

BANKRUPTCY OR INSOLVENCY. If the Grantor or any Guarantor: (i) becomes
insolvent, or makes a transfer in fraud of creditors, or makes an
assignment for the benefit of creditors, or admits in writing its
inability to pay its debts as they become due; (n) generally is not
paying its debts as such debts become due; (iii) has a receiver, trustee
or custodian appointed for, or take possession of, all or substantially
all of the assets of such party or any of the Collateral, either in a
proceeding brought by such party or in a proceeding brought against such
party and such appointment is not discharged or such possession is not
terminated within sixty (60) days after the effective date thereof or
such party consents to or acquiesces in such appointment or possession;
(iv) files a petition for relief under the United States Bankruptcy Code
or any other present or future federal or state insolvency, bankruptcy
or similar laws (all of the foregoing hereinafter collectively called
"APPLICABLE BANKRUPTCY LAW") or an involuntary petition for relief is
filed against such party under any Applicable Bankruptcy Law and such
involuntary petition is not dismissed within sixty (60) days after the
filing thereof, or an order for relief naming such party is entered
under any Applicable Bankruptcy Law, or any composition, rearrangement,
extension, reorganization or other relief of debtors now or hereafter
existing is requested or consented to by such party; (v) fails to have
discharged within a period of sixty (60) days any attachment,
sequestration or similar writ levied upon any property of such party; or
(vi) fails to pay within thirty (30) days any final money judgment
against such party.

LIQUIDATION, DEATH AND RELATED EVENTS. If Grantor or any Guarantor is an
entity, the liquidation, dissolution, merger or consolidation of any
such entity or, if any of such parties is an individual, the death or
legal incapacity of any such individual.

CREDITOR OR FORFEITURE PROCEEDINGS. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Grantor or by any
governmental agency against the Collateral or any other collateral
securing the Indebtedness.

RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this
Agreement, at any time thereafter, Lender shall have all the rights of a secured
party under the Code. In addition and without limitation, Lender may exercise
any one or more of the following rights and remedies:

ACCELERATE INDEBTEDNESS. Lender may declare the entire Indebtedness,
including any prepayment penalty which Grantor would be required to pay,
immediately due and payable, without notice.

ASSEMBLE COLLATERAL. Lender may require Grantor to deliver to Lender all
or any portion of the Collateral and any and all certificates of title
and other documents relating to the Collateral. Lender may require
Grantor to assemble the Collateral and make it available to Lender at a
place to be designated by Lender. Lender also shall have full power to
enter upon the property of Grantor to take possession of and remove the
Collateral. If the Collateral contains other goods not covered by this
Agreement at the time of repossession, Grantor agrees Lender may take
such other goods, provided that Lender makes reasonable efforts to
return them to Grantor after repossession.

SELL THE COLLATERAL. Lender shall have full power to sell, lease,
transfer, or otherwise dispose of the Collateral or the proceeds thereof
in its own name or that of Grantor. Lender may sell the Collateral (as a
unit or in parcels) at public auction or private sale. Lender may buy
the Collateral, or any portion thereof, (i) at any public sale, and (ii)
at any private sale if the Collateral is of a type customarily sold in a
recognized market or is of a type which is the subject of widely
distributed standard price quotations. Lender shall not be obligated to
make any sale of Collateral regardless of a notice of sale having been
given. Lender may adjourn any public or private sale from time to time
by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned. Unless the Collateral is perishable or threatens to decline
speedily in value or is of a type customarily sold on a recognized
market, Lender will give Grantor reasonable notice of the time and place
of any public sale thereof or of the time after which any private sale
or any other intended disposition of the Collateral is to be made. The
requirements of reasonable notice shall be met if such notice is given
at least ten (10) days prior to the date any public sale, or after which
a private sale, of any of such Collateral is to be held. All expenses
relating to the disposition of the Collateral, including without
limitation the expenses of retaking, holding, insuring, preparing for
sale and selling the Collateral, shall become a part of the Indebtedness
secured by this Agreement and shall be payable on demand, with interest
at the Note rate from date of expenditure until repaid. Any sale of
Collateral through the public trustee shall be deemed a commercially
reasonable sale.

APPOINT RECEIVER. To the extent permitted by applicable law, Lender
shall have the following rights and remedies regarding the appointment
of a receiver: (a) Lender may have a receiver appointed as a matter of
right, (b) the receiver may be an employee of Lender and may serve
without bond, and (c) all fees of the receiver and his or her attorney
shall become part of the Indebtedness secured by this Agreement and
shall be payable on demand, with interest at the Note rate from date of
expenditure until repaid. The receiver may be appointed by a court of
competent jurisdiction upon ex parte application and without notice,
notice being expressly waived.

COLLECT REVENUES, APPLY ACCOUNTS. Lender, either itself or through a
receiver, may collect the payments, rents, income, and revenues from the
Collateral. Lender may transfer any Collateral into its own name or that
of its nominee and receive the payments, rents, income, and revenues
therefrom and hold the same as security for the Indebtedness or apply it
to payment of the Indebtedness in such order of

<PAGE> 6

10-27-99 COMMERCIAL SECURITY AGREEMENT
Loan No. (Continued)

Page 4

preference as Lender may determine. Insofar as the Collateral consists
of accounts, general intangibles, insurance policies, instruments,
chattel paper, choses in action, or similar property, Lender may demand,
collect, receipt for, settle, compromise, adjust, sue for, foreclose, or
realize on the Collateral as Lender may determine For these purposes,
Lender may, on behalf of and in the name of Grantor, receive, open and
dispose of mail addressed to Grantor; change any address to which mail
and payments are to be sent; and endorse notes, checks, drafts, money
orders, documents of title, instruments and items pertaining to payment,
shipment, or storage of any Collateral. To facilitate collection, Lender
may notify account debtors and obligors on any Collateral to make
payments directly to Lender.

OBTAIN DEFICIENCY. If Lender chooses to sell any or all of the
Collateral, Lender may obtain a judgment against Grantor for any
deficiency remaining on the Indebtedness due to Lender after application
of all amounts received from the exercise of the rights provided in this
Agreement. Grantor shall be liable for a deficiency even if the
transaction described in this subsection is a sale of accounts or
chattel paper.

OTHER RIGHTS AND REMEDIES. Lender shall have all the rights and remedies
of a secured creditor under the provisions of the Code, as may be
amended from time to time. In addition, Lender shall have and may
exercise any or all other rights and remedies it may have available at
law, in equity, or otherwise. Grantor waives any right to require Lender
to proceed against any third party, exhaust any other security for the
Indebtedness or pursue any other right or remedy available to Lender.

CUMULATIVE REMEDIES. All of Lender's rights and remedies, whether
evidenced by this Agreement or the Related Documents or by any other
writing, shall be cumulative and may be exercised singularly or
concurrently. Election by Lender to pursue any remedy shall not exclude
pursuit of any other remedy, and an election to make expenditures or to
take action to perform an obligation of Grantor under this Agreement,
after Grantor's failure to perform, shall not affect Lender's right to
declare a default and to exercise its remedies.

MISCELLANEOUS PROVISIONS.

AMENDMENTS. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to
the matters set forth in this Agreement and supercedes all prior written
and oral agreements and understandings, if any, regarding same. No
alteration of or amendment to this Agreement shall be effective unless
given in writing and signed by the party or parties sought to be charged
or bound by the alteration or amendment.

APPLICABLE LAW. This Agreement has been delivered to Lender and accepted
by Lender in the State of Colorado. Subject to the provisions on
arbitration in any Related Document, this Agreement shall be governed by
and construed in accordance with the laws of the State of Colorado
without regard to any conflict of laws or provisions thereof.

JURY WAIVER. THE UNDERSIGNED AND LENDER (BY ITS ACCEPTANCE HEREOF)
HEREBY VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY
RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE (WHETHER BASED
UPON CONTRACT, TORT OR OTHERWISE) BETWEEN OR AMONG THE UNDERSIGNED AND
LENDER ARISING OUT OF OR IN ANY WAY RELATED TO THIS DOCUMENT, AND ANY
OTHER RELATED DOCUMENT, OR ANY RELATIONSHIP BETWEEN LENDER AND THE
BORROWER. THIS PROVISION IS A MATERIAL INDUCEMENT TO LENDER TO PROVIDE
THE FINANCING DESCRIBED HEREIN OR IN THE OTHER RELATED DOCUMENTS.

ATTORNEYS' FEES; EXPENSES. Grantor will upon demand pay to Lender the
amount of any and all costs and expenses (including without limitation,
reasonable attorneys' fees and expenses) which Lender may incur in
connection with (i) the perfection and preservation of the collateral
assignment and security interests created under this Agreement, (ii) the
custody, preservation, use or operation of, or the sale of, collection
from, or other realization upon, the Collateral, (iii) the exercise or
enforcement of any of the rights of Lender under this Agreement, or (iv)
the failure by Grantor to perform or observe any of the provisions
hereof.

TERMINATION. Upon (i) the satisfaction in full of the Indebtedness and
all obligations hereunder, (ii) the termination or expiration of any
commitment of Lender to extend credit that would become Indebtedness
hereunder, and (iii) Lender's receipt of a written request from Grantor
for the termination hereof, this Agreement and the security interests
created hereby shall terminate. Upon termination of this Agreement and
Grantor's written request, Lender will, at Grantor's sole cost and
expense, return to Grantor such of the Collateral as shall not have been
sold or otherwise disposed of or applied pursuant to the terms hereof
and execute and deliver to Grantor such documents as Grantor shall
reasonably request to evidence such termination.

INDEMNITY. Grantor hereby agrees to indemnify, defend and hold harmless
Lender, and its officers, directors, shareholders, employees, agents and
representatives (each an "Indemnified Person") from and against any and
all liabilities, obligations, claims, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind
or nature (collectively, the "Claims") which may be imposed on, incurred
by or asserted against, any Indemnified Person (whether or not caused by
any Indemnified Person's sole, concurrent or contributory negligence)
arising in connection with the Related Documents, the Indebtedness or
the Collateral (including, without limitation, the enforcement of the
Related Documents and the defense of any Indemnified Person's action
and/or inactions in connection with the Related Documents), except to
the limited extent that the Claims against the Indemnified Person are
proximately caused by such Indemnified Person's willful misconduct. The
indemnification provided for in this Section shall survive the
termination of this Agreement and shall extend and continue to benefit
each individual or entity who is or has at any time been an Indemnified
Person hereunder.

CAPTION HEADINGS. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the
provisions of this Agreement.

NOTICES. All notices required to be given under this Agreement shall be
given in writing, and shall be effective when actually delivered or when
deposited with a nationally recognized overnight courier or deposited in
the United States mail, first class, postage prepaid, addressed to the
party to whom the notice is to be given at the address shown above. Any
party may change its address for notices under this Agreement by giving
formal written notice to the other parties, specifying that the purpose
of the notice is to change the party's address. To the extent permitted
by applicable law, if there is more than one Grantor, notice to any
Grantor will constitute notice to all Grantors. For notice purposes,
Grantor will keep Lender informed at all times of Grantor's current
address(es).

POWER OF ATTORNEY. Grantor hereby irrevocably appoints Lender as its
true and lawful attorney-in-fact, such power of attorney being coupled
with an interest, with full power of substitution to do the following in
the place and stead of Grantor and in the name of Grantor: (a) to
demand, collect, receive, receipt for, sue and recover all sums of money
or other property which may now or hereafter become due, owing or
payable from the Collateral; (b) to execute, sign and endorse any and
all claims, instruments, receipts, checks, drafts or warrants issued in
payment for the Collateral; (c) to settle or compromise any and all
claims arising under the Collateral, and, in the place and stead of
Grantor, to execute and deliver its release and settlement for the
claim; and (d) to file any claim or claims or to take any action or
institute or take part in any proceedings, either in its own name or in
the name of Grantor, or otherwise, which in the discretion of Lender may
seem to be necessary or advisable. This power is given as security for
the Indebtedness, and the authority hereby conferred is and shall be
irrevocable and shall remain in full force and effect until renounced by
Lender.

SEVERABILITY. If a court of competent jurisdiction finds any provision
of this Agreement to be invalid or unenforceable as to any person or
circumstance, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances. If feasible, any
such offending provision shall be deemed to be modified to be within the
limits of enforceability or validity; however, if the offending
provision cannot be so modified, it shall be stricken and all other
provisions of this Agreement in all other respects shall remain valid
and enforceable.

SUCCESSOR INTERESTS. Subject to the limitations set forth above on
transfer of the Collateral, this Agreement shall be binding upon and
inure to the benefit of the parties, their successors and assigns;
provided, however, Grantor's rights and obligations hereunder may not be
assigned or otherwise transferred without the prior written consent of
Lender.

WAIVER. Lender shall not be deemed to have waived any rights under this
Agreement unless such waiver is given in writing and signed by Lender.
No delay or omission on the part of Lender in exercising any right shall
operate as a waiver of such right or any other right. A waiver by Lender
of a provision of this Agreement shall not prejudice or constitute a
waiver of Lender's right to thereafter demand strict compliance with
that provision or any other provision of this Agreement. No prior waiver
by Lender, nor any course of dealing between Lender and Grantor, shall
constitute a waiver of any of Lender's rights or of any of Grantor's
obligations as to any future transactions. Whenever the consent of
Lender is required under this Agreement, the granting of such consent by
Lender in any instance shall not constitute continuing consent to
subsequent instances where such consent is required and in all cases
such consent may be granted or withheld in the sole discretion of Lender

<PAGE> 7

10-27-99 COMMERCIAL SECURITY AGREEMENT
Loan No. (Continued)

Page 5

GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS COMMERCIAL SECURITY
AGREEMENT, AND GRANTOR AGREES TO ITS TERMS. THIS AGREEMENT IS DATED OCTOBER 27,
1999.

GRANTOR:
THE TRIZETTO GROUP, INC., A DELAWARE CORPORATION

By: /s/ JEFFREY H. MARGOLIS
--------------------------------------
JEFFREY H. MARGOLIS, PRESIDENT AND CEO

<PAGE> 8

[BANK-ONE LOGO]

LOAN AGREEMENT

<TABLE>
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PRINCIPAL LOAN DATE MATURITY LOAN NO CALL COLLATERAL ACCOUNT OFFICER INITIALS
$3,000,000.00 10-27-1999 11-04-2000 106525 328 2756603893 00480
- ------------------------------------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item
- ------------------------------------------------------------------------------------------------------------------
</TABLE>

BORROWER: THE TRIZETTO GROUP, INC., A DELAWARE
CORPORATION
567 SAN NICOLAS DRIVE - SUITE 360
NEWPORT BEACH, CA 92660

LENDER: Bank One, Colorado, NA
Corporate Lending - Boulder
1125 17th Street
Denver, CO 80217

THIS LOAN AGREEMENT BETWEEN THE TRIZETTO GROUP, INC., A DELAWARE CORPORATION
("BORROWER") AND BANK ONE, COLORADO, NA ("LENDER") IS MADE AND EXECUTED AS OF
OCTOBER 27, 1999, THIS AGREEMENT GOVERNS ALL LOANS, CREDIT FACILITIES AND/OR
OTHER FINANCIAL ACCOMMODATIONS DESCRIBED HEREIN AND, UNLESS OTHERWISE AGREED TO
IN WRITING BY LENDER AND BORROWER, ALL OTHER PRESENT AND FUTURE LOANS, CREDIT
FACILITIES AND OTHER FINANCIAL ACCOMMODATIONS PROVIDED BY LENDER TO BORROWER.
ALL SUCH LOANS, CREDIT FACILITIES AND OTHER FINANCIAL ACCOMMODATIONS, TOGETHER
WITH ALL RENEWALS, EXTENSIONS AND MODIFICATIONS THEREOF, ARE REFERRED TO IN THIS
AGREEMENT INDIVIDUALLY AS THE "LOAN" AND COLLECTIVELY AS THE "LOANS." BORROWER
UNDERSTANDS AND AGREES THAT: (A) IN GRANTING, RENEWING, OR EXTENDING ANY LOAN,
LENDER IS RELYING UPON BORROWER'S REPRESENTATIONS, WARRANTIES, AND AGREEMENTS,
AS SET FORTH IN THIS AGREEMENT, AND (B) ALL SUCH LOANS SHALL BE AND SHALL REMAIN
SUBJECT TO THE FOLLOWING TERMS AND CONDITIONS OF THIS AGREEMENT.

TERM. This Agreement shall be effective as of OCTOBER 27, 1999, and shall
continue thereafter until all Loans and other obligations owing by Borrower to
Lender hereunder have been paid in full and Lender has no commitments or
obligations to make further Advances under the Loans to Borrower.

DEFINITIONS. The following words shall have the following meanings when used in
this Agreement. Terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code as adopted in
the State of Colorado. All references to dollar amounts shall mean amounts in
lawful money of the United States of America.

AGREEMENT. The word "Agreement" means this Loan Agreement, as may be
amended or modified from time to time, together with all exhibits and
schedules attached hereto from time to time.

ACCOUNT. The word "Account" means a trade account receivable of Borrower
for goods sold or leased or for services rendered by Borrower in the
ordinary course of its business.

ACCOUNT DEBTOR. The words "Account Debtor" mean the person or entity
obligated upon an Account.

ADVANCE. The word "Advance" means any advance or other disbursement of
Loan proceeds under this Agreement.

BORROWER. The word "Borrower" means THE TRIZETTO GROUP, INC , A DELAWARE
CORPORATION.

BORROWING BASE. The words "Borrowing Base" mean 75.00% of the aggregate
amount of Eligible Accounts, less the aggregate amount of letters of
credit issued under the line.

COLLATERAL. The word "Collateral" means and includes without limitation
all property and assets granted as collateral for any Loan, whether real
or personal property, whether granted directly or indirectly, whether
granted now or in the future, and whether granted in the form of a
security interest, mortgage, deed of trust, assignment, pledge, chattel
mortgage, chattel trust, factor's lien, equipment trust, conditional
sale, trust receipt, lien, charge, lien or title retention contract,
lease or consignment intended as a security device, or any other
security or lien interest whatsoever, whether created by law, contract,
or otherwise.

COMMITTED SUM. The words "Committed Sum" mean an amount equal to
$3,000,000.00.

ELIGIBLE ACCOUNTS. The words "Eligible Accounts" mean, at any time, all
of Borrower's Accounts which contain terms and conditions acceptable to
Lender and in which Lender has a first lien security interest, less the
amount of all returns, discounts, credits, and offsets of any nature,
provided, however, unless otherwise agreed to by Lender in writing,
Eligible Accounts do not include:

(a) Accounts with respect to which the Account Debtor is an
officer, an employee or agent of Borrower and to which the Account
Debtor is a subsidiary of, or affiliated with or related to
Borrower or its shareholders, officers, or directors.

(b) All Accounts with respect to which Borrower has furnished a
payment and/or performance bond and that portion of any Accounts
for or representing retainage, if any, until all prerequisites to
the immediate payment of such retainage have been satisfied.

(c) Accounts with respect to which goods are placed on consignment
or subject to a guaranteed sale or other terms by reason of which
the payment by the Account Debtor may be conditional.

(d) Accounts with respect to which the Account Debtor is not a
resident of, or whose principal place of business is located
outside of, the United States or its territories, except to the
extent such Accounts are supported by insurance, bonds or other
assurances satisfactory to Lender in its sole and absolute
discretion.

(e) Accounts with respect to which Borrower is or may become liable
to the Account Debtor for goods sold or services rendered by the
Account Debtor to Borrower.

(f) Accounts which are subject to dispute, counterclaim, or setoff.

(g) Accounts with respect to which all goods have not been shipped
or delivered, or all services have not been rendered, to the
Account Debtor.

(h) Accounts with respect to which Lender, in its sole discretion,
deems the creditworthiness or financial condition of the Account
Debtor to be unsatisfactory.

(i) Accounts of any Account Debtor who has filed or has had filed
against it a petition in bankruptcy or an application for relief
under any provision of any state or federal bankruptcy, insolvency,
or debtor-in-relief acts, or who has had appointed a trustee,
custodian, or receiver for the assets of such Account Debtor, or
who has made an assignment for the benefit of creditors or has
become insolvent or fails generally to pay its debts (including its
payrolls) as such debts become due.

(j) Accounts with respect to which the Account Debtor is the United
States government or any department or agency of the United States,
except to the extent an acknowledgement of assignment to Lender of
any such Accounts in compliance with the Federal Assignment of
Claims Act and other applicable laws has been received by Lender.

(k) Accounts which have not been paid or are not due and payable in
full within ninety (90) days from the original invoice date. The
entire balance of all Accounts of any single Account Debtor will be
ineligible whenever 10.000% or more of the total amount outstanding
on all Accounts owing by such Account Debtor is past due ninety
(90) days or more.

ERISA. The word "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.

GRANTOR. The word "Grantor" means and includes each and all of the
persons or entities granting a Security Interest in any Collateral for
any of the Loans.

GUARANTOR. The word "Guarantor" means and includes without limitation,
each and all of the guarantors, sureties, and accommodation parties for
any of the Loans.

INDEBTEDNESS. The word "Indebtedness" means the indebtedness evidenced
by the Note, including all principal and accrued interest thereon,
together with all other liabilities, costs and expenses for which
Borrower is responsible under this Agreement or under any of the Related
Documents. In addition, the word "Indebtedness" includes all other
obligations, debts and liabilities, plus any accrued interest thereon,
owing by Borrower, or any one or more of them, to Lender of any kind or
character, now existing or hereafter arising, as well as all present and
future claims by Lender against Borrower, or any one or more of them,
and all renewals, extensions, modifications, substitutions and
rearrangements of any of the foregoing; whether such Indebtedness arises
by note, draft, acceptance, guaranty, endorsement, letter of credit,
assignment, overdraft, indemnity agreement or otherwise; whether such
Indebtedness is voluntary or involuntary, due or not due, direct or
indirect, absolute or contingent, liquidated or unliquidated; whether
Borrower may be liable individually or jointly with others; whether
Borrower may be liable primarily or secondarily or as debtor, maker,
comaker, drawer, endorser, guarantor, surety, accommodation party or
otherwise.

LENDER. The word "Lender" means Bank One, Colorado, NA, its successors
and assigns.

LINE OF CREDIT. The words "Line of Credit" mean the credit facility
described in the Section titled "LINE OF CREDIT" below.

NOTE. The word "Note" means any and all promissory note or notes which
evidence Borrower's Loans in favor of Lender, as well as any

<PAGE> 9

10-27-1999 LOAN AGREEMENT PAGE 2
LOAN NO. (CONTINUED)
- -------------------------------------------------------------------------------

amendment, modification, renewal or replacement thereof.

PERMITTED LIENS. The words "Permitted Liens" mean (a) hens and security
interests securing Indebtedness owed by Borrower to Lender, (b) hens for
taxes, assessments, or similar charges either (i) not yet due, or (ii)
being contested to good faith by appropriate proceedings and for which
Borrower has established adequate reserves, (c) purchase money hens or
purchase money security interests upon or in any property acquired or
held by Borrower in the ordinary course of business to secure any
indebtedness permitted under this Agreement, and (d) liens and security
interests which, as of the date of this Agreement, have been disclosed
to and approved by the Lender in writing.

SECURITY AGREEMENT. The words "Security Agreement" mean and include
without limitation any agreements, promises, covenants, arrangements,
understandings or other agreements, whether created by law, contract, or
otherwise, evidencing, governing, representing, or creating a Security
Interest.

SECURITY INTEREST. The words "Security Interest" mean and include
without limitation any type of security interest, whether in the form of
a lien, charge, mortgage, deed of trust, assignment, pledge, chattel
mortgage, chattel trust, factor's lien, equipment trust, conditional
sale, trust receipt, lien or title retention contract, lease or
consignment intended as a security device, or any other security or lien
interest whatsoever, whether created by law, contract, or otherwise.

LINE OF CREDIT. Subject to the other terms and conditions herein, Lender hereby
establishes a Line of Credit for Borrower through which Lender agrees to make
advances to Borrower from time to time from the effective date of this Agreement
until the maturity date of the Note evidencing the Line of Credit, provided the
aggregate amount of such advances outstanding at any time does not exceed the
lesser of the amount equal to the Borrowing Base or an amount equal to the
Committed Sum Within the foregoing limits, Borrower may borrow, partially or
wholly prepay, and reborrow under this Agreement.

BORROWING BASE COMPLIANCE. If at any time the aggregate principal amount
outstanding under the Line of Credit shall exceed the applicable
Borrowing Base, Borrower shall pay to Lender an amount equal to the
difference between the outstanding principal balance under the Line of
Credit and the Borrowing Base.

REPRESENTATIONS AND WARRANTIES CONCERNING ACCOUNTS. With respect to the
Accounts, Borrower represents and warrants to Lender (a) Each Account
represented by Borrower to be an Eligible Account for purposes of this
Agreement conforms to the requirements of the definition of an Eligible
Account; and (b) All Account information listed on reports and schedules
delivered to Lender will be true and correct, subject to immaterial
variance.

REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as
of the date of this Agreement, as of the date of each request for an Advance, as
of the date of any renewal, extension or modification of any Loan, and at all
times any Loans or Lender's commitment to make Loans hereunder is outstanding.

ORGANIZATION. Borrower is a corporation which is duly organized, validly
existing, and in good standing under the laws of the State of Delaware
and is duly qualified and in good standing in all other states in which
Borrower is doing business Borrower has the full power and authority to
own its properties and to transact the businesses in which it is
presently engaged or presently proposes to engage.

AUTHORIZATION. The execution, delivery, and performance of this
Agreement and all Related Documents to which Borrower is a party have
been duly authorized by all necessary action by Borrower; do not require
the consent or approval of any other person, regulatory authority or
governmental body, and do not conflict with, result in a violation of,
or constitute a default under (a) any provision of its articles of
incorporation or organization, or bylaws, or any agreement or other
instrument binding upon Borrower or (b) any law, governmental
regulation, court decree, or order applicable to Borrower Borrower has
all requisite power and authority to execute and deliver this Agreement
and all other Related Documents to which Borrower is a party.

FINANCIAL INFORMATION. Each financial statement of Borrower supplied to
Lender truly and completely discloses Borrower's financial condition as
of the date of the statement, and there has been no material adverse
change in Borrower's financial condition subsequent to the date of the
most recent financial statement supplied to Lender Borrower has no
material contingent obligations except as disclosed in such financial
statements.

LEGAL EFFECT. This Agreement and all other Related Documents to which
Borrower is a party constitute legal, valid and binding obligations of
Borrower enforceable against Borrower in accordance with their
respective terms, except as limited by bankruptcy, insolvency or similar
laws of general application relating to the enforcement of creditors'
rights and except to the extent specific remedies may generally be
limited by equitable principles.

PROPERTIES. Except for Permitted Liens, Borrower is the sole owner of,
and has good title to, all of Borrower's properties free and clear of
all Security Interests, and has not executed any security documents or
financing statements relating to such properties. All of Borrower's
properties are titled in Borrower's legal name, and Borrower has not
used, or filed a financing statement under, any other name for at least
the last six (6) years.

COMPLIANCE. Except as disclosed in writing to Lender (a) Borrower is
conducting Borrower's businesses in material compliance with all
applicable federal, state and local laws, statutes, ordinances, rules,
regulations, orders, determinations and court decisions, including
without limitation, those pertaining to health or environmental matters,
and (b) Borrower otherwise does not have any known material contingent
liability in connection with the release into the environment, disposal
or the improper storage of any toxic or hazardous substance or solid
waste.

LITIGATION AND CLAIMS. No litigation, claim, investigation,
administrative proceeding or similar action (including those for unpaid
taxes) against Borrower is pending or threatened, and no other event has
occurred which may in any one case or in the aggregate materially
adversely affect Borrower's financial condition or properties, other
than litigation, claims, or other events, if any, that have been
disclosed to and acknowledged by Lender in writing.

TAXES. All tax returns and reports of Borrower that are or were required
to be filed, have been filed, and all taxes, assessments and other
governmental charges have been paid in full, except those that have been
disclosed in writing to Lender which are presently being or to be
contested by Borrower in good faith in the ordinary course of business
and for which adequate reserves have been provided.

LIEN PRIORITY. Unless otherwise previously disclosed to and approved by
Lender in writing, Borrower has not entered into any Security
Agreements, granted a Security Interest or permitted the filing or
attachment of any Security Interests on or affecting any of the
Collateral, except in favor of Lender.

LICENSES, TRADEMARKS AND PATENTS. Borrower possesses and will continue
to possess all permits, licenses, trademarks, patents and rights thereto
which are needed to conduct Borrower's business and Borrower's business
does not conflict with or violate any valid rights of others with
respect to the foregoing.

COMMERCIAL PURPOSES. Borrower intends to use the Loan proceeds solely
for business or commercial related purposes approved by Lender and such
proceeds will not be used for the purchasing or carrying of "margin
stock" as defined in Regulation U issued by the Board of Governors of
the Federal Reserve System.

INELIGIBLE SECURITIES. No portion or any advance or Loan made hereunder
shall be used directly or indirectly to purchase ineligible securities,
as defined by applicable regulations of the Federal Reserve Board,
underwritten by Lender or any other affiliate of Banc One Corporation
during the underwriting period and for 30 days thereafter.

EMPLOYEE BENEFIT PLANS. Each employee benefit plan as to which Borrower
may have any liability complies in all material respects with all
applicable requirements of law and regulations, and (i) no Reportable
Event nor Prohibited Transaction (as defined in ERISA) has occurred with
respect to any such plan, (ii) Borrower has not withdrawn from any such
plan or initiated steps to do so, (iii) no steps have been taken to
terminate any such plan, and (iv) there are no unfunded liabilities
other than those previously disclosed to Lender in writing.

LOCATION OF BORROWER'S OFFICES AND RECORDS. Borrower's place of
business, or Borrower's chief executive office if Borrower has more than
one place of business, is located at 567 SAN NICOLAS DRIVE - SUITE 360,
NEWPORT BEACH, CA 92660. Unless Borrower has designated otherwise in
writing this location is also the office or offices where Borrower keeps
its records concerning the Collateral.

INFORMATION. All information heretofore or contemporaneously herewith
furnished by Borrower to Lender for the purposes of or in connection
with this Agreement or any transaction contemplated hereby is, and all
information hereafter furnished by or on behalf of Borrower to Lender
will be, true and accurate in every material respect on the date as of
which such information is dated or certified, and none of such
information is or will be incomplete by omitting to state any material
fact necessary to make such information not misleading.

SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Borrower understands and
agrees that Lender, without independent investigation, is relying upon
the above representations and warranties in extending the Loans to
Borrower. Borrower further agrees that the foregoing representations and
warranties shall be continuing in nature and shall remain in full force
and effect during the term of this Agreement.

<PAGE> 10
10-27-1999 LOAN AGREEMENT PAGE 3
LOAN NO. (CONTINUED)
- -------------------------------------------------------------------------------

AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, while
this Agreement is in effect, Borrower will:

DEPOSITORY RELATIONSHIP. Establish and maintain its primary operating
account(s) with Lender.

LITIGATION. Promptly inform Lender in writing of (a) all material
adverse changes in Borrower's financial condition, (b) all existing and
all threatened litigation, claims, investigations, administrative
proceedings or similar actions affecting Borrower or any Guarantor which
could materially affect the financial condition of Borrower or the
financial condition of any Guarantor, and (c) the creation, occurrence
or assumption by Borrower of any actual or contingent liabilities not
permitted under this Agreement.

FINANCIAL RECORDS. Maintain its books and records in accordance with
generally accepted accounting principles, applied on a consistent basis,
and permit Lender to examine, audit and make and take away copies or
reproductions of Borrower's books and records at all reasonable times.
If Borrower now or at any time hereafter maintains any records
(including without limitation computer generated records and computer
software programs for the generation of such records) in the possession
of a third party, Borrower, upon request of Lender, shall notify such
party to permit Lender free access to such records at all reasonable
times and to provide Lender with copies of any records it may request,
all at Borrower's expense.

FINANCIAL STATEMENTS. Furnish Lender with, as soon as available, but in
no event later than one hundred twenty (120) days after the end of each
fiscal year, Borrower's balance sheet, income statement, and statement
of changes in financial position for the year ended, audited by a
certified public accountant satisfactory to Lender. All financial
reports required to be provided under this Agreement shall be prepared
in accordance with generally accepted accounting principles, applied on
a consistent basis, and certified by Borrower as being true and correct.

ADDITIONAL INFORMATION. Furnish such additional information and
statements, lists of assets and liabilities, agings of receivables and
payables, inventory schedules, budgets, forecasts, tax returns, and
other reports with respect to Borrower's financial condition and
business operations as Lender may request from time to time.

INSURANCE. Maintain fire and other risk insurance, public liability
insurance, and such other insurance as Lender may require with respect
to Borrower's properties and operations, in form, amounts, coverages and
with insurance companies reasonably acceptable to Lender. Borrower, upon
request of Lender, will deliver to Lender from time to time the policies
or certificates of insurance in form satisfactory to Lender, including
stipulations that coverages will not be cancelled or diminished without
at least thirty (30) days' prior written notice to Lender. In connection
with all policies covering assets in which Lender holds or is offered a
Security Interest for the Loans, Borrower will provide Lender with such
loss payable or other endorsements as Lender may require.

INSURANCE REPORTS. Furnish to Lender, upon request of Lender, reports on
each existing insurance policy showing such information as Lender may
reasonably request, including without limitation the following: (a) the
name of the insurer, (b) the risks insured, (c) the amount of the
policy, (d) the properties insured, (e) the then current property values
on the basis of which insurance has been obtained, and the manner of
determining those values, and (f) the expiration date of the policy.

OTHER AGREEMENTS. Comply with all terms and conditions of all other
agreements, whether now or hereafter existing, between Borrower and any
other party and notify Lender immediately in writing of any default in
connection with any other such agreements.

LOAN FEES AND CHARGES. In addition to all other agreed upon fees and
charges, pay the following: $6,250.00 FACILITY FEE.

LOAN PROCEEDS. Use all Loan proceeds solely for Borrower's business
operations, unless specifically consented to the contrary by Lender in
writing.

TAXES, CHARGES AND LIENS. Pay and discharge when due all of its
indebtedness and obligations, including without limitation all
assessments, taxes, governmental charges, levies and liens, of every
kind and nature, imposed upon Borrower or its properties, income, or
profits, prior to the date on which penalties would attach, and all
lawful claims that, if unpaid, might become a lien or charge upon any of
Borrower's properties, income, or profits; provided however, Borrower
will not be required to pay and discharge any such assessment, tax,
charge, levy, lien or claim so long as (a) the legality of the same
shall be contested in good faith by appropriate proceedings, and (b)
Borrower shall have established on its books adequate reserves with
respect to such contested assessment, tax, charge, levy, lien, or claim
in accordance with generally accepted accounting principles. Borrower,
upon demand of Lender, will furnish to Lender evidence of payment of the
assessments, taxes, charges, levies, liens and claims and will authorize
the appropriate governmental official to deliver to Lender at any time a
written statement of any assessments, taxes, charges, levies, liens and
claims against Borrower's properties, income, or profits.

PERFORMANCE. Perform and comply with all terms, conditions, and
provisions set forth in this Agreement and in the Related Documents in a
timely manner, and promptly notify Lender if Borrower learns of the
occurrence of any event which constitutes an Event of Default under this
Agreement or under any of the Related Documents.

OPERATIONS. Conduct its business affairs in a reasonable and prudent
manner and in compliance with all applicable federal, state and
municipal laws, ordinances, rules and regulations respecting its
properties, charters, businesses and operations, including without
limitation, compliance with the Americans With Disabilities Act, all
applicable environmental statutes, rules, regulations and ordinances and
with all minimum funding standards and other requirements of ERISA and
other laws applicable to Borrower's employee benefit plans.

ENVIRONMENTAL COMPLIANCE AND REPORTS. Borrower shall comply in all
respects with all federal, state and local environmental laws, statutes,
regulations and ordinances; not cause or permit to exist, as a result of
an intentional or unintentional action or omission on its part or on the
part of any third party, on property owned and/or occupied by Borrower,
any environmental activity where damage may result to the environment,
unless such environmental activity is pursuant to and in compliance with
the conditions of a permit issued by the appropriate federal, state or
local governmental authorities, and furnish to Lender promptly and in
any event within thirty (30) days after receipt thereof a copy of any
notice, summons, lien, citation, directive, letter or other
communication from any governmental agency or instrumentality concerning
any intentional or unintentional action or omission on Borrower's part
in connection with any environmental activity whether or not there is
damage to the environment and/or other natural resources.

BORROWING BASE CERTIFICATE. Contemporaneously with each request for an
Advance under the Line of Credit, Borrower shall deliver to Lender a
borrowing base certificate, in form and detail satisfactory to Lender,
along with such supporting documentation as Lender may request,
including without limitation, an accounts receivable aging report and/or
a list or schedule of Borrower's accounts receivable, inventory and/or
equipment.

ADDITIONAL ASSURANCES. Make, execute and deliver to Lender such
promissory notes, mortgages, deeds of trust, security agreements,
financing statements, instruments, documents and other agreements as
Lender or its attorneys may reasonably request to evidence and secure
the Loans and to perfect all Security Interests.

NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this
Agreement is in effect, Borrower shall not, without the prior written consent of
Lender:

MAINTAIN BASIC BUSINESS. Engage in any business activities substantially
different than those in which Borrower is presently engaged.

CONTINUITY OF OPERATIONS. Cease operations, liquidate, dissolve or merge
or consolidate with or into any other entity.

INDEBTEDNESS. Create, incur or assume additional indebtedness for
borrowed money, including capital leases, or guarantee any indebtedness
owing by others, other than (a) current unsecured trade debt incurred in
the ordinary course of business, (b) indebtedness owing to Lender, (c)
borrowings outstanding as of the date hereof and disclosed to Lender in
writing, and (d) any borrowings otherwise approved by Lender in writing.

LIENS. Mortgage, assign, pledge, grant a security interest in or
otherwise encumber Borrower's assets, except as allowed as a Permitted
Lien.

TRANSFER OF ASSETS. Transfer, sell or otherwise dispose of any of
Borrower's assets other than in the ordinary course of business.

INVESTMENTS. Invest in, or purchase, create, form or acquire any
interest in, any other enterprise or entity.

LOANS. Make any loans to any person or entity.

DIVIDENDS. Pay any dividends on Borrower's capital stock or purchase,
redeem, retire or otherwise acquire any of Borrower's capital stock or
alter or amend Borrower's capital structure.

AFFILIATES. Enter into any transaction, including, without limitation,
the purchase, sale, or exchange of property or the rendering of any
service, with any Affiliate of Borrower, except in the ordinary course
of and pursuant to the reasonable requirements of Borrower's business
and upon fair and reasonable terms no less favorable than would be
obtained in a comparable arm's length transaction with a person or
entity not an Affiliate of Borrower. As used herein, the term
"Affiliate" means any individual or entity directly or indirectly
controlling, controlled by or under common control with, another entity
or individual.

CONDITIONS PRECEDENT TO ADVANCES. Lender's obligation to make any Advances or to
provide any other financial accommodations to or

<PAGE> 11
10-27-1999 LOAN AGREEMENT PAGE 4
LOAN NO. (CONTINUED)
- --------------------------------------------------------------------------------

for the benefit of Borrower hereunder shall be subject to the conditions
precedent that as of the date of such advance or disbursement and after giving
effect thereto (a) all representations and warranties made to Lender in this
Agreement and the Related Documents shall be true and correct as of and as if
made on such date, (b) no material adverse change in the financial condition of
Borrower or any Guarantor since the effective date of the most recent financial
statements furnished to Lender, or to the value of any Collateral, shall have
occurred and be continuing, (c) no event has occurred and is continuing, or
would result from the requested advance or disbursement, which with notice or
lapse of time, or both, would constitute an Event of Default, (d) no Guarantor
has sought, claimed or otherwise attempted to limit, modify or revoke such
Guarantor's guaranty of any Loan, and (e) Lender has received all Related
Documents appropriately executed by Borrower and all other proper parties.

ADDENDUM. An addendum, titled "ADDENDUM", is attached to this document and by
this reference is made a part of this document just as if all the provisions,
terms and conditions of the ADDENDUM had been fully set forth in this document

RIGHT OF SETOFF. Unless a lien would be prohibited by law or would render a
nontaxable account taxable, Borrower grants to Lender a contractual security
interest in, and hereby assigns, conveys, delivers, pledges, and transfers to
Lender all Borrower's right, title and interest in and to, Borrower's accounts
with Lender (whether checking, savings, or any other account), including without
limitation all accounts held jointly with someone else and all accounts Borrower
may open in the future Borrower authorizes Lender, to the extent permitted by
applicable law, to charge or setoff all sums owing on the Indebtedness against
any and all such accounts.

EVENTS OF DEFAULT. Each of the following shalt constitute an Event of Default
under this Agreement

DEFAULT ON INDEBTEDNESS. Failure of Borrower to make any payment when
due on any of the Indebtedness.

OTHER DEFAULTS. Failure of Borrower, any Guarantor or any Grantor to
comply with or to perform when due any other term, obligation, covenant
or condition contained in this Agreement, the Note or in any of the
other Related Documents, or failure of Borrower to comply with or to
perform any other term, obligation, covenant or condition contained in
any other agreement now existing or hereafter arising between Lender and
Borrower.

FALSE STATEMENTS. Any warranty, representation or statement made or
furnished to Lender under this Agreement or the Related Documents is
false or misleading in any material respect.

DEFAULT TO THIRD PARTY. The occurrence of any event which permits the
acceleration of the maturity of any indebtedness owing by Borrower,
Grantor or any Guarantor to any third party under any agreement or
undertaking.

BANKRUPTCY OR INSOLVENCY. If the Borrower, Grantor or any Guarantor: (i)
becomes insolvent, or makes a transfer in fraud of creditors, or makes
an assignment for the benefit of creditors, or admits in writing its
inability to pay its debts as they become due; (ii) generally is not
paying its debts as such debts become due; (iii) has a receiver, trustee
or custodian appointed for, or take possession of, all or substantially
all of the assets of such party or any of the Collateral, either in a
proceeding brought by such party or in a proceeding brought against such
party and such appointment is not discharged or such possession is not
terminated within sixty (60) days after the effective date thereof or
such party consents to or acquiesces in such appointment or possession;
(iv) files a petition for relief under the United States Bankruptcy Code
or any other present or future federal or state insolvency, bankruptcy
or similar laws (all of the foregoing hereinafter collectively called
"APPLICABLE BANKRUPTCY LAW") or an involuntary petition for relief is
filed against such party under any Applicable Bankruptcy Law and such
involuntary petition is not dismissed within sixty (60) days after the
filing thereof, or an order for relief naming such party is entered
under any Applicable Bankruptcy Law, or any composition, rearrangement,
extension, reorganization or other relief of debtors now or hereafter
existing is requested or consented to by such party; (v) fails to have
discharged within a period of sixty (60) days any attachment,
sequestration or similar writ levied upon any property of such party; or
(vi) fails to pay within thirty (30) days any final money judgment
against such party.

LIQUIDATION, DEATH AND RELATED EVENTS. If Borrower, Grantor or any
Guarantor is an entity, the liquidation, dissolution, merger or
consolidation of any such entity or, if any of such parties is an
individual, the death or legal incapacity of any such individual.

CREDITOR OR FORFEITURE PROCEEDINGS. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Borrower, any
creditor of any Grantor against any collateral securing the
Indebtedness, or by any governmental agency.

EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, Lender may,
at its option, without further notice or demand, (a) terminate all commitments
and obligations of Lender to make Loans to Borrower, if any, (b) declare all
Loans and any other Indebtedness immediately due and payable, (c) refuse to
advance any additional amounts under the Note or to provide any other financial
accommodations under this Agreement, or (d) exercise all the rights and remedies
provided in the Note or in any of the Related Documents or available at law, in
equity, or otherwise; provided, however, if any Event of Default of the type
described in the "Bankruptcy or Insolvency" subsection above shall occur, all
Loans and any other Indebtedness shall automatically become due and payable,
without any notice, demand or action by Lender. Except as may be prohibited by
applicable law, all of Lender's rights and remedies shall be cumulative and may
be exercised singularly or concurrently. Election by Lender to pursue any remedy
shall not exclude pursuit of any other remedy, and an election to make
expenditures or to take action to perform an obligation of Borrower or of any
Grantor shall not affect Lender's right to declare a default and to exercise its
rights and remedies.

MISCELLANEOUS PROVISIONS.

AMENDMENTS. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to
the matters set forth in this Agreement No alteration of or amendment to
this Agreement shall be effective unless given in writing and signed by
the party or parties sought to be charged or bound by the alteration or
amendment.

APPLICABLE LAW. This Agreement has been delivered to Lender and accepted
by Lender in the State of Colorado. Subject to the provisions on
arbitration, this Agreement shall be governed by and construed in
accordance with the laws of the State of Colorado without regard to any
conflict of laws or provisions thereof.

ARBITRATION. Lender and Borrower agree that upon the written demand of
either party, whether made before or after the institution of any legal
proceedings, but prior to the rendering of any judgment in that
proceeding, all disputes, claims and controversies between them, whether
individual, joint, or class in nature, arising from this Agreement, any
Related Document or otherwise, including without limitation contract
disputes and tort claims, shall be resolved by binding arbitration
pursuant to the Commercial Rules of the American Arbitration Association
("AAA"). Any arbitration proceeding held pursuant to this arbitration
provision shall be conducted in the city nearest the Borrower's address
having an AAA regional office, or at any other place selected by mutual
agreement of the parties. No act to take or dispose of any Collateral
shall constitute a waiver of this arbitration agreement or be prohibited
by this arbitration agreement. This arbitration provision shall not
limit the right of either party during any dispute, claim or controversy
to seek, use, and employ ancillary, or preliminary rights and/or
remedies, judicial or otherwise, for the purposes of realizing upon,
preserving, protecting, foreclosing upon or proceeding under forcible
entry and detainer for possession of, any real or personal property, and
any such action shall not be deemed an election of remedies. Such
remedies include, without limitation, obtaining injunctive relief or a
temporary restraining order, invoking a power of sale under any deed of
trust or mortgage, obtaining a writ of attachment or imposition of a
receivership, or exercising any rights relating to personal property,
including exercising the right of set-off, or taking or disposing of
such property with or without judicial process pursuant to the Uniform
Commercial Code. Any disputes, claims, or controversies concerning the
lawfulness or reasonableness of an act, or exercise of any right or
remedy, concerning any Collateral, including any claim to rescind,
reform, or otherwise modify any agreement relating to the Collateral,
shall also be arbitrated; provided, however that no arbitrator shall
have the right or the power to enjoin or restrain any act of either
party. Judgment upon any award rendered by any arbitrator may be entered
in any court having jurisdiction. The statute of limitations, estoppel,
waiver, laches and similar doctrines which would otherwise be applicable
in an action brought by a party shall be applicable in any arbitration
proceeding, and the commencement of an arbitration proceeding shall be
deemed the commencement of any action for these purposes. The Federal
Arbitration Act (Title 9 of the United States Code) shall apply to the
construction, interpretation, and enforcement of this arbitration
provision.

CAPTION HEADINGS. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the
provisions of this Agreement.

CONSENT TO LOAN PARTICIPATION. Borrower agrees and consents to Lender's
sale or transfer, whether now or later, of one or more participation
interests in the Loans to one or more purchasers, whether related or
unrelated to Lender. Lender may provide, without any limitation
whatsoever, to any one or more purchasers, or potential purchasers, any
information or knowledge Lender may have abut Borrower or about any
other matter relating to the Loan, and Borrower hereby waives any rights
to privacy it may have with respect to such matters. Borrower
additionally waives any and all notices of sale of participation
interests, as well as all notices of any repurchase of

<PAGE> 12
10-27-1999 LOAN AGREEMENT PAGE 5
LOAN NO. (CONTINUED)
- --------------------------------------------------------------------------------

such participation interests.

COSTS AND EXPENSES. Borrower agrees to pay upon demand all of Lender's
expenses, including attorneys' fees, incurred in connection with the
preparation, execution, enforcement, modification and collection of this
Agreement or in connection with the Loans made pursuant to this
Agreement. Lender may hire one or more attorneys to help collect the
Indebtedness if Borrower does not pay, and Borrower will pay Lender's
reasonable attorneys' fees.

NOTICES. All notices required to be given under this Agreement shall be
given in writing, and shall be effective when actually delivered or when
deposited with a nationally recognized overnight courier or deposited in
the United States mail, first class, postage prepaid, addressed to the
party to whom the notice is to be given at the address shown above. Any
party may change its address for notices under this Agreement by giving
formal written notice to the other parties, specifying that the purpose
of the notice is to change the party's address. To the extent permitted
by applicable law, if there is more than one Borrower, notice to any
Borrower will constitute notice to all Borrowers. For notice purposes,
Borrower will keep Lender informed at all times of Borrower's current
address(es).

COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute the same document. Signature pages may be
detached from the counterparts to a single copy of this Agreement to
physically form one document.

SUCCESSORS AND ASSIGNS. All covenants and agreements contained by or on
behalf of Borrower shall bind its successors and assigns and shall inure
to the benefit of Lender, its successors and assigns. Borrower shall
not, however, have the right to assign its rights under this Agreement
or any interest therein, without the prior written consent of Lender.

SURVIVAL. All warranties, representations, and covenants made by
Borrower in this Agreement or in any certificate or other instrument
delivered by Borrower to Lender under this Agreement shall be considered
to have been relied upon by Lender and will survive the making of the
Loan and delivery to Lender of the Related Documents, regardless of any
investigation made by Lender or on Lender's behalf.

TIME IS OF THE ESSENCE. Time is of the essence in the performance of
this Agreement.

WAIVER. Lender shall not be deemed to have waived any rights under this
Agreement unless such waiver is given in writing and signed by Lender.
No delay or omission on the part of Lender in exercising any right shall
operate as a waiver of such right or any other right. A waiver by Lender
of a provision of this Agreement shall not prejudice or constitute a
waiver of Lender's right otherwise to demand strict compliance with that
provision or any other provision of this Agreement. No prior waiver by
Lender, nor any course of dealing between Lender and Borrower, or
between Lender and any Grantor or Guarantor, shall constitute a waiver
of any of Lender's rights or of any obligations of Borrower or of any
Grantor as to any future transactions. Whenever the consent of Lender is
required under this Agreement, the granting of such consent by Lender in
any instance shall not constitute continuing consent in subsequent
instances where such consent is required, and in all cases such consent
may be granted or withheld in the sole discretion of Lender.

BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS LOAN AGREEMENT, AND
BORROWER AGREES TO ITS TERMS. THIS AGREEMENT IS EXECUTED AS OF THE DATE SET
FORTH ABOVE.

BORROWER:

THE TRIZETTO GROUP, INC., A DELAWARE CORPORATION

BY: /s/ JEFFREY H. MARGOLIS
--------------------------------------
JEFFREY H. MARGOLIS, PRESIDENT AND CEO

LENDER:

BANK ONE, COLORADO, NA

BY:
--------------------------------------
AUTHORIZED OFFICER

<PAGE> 13
ADDENDUM

BORROWER: LENDER:
THE TRIZETTO GROUP, INC. Bank One, Colorado, NA
A DELAWARE CORPORATION Corporate Lending -- Boulder
567 SAN NICOLAS DRIVE, SUITE 360 1125 17th Street
NEWPORT BEACH, CA 92660 Denver, Co. 80217

THIS ADDENDUM IS ATTACHED TO AND BY THIS REFERENCE IS MADE A PART OF THE LOAN
AGREEMENT DATED OCTOBER 27, 1999, AND EXECUTED IN CONNECTION WITH A LOAN OR
OTHER FINANCIAL ACCOMMODATIONS BETWEEN BANK ONE, COLORADO, NA (THE "LENDER") AND
THE TRIZETTO GROUP, INC., A DELAWARE CORPORATION (THE "BORROWER").

ADDITIONAL PROVISION: "Notwithstanding any other provision of this Loan
Agreement to the contrary."

ADDITIONAL REPRESENTATIONS AND WARRANTIES - YEAR 2000. Borrower further
represents and warrants to Lender, as of the date of this Agreement, as of the
date of each request for an advance or disbursement of Loan proceeds, as of the
date of any renewal, extension or modification of any Loan, and at all times any
Indebtedness exists hereafter, that:

(A) All devices, systems, machinery, information technology, computer
software and hardware, and other date sensitive technology (jointly and
severally the "Systems") necessary for Borrower to carry on its business as
presently conducted and as contemplated to be conducted in the future are Year
2000 Compliant or will be Year 2000 Compliant within a period of time calculated
to result in no material disruption of any of Borrower's business operations.
For purposes of these provisions, "Year 2000 Compliant" means that such Systems
are designed to be used prior to, during and after the Gregorian calendar year
2000 A.D. and will operate during each such time period without error relating
to date data, specifically including any error relating to, or the product of,
date data which represents or references different centuries or more than one
century.

(B) Borrower has: (1) undertaken a detailed inventory, review, and
assessment of all areas within its business and operations that could be
adversely affected by the failure of Borrower to be Year 2000 Compliant on a
timely basis; (2) developed a detailed plan and time line for becoming Year 2000
Compliant on a timely basis, and (3) to date, implemented that plan in
accordance with that timetable in all material respects.

(C) Borrower has made written inquiry of each of its key suppliers,
vendors, and customers, and has obtained in writing confirmations from all such
persons, as to whether such persons have initiated programs to become Year 2000
Compliant and on the basis of such confirmations, Borrower reasonably believes
that all such persons will be or become so compliant. For purposes hereof, "key
suppliers, vendors, and customers" refers to those suppliers, vendors, and
customers of Borrower whose business failure would, with reasonable probability,
result in a material adverse change in the business, properties, condition
(financial or otherwise), or prospects of Borrower. For purposes of this
paragraph, Lender, as a lender of funds under the terms of any Loan, confirms to
Borrower that Lender has initiated its own corporate-wide Year 2000 program with
respect to its lending activities.

(D) The fair market value of all real and personal property, if any,
pledged to Lender as collateral to secure any Loan is not and shall not be less
than currently anticipated or subject to substantial deterioration in value
because of the failure of such collateral to be Year 2000 Compliant.

ADDITIONAL AFFIRMATIVE COVENANT - YEAR 2000. Borrower further covenants
and agrees with Lender that, while this Agreement is in effect, Borrower will:

(A) Furnish such additional information, statements and other reports
with respect to Borrower's activities, course of action and progress towards
becoming Year 2000 Compliant as Lender may request from time to time.

(B) In the event of any change in circumstances that causes or will
likely cause any of Borrower's representations and warranties with respect to
its being or becoming Year 2000 Compliant to no longer be true (hereinafter,
referred to as a "Change in Circumstances") then Borrower shall promptly, and in
any event within ten (10) days of receipt of information regarding a Change in
Circumstances, provide Lender with written notice (the "Year 2000 Notice") that
describes in reasonable detail the Change in Circumstances and how such Change
in Circumstances caused or will likely cause Borrower's representations and
warranties with respect to being or becoming Year 2000 Compliant to no longer be
true. Borrower shall, within ten (10) days of a request, also provide Lender
with any additional information Lender requests of Borrower in connection with
the Year 2000 Notice and/or a Change in Circumstances.

(C) Promptly upon its becoming available, furnish to Lender one copy of
each financial statement, report, notice, or proxy statement sent by Borrower to
stockholders generally and of each regular or periodic report, registration
statement or prospectus filed by Borrower with any securities exchange or the
Securities and Exchange Commission or any successor agency, and of any order
issued by any Governmental Authority in any proceeding to which Borrower is a
party. For purposes of these provisions, "Governmental Authority" shall mean any
government (or any political subdivision or jurisdiction thereof), court,
bureau, agency or other governmental entity having or asserting jurisdiction
over Borrower or any of its business, operations or properties.

(D) Give any representative of Lender access during all business hours
to, and permit such representative to examine, copy or make excerpts from, any
and all books, records and documents in the possession of Borrower and relating
to its affairs, and to inspect any of the properties and Systems of Borrower,
and to project test the Systems to determine if they are Year 2000 Compliant in
an integrated environment, all at the sole cost and expense of Lender.

Acknowledged by:

THE TRIZETTO GROUP, INC.,
A DELAWARE CORPORATION

By: /s/ JEFFREY H. MARGOLIS
--------------------------------------
JEFFREY H. MARGOLIS, PRESIDENT AND CEO

<PAGE> 14

ADDENDUM

BORROWER: THE TRIZETTO GROUP, INC. LENDER: BANK ONE, COLORADO, NA
A DELAWARE CORPORATION 1125 17th STREET
567 SAN NICOLAS DRIVE, PO BOX 5586 TA
SUITE 360 DENVER, CO. 80217
NEWPORT BEACH, CA 92660

This ADDENDUM is attached to and by this reference is made a part of the Loan
Agreement, dated October 27, 1999 executed by Lender and Borrower ("Loan
Agreement").

ADDITIONAL DEFINITIONS. The Loan Agreement and this Addendum are hereinafter
referred to as the "Agreement". Capitalized terms used herein shall have the
meanings set forth in the Loan Agreement and the following terms shall have the
following meanings

"ADVANCE" means an advance by Lender to Borrower under the Line of
Credit.

"COMMITMENT" means the agreement of Lender hereunder to issue Letters of
Credit pursuant to the terms and conditions to Letter of Credit
Agreements and to make Advances pursuant to the terms and conditions to
the Agreement

"EXISTING LETTER(S) OF CREDIT" means any and all letter(s) of credit
issued by Lender at the request of Borrower prior to the date of this
Agreement, which expire after the date of this Agreement.

"LETTER OF CREDIT AGREEMENT" means Lender's standard form Application
and Agreement for Irrevocable Standby Letter of Credit, Lender's
standard form Application for Irrevocable Commercial Letter of Credit
and Commercial Letter of Credit Agreement, or other standard application
and agreement for letters of credit in use by Lender from time to time.

"LETTERS OF CREDIT" means the letters of credit to Lender's standard
form from time to time issued pursuant to this Agreement and any
Existing Letters of Credit.

"REIMBURSEMENT AMOUNT" means the amount Borrower is obligated to pay to
Lender under a Letter of Credit Agreement in respect of a draft drawn or
drawn and accepted under the respective Letter of Credit, which amount
shall be the amount of the draft or acceptance and all costs, expenses,
fees, and other amounts then payable by Borrower to Lender under the
Letter of Credit Agreement.

ISSUANCE OF LETTERS OF CREDIT. Subject to the terms and conditions of this
Agreement and the Letter of Credit Agreements and subject to the policies,
procedures, and requirements of Lender in effect from time to time for issuance
of Letters of Credit (including, without limitation, payment of letter of credit
fees), Lender agrees to issue, from time to time on or before the maturity date
of the Note, Letters of Credit upon request by and for the account of Borrower,
provided that as to each requested Letter of Credit Borrower has delivered to
Lender a completed and executed Letter of Credit Agreement, and provided further
that the last date for payment of drafts drawn or drawn and accepted under a
requested Letter of Credit is at least thirty (30) days before the maturity date
of the Note. Each reference in this Agreement to "issue" or "issuance" or other
forms of such words in relation to Letters of Credit shall also include any
extension or renewal of a Letter of Credit. Upon occurrence of an event of
default, or any condition or event that with notice, passage of time, or both
would be an Event of Default, Lender, in its absolute and sole discretion and
without notice, may suspend the commitment to issue Letters of Credit. In
addition, upon occurrence of an Event of Default, Lender, in its absolute and
sole discretion and without notice, may terminate the commitment to issue
Letters of Credit.

ISSUANCE PROCEDURE. To obtain a Letter of Credit, Borrower shall complete and
execute a Letter of Credit Agreement and submit it to the letter of credit
department of Lender. Upon receipt of a completed and executed Letter of Credit
Agreement, Lender will process the application in accordance with the policies,
procedures, and requirements of Lender then in effect. If the application meets
the requirements of Lender and is within the policies of Lender then in effect,
Lender will issue the requested Letter of Credit.

REIMBURSEMENT OF LENDER FOR PAYMENT OF DRAFTS DRAWN OR DRAWN AND ACCEPTED UNDER
LETTERS OF CREDIT. The obligation of Borrower to reimburse Lender for payment by
Lender of drafts drawn or drawn and accepted under a Letter of Credit shall be
as provided in the respective Letter of Credit Agreement. Lender will notify
Borrower of payment by Lender of a draft drawn or drawn and accepted under a
Letter of Credit and of the respective Reimbursement Amount and will give
Borrower the election (i) to pay the Reimbursement Amount pursuant to the
respective Letter of Credit Agreement or (ii) to pay the Reimbursement Amount by
Lender making an Advance subject to the terms and conditions of this Agreement
and applying the proceeds of the Advance to pay the Reimbursement Amount. If
Borrower does not communicate to Lender its election within two Business Days
after notification by Lender of payment of the draft or acceptance, Borrower
shall be deemed to have elected to pay the Reimbursement Amount by Lender making
an Advance hereunder, provided that if the terms and conditions in this
Agreement for an Advance hereunder are not satisfied, Borrower shall be deemed
to have elected to pay the Reimbursement Amount pursuant to the Letter of Credit
Agreement. Each Advance to pay a Reimbursement Amount shall be dated the date
that Lender pays the respective draft or acceptance and shall accrue interest
from and after such date. If Borrower is to pay the Reimbursement Amount
pursuant to the Letter of Credit Agreement, Borrower shall also pay to Lender
interest on the Reimbursement Amount from and including the date Lender pays the
respective draft or acceptance at the rate per annum at which interest is then
accruing under the Note until the Reimbursement Amount and such interest are
paid in full, provided that if Borrower fails to pay the Reimbursement Amount
and accrued interest thereon within five (5) days after notification by Lender
to Borrower of payment of the respective draft or acceptance, interest
thereafter shall accrue at the interest rate applicable to past-due payments
under the Note. Such interest shall be computed on the basis of a 360-day year
and accrue on a daily basis for the actual number of days elapsed.
Notwithstanding the above, if Borrower elects or is deemed to have elected to
pay the Reimbursement Amount pursuant to the Letter of Credit Agreement and
fails to pay the Reimbursement Amount and interest thereon within five (5) days
after notification by Lender to Borrower, Lender, in its absolute and sole
discretion and without notice to Borrower and regardless of whether the terms
and conditions in this Agreement for Advances are satisfied, may make an Advance
under this Agreement in the amount of the Reimbursement Amount and accrued
interest thereon and apply the proceeds of such Advance to pay the Reimbursement
Amount and accrued interest.

LETTERS OF CREDIT AND ADVANCES. Letters of Credit may be issued by Lender at the
oral or written request of the respective person or persons designated in the
Agreement to request Advances. Such person or persons are hereby authorized by
Borrower to request Letters of Credit and Advances, to execute and deliver
Letter of Credit Agreements on behalf of Borrower, and to direct disposition of
the proceeds of Advances until written notice of the revocation of such
authority is received from Borrower by Lender and Lender has had a reasonable
time to act upon such notice. Lender shall have no duty to monitor for Borrower
or to report to Borrower the use of Letters or Credit or proceeds of Advances
Advances shall be disbursed by Lender in the manner agreed upon by Lender and
Borrower from time to time.

LIMIT ON LETTERS OF CREDIT AND ADVANCES. Anything in the Related Documents to
the contrary notwithstanding, the sum from time to time of (i) the aggregate
amount of outstanding and undrawn Letters of Credit, (ii) the aggregate amount
of outstanding and unpaid drafts drawn or drawn and accepted under Letters of
Credit, (iii) the aggregate amount of unpaid Reimbursement Amounts, and (iv) the
amount of outstanding and unpaid Advances shall not exceed $3,000,000.00,
provided, that if such sum at any time exceeds such amount, Borrower, without
notice or demand, shall immediately make a payment to Lender in an amount equal
to the sum of (A) such excess and (B) accrued and unpaid interest thereon.

1
<PAGE> 15

COLLATERAL UPON EVENT OF DEFAULT. Upon an event of default and demand by Lender
in its absolute and sole discretion, Borrower shall immediately deliver to
Lender as security for all obligations of Borrower under the Related Documents
(including, without limitation, the obligation to pay Reimbursement Amounts),
immediately available funds in an amount equal to the sum of (i) the aggregate
amount of outstanding and undrawn Letters of Credit, and (ii) the aggregate
amount of outstanding and unpaid drafts drawn or drawn and accepted under
Letters of Credit. Borrower hereby grants to Lender a security interest in all
such funds delivered to Lender to secure payment and performance of the
Indebtedness.

CONDITIONS PRECEDENT TO LETTERS OF CREDIT. Lender's obligation to issue a Letter
of Credit shall be subject to the conditions precedent to Advances set forth in
the loan Agreement being satisfied as of the date of the issuance of such Letter
of Credit and after giving effect thereto. Delay or failure by Lender to insist
on satisfaction of any condition precedent to the issuance of a Letter of Credit
or the making of an Advance shall not be a waiver of such condition precedent or
any other condition precedent. If Borrower is unable to satisfy any condition
precedent to the issuance of a Letter of Credit or making an Advance, the
issuance of the Letter of Credit or the making of the Advance shall not preclude
Lender from thereafter declaring the condition or event causing such inability
to be an event of default.

Dated this___________day of______________, 199___.

BORROWER:

THE TRIZETTO GROUP, INC.,
a Delaware corporation

By: /s/ JEFFREY H. MARGOLIS
--------------------------------------
JEFFREY H. MARGOLIS, PRESIDENT AND CEO

LENDER:

BANK ONE, COLORADO, NA
a national banking association

By:
--------------------------------------
Robert O'Leary, Assistant Vice President

2
<PAGE> 16
ADDENDUM
- --------------------------------------------------------------------------------
BORROWER: THE TRIZETTO GROUP, INC. LENDER: BANK ONE, COLORADO, NA
A DELAWARE CORPORATION CORPORATE LENDING BOULDER
567 SAN NICOLAS DRIVE, 1125 17" STREET
SUITE 360 DENVER, CO. 80217
NEWPORT BEACH, CA 92660
- --------------------------------------------------------------------------------

THIS ADDENDUM IS ATTACHED TO AND BY THIS REFERENCE IS MADE A PART OF THE
BUSINESS LOAN AGREEMENT DATED OCTOBER 27, 1999, AND EXECUTED BY BANK ONE,
COLORADO, NA AND THE TRIZETTO GROUP, INC., A DELAWARE CORPORATION.

ADDITIONAL AFFIRMATIVE COVENANT - CURRENT RATIO. Borrower further covenants and
agrees with Lender that, while this Agreement is in effect, Borrower will comply
at all times with the following covenant and ratio: Maintain a ratio of Liquid
Assets plus Inventory, to current liabilities in excess of 3.00 to 1.00 (i)
monthly if the principal balance outstanding is greater than zero or (ii)
quarterly when the principal balance outstanding is zero.

ADDITIONAL AFFIRMATIVE COVENANT - TANGIBLE NET WORTH. Borrower further covenants
and agrees with Lender that, while this Agreement is in effect, Borrower will
comply at all times with the following covenant and ratio: Maintain a Tangible
Net Worth of not less than $31,000,000 (i) monthly if the principal balance
outstanding is greater than zero or (ii) quarterly when the principal balance
outstanding is zero.

For purposes of this Agreement and to the extent the following terms are
utilized in this Agreement: The term "Tangible Net Worth" shall mean Borrower's
total assets excluding all intangible assets (including, without limitation,
goodwill, trademarks, patents, copyrights, organization expenses, and similar
intangible items) less total liabilities excluding Subordinated Debt. The term
"Subordinated Debt" shall mean all indebtedness owing by Borrower which has been
subordinated by written agreement to all indebtedness now or hereafter owing by
Borrower to Lender, such agreement to be in form and substance acceptable to
Lender. The term "Liquid Assets", shall mean Borrower's unencumbered cash,
marketable securities and accounts receivable net of reserves. The term
"Distributions'" shall mean all dividends and other distributions made by
Borrower to its shareholders, partners, owners or members, as the case may be,
other than salary, bonuses and other compensation for services expended in the
current accounting period. Except as provided above, all computations made to
determine compliance with the requirements contained in this paragraph shall be
made in accordance with generally accepted accounting principles, applied on a
consistent basis, and certified as being true and correct.

ADDITIONAL AFFIRMATIVE COVENANT - FINANCIAL STATEMENTS. Borrower further
covenants and agrees with Lender that, while this Agreement is in effect,
Borrower will furnish Lender within thirty (30) days of each (i) month end if
the principal balance outstanding is greater than zero or (ii) fiscal quarter
end if the principal balance outstanding is zero, with Borrower's balance sheet
and income statement for the period ended, prepared and certified, subject to
year-end review adjustments, as correct to the best knowledge and belief by its
chief financial officer or other person reasonably acceptable to Lender.

ADDITIONAL AFFIRMATIVE COVENANT - COMPLIANCE CERTIFICATE. Borrower further
covenants and agrees with Lender that, while this Agreement is in effect,
Borrower will comply at all times with the following covenant and ratio: Unless
waived in writing by Lender, provide Lender thirty (30) days after each (i)
month if the principal balance outstanding is greater than zero, or (ii) fiscal
quarter if the principal balance outstanding is zero, with a certificate
executed by Borrower's chief financial officer, or other officer or person
acceptable to Lender, (a) certifying that the representations and warranties set
forth in this Agreement are true and correct as to the date of the certificate
and that, as of the date of the certificate, no Event of Default exists under
this Agreement, and (b) demonstrating compliance with all financial covenants
set forth in this Agreement.

ADDITIONAL AFFIRMATIVE COVENANT - BORROWING BASE CERTIFICATE. Borrower further
covenants and agrees with Lender that, while this Agreement is in effect,
Borrower will provide Lender within thirty (30) days after each (i) month if the
principal balance outstanding is greater than zero, or (ii) fiscal quarter if
the principal balance outstanding is zero, Borrower shall deliver to Lender, a
borrowing base certificate, in form and detail satisfactory to Lender, along
with such supporting documentation as Lender may request including a list or
schedule of Borrower's inventory and/or equipment.

ADDITIONAL AFFIRMATIVE COVENANT - ADDITIONAL REPORTING. Borrower further
covenants and agrees with Lender that, while this Agreement is in effect,
Borrower will provide Lender (a) within thirty (30) days of each (i) month if
the principal balance outstanding is greater than zero, or (ii) fiscal quarter
if the principal balance outstanding is zero, an aging and listing of all
accounts receivable prepared in accordance with generally accepted accounting
principles which itemizes each account debtor by name and which states the total
amount payable to Borrower and contains a breakdown indicating future amounts
due and when due, current amounts due, amounts thirty (30) days past due, sixty
(60) days past due and ninety (90) or more days past due, and reflecting any
credit adjustments, returns and allowances; (b) within thirty (30) days of each
fiscal year end, Borrower's annual projections for the year immediately
following (balance sheet, income statement, cash flow) showing monthly activity
forecast.

<PAGE> 17
10-27-1997 ADDENDUM
LOAN NO. (CONTINUED) PAGE 2
- --------------------------------------------------------------------------------

LINE OF CREDIT CLEARANCE. Borrower shall, at lease once during the term of the
Line of Credit, reduce and maintain the outstanding principal balance of the
Line of Credit to $0.00 for a period of at least thirty (30) consecutive
calendar days.

ADDITIONAL NEGATIVE COVENANT - CHANGE IN MANAGEMENT. Borrower further covenants
and agrees with Lender that, while this Agreement is in effect, Borrower shall
not, without the prior written consent of Lender permit a material change in the
capacity, responsibility or authority of the following management personnel:
Jeffrey H. Margolis and D. Brian Karr.

ADDITIONAL NEGATIVE COVENANT - TRANSFER OF OWNERSHIP. Borrower further covenants
and agrees with Lender that, while this Agreement is in effect, Borrower shall
not, without the prior written consent of Lender permit the sale, pledge or
other transfer of any ownership interest in Borrower. Additional equity raised
may be used to retire outstanding capital stock.

THIS ADDENDUM IS EXECUTED OCTOBER 27, 1999.

BORROWER:

THE TRIZETTO GROUP, INC., A DELAWARE CORPORATION

BY: /s/ JEFFREY H. MARGOLIS
--------------------------------------
JEFFREY H. MARGOLIS, PRESIDENT AND CEO

LENDER:

BANK ONE, COLORADO, NA

BY:
--------------------------------------
AUTHORIZED OFFICER

<PAGE> 1
EXHIBIT 10.22

FIRST MODIFICATION AND RATIFICATION OF LEASE

THIS FIRST MODIFICATION AND RATIFICATION OF LEASE is made and entered
into effective this 1st day of November, 1999 by and between ST. PAUL
PROPERTIES, INC., a Delaware corporation ("Landlord"), and THE TRIZETTO GROUP,
INC., a Delaware corporation ("Tenant").

WITNESSETH:

WHEREAS, Landlord and Tenant entered into that certain Office Lease
dated as of April 26, 1999, as amended by that certain Lease commencement letter
signed by Landlord on September 9, 1999, and by Tenant on September 7, 1999
(hereafter collectively the "Lease"), for the rental of certain commercial real
property located in the Building known as Atrium I, 6061 S. Willow Drive,
Englewood, Colorado, and more particularly described in the Lease as Suite 310
(the "Leased Premises"); and

WHEREAS, pursuant to Exhibit "B" to the Lease, Landlord agreed to
provide an Additional Construction Credit to Tenant over and above the
Construction Credit, if needed, and which amounts were to be amortized over the
term of the Lease and added to the Base Rent under the Lease in accordance with
Exhibit "B"; and

WHEREAS, Landlord has provided an Additional Construction Credit to
Tenant of One Hundred Eighteen Thousand and Fifty and No/100 Dollars
($118,050.00), towards construction of tenant improvements on the Premises; and

WHEREAS, Landlord and Tenant desire to amend the Lease to reflect the
increase in Base Rent payable under the Lease to reflect the amortized cost of
the Additional Construction Credit.

NOW, THEREFORE, in consideration of the foregoing, the agreements of the
parties, and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties agree as follows:

1. Definitions. All capitalized terms used herein not otherwise defined
in this First Modification and Ratification of Lease shall have the
meanings given them in the Lease.

2. Base Rent. Article 1.03H of the Lease entitled "Base Rent" shall be
amended in its entirety to read as follows:

Tenant shall pay total aggregate Base Rent during the term of the Lease
of Two Million Five Hundred Twenty-five Thousand One Hundred Sixty-eight
and 20/100 Dollars ($2,525,168.20) ($21.04/rentable square foot/year).

<PAGE> 2

3. Monthly Installments of Base Rent. Article 1.03I of the Lease
entitled "Monthly Installments of Base Rent" shall be amended by replacing the
first and second paragraphs thereof with the following:

Base Rent shall be payable monthly, in advance, without demand,
deduction or set-off at the rate of Forty-one Thousand Three Hundred
Ninety-six and 20/100 Dollars ($41,396.20) per month ($21.04/rentable
square foot/year).

Rent Abatement. The foregoing notwithstanding, and provided that no
default (or no event which, with the passage of time or the giving of notice or
both, would constitute and event of default under the Lease) shall have occurred
under this Lease, Base Rent for the Premises, net of operating expenses, and net
of the amortized portion of Base Rent for the Additional Construction Credit in
the amount of Two Thousand Five Hundred Thirty-five and 10/100 Dollars
($2,535.10) per month, shall be abated for a period of one (1) month following
the Commencement Date. In the event of any default by Tenant, the entire amount
of Base Rent that was otherwise abated, as set forth above, shall be immediately
due and payable.

4. Real Estate Brokers. Tenant hereby warrants and represents to
Landlord that it has not dealt with or been represented by any broker in
connection with its execution of this Third Modification and Ratification of
Lease other than Landlord's listing agent, Venture Group Real Estate, LLC,
acting as agent of Landlord, and Julien J. Studley, Inc., acting as agent of
Tenant. Tenant shall be responsible for payment of any compensation or
commission to its agent, Julien J. Studley, Inc., with respect to this First
Modification and Ratification of Lease and Landlord shall be responsible for
payment of any compensation or commission to Venture Group Real Estate, LLC,
with respect to this First Modification and Ratification of Lease. Tenant agrees
to indemnify and hold Landlord harmless from and against any claims for
commissions or similar compensation from any or person claiming an entitlement
to any such payment as a result of its representation of Tenant. In addition,
Landlord agrees to indemnify and hold Tenant harmless from and against any
claims for commissions or similar compensation from any other broker or person
claiming an entitlement to any such payment as a result of its representation of
Landlord.

5. No Offer. The submission of this First Modification and Ratification
of Lease by Landlord to the Tenant is not an offer to modify or amend the Lease
and is not effective until execution and delivery by both Landlord and Tenant.

6. Entire Agreement. This First Modification and Ratification of Lease
contains the entire agreement between the parties as to its subject matter and
supersedes any and all prior agreements, arrangements or understandings between
the parties relating to the subject matter hereof.

7. Conflicts and Non-Amended Provisions. In the event of any express
conflict or inconsistency between the terms of the Lease and the terms of this
First Modification and Ratification of Lease, the terms of this First
Modification and Ratification of Lease shall

2
<PAGE> 3

control and govern. Except as modified above, the Landlord and Tenant hereby
confirm and ratify the terms, conditions and covenants of the Lease.

8. Counterparts. This First Modification and Ratification of Lease may
be executed in a number of identical counterparts, each of which shall be deemed
an original for all purposes, but all of which together shall constitute one and
the same instrument.

IN WITNESS WHEREOF, the parties have entered into this Agreement
effective as of the date first set forth hereinabove.

LANDLORD: TENANT:

ST. PAUL PROPERTIES, INC., a THE TRIZETTO GROUP, INC.,
Delaware corporation a Delaware corporation

By: /s/ R. WILLIAM INSERRA By: /s/ MJ SUNDERLAND
----------------------------- -----------------------------------
R. William Inserra Name: SR VP MJ SUNDERLAND
Vice President - Title: & CFO
Asset Management

<PAGE> 1
EXHIBIT 10.23

SECOND MODIFICATION AND RATIFICATION OF LEASE

THIS SECOND MODIFICATION AND RATIFICATION OF LEASE ("Modification") is
made and entered into effective this ___ day of December 1999 by and between ST.
PAUL PROPERTIES, INC., a Delaware corporation ("Landlord"), and THE TRIZETTO
GROUP, INC., a Delaware corporation ("Tenant").

WITNESSETH:

WHEREAS, Landlord and Tenant entered into that certain Office Lease
dated as of April 26, 1999, as amended by that certain Lease commencement letter
signed by Landlord on September 9, 1999, and by Tenant on September 7, 1999, and
by that certain First Modification and Ratification of Lease entered into
effective November 1, 1999 (hereafter collectively the "Lease"), for the rental
of certain commercial real property located in the Building known as Atrium I,
6061 S. Willow Drive, Englewood, Colorado, and more particularly described in
the Lease as Suite 310 (the "Premises"); and

WHEREAS, effective May 1, 2000, Tenant desires to expand the Premises
through the addition of Suite 300 in the Building, containing approximately
22,670 rentable square feet on the third floor of the Building (the "Expansion
Premises") as depicted in Exhibit A-1; and

WHEREAS, Tenant desires to extend the term of the Lease for the primary
Premises to be coterminous with the term of the Lease for the Expansion Premises
as set forth below; and

WHEREAS, Landlord is willing to modify the Lease to accommodate such
desires, subject to the terms and conditions of this Modification and Landlord
and Tenant desire to amend the Lease to reflect the addition of the Expansion
Premises, the extension of the Lease Term and the increase in Base Rent payable
under the Lease.

1. Definitions. All capitalized terms used herein not otherwise defined
in this Modification shall have the meanings given them in the Lease.

2. Additional Premises. Effective May 1, 2000, or upon substantial
completion of the tenant improvements to be made to the Expansion Premises as
defined in Exhibit B-1 attached hereto, whichever is later ("Expansion Premises
Commencement Date"), Landlord shall lease to Tenant and Tenant shall lease from
Landlord the Expansion Premises. It is expressly understood that the actual
number of rentable square feet within the Expansion Premises is subject to
confirmation in accordance with BOMA standards based upon the final space plan
to be prepared by Landlord's architect for the Expansion Premises, and the
parties agree to further amend the Lease to reflect any change in the actual
size of the Expansion Premises,

<PAGE> 2

together with the calculation of Base Rent, and all other matters that are
dependent upon the size of the Expansion Premises. In addition the
identification of the Leased Premises in Section 1.03 (B) of the Lease is hereby
amended by adding immediately after the description of the Leased Premises the
following:

EXPANSION PREMISES:

That part of the Building outlined on Exhibit A-1, called
Suite 300, on the third floor(s) of the Building, containing
approximately 22,670 rentable square feet, including tenant
improvements to be made by Landlord pursuant to Exhibit B-1 to
the Second Modification and Ratification of Lease.

3. Expansion Premises Commencement Date. Section 1.03(D) of the Lease is
hereby amended by adding immediately after the description of the commencement
date of the Lease the following:

The Expansion Premises Commencement Date shall be May 1, 2000,
unless delayed by Force Majeure, or as otherwise delayed as
provided in Exhibit "B1 " to the Second Modification and
Ratification of Lease.

4. Expansion Premises Completion Date. Section 1.03(E) of the Lease is
hereby amended by adding immediately after the description of the completion
date under the Lease the following:

The Expansion Premises Completion Date shall be May 1, 2000,
unless delayed by Force Majeure, or as otherwise delayed as
provided in Exhibit "B-1" to the Second Modification and
Ratification of Lease.

5. Termination Date. Section 1.03(F) of the Lease is hereby amended in
its entirety by replacing the existing Termination Date of the Lease of November
30, 2004, with the following:

The Termination Date of the Lease for the Premises and the
Expansion Premises shall be April 30, 2006 (seventy-two (72)
months following the Expansion Premises Commencement Date),
unless sooner terminated as provided in this Lease, or as
otherwise extended as provided in Exhibit "B-1" to the Second
Modification and Ratification of Lease.

6. Expansion Premises Term. Section 1.03(G) of the Lease is hereby
amended by adding immediately after the description of the Term of the Lease the
following:

The Term of the Lease for the Premises shall be extended so
that it coincides with the expiration of the Term for the
Expansion Premises. The Expansion Premises Term shall be a
period of seventy-two (72) months commencing on the Expansion
Premises Commencement Date and expiring at 11:59 p.m. local
time

2
<PAGE> 3

on the Termination Date, unless sooner terminated or extended
as provided in this Lease.

7. Tenant's Proportionate Share. Section 1.03(J) of the Lease is amended
effective on the Expansion Premises Commencement Date by adding immediately
after the description of the Tenant's Proportionate Share under the Lease for
the Premises the following:

Tenant's Proportionate Share for the Expansion Premises shall
be 17.52%.

8. Security Deposit. Section 1.03(K) of the Lease is hereby amended by
increasing the security deposit for the Premises and Expansion Premises in the
amount of Thirty-seven Thousand Three Hundred Eleven and 04/100 Dollars
($37,311.04), for a total security deposit of One Hundred Fifteen Thousand
Twenty-seven and 29/100 Dollars ($115,027.29), which additional amount shall be
payable to Landlord upon execution of this Modification.

9. Parking Spaces. Section 1.03(O) of the Lease is amended effective on
the Expansion Premises Commencement Date by the addition of the following at the
end of the section:

During the Expansion Premises Term, Tenant shall be entitled
to the additional non-exclusive use in common with Landlord
and others of a maximum of seventy-four (74) parking spaces in
the Building parking areas at no charge during the primary
Term of the Lease. Within the foregoing parking allowance,
Tenant shall be entitled during the primary Lease Term to ten
(10) covered parking spaces in the Building parking area at
the rate of $30.00 per parking space per month. In addition,
through June 30, 2002, Tenant may be entitled to use
additional parking spaces, in an amount to be determined by
Landlord, on a non-reserved, non-exclusive basis in common
with other tenants of the Building, in that certain parking
lot adjacent to the Building parking lot and currently leased
by Landlord and known as the "Sheplers" parking lot, at no
additional cost to Tenant. Landlord reserves the right to
strictly enforce the number of parking spaces utilized by
Tenant during the term of this Lease based upon a parking
ratio of 3.3 parking spaces per 1,000 rentable square feet.

10. Operating Expenses. Section 2.02 of the Lease shall be amended
effective on the Expansion Premises Commencement Date by adding to the first
sentence thereof immediately after the words "the 1999 base year" and
immediately before the parenthetical reference "("Excess Expenses")," the
following:

for the Premises through November 30, 2004, and during the
2000 base year with respect to the Expansion Premises during
the Expansion Premises Term and with respect to the Premises
beginning on December 1, 2004.

In addition, the following shall be added immediately after the last
paragraph of Section 2.02:

If during any calendar year of this Lease, the occupancy of
the Building averages less than ninety-five percent (95%),
it is agreed that the Operating Expenses with

3
<PAGE> 4

respect to the Expansion Premises shall be computed as though
the Building had been ninety-five percent (95%) occupied for
such calendar year.

11. Base Rent. Effective on the Expansion Premises Commencement Date,
Section 1.03(H) of the Lease entitled Base Rent, and Section 1.03(I) of the
Lease entitled Monthly Installments of Base Rent, shall be amended in their
entirety and replaced with the following:

(a) Base Rent. Tenant shall pay Base Rent for the Premises,
payable monthly in advance, without demand, deduction or
set-off, in accordance with the following schedule:

<TABLE>
<CAPTION>
Rentable Lease Annual Monthly
Months Square Feet Rate Payment Payment
------ ----------- ---- ------- -------
<S> <C> <C> <C> <C>
1-61 23,610 $21.04/rsf $496,754.40 $41,396.20
(11/8/99-11/30/2004)
62-73 23,610 $21.46/rsf $506,670.60 $42,222.55
(12/1/2004-11/30/2005)
74-78 23,610 $21.89/rsf $516,822.90 $43,068.58
(12/1/2005-4/30/2006)
</TABLE>

(b) Expansion Premises Base Rent. In addition to the Base
Rent payable with respect to the Premises, Tenant shall
also pay Base Rent with respect to the Expansion
Premises, payable monthly in advance, without demand,
deduction or set-off, in accordance with the following
schedule:

<TABLE>
<CAPTION>
Rentable Lease Annual Monthly
Months Square Feet Rate Payment Payment
------ ----------- ---- ------- -------
<S> <C> <C> <C> <C>
1-60 22,670 $19.75/rsf $447,732.50 $37,311.04
(5/1/00-4/30/05)
61-72 22,670 $20.15/rsf $456,800.50 $38,066.71
(5/1/05-4/30/06)
</TABLE>

12. Termination Option. Paragraph 3 of the Addendum to the Lease shall
be deleted in its entirety and replaced with the following:

Provided no Event of Default has occurred and is continuing, and
provided that Tenant has not assigned the Lease or sublet all or any
portion of the Premises or the Expansion Premises, and in the event
Landlord is unable to accommodate within the Building the growth
requirements of Tenant, Tenant shall have the option, in its sole
discretion, to terminate the Lease with respect to the Premises and the
Expansion Premises on April

4
<PAGE> 5

30, 2005, by providing Landlord with one-hundred eighty (180) days'
prior written notice of Tenant's intent to terminate the Lease with
respect to the Expansion Premises, and provided that by April 30, 2005,
Tenant shall pay Landlord a termination fee equal to the sum of all of
Landlord's unamortized costs of leasing the Premises and Expansion
Premises to Tenant, including but not limited to leasing commissions,
tenant improvements and other concessions, plus an amount equal to four
(4) months of the then existing Base Rent for the Premises and Expansion
Premises.

13. Tenant Improvements. Landlord agrees to provide Tenant with an allowance for
tenant improvements for the Expansion Premises in the amount and in the manner
as set forth in the attached Exhibit B-1 - Provisions Relating To Construction
Of Tenant's Expansion Premises (Finish Allowance only).

14. Right of Offer. Paragraph 2 of the Addendum to the Lease shall be deleted in
its entirety and replaced with the following:

During the initial Term of the Lease, Tenant shall have a right of
offer, subject to existing rights granted to other tenants as of the
date of this Modification, to lease any space that may become vacant and
located on the second (2nd) floor of the Building as more particularly
shown on Exhibit A-2 attached hereto (the "Offer Space"), if and when
the Offer Space becomes "available for lease." For purposes of this
right of offer, the Offer Space will be considered to be "available for
lease" if (i) no bona fide written lease agreement is currently in force
or effect with respect to such space, (ii) the space becomes vacant, or
will become vacant, because an existing tenant's lease has or will
expire or be terminated with no renewal or extension options subject to
being exercised with respect to such space, and (iii) Landlord makes the
Offer Space available for leasing to others. Tenant's right of offer
with respect to such Offer Space shall be upon the following terms and
conditions:

a) In the event that (i) the Offer Space, or any part thereof, becomes
or is about to become available for lease as provided above,
Landlord will notify Tenant of the rental terms on which it would
be willing to lease the Offer Space to Tenant, and Tenant shall
have a right of offer to lease that portion of the Offer Space
identified in Landlord's notice, subject to existing rights granted
to other tenants as of the date of this Modification, at the rent
and on the terms and conditions contained in Landlord's notice.

b) The right of offer will be exercised by Tenant signing a lease
amendment with respect to the subject portion of the Offer Space at
the rent and on the terms set forth in Landlord's notice. Tenant
shall accept or reject the offer contained in Landlord's notice
within five business (5) days after the receipt of Landlord's
notice. If an amendment incorporating the terms contained in
Landlord's notice is not signed within five business (5) days
following receipt of Landlord's notice, time being strictly of the
essence, Landlord will have the right to lease all or a portion of
the Offer Space free of the rights of Tenant under this

5
<PAGE> 6

Paragraph, and Tenant's right of offer granted herein shall be null
and void. Any space leased by Tenant will be added to the Premises
as of the date provided in the proposed amendment.

c) Landlord is under no obligation to offer for lease all or any
portion of the Offer Space to Tenant or any other person.

d) Notwithstanding any other provision set forth above, it is agreed
that Tenant shall not be permitted to exercise any of its rights
contained in this Paragraph 14 at any time when the Lease is not in
effect or at any time when an Event of Default exists, (ii) in the
event that Tenant assigns the Lease or sublets any portion of the
Premises or the Expansion Premises at any time, and (iii) Tenant
may not exercise the right contained in this Paragraph 14 if the
effective date of the addition of the Offer Space to the Premises
previously leased would be at any time during the last year of the
then existing term of the Lease.

e) In the event that Tenant fails to exercise the foregoing right of
offer as provided in this Paragraph 14, time being strictly of the
essence, Tenant's right of offer shall be null and void.

f) Tenant acknowledges that it is only being granted a right of offer
that is subject and subordinate to the rights of any existing
tenant with pre-existing rights of refusal, rights of offer, or
options to lease, as of the date of this Modification.

g) In no event shall Landlord be responsible for any brokerage
commission for any real estate broker retained by Tenant with
respect to this right of first offer.

15. Monument Signage. Provided that Tenant is not then in default of the
Lease, and provided that Tenant has not assigned this Lease, nor sublet all or
any portion of the Premises or the Expansion Premises, Landlord shall permit
Tenant to utilize the Building monument signage located on the east side or west
side of the Building, but not both. All signage plans shall be subject to
Landlord's approval, and further shall comply with all laws governing use of
such signage, including but not limited to the those restrictions imposed by the
Denver Technological Center Architectural Control Committee and the City of
Greenwood Village, Colorado. Tenant, at its sole cost and expense, shall be
responsible for costs related to such monument signage.

16. Real Estate Brokers. Each of the parties hereto hereby warrants and
represents to the other party that it has not dealt with or been represented by
any broker in connection with its execution of this Modification other than
Landlord's listing agent, Venture Group Real Estate, LLC, acting as agent of
Landlord, and Julien J. Studley, Inc., acting as agent-of Tenant. Landlord shall
be responsible for payment of any compensation or commission to Venture Group
Real Estate, LLC, and Julien J. Studley, Inc., with respect to this
Modification. Tenant agrees to indemnify and hold Landlord harmless from and
against any other claims for commissions or similar compensation from any other
person claiming an entitlement to any such payment as a result of its
representation of Tenant. In addition, Landlord agrees to indemnify and hold
Tenant harmless from and against any claims for commissions or similar

6
<PAGE> 7

compensation from any other broker or person claiming an entitlement to any such
payment as a result of its representation of Landlord.

17. Performance of Obligations. Tenant hereby acknowledges and confirms
that, as of the date hereof, Landlord has performed all obligations on the part
of the Landlord under the Lease and that Tenant has no claims against Landlord
or claims of offset against any rent or other sums payable by Tenant under the
Lease.

18. Conflicts and Non-Amended Provisions. In the event of any express
conflict or inconsistency between the terms of the Lease and the terms of this
Modification, the terms of this Modification shall control and govern. In all
other respects, the terms, covenants and conditions of the Lease are hereby
ratified, reaffirmed and republished in their entirety.

19. Condition Precedent. This Modification, and Tenant's right to lease
the Expansion Space, is expressly conditioned upon the Expansion Premises being
available to lease, and is subject to pre-existing rights of existing tenants in
the Building. In the event that any tenants within the Building exercise any
pre-existing rights to the Expansion Space, time being strictly of the essence,
this Modification shall be null and void.

20. No Offer. The submission of this Modification by Landlord to the
Tenant is not an offer to modify or amend the Lease and is not effective until
execution and delivery by both Landlord and Tenant.

21. Entire Agreement. This Modification contains the entire agreement
between the parties as to its subject matter and supersedes any and all prior
agreements, arrangements or understandings between the parties relating to the
subject matter hereof.

22. Counterparts. This Modification may be executed in a number of
identical counterparts, each of which shall be deemed an original for all
purposes, but all of which together shall constitute one and the same
instrument.

IN WITNESS WHEREOF, the parties have entered into this Modification
effective as of the date first set forth hereinabove.

LANDLORD: TENANT:

ST. PAUL PROPERTIES, INC., a THE TRIZETTO GROUP, INC.,
Delaware corporation a Delaware corporation

By: /s/ R. WILLIAM INSERRA By: /s/ MJ SUNDERLAND
----------------------------- -----------------------------------
R. William Inserra Name: MJ SUNDERLAND
Vice President - Title: SR VP, CFO
Asset Management

7
<PAGE> 8

EXHIBIT "B-1"
PROVISIONS RELATING TO CONSTRUCTION OF TENANT'S EXPANSION
PREMISES
(FINISH ALLOWANCE ONLY)

1. Landlord will provide Tenant with a construction credit in the sum of
up to Fifteen and No/100 Dollars ($15.00) per rentable square foot of the
Expansion Premises, which equals Three Hundred Forty Thousand Fifty and No/100
Dollars ($340,050.00) (the "Construction Credit"), which may be used only
against the cost of design and construction by Landlord of Improvements or
alterations permanently installed and incorporated in the realty of the
Expansion Premises or the Premises, including space plans and working drawings
of the Expansion Premises (excluding specifically fixtures, furniture and
equipment), as contemplated under the plans and specifications and working
drawings to be prepared by an architect selected by Tenant, and subject to
Landlord's reasonable approval, and to be initialed by Tenant and by Landlord
for identification and approval (the "Plans"); provided, however, that Landlord
shall provide Tenant with one space plan for the Expansion Premises at no charge
(the cost of any additional space plans and all working drawings shall be paid
for out of the Construction Credit). Landlord will cause such work (the "Work")
to be performed in a good and workmanlike manner and in accordance with the
Plans, using Landlord's standard building materials (unless otherwise specified
by Tenant), and using one of Landlord's approved contractors for the Building.
All Work performed shall be subject to Landlord's review and approval, including
but not limited to administration of the Work, which administration shall be
subject to a construction management fee payable to Landlord out of the
Construction Credit of one percent (1%) of the Construction Credit, which is
equal to Three Thousand Four Hundred and 50/100 Dollars ($3,400.50). All Work
shall also be subject to the reasonable approval of the architect. If the
Construction Credit is not used within six months of the Commencement Date, the
unused portion shall revert back to Landlord.

2. In the event the cost of the Work exceeds the Construction Credit,
Landlord agrees to provide an additional Construction Credit (the "Additional
Construction Credit") of up to Three and No/100 Dollars ($3.00) per rentable
square foot, which equals Sixty-eight Thousand Ten and No/100 Dollars
($68,010.00) provided the cost of any such Additional Construction Credit shall
increase the Base Rent under the Lease for the Premises and the Expansion
Premises by amortizing such Additional Construction Credit over the Term at the
rate of eleven percent (11%) per annum, compounded monthly, and further
provided, that Landlord and Tenant shall enter into an amendment to this Lease
memorializing the amount of the Additional Construction Credit used, and the new
Base Rent for the Premises and the Expansion Premises. Any portion of the
Additional Construction Credit used by Tenant shall also be subject to a one
percent (1%) construction management fee payable to Landlord out of the
Additional Construction Credit. Tenant shall have the option of reimbursing
Landlord the Additional Construction Credit amounts provided by Landlord within
thirty (30) days of the final accounting of such costs.

3. All material and labor selected by Tenant must be readily available
in Denver, Colorado. Tenant agrees that promptly after the execution of the
Modification, Tenant will

8
<PAGE> 9

advise Landlord of all selections or designations as to paint, color and
materials, if other than Landlord's standard materials.

4. Any additional work which Landlord may agree to perform, or cost of
changes or any materials or installations other than Landlord standard materials
or installations which Landlord may agree to obtain over and above the
Construction Credit, or the Additional Construction Credit if utilized by
Tenant, (to be known as "Tenant's Overstandard Work"), shall be procured at a
cost, plus 5% thereof as an administration payment. Costs include but are not
limited to so-called "general conditions" (e.g., trash, clean-up and hauling,
job lighting and power, insurance, safety protection, security and hoists) in
whole or in part apportionable to Tenant's Overstandard Work. If the aggregate
of all Tenant's Overstandard Work to which Landlord agrees is less than
$2,000.00, the whole amount shall be payable promptly after completion of such
work and after Landlord's billing Tenant for the work. If the aggregate of all
Tenant's Overstandard Work exceeds $2,000.00, such aggregate shall be payable
50% upon Tenant's signing with Landlord the agreement under which Landlord
agrees to perform such Tenant's Overstandard Work, and the balance shall be
payable in substantially equal progress payments promptly after Landlord's
billing Tenant for that work. Such payments in either event shall be collectible
as additional obligations which Tenant shall bear pursuant to the Lease, and, if
Tenant defaults in the payment of that work, Landlord shall have (in addition to
all other remedies) the same rights as provided in the Lease in the event of
Tenants' default in the payment of rent. Any Tenant's Overstandard Work shall
also be subject to the terms of the Lease and shall also be subject to
Landlord's approval of plans and specifications as set forth in Paragraph 1
above.

5. If the Expansion Premises are not ready for occupancy because of
delays attributable to Tenant (such as changes by Tenant to its finish
requirements after approval of the initial design, delays in providing
information or approving space plans and drawings, and like delays, but not
including the architect's reasonable rejection of the Work under Paragraph 1
above) the Expansion Premises Commencement Date shall be the date the Expansion
Premises would have been substantially completed and ready for occupancy in the
absence of such delays, which date is agreed to be May 1, 2000. Failure by
Landlord to complete the tenant finish improvements shall not relieve Tenant of
its duty to pay rent and perform its obligations under the Lease if such failure
is attributable to Tenant's failure to determine its requirements, approve plans
and specifications or otherwise facilitate completion of the tenant finish
improvements. However, if the Expansion Premises are not ready for occupancy
because of delays not attributable to Tenant, Force Majeure, or architect's
reasonable rejection of the Work pursuant to Paragraph 1 above, the Expansion
Premises Commencement Date shall be the first day of the month following the
date the Work is substantially complete and the Expansion Premises are
substantially ready for occupancy. In the event the Expansion Premises
Commencement Date is delayed beyond May 1, 2000, the Termination Date of the
Lease for the Premises and Expansion Premises shall be extended to the date
which is the last day of the month that is seventy-two (72) full months after
the Expansion Premises Commencement Date, and the parties shall enter into an
amendment to the Lease verifying the Expansion Premises Commencement Date and
the Termination Date of the Lease.

<PAGE> 10

6. The terms "substantially complete" and "substantial completion" are
defined as the date when construction is sufficiently completed in accordance
with the contract documents, as modified by any change orders agreed to by the
parties, and subject to completion of Tenant's reasonable list of punch-list
items, so that Tenant can occupy the Expansion Premises for the use for which it
was intended.

<PAGE> 1
EXHIBIT 10.24

[BANK ONE LOGO]

MASTER LEASE AGREEMENT

Dated As Of: _____________

This MASTER LEASE AGREEMENT is made and entered into by and between BANC
ONE LEASING CORPORATION ("Lessor"), and Ohio corporation, with its principal
place of business at 1111 Polaris Parkway, Columbus, Ohio 43240 and the Lessee
identified below:

LESSEE NAME: THE TRIZETTO GROUP, INC.

LESSEE ADDRESS: 569 SAN NICOLAS DRIVE
SUITE 360
NEWPORT BEACH, CA 92660

1. LEASE OF EQUIPMENT: Lessor leases to Lessee, and Lessee leases from
Lessor, all the property described in the Lease Schedules which are signed from
time to time by Lessor and Lessee.

2. CERTAIN DEFINITIONS: "Schedule" means each Lease Schedule signed by
Lessee and Lessor which incorporates the terms of this Master Lease Agreement,
together with all exhibits, riders, attachments and addenda thereto. "Equipment"
means the property in each Schedule, together with all attachments, additions,
accessions, parts, repairs, improvements, replacements and substitutions
thereto. "Lease", "herein", "hereunder", "hereof" and similar words mean this
Master Lease Agreement and all Schedules, together with all exhibits, riders,
attachments and addenda to any of the foregoing, as the same may from time to
time be amended, modified or supplemented. "Prime Rate" means the prime rate of
interest announced from time to time as the prime rate by Bank One, Columbus,
NA; provided, that the parties acknowledge that the Prime Rate is not intended
to be the lowest rate of interest charged by said bank in connection with
extensions of credit. "Lien" means any security interest, lien, mortgage,
pledge, encumbrance, judgment, execution, attachment, warrant, writ, levy,
other judicial process or claim of any nature whatsoever by or of any person.
"Fair Market Value" means the amount which would be paid for an item of
Equipment by an informed and will buyer (other than a used equipment or scrap
dealer) and an informed and willing seller neither under a compulsion to buy or
sell. "Lessor's Cost" means the invoiced price of any item of Equipment plus
any other cost to Lessor of acquiring an item of Equipment. All terms defined
in the Lease are equally applicable to both the singular and plural form of
such terms.

3. LEASE TERM AND RENT: The term of the lease of the Equipment described
in each Schedule ("Lease Term") commences on the date stated in the Schedule
and continues for the term stated therein. As rent for the Equipment described
in each Schedule, Lessee shall pay Lessor the rent payments and all other
amounts stated in such Schedule, payable on the dates specified therein. All
payments due under the Lease shall be made in United States dollars at Lessor's
office stated in the opening paragraph or as otherwise directed by Lessor in
writing.

4. ORDERING, DELIVERY, REMOVAL AND INSPECTION OF EQUIPMENT: If an event
of default occurs or if for any reason Lessee does not accept, or revokes its
acceptance of, equipment covered by a purchase order or purchase contract or if
any commitment or agreement of Lessor to lease equipment to Lessee expires,
terminates or is otherwise canceled, then automatically upon notice from
Lessor, any purchase order or purchase contract and all obligations thereunder
shall be assigned to Lessee and Lessee shall pay and perform all obligations
thereunder. Lessee agrees to pay, defend, indemnify and hold Lessor harmless
from any liabilities, obligations, claims, costs and expenses (including
reasonable attorney fees and expenses) of whatever kind imposed on or asserted
against Lessor in any way related to any purchase orders or purchase contracts.
Lessee shall make all arrangements for, and Lessee shall pay all costs of,
transportation, delivery, installation and testing of Equipment. The Equipment
shall be delivered to Lessee's premises stated in the applicable Schedule and
shall not be removed without Lessor's prior written consent. Lessor has the
right upon reasonable notice to Lessee to inspect the Equipment wherever
located. Lessor may enter upon any premises where Equipment is located and
remove it immediately, without notice or liability to Lessee, upon the
expiration or other termination of the Lease Term.

5. MAINTENANCE AND USE: Lessee agrees it will, at its sole expense: (a)
repair and maintain the Equipment in good condition and working order and
supply and install all replacement parts or other devices when required to so
maintain the Equipment or when required by applicable law or regulation, which
parts or devices shall automatically become part of the Equipment; (b) use and
operate in a careful manner in the normal course of its business and only for
the purposes for which it was designed in accordance with the manufacturer's
warranty requirements, and comply with all laws and regulations relating to the
Equipment, and obtain all permits or licenses necessary to install, use or
operate the Equipment; and (c) make no alterations, additions, subtractions,
upgrades or improvements to the Equipment without Lessor's prior written
consent, but any such alterations, additions, upgrades or improvements shall
automatically become part of the Equipment. The Equipment will not be used or
located outside of the United States.

6. NET LEASE; NO EARLY TERMINATION: The Lease is a net lease. Lessee's
obligation to pay all rent and all other amounts payable under the Lease is
absolute and unconditional under any and all circumstances and shall not be
affected by any circumstance or any character including, without limitation,
(a) any setoff, claim, counterclaim, defense or reduction which Lessee may have
at any time against Lessor or any other party for any reason, or (b) any defect
in the condition, design or operation of, any lack of fitness for use of, any
damage to or loss of, or any lack of maintenance or service for any of the
Equipment. Each Schedule is a noncancelable lease of the Equipment described
therein and Lessee's obligation to pay rent and perform all other obligations
thereunder and under the Lease are not subject to cancellation or termination
by Lessee for any reason.

Page 1 of 6
<PAGE> 2
[BANK ONE LOGO]

7. NO WARRANTIES BY LESSOR: LESSOR LEASES THE EQUIPMENT AS-IS, WHERE-IS,
AND WITH ALL FAULTS. LESSOR MAKES NO WARRANTIES OR REPRESENTATIONS, EXPRESS OR
IMPLIED, OF ANY KIND AS TO THE EQUIPMENT INCLUDING, WITHOUT LIMITATION: ITS
MERCHANTABILITY; ITS FITNESS FOR ANY PARTICULAR PURPOSE; ITS DESIGN, CONDITION,
QUALITY, CAPACITY, DURABILITY, CAPABILITY, SUITABILITY OR WORKMANSHIP; ITS
NON-INTERFERENCE WITH OR NON-INFRINGEMENT OF ANY PATENT, TRADEMARK, COPYRIGHT
OR OTHER INTELLECTUAL PROPERTY RIGHT; OR ITS COMPLIANCE WITH ANY LAW, RULE,
SPECIFICATION, PURCHASE ORDER OR CONTRACT PERTAINING THERETO. Lessor hereby
assigns to Lessee the benefit of any assignable manufacturer's or supplier's
warranties, but Lessor, at Lessee's written request, will cooperate with Lessee
in pursuing any remedies Lessee may have under such warranties. Any action
taken with regard to warranty claims against any manufacturer or supplier by
Lessee will be at Lessee's sole expense. LESSOR MAKES NO REPRESENTATIONS OR
WARRANTIES, EXPRESS OR IMPLIED, OF ANY KIND AS TO THE FINANCIAL CONDITION OR
FINANCIAL STATEMENTS OF ANY PARTY OR AS TO THE TAX OR ACCOUNTING TREATMENT OR
CONSEQUENCES OF THE LEASE, THE EQUIPMENT OR THE RENTAL PAYMENTS.

8. INSURANCE: Lessee at its sole expense shall at all times keep each item
of Equipment insured against all risks of loss or damage from every cause
whatsoever for an amount not less than the greater of the full replacement
value or the Lessor's Cost of such item of Equipment. Lessee at its sole
expense shall at all times carry public liability and property damage insurance
in amounts satisfactory to Lessor protecting Lessee and Lessor from liabilities
for injuries to persons and damage to property of others relating in any way to
the Equipment. All insurers shall be reasonably satisfactory to Lessor. Lessee
shall deliver to Lessor satisfactory evidence of such coverage. Proceeds of any
insurance covering damage or loss of the Equipment shall be payable to Lessor
as loss payee and shall, at Lessor's option, be applied toward (a) the
replacement, restoration or repair of the Equipment, or (b) payment of the
obligations of Lessee under the Lease. Proceeds of any public liability or
property insurance shall be payable first to Lessor as additional insured to
the extent of its liability, then to Lessee. If an event of default occurs and
is continuing, or if Lessee fails to make timely payments due under Section 9
hereof, then Lessee automatically appoints Lessor as Lessee's attorney-in-fact
with full power and authority in the place of Lessee and in the name of Lessee
or Lessor to make claim for, receive payment of, and sign and endorse all
documents, checks or drafts for loss or damage under any such policy. Each
insurance policy will require that the insurer give Lessor at least 30 days
prior written notice of any cancellation of such policy and will require that
Lessor's interests remain insured regardless of any act, error, omission,
neglect or misrepresentation of Lessee. The insurance maintained by Lessee
shall be primary without any right of contribution from insurance which may be
maintained by Lessor.

9. LOSS AND DAMAGE: (a) Lessee bears the entire risk of loss, theft,
damage or destruction of Equipment in whole or in part from any reason
whatsoever ("Casualty Loss"). No Casualty Loss to Equipment shall relieve
Lessee from the obligation to pay rent or from any other obligation under the
Lease. In the event of Casualty Loss to any item of Equipment, Lessee shall
immediately notify Lessor of the same and Lessee shall, if so directed by
Lessor, immediately repair the same. If Lessor determines that any item of
Equipment has suffered a Casualty Loss beyond repair ("Lost Equipment"), then
Lessee, at the option of Lessor, shall: (1) immediately replace the Lost
Equipment with similar equipment in good repair, condition and working order
free and clear of any Liens and deliver to Lessor a bill of sale covering the
replacement equipment, in which event such replacement equipment shall
automatically be Equipment under the Lease; or (2) On the rent payment date
which is at least 30 but not more than 60 days after the date of the Casualty
Loss, pay to Lessor all amounts then due and payable by Lessee under the Lease
for the Lost Equipment plus the Stipulated Loss Value for such Lost Equipment
as of the date of the Casualty Loss. Upon payment by Lessee of all amounts due
under the above clause (2), the lease of the Lost Equipment will terminate and
Lessor shall transfer to Lessee all of Lessor's right, title and interest in
such Equipment on "as-is, where-is" basis with all faults, without recourse and
without representation or warranty of any kind, express or implied.

(b) "Stipulated Loss Value" of any item of Equipment during its Lease Term
equals the present value discounted in arrears to the applicable date at the
applicable SLV Discount Rate of (1) the remaining rents and all other amounts
[including, without limitation, any balloon payment and, as to a terminal rental
adjustment clause ("TRAC") lease, the TRAC value stated in the Schedule, and
any other payments required to be paid by Lessee at the end of the applicable
Lease Term] payable under the Lease for such item on and after such date to the
end of the applicable Lease Term and (2) an amount equal to the Economic
Value of the Equipment. For any item of Equipment, "Economic Value" means the
Fair Market Value of the Equipment at the end of the applicable Lease Term as
originally anticipated by Lessor at the Commencement Date of the applicable
Schedule; provided, that Lessee agrees that such value shall be determined by
the books of Lessor as of the Commencement Date of the applicable Schedule.
After the payment of all rent due under the applicable Schedule and the
expiration of the Lease Term of any item of Equipment, the Stipulated Loss Value
of such item equals the Economic Value of such item. Stipulated Loss Value
shall also include any Taxes payable by Lessor in connection with its receipt
thereof. For any item of Equipment, "SLV Discount Rate" means an interest rate
equal to the Prime Rate in effect on the Commencement Date of the Schedule for
such item minus two percentage points.

10. TAX BENEFITS INDEMNITY. (a) The Lease has been entered into on the
basis that Lessor shall be entitled to such deductions, credits and other tax
benefits as are provided by federal, state and local income tax law to an owner
of the Equipment (the "Tax Benefits") including, without limitation: (1)
modified accelerated cost recovery deductions on each item of Equipment under
Section 168 of the Code (as defined below) in an amount determined commencing
with the taxable year in which the Commencement Date of the applicable Schedule
occurs, using the maximum allowable depreciation method available under Section
168 of the Code, using a recovery period (as defined in Section 168 of the
Code) reasonably determined by Lessor, and using an initial adjusted basis
which is equal to the Lessor's Cost of such item; (2) amortization of the
expenses paid by Lessor in connection with the Lease on a straight-line basis
over the term of the applicable Schedule; and (3) Lessor's federal taxable
income will be subject to the maximum rate on corporations in effect under the
Code as of the Commencement Date of the applicable Schedule.

(b) If on any one or more occasions (1) Lessor shall lose, shall not have
or shall lose the right to claim all or any part of the Tax Benefits, (2) there
shall be reduced, disallowed, recalculated or recaptured all or any part of the
Tax Benefits, or (3) all or any part of the Tax Benefits is reduced by a change
in law or regulation (each of the events described in subparagraphs 1, 2, or 3
of this paragraph (b) will be referred to as a "Tax Loss"), then upon 30 days
written notice by Lessor to Lessee that a Tax Loss has occurred, Lessee shall
pay Lessor an amount which, in the reasonable opinion of Lessor and after the
deduction of all taxes required to be paid by Lessor with respect to the receipt
of such amount, will provide Lessor with the same after-tax net economic yield
which was originally anticipated by Lessor as of the Commencement Date of the
applicable Schedule.

(c) A Tax Loss shall occur upon the earliest of: (1) the happening of
any event (such as disposition or change in use of an item of Equipment) which
may cause such Tax Loss; (2) Lessor's payment to the applicable taxing
authority of the tax increase resulting from such Tax Loss; or (3) the
adjustment of Lessor's tax return to reflect such Tax Loss.

(d) Lessor shall not be entitled to payment under this section for any
Tax Loss caused solely by one or more of the following events: (1) a
disqualifying sale or disposition of an item of Equipment by Lessor prior to
any default by Lessee; (2) Lessor's failure to timely or properly claim the Tax
Benefits in Lessor's tax return; (3) a disqualifying change in the nature of
Lessor's business or liquidation thereof; (4) a foreclosure by any person
holding through Lessor a security interest on an item of Equipment which
foreclosure results solely from an act of Lessor; or (5) Lessor's failure to
have sufficient taxable income or tax liability to utilize the Tax Benefits.

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<PAGE> 3
[BANK ONE LOGO]

(e) "Code" shall mean the Internal Revenue Code of 1986, as amended. For
the purposes of this section 10, the term "Lessor" shall include any affiliate
group (within the meaning of section 1504 of the Code) of which Lessor is a
member for any year in which a consolidated income tax return is filed for such
affiliated group. Lessee's obligations under this section shall survive
the expiration, cancellation or termination of the Lease.

11. GENERAL TAX INDEMNITY: Lessee will pay, and will defend, indemnify and
hold Lessor harmless on an after-tax basis from, any and all Taxes (as defined
below) and related audit and contest expenses on or relating to (a) any of the
Equipment, (b) the Lease, (c) purchase, acceptance, ownership, lease,
possession, use, operation, transportation, return or other disposition of any
of the Equipment, and (d) rentals or earnings relating to any of the Equipment
or the Lease. "Taxes" means present and future taxes or other governmental
charges that are not based on the net income of Lessor, whether they are
assessed to or payable by Lessee or Lessor, including, without limitation (i)
sales, use, excise, licensing, registration, titling, franchise, business and
occupation, gross receipts, stamp and personal property taxes, (ii) levies,
imposts, duties, assessments, charges and withholdings, (iii) penalties, fines,
and additions to tax and (iv) interest on any of the foregoing. Unless Lessor
elects otherwise, Lessor will prepare and file all reports and returns relating
to any Taxes and will pay all Taxes to the appropriate taxing authority. Lessee
will reimburse Lessor for all such payments promptly on request. On or after any
applicable assessments/levy/lien date for any personal property Taxes relating
to any Equipment, Lessee agrees that upon Lessor's request Lessee shall pay to
Lessor the personal property Taxes which Lessor reasonably anticipates will be
due, assessed, levied or otherwise imposed on any Equipment during its Lease
Term. If Lessor elects in writing, Lessee will itself prepare and file all such
reports and returns, pay all such Taxes directly to the taxing authority, and
send Lessor evidence thereof. Lessee's obligations under this section shall
survive the expiration, cancellation or termination of the Lease.

12. GENERAL INDEMNITY: Lessee assumes all risk and liability for, and
shall defend, indemnify and keep Lessor harmless on an after-tax basis from,
any and all liabilities, obligations, losses, damages, penalties, claims,
actions, suits, costs and expenses, including reasonable attorney fees and
expenses, of whatsoever kind and nature imposed on, incurred by or asserted
against Lessor, in any way relating to or arising out of the manufacture,
purchase, acceptance, rejection, ownership, possession, use, selection,
delivery, lease, operation, condition, sale, return or other disposition of the
Equipment or any part thereof (including, without limitation, any claim for
latent or other defects, whether or not discoverable by Lessee or any other
person, any claim for negligence, tort or strict liability, any claim under any
environmental protection or hazardous waste law and any claim for patent,
trademark or copyright infringement). Lessee will not indemnify Lessor under
this section for loss or liability arising from events which occur after the
Equipment has been returned to Lessor or for loss or liability caused directly
and solely by the gross negligence or willful misconduct of Lessor. In this
section, "Lessor" also includes any director, officer, employee, agent,
successor or assign of Lessor. Lessor's obligations under this section shall
survive the expiration, cancellation or termination of the Lease.

13. PERSONAL PROPERTY: Lessee represents and agrees that the Equipment
is, and shall at all times remain, separately identifiable personal property.
Upon Lessor's request, Lessee shall furnish Lessor a landlord's and/or
mortgagee's waiver and consent to remove all Equipment. Lessor may display
notice of its interest in the Equipment by any reasonable identification.
Lessee shall not alter or deface any such indicia of Lessor's interest.

14. DEFAULT: Each of the following events shall constitute an event of
default under the Lease: (a) Lessee fails to pay any rent or other amount due
under the Lease within ten days of its due date; or (b) Lessee fails to perform
or observe any of its obligations in Sections 8, 18, or 22 hereof; or (c) Lessee
fails to perform or observe any of its other obligations in the Lease for more
than 30 days after Lessor notifies Lessee of such failure; or (d) Lessee or any
Lessee affiliate defaults in the payment, performance or observance of any
obligation under any loan, credit agreement or other lease in which Lessor or
any subsidiary (direct or indirect) of Bank One Corporation (which is Lessor's
ultimate parent corporation) is the creditor or Lessor, or (e) any statement,
representation or warranty made by Lessee in the Lease, in any Schedule or in
any document, certificate or financial statement in connection with the Lease
proves at any time to have been untrue or misleading in any material respect as
of the time when made; or (f) Lessee becomes insolvent or bankrupt, or Lessee
admits its inability to pay its debts as they mature, or Lessee makes an
assignment for the benefit of creditors, or Lessee applies for, institutes or
consents to the appointment of a receiver, trustee or similar official for
Lessee or any substantial part of its property or any such official is appointed
without Lessee's consent, or Lessee applies for, institutes or consents to any
bankruptcy, insolvency, reorganization, debt moratorium, liquidation or similar
proceeding relating to Lessee or any substantial part of its property under the
laws of any jurisdiction or any such proceeding is instituted against Lessee
without stay or dismissal for more than 30 days, or Lessee commences any act
amounting to a business failure or a winding up of its affairs, or Lessee ceases
to do business as a going concern; or (g) with respect to any guaranty, letter
of credit, pledge agreement, security agreement, mortgage, deed of trust, debt
subordination agreement or other credit enhancement or credit support agreement
(whether now existing or hereafter arising) signed or issued by any party in
connection with all or any part of Lessee's obligations under the Lease, the
party signing or issuing any such agreement defaults in its obligations
thereunder or any such agreement shall cease to be in full force and effect or
shall be declared to be null, void, invalid or unenforceable by the party
signing or issuing it; or (h) there shall occur in Lessor's reasonable opinion
any material adverse change in the financial condition, business or operations
of Lessee.

As used in this section 14, the term "Lessee" also includes any guarantor
(whether now existing or hereafter arising) of all or any part of Lessee's
obligations under the Lease and/or any issuer of a letter of credit (whether
now existing or hereafter arising) relating to all or any part of Lessee's
obligations under the Lease, and the term "Lease" also includes any guaranty or
letter of credit (whether now existing or hereafter arising) relating to all or
any part of Lessee's obligations under the Lease.

15. REMEDIES. If any event of default exists, Lessor may exercise in any
order one or more of the remedies described in the lettered subparagraphs of
this section, and Lessee shall perform its obligations imposed thereby;

(a) Lessor may require Lessee to return any or all Equipment as provided
in the Lease.

(b) Lessor or its agent may repossess any or all Equipment wherever found,
may enter the premises where the Equipment is located and disconnect, render
unusable and remove it, and may use such premises without charge to store or
show the Equipment for sale.

(c) Lessor may sell any or all Equipment at public or private sale, with
or without advertisement or publication, may re-lease or otherwise dispose of
it or may use, hold or keep it.

(d) Lessor may require Lessee to pay to Lessor on a date specified by
Lessor, with respect to any or all Equipment (i) all accrued and unpaid rent,
late charges and other amounts due under the Lease on or before such date, plus
(ii) as liquidated damages for loss of a bargain and not as a penalty, and in
lieu of any further payments of rent, the Stipulated Loss Value of the
Equipment on such date, plus (iii) interest at the Overdue Rate on the total of
the foregoing ("Overdue Rate" means an interest rate per annum equal to the
higher of 18% or 2% over the Prime Rate, but not to exceed the highest rate
permitted by applicable law). The parties acknowledge that the foregoing money
damage calculation reasonably reflects Lessor's anticipated loss with respect
to the Equipment and the related Lease resulting from the event of default.
If an event of default under section 14 (f) of this Master Lease Agreement
exists, then Lessee will be automatically liable to pay Lessor the foregoing
amounts as of the next payment date unless Lessor otherwise elects in writing.

Page 3 of 6

<PAGE> 4
(e) Lessee shall pay all costs, expenses and damages incurred by Lessor
because of the event of default or its actions under this section, including,
without limitation any collection agency and/or attorney fees and expenses, any
costs related to the repossession, safekeeping, storage, repair, reconditioning
or disposition of the Equipment and any incidental and consequential damages.

(f) Lessor may terminate the Lease and/or any or all Schedules, may sue
to enforce Lessee's performance of its obligations under the Lease and/or may
exercise any other right or remedy then available to Lessor at law or in equity.

Lessor is not required to take any legal process or give Lessee any notice
before exercising any of the above remedies. None of the above remedies is
exclusive, but each is cumulative and in addition to any other remedy available
to Lessor. Lessor's exercise of one or more remedies shall not preclude its
exercise of any other remedy. No action taken by Lessor shall release Lessee
from any of its obligations to Lessor. No delay or failure on the part of
Lessor to exercise any right hereunder shall operate as a waiver thereof, nor
as an acquiescence in any default, nor shall any single or partial exercise of
any right preclude any other exercise thereof or the exercise of any other
right. After any default, Lessor's acceptance of any payment by Lessee under
the Lease shall not constitute a waiver by Lessor of such default, regardless of
Lessor's knowledge or lack of knowledge at the time of such payment, and shall
not constitute a reinstatement of the Lease if the Lease has been declared in
default by Lessor, unless Lessor has agreed in writing to reinstate the Lease
and to waive the default.

If Lessor actually repossesses any Equipment, then it will use
commercially reasonable efforts under the then current circumstances to
attempt to mitigate its damages, provided, that Lessor shall not be required to
sell, release or otherwise dispose of any Equipment prior to Lessor enforcing
any of the remedies described above. Lessor may sell or release the Equipment
in any manner it chooses, free and clear of any claims or rights of Lessee and
without any duty to account to Lessee with respect thereto except as provided
below. If Lessor actually sells or releases the Equipment, it will credit the
net proceeds of any sale of the Equipment, or the net present value (discounted
at the then current Prime Rate) of the rents payable under any new lease of
the Equipment, against and up to (but not exceeding) the Stipulated Loss Value
of the Equipment and any other amounts Lessee owes Lessor, or will reimburse
Lessee for and up to (but not exceeding) Lessee's payment thereof. The term
"net" as used above shall mean such amount after deducting the costs and
expenses described in clause(3) above of this section. If lessor elects in
writing not to sell or release any Equipment, it will similarly credit or
reimburse Lessee for Lessor's reasonable estimate of such Equipment's Fair
Market Value.

16. LESSOR'S RIGHT TO PERFORM: If Lessee fails to make any payment under
the Lease or fails to perform any of its agreements in the Lease (including,
without limitation, its agreement to provide insurance coverage as stated in
the Lease), Lessor may itself make such payment or perform such agreement, and
the amount of such payment and the amount of the expenses of Lessor incurred in
connection with such payment or performance shall be deemed to be additional
rent, payable by Lessee on demand.

17. FINANCIAL REPORTS: Lessee agrees to furnish to Lessor, (a) annual
financial statements setting forth the financial condition and results of
operation of Lessee (financial statements shall include balance sheet, income
statement and changes in financial position and all notes thereto) within 120
days of the end of each fiscal year of Lessee; (b) quarterly financial
statements setting forth the financial condition and results of operation of
Lessee within 60 days of the each of the first three fiscal quarters of Lessee;
and (c) such other financial information as Lessor may from time to time
reasonably request including, without limitation, financial reports filed by
Lessee with federal or state regulatory agencies. All such financial
information shall be prepared in accordance with generally accepted accounting
principles. If Lessee fails to furnish the annual financial statements to
Lessor within 30 days of Lessor's written request, then Lessor may, at its
option, charge Lessee a non-performance fee equal to all the rentals due under
the Lease for the current month (unless otherwise prohibited by law) and such
fees shall be deemed to be additional rent, payable by Lessee on demand.

18. NO CHANGE IN LESSEE: Lessee shall not; (a) liquidate, dissolve or
suspend business; (b) sell, transfer or otherwise dispose of all or a majority
of its assets, except that Lessee may sell its inventory in the ordinary course
of its business; (c) enter into any merger, consolidation or similar
reorganization unless it is the surviving corporation; (d) transfer all or any
substantial part of its operations or assets outside of the United States of
America; or (e) without 30 days advance written notice to Lessor, change its
name or chief place of business. Lessee shall at all times maintain a tangible
net worth which is no less than the greater of 75% of its tangible net worth as
of the date of the Master Lease Agreement or 75% of its highest tangible net
worth thereafter.

19. LATE CHARGES: If any rent or other amount payable under the Lease is
not paid when due, then as compensation for the administration and enforcement
of Lessee's obligation to make timely payments, Lessee shall pay with respect
to each overdue payment on demand an amount equal to the greater of fifteen
dollars ($15.00) or five percent (5%) of the each overdue payment (but not to
exceed the highest late charge permitted by applicable law) plus any collection
agency fees and expenses.

20. NOTICES; POWER OF ATTORNEY: (a) Service of all notices under the
Lease shall be sufficient if given personally or couriered or mailed to the
party involved at its respective address set forth herein or at such other
address as such party may provide in writing from time to time. Any such notice
mailed to such address shall be effective three days after deposit in the
United States mail with postage prepaid, (b) With respect to any power of
attorney covered by the Lease, the powers conferred on Lessor thereby; are
powers coupled with an interest; are irrevocable; are solely to protect
Lessor's interests under the Lease; and do not impose any duty on Lessor to
exercise such power. Lessor shall be accountable solely for amounts it actually
receives as a result of its exercise of such powers.

21. ASSIGNMENT BY LESSOR: Lessor and any assignee of Lessor, with or
without notice to or consent of Lessee, may sell, assign, transfer or grant a
security interest in all or any part of Lessor's rights, obligations, title or
interest in the Equipment, the Lease, any Schedule or the amounts payable under
the Lease or any Schedule to any entity ("transferee"). The transferee shall
succeed to all of Lessor's rights in respect to the Lessee (including, without
limitation, all rights to insurance and indemnity protection described in the
Lease). Lessee agrees to sign any acknowledgment and other documents reasonably
requested by Lessor or the transferee in connection with any such transfer
transaction. Lessee, upon receiving notice of any such transfer transactions,
shall comply with the terms and conditions thereof. Lessee agrees that it shall
not assert against any transferee any claim, defense, setoff, deduction or
counterclaim which Lessee may now or hereafter be entitled to assert against
Lessor. Unless otherwise agreed in writing, the transfer transaction shall not
relieve Lessor of any of its obligations to Lessee under the Lease and Lessee
agrees that the transfer transaction shall not be construed as being an
assumption of such obligations by the transferee.

22. NO ASSIGNMENT, SUBLEASE OR LIEN BY LESSEE: LESSEE SHALL NOT, DIRECTLY
OR INDIRECTLY, (a) MORTGAGE, ASSIGN, SELL, TRANSFER, OR OTHERWISE DISPOSE OF
THE LEASE OR ANY INTEREST THEREIN OR THE EQUIPMENT OR ANY PART THEREOF, OR (b)
SUBLEASE, RENT, LEND OR TRANSFER POSSESSION OR USE OF THE EQUIPMENT OR ANY PART
THEREOF TO ANY PARTY, OR (c) CREATE, INCUR, GRANT, ASSUME OR ALLOW TO EXIST ANY
LIEN ON THE LEASE, ANY SCHEDULE, THE EQUIPMENT OR ANY PART THEREOF.

Page 4 of 6
<PAGE> 5
[BANK 1 ONE. LOGO]

23. EXPIRATION OF LEASE TERM: (a) At least 90 days (or earlier if
otherwise specified), but no more than 270 days prior to expiration of the
Lease Term of each Schedule, Lessee shall give Lessor written notice of its
electing one of the following options for all (but not less than all) of the
Equipment covered by such Schedule: return the Equipment under clause (b)
below; or purchase the Equipment under clause (c) below. The election of an
option shall be irrevocable. If Lessee fails to give timely notice of its
election, it shall be deemed to have elected to return the Equipment.

(b) If Lessee elects or is deemed to have elected to return the Equipment
at the expiration of the Lease Term of a Schedule or if Lessee is obligated at
any time to return the Equipment, then Lessee shall, at its sole expense and
risk, deinstall, disassemble, pack, crate, insure and return the Equipment to
Lessor (all in accordance with applicable industry standards) at any location
in the continental United States of America selected by Lessor. The Equipment
shall be in the same condition as when received by Lessee, reasonable wear,
tear and depreciation resulting from normal and proper use excepted (or, if
applicable, in the condition set forth in the Lease or the Schedule), shall be
in good operating order and maintenance as required by the Lease, shall be
certified as being eligible for any available manufacturer's maintenance
program, shall be free and clear of any Liens as required by the Lease, shall
comply with all applicable laws and regulations and shall include all manuals,
specifications, repair and maintenance records and similar documents. Until
Equipment is returned as required above, all terms of the Lease shall remain in
full force and effect including, without limitation, obligations to pay rent
and insure the Equipment; provided, that after the expiration of any Schedule
and before Lessee has completed its return of the Equipment or its purchase
option (if elected), the term of the lease of the Equipment covered by such
Schedule shall be month-to-month or such shorter period as may be specified by
Lessor.

(c) If Lessee gives Lessor timely notice of its election to purchase
Equipment, then on the expiration date of the applicable Schedule Lessee shall
purchase all (but not less than all) of the Equipment and shall pay to Lessor
the Fair Market Value of the Equipment plus all Taxes (other than income taxes
on Lessor's gains on such sale), costs and expenses incurred or paid by Lessor
in connection with such sale plus all accrued but unpaid amounts due with
respect to the Equipment and/or the Schedule. The Stipulated Loss Value or
Economic Value of any item of Equipment shall have no bearing or influence on
the determination of Fair Market Value under this clause (c). Upon payment in
full of the above amounts, and if no default has occurred and is continuing
under the Lease, Lessor shall transfer title to such Equipment to Lessee
"as-is, where-is" with all faults and without recourse to Lessor and without
any representation or warranty of any kind whatsoever by Lessor, express or
implied.

(d) For purposes of the purchase option of the Lease, the determination
of the Fair Market Value of any Equipment shall be determined (1) without
deducting any costs of dismantling or removal from the location of use, (2) on
the assumption that the Equipment is in the condition required by the
applicable return and maintenance provisions of the Lease and is free and clear
of any Liens as required by the Lease, and (3) shall be determined by mutual
agreement of Lessee and Lessor or; if Lessor and Lessee are not able to agree
on such value, by the Appraisal Procedure. "Appraisal Procedure" means the
determination of Fair Market Value by an independent appraiser acceptable to
Lessor and Lessee, or, if the parties are unable to agree on an acceptable
appraiser, by averaging the valuation (disregarding the one which differs the
most from the other two) of three independent appraisers, the first appointed
by Lessor, the second appointed by Lessee and the third appointed by the first
two appraisers. For purposes of the "Remedies" section of the Lease, the Fair
Market Value shall be determined by Lessor in good faith and any such valuation
shall be on an "as-is, where is" basis without regard to the first sentence of
clause (d). Lessee, at its sole expense, shall pay all fees, costs and expenses
of the above described appraisers.

24. GOVERNING LAW: THE INTERPRETATION, CONSTRUCTION AND VALIDITY OF THE
LEASE SHALL BE GOVERNED BY THE LAWS OF THE STATE OF OHIO. WITH RESPECT TO ANY
ACTION BROUGHT BY LESSOR AGAINST LESSEE TO ENFORCE ANY TERM OF THE LEASE,
LESSEE HEREBY IRREVOCABLY CONSENTS TO THE JURISDICTION AND VENUE OF ANY STATE OR
FEDERAL COURT IN THE FRANKLIN COUNTY, OHIO, WHERE LESSOR HAS ITS PRINCIPAL
PLACE OF BUSINESS AND WHERE PAYMENTS ARE TO BE MADE BY LESSEE.

25. MISCELLANEOUS: (a) Subject to the limitations herein, the Lease shall
be binding upon and inure to the benefit of the parties hereto and their
respective heirs, administrators, successors and assigns. (b) This Master Lease
Agreement and each Schedule may be executed in any number of counterparts,
which together shall constitute a single instrument. Only one counterpart of
each Schedule shall be marked "Lessor's Original" and all other counterparts
shall be marked "Duplicate". A security interest in any Schedule may be created
through transfer and possession only of the counterpart marked "Lessor's
Original". (c) Section and paragraph headings in this Master Lease Agreement
and the Schedules are for convenience only and have no independent meaning. (d)
The terms of the Lease shall be severable and if any term thereof is declared
unconscionable, invalid, illegal or void, in whole or in part, the decision so
holding shall not be construed as impairing the other terms of the Lease
and the Lease shall continue in full force and effect as if such invalid,
illegal, void or unconscionable term were not originally included herein. (e)
All indemnity obligations of Lessee under the Lease and all rights, benefits
and protections provided to Lessor by warranty disclaimers shall survive the
cancellation, expiration or termination of the Lease. (f) Lessor shall not be
liable to Lessee for any indirect, consequential or special damages for any
reason whatsoever. (g) Each payment made by Lessee shall be applied by Lessor
in such manner as Lessor determines in its discretion which may include,
without limitation, application as follows: first, to accrued late charges;
second, to accrued rent; and third, the balance to any other amounts then due
and payable by Lessee under the Lease. (h) If the Lease is signed by more than
one Lessee, each of such Lessees shall be jointly and severally liable for
payment and performance of all of Lessee's obligations under the Lease.

26. ENTIRE AGREEMENT: THE LEASE REPRESENTS THE FINAL, COMPLETE AND ENTIRE
AGREEMENT BETWEEN THE PARTIES HERETO. THERE ARE NO ORAL OR UNWRITTEN AGREEMENTS
OR UNDERSTANDINGS AFFECTING THE LEASE OR THE EQUIPMENT. Lessee agrees that
Lessor is not the agent of any manufacturer or supplier, that no manufacturer
or supplier is an agent of Lessor, and that any representation, warranty or
agreement made by manufacturer, supplier or by their employees, sales
representatives or agents shall not be binding on Lessor.

Page 5 of 6
<PAGE> 6
[BANK 1 ONE. LOGO]

27. JURY WAIVER: ALL PARTIES TO THIS MASTER LEASE AGREEMENT WAIVE ALL
RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY
ANY PARTY AGAINST ANY OTHER PARTY ON ANY MATTER WHATSOEVER ARISING OUT OF, IN
CONNECTION WITH OR IN ANY WAY RELATED TO THIS MASTER LEASE AGREEMENT.

IN WITNESS WHEREOF, the undersigned have duly executed and delivered this
Master Lease Agreement as of the date first written above.

BANC ONE LEASING CORPORATION THE TRIZETTO GROUP, INC.
Lessor
(Name of Lessee)

By: By: /s/ M.J. SUNDERLAND
----------------------------- -----------------------------

Title: Title: SR VP, CFO
-------------------------- --------------------------

Lessee's Witness:
---------------

Regardless of any prior, present or future oral agreement or course of
dealing, no term or condition of the lease may be amended, modified, waived,
discharged, cancelled or terminated except by a written instrument signed by
the party to be bound; except Lessee authorizes Lessor to complete the
Acceptance Date of each schedule and the serial numbers of any equipment.

THE TRIZETTO GROUP, INC.
(Name of Lessee)

By: /s/ M.J. SUNDERLAND
-----------------------------

Title: SR VP, CFO
--------------------------

Page 6 of 6
<PAGE> 7
[BANK 1 ONE LOGO]

SECURITY AGREEMENT

This Agreement is made as of ____________ by and between BANC ONE LEASING
CORPORATION ("Banc One Leasing"), with Banc One Leasing's mailing address being
at 1111 Polaris Parkway, Suite A3 (OH1-1085), Columbus, Ohio 43240 and
Debtor(s) identified below (individually and collectively, the "Debtor").

Debtor means: THE TRIZETTO GROUP, INC.

Lease/Loan Customer: THE TRIZETTO GROUP, INC.

1. Grant of Security Interest. For valuable consideration, receipt of
which is hereby acknowledged, Debtor grants, pledges and assigns to Banc One
Leasing a security interest in all of Debtor's respective right, title and
interest, purchase money as appropriate, in and to the property described
below, now or hereafter arising or acquired, wherever located, together with
any and all additions, accessions, parts, accessories, substitutions and
replacements thereof, now or hereafter installed in, affixed to or used in
connection with said property, in all products and proceeds thereof, cash and
non-cash, including, but not limited to, proceeds of notes, checks,
instruments, indemnity proceeds, or any insurance on such and any refund or
rebate of premiums on such, and all books, records, ledger cards, files,
correspondence, computer program, tapes, disks and related data processing
software, owned by Debtor or in which it has an interest that at any time
evidences or contains information relating thereto or is otherwise necessary or
helpful in the collection thereof or realization thereupon ("Collateral"), to
secure the prompt payment and complete performance of the Obligations (as
hereinafter defined); provided, however, that the Collateral shall not include
any Hazardous Materials (as hereinafter defined), except for any Hazardous
Materials (a) which are and/or hereafter will be handled, stored and contained
in accordance with all applicable Hazardous Materials Laws (as hereinafter
defined) and (b) which either (i) are and/or will be hereafter used or useful
in the ordinary course of business of Debtor or (ii) have a resale or salvage
value which exceeds the cost of disposing of each Hazardous Materials.

The Collateral in which this security interest is granted is all of the
Debtor's property described in EXHIBIT A attached hereto (and such terms as are
used in Exhibit A shall be used in their broader definitions and shall include,
without limitation, the definitions of such terms as are found in the Uniform
Commercial Code that governs security interests in any such property).

2. Secured Obligations. This Agreement secures the full and prompt
performance of all obligations which any Lease/Loan Customer identified above
(hereinafter individually and collectively called "Customer") and/or any Debtor
now have or may hereafter have to Banc One Leasing, including, but not limited
to, obligations under equipment leases, promissory notes, loan agreements and
guaranties executed in connection with equipment leases, promissory notes or
loan agreements (including but not limited to all present and future leases,
promissory notes, loan agreements and guaranties), and secures the prompt
payment when due (whether at scheduled maturity, upon acceleration or
otherwise) of any and all sums, indebtedness, obligations and liabilities of
whatsoever nature, due or to become due, direct or indirect, absolute or
contingent, joint or several, now or hereafter at any time owed or contracted
by any Customer or any Debtor to Banc One Leasing and whether owing by any
Customer or any Debtor alone or with one or more other customers, persons or
other parties, and all costs and expenses of and incidental to collection of
any of the foregoing, including reasonable attorneys' fees (all of the
foregoing hereinafter called "Obligations"). It is Debtor's express intention
that this Agreement and the continuing security interest granted hereby, in
addition to covering all present Obligations of any Customer and/or any Debtor
to Banc One Leasing, shall extend to all future Obligations of any Customer and
any Debtor to Banc One Leasing, whether or not such Obligations are reduced or
entirely extinguished and thereafter increased or are reincurred, and whether
or not such Obligations are specifically contemplated by any Debtor and Banc
One Leasing as of the date hereof. The absence of any reference to this
Agreement in any documents, instruments or agreements evidencing or relating to
any Obligations secured hereby shall not limit or be construed to limit the
scope of this Agreement.

3. Location(s) of Collateral. The Collateral will be kept at the
location(s) set forth in EXHIBIT B attached hereto ("Location").

4. Representations, Warranties and Covenants. Debtor represents, warrants,
covenants and agrees as follows:

(a) Debtor is and will continue to be (or, with respect to after acquired
property, will be when acquired), the legal and beneficial owner of the
Collateral free and clear of any lien, security interest, mortgage, charge or
encumbrance except for the security interest created by this Agreement and/or
any Permitted Lien. "Permitted Lien" means any other security interest in any
of the Collateral in favor of the Lienholder(s) that is/are identified on
EXHIBIT C attached hereto and approved by Banc One Leasing. Except as may be
related to a Permitted Lien, no effective Uniform Commercial Code ("UCC")
financing statement or other instrument covering all or any part of the
Collateral is on

Page 1 of 6
<PAGE> 8
[BANK 1 ONE LOGO]

file in any recording office, except those in favor of Banc One Leasing;

(b) Debtor will join with Banc One Leasing in executing such financing
statements, security agreements, or other instruments in form satisfactory to
Banc One Leasing upon Banc One Leasing's request and, in the event for any
reason the law of any jurisdiction becomes or is applicable to the Collateral or
any part thereof, or to any Obligation owed to Banc One Leasing, Debtor agrees
to execute and deliver all such instruments and to do all of such other things
as may be reasonably necessary or appropriate to preserve, protect and enforce
the security interest and lien of Banc One Leasing under the law of such
jurisdiction to the extent such security interest would be protected under that
jurisdiction's UCC and will pay all expenses of filing and releasing same in all
public offices wherever filing is deemed necessary or desired by Banc One
Leasing;

(c) The Collateral will not be attached or affixed to real estate in such a
manner that it would become a fixture thereto or an accession to other goods
without prior disclosure, notification to and approval by Banc One Leasing in
addition in the execution of an owner/mortgagee/landlord release/waiver in favor
of Banc One Leasing;

(d) Debtor at its sole expense shall keep each item of Collateral insured
against all risks of loss or damage from every cause whatsoever for an amount
not less than the greater of the full replacement value or the original cost of
acquiring such item of Collateral. Debtor at its sole expense shall carry public
liability and property damage insurance in amounts satisfactory to Banc One
Leasing protecting Debtor and Banc One Leasing from liabilities for injuries to
persons and damage to property of others relating in any way to the Collateral.
Debtor at its sole expense shall carry environmental risk insurance should any
of the collateral include Hazardous Materials. All insurers shall be reasonably
satisfactory to Banc One Leasing. Debtor shall deliver to Banc One Leasing
satisfactory evidence of such coverage. Proceeds of any insurance covering
damage or loss of the Collateral shall be payable to Banc One Leasing as loss
payee and shall, at Banc One Leasing's option, be applied toward (a) the
replacement, restoration or repair of the Collateral, or (b) payment of the
obligations of Debtor under the Obligations. Proceeds of any public liability or
property insurance shall be payable first to Banc One Leasing as additional
insured to the extent of its liability, then to Debtor. Debtor hereby appoints
Banc One Leasing as Debtor's attorney-in-fact with full power and authority in
the place of Debtor and in the name of Debtor or Banc One Leasing to make claim
for, receive payment of, and sign and endorse all documents, checks or drafts
for loss or damage under any such policy. Each insurance policy will require
that the insurer give Banc One Leasing at least 30 days prior written notice of
any cancellation of such policy and will require that Banc One Leasing's
interests be continued insured regardless of any act, error, omission, neglect
or misrepresentation of Debtor. The insurance maintained by Debtor shall be
primary without any right of contribution from insurance which may be maintained
by Banc One Leasing. If Debtor does not keep the Collateral insured as required
herein and/or fails to supply Banc One Leasing with evidence of that insurance,
Banc One Leasing shall have the right, in its sole discretion, to obtain
insurance in amounts sufficient to fully protect its interest, without notifying
Debtor. Debtor agrees that Banc One Leasing shall have the right, in its sole
discretion, to determine the manner in which Debtor shall reimburse Banc One
Leasing for the premium for such insurance, including but not limited to (a)
requiring Debtor to immediately reimburse Banc One Leasing for the premium and
other costs it incurs or (b) adding that amount directly to the principal
balance of any of the Obligations. Debtor will pay interest on any amount added
to the principal balance at the highest rate set forth in any of such
Obligation(s);

(e) Debtor will pay promptly when due all taxes, assessments and
governmental charges upon or against Debtor, the Collateral or the property or
operations of Debtor, in each case before same becomes delinquent and before
penalties accrue thereon, unless and to the extent that same are being contested
in good faith by appropriate proceedings. At its option, Banc One Leasing may
discharge taxes, liens or security interests or other encumbrances at any time
placed on the Collateral and may pay for maintenance and preservation of the
Collateral, all at Debtor's expense;

(f) Debtor agrees it will, at its sole expense: (a) repair and maintain the
Collateral in good condition and working order and supply and install all
replacement parts or other devices when required to so maintain the Collateral
or when required by applicable law or regulation, which parts or devices shall
automatically become part of the Collateral; (b) use and operate the Collateral
in a careful manner in the normal course of its business and only for the
purposes for which it was designed in accordance with the manufacturer's
warranty requirements, and comply with all laws and regulations relating to the
Collateral, and obtain all permits or licenses necessary to install, use or
operate the Collateral, and (c) make no alterations, additions, subtractions,
upgrades or improvements to the Collateral without Banc One Leasing's prior
written consent, but any such alterations, additions, upgrades or improvements
shall automatically become part of the Collateral. The Collateral will not be
used or located outside of the United States.

(g) Debtor will, in the event of appropriation or taking of all or any part
of the Collateral, give Banc One Leasing prompt written notice thereof. Banc One
Leasing shall be entitled to receive directly, and Debtor shall promptly pay
over to Banc One Leasing, any awards or other amounts payable with respect to
such condemnation, requisition or other taking and in its sole discretion may
apply the proceeds as it deems best without regard to whether an Event of
Default has or has not occurred;

(h) At least thirty (30) days prior to the occurrence of the event, Debtor
will deliver to Banc One Leasing written notice of any addition change in
Debtor's name, identity or legal structure;

Page 2 of 6
<PAGE> 9
(i) Debtor will defend the Collateral against all claims and demands of
all persons at any time claiming the same or an interest therein;

(j) Debtor will from time to time execute and deliver to Banc One Leasing
such lists, descriptions and designations of Collateral as Banc One Leasing may
require to identify the nature, extent and location of the Collateral;

(k) Debtor is in material compliance with all Federal, State and local
laws, statutes, ordinances, regulations, rulings and interpretations relating to
industrial hygiene, public health or safety, environmental conditions, the
protection of the environment, the release, discharge, emission or disposal to
air, water, land or ground water, the withdrawal or use of ground water or the
use, handling, disposal, treatment, storage or management of or exposure to
Hazardous Materials ("Hazardous Materials Laws"), the violation of which would
have a material effect on its business, its financial condition or the
Collateral. The term "Hazardous Materials" means any flammable materials,
explosives, radioactive materials, pollutants, toxic substances, hazardous
water, hazardous materials, hazardous substances, polychlorinated biphenyls,
asbestos, urea formaldehyde, petroleum (including its derivatives, by-products
or other hydrocarbons) or related materials or other controlled, prohibited or
regulated substances or materials, including, without limitation, any substances
defined or listed as or included in the definition of "hazardous substances",
"hazardous wastes", "hazardous materials", "pollutants" or "toxic substances"
under any Hazardous Materials Laws. Debtor has not received any written or oral
communication or notice from any judicial or governmental entity nor is it aware
of any investigation by any agency for any violation of any Hazardous Materials
Law;

(l) All representations, warranties, covenants and agreements set forth
herein and all information furnished by Debtor concerning the Collateral or
otherwise in connection with the Obligations, shall be at the time same is
furnished, accurate, correct and complete in all material respects as of the
date hereof, on the date upon which Debtor acquires any of the Collateral or any
rights therein not presently acquired or existing and shall continue until the
Obligations are paid in full.

5. Appointment of Attorney-in-Fact. Debtor hereby irrevocably appoints
Banc One Leasing or its designee as Debtor's attorney in fact, with full
authority in the place instead of Debtor, from time to time in Banc One
Leasing's discretion prior to, upon, during, and after an Event of Default, to
take any action and to execute any instrument which Banc One Leasing may deem
necessary or advisable to accomplish the purposes of this Agreement, including
without limitation, (a) to perfect and continue to perfect the security
interests created by this Agreement; (b) to ask, demand, collect or sue for,
recover, compound, receive and give acquittance in receipts for any monies due
or become due under or in respect for any Collateral; (c) to receive, endorse
and collect any drafts or other instruments, documents and chattel paper, in
connection with the Collateral; and (d) to file any claims or take any action or
institute any proceeding which Banc One Leasing may deem necessary or desirable
for the collection of any Collateral or otherwise to enforce the rights of Banc
One Leasing in the Collateral.

6. Events of Default. The following events shall be "Events of Default"
under this Agreement: (a) default by Debtor in performance of any covenant or
agreement herein; (b) any warranty, representation or statement made or
furnished to Banc One Leasing by or on behalf of Debtor in connection with this
Agreement or to induce Banc One Leasing to make a loan or extend other credit to
Debtor, proving to have been false in any material respect when made or
furnished; (c) default by Debtor or any other obligor in performance of any
covenant or agreement contained in any Obligation; (d) default by Debtor or any
other obligor in performance of any covenant or agreement contained in any
letter or agreement executed in conjunction with any Obligation; (e) death,
dissolution, termination of existence, insolvency, business failure, appointment
of a receiver of any part of the property of, assignment for the benefit of
creditors by or the commencement of any proceeding under any bankruptcy or
insolvency laws by or against Debtor or any guarantor or surety for Debtor; (f)
any uninsured loss, theft, damage or destruction of the Collateral; (g) the
making of any levy, seizure or attachment of any Collateral; (h) refusal to
surrender the Collateral as herein above provided; or (i) if Banc One Leasing
shall for any reason deem itself insecure as to the prospect of payment of any
Obligation.

7. Rights upon Default. If any Event of Default shall occur, then.

(a) Banc One Leasing may, at its option and without notice, declare the
unpaid balance of any or all of the Obligations immediately due and payable and
this Agreement and any or all of the Obligations in default;

(b) All payments received by Debtor under or in connection with any of the
Collateral shall be held by Debtor in trust for Banc One Leasing, shall be
segregated from other funds of Debtor and shall forthwith upon receipt by Debtor
be turned over to Banc One Leasing in the same form as received by Debtor (duly
endorsed by Debtor to Banc One Leasing, if required). Any and all such payments
so received by Banc One Leasing (whether from Debtor or otherwise) may, in the
sole discretion of Banc One Leasing, be held by Banc One Leasing, of then or at
any time thereafter be applied in whole or in part by Banc One Leasing against,
all or any part of the Obligations in such order as Banc One Leasing may elect;

Page 3 of 6
<PAGE> 10
(c) Banc One Leasing shall have the rights and remedies of a secured party
under this Agreement, under any other instrument or agreement securing,
evidencing or relating to the Obligations and under the UCC as adopted in the
state where Banc One Leasing's principal office is located or other applicable
laws. Without limiting the generality of the foregoing, Banc One Leasing shall
have the right to take possession of the Collateral in full or in part and for
that purpose Banc One Leasing may enter upon any premises on which the
Collateral may be situated and remove the Collateral therefrom;

(d) Without demand of performance or other demand, advertisement or notice
of any kind (except the notice(s) specified below regarding the time and place
of public sale or disposition or time after which a private sale or disposition
is to occur) to Debtor, any Obligor or any other person or entity (all and each
of which demands, advertisement and/or notices are hereby expressly waived),
Banc One Leasing may forthwith collect, receive, appropriate and realize upon
the Collateral, in full or in any part thereof, may abandon, not claim or not
take possession of any Collateral, and/or may forthwith sell, lease, assign,
give an option or options to purchase or sell or otherwise dispose of and
deliver the Collateral (or contract to do so), or any part thereof, in one or
more parcels at public or private sale(s) at any of Banc One Leasing's offices
or elsewhere at such price(s) as Banc One Leasing may determine, for cash or
credit or for future delivery without assumption of any credit risk. Banc One
Leasing shall have the right upon any public sale(s), and, to the extent
permitted by law, upon any such private sale(s), to purchase the whole or any
part of the Collateral so sold, free of any right or equity of redemption of
Debtor;

(e) Debtor, at Banc One Leasing's request, will assemble the Collateral
and make it available to Banc One Leasing at such place(s) as Banc One Leasing
may reasonably select, whether at Debtor's place(s) of business and/or the
Location of Collateral or elsewhere. Debtor further agrees to allow Banc One
Leasing to use or occupy Debtor's place(s) of business and/or Location of
Collateral, without charge, for the purpose of effecting Banc One Leasing's
remedies in respect to the Collateral;

(f) Banc One Leasing shall apply the net proceeds of any such collection,
recovery, receipt, appropriation, realization or sale, after deducting all
reasonable costs and expenses of every kind incurred in connection therewith or
incidental to the care or safekeeping of any or all of the Collateral or in any
way relating to the rights of Banc One Leasing hereunder, including attorney's
fees and legal expenses, to the payment in whole or part of the Obligations, in
such order as Banc One Leasing may elect, and only after or applying over such
net proceeds and after the payment by Banc One Leasing of any other amount
required by any provision of law, need Banc One Leasing account for the surplus,
if any, to Debtor;

(g) To the extent permitted by applicable law, Debtor waives all claims,
damages and demands against Banc One Leasing arising out of the repossession,
retention, sale or disposition of the Collateral;

(h) Debtor agrees that Banc One Leasing need not give more than ten (10)
calendar days' notice, addressed to Debtor at Debtor's mailing address set forth
above, of the time and place of any public sale or of the time after which a
private sale may take place and that such notice is reasonable notification of
such matters; and

(i) Debtor shall remain liable for any deficiency if the proceeds of any
sale or disposition of the Collateral are insufficient to pay all amounts to
which Banc One Leasing is entitled.

8. Processing of Collateral After an Event of Default. Debtor hereby
agrees that Banc One Leasing or its designee may do whatever Banc One Leasing
in its sole discretion deems to be commercially reasonable to prepare any
Collateral for disposition and to dispose of any Collateral, including without
limitation operating any of Debtor's manufacturing or other processes relating
to the Collateral and using patents, copyrights, trademarks, trade names, trade
secrets, rights under manufacturer's warranties, and the like relating to or
affecting such processes or the Collateral and disposition thereof, and that
Debtor shall not do anything which would restrict Banc One Leasing's right so
to act. Banc One Leasing may transfer Collateral into its name or that of a
nominee and receive the dividends, royalties or income thereof. Banc One
Leasing shall have no duty as to the collection or protection of the Collateral
or any income therefrom, nor as the preservation of rights against prior
parties, not as to the preservation of any right pertaining thereto.

9. Construction of Rights and Remedies and Waiver of Notice and Consent.
Unless otherwise expressly provided herein, (a) any right or remedy of Banc One
Leasing may be pursued without notice to or further consent of Debtor, both of
which Debtor hereby expressly waives; (b) each right or remedy is distinct from
but cumulative to each other right or remedy and may be exercised independently
or concurrently with, or successively to any other right and remedy; (c) no
extension(s) of time and/or modification(s) or amortization of any Obligation
shall release the liability of or bar the availability of any right or remedy
against Debtor, and Banc One Leasing shall not be required to commence
proceedings against Debtor or to extend time for payment or otherwise to modify
amortization of any Obligation, and (d) Banc One Leasing has the right to
proceed at its election against any or all of the Collateral, against all such
property together or against any items thereof from time to time, and not action
against any item(s) of property shall bar subsequent actions against any other
item(s) of property.

Page 4 of 6

<PAGE> 11
10. Extensions and Compromises. With respect to any Collateral or any
Obligation, Debtor assents to all extensions or postponements to the time of
payment thereof or any other indulgence in connection therewith, to each
substitution, exchange or release of Collateral, to the release of any party
primarily or secondarily liable, to the acceptance of partial payment thereof or
to the settlement or compromise thereof, all in such matter and such time or
times as Banc One Leasing may deem advisable. No forbearance in exercising any
right or remedy on any one or more occasions shall operate as a waiver thereof
on any future occasion; and no single or partial exercise of any right or remedy
shall preclude any other exercise thereof or the exercise of any other right or
remedy.

11. Indemnity and Expenses (a) Debtor agrees to indemnify Banc One Leasing
from any and all claims, losses and liabilities growing out of or resulting from
this Agreement; (b) Debtor will upon demand pay or reimburse Banc One Leasing,
as the case may be, the amount of any and all expenses, including fees and
disbursements of counsel, experts and agents, which Banc One Leasing may incur
in connection with, (i) the administration of this Agreement; (ii) the custody,
preservation, use or operation of, or the sale of, collections from, or other
realization upon my Collateral; (iii) the exercise or enforcement of any of the
nights of Banc One Leasing hereunder, or (iv) the failure by Debtor to perform
or observe any of the provisions hereof. Upon Debtor's failure to promptly pay
any said amount, Banc One Leasing may add said amount to the principal amount
owed on any Obligation and charge interest on the same at the rate of interest
as set forth in said Obligation; (c) Debtor shall fully and promptly pay,
perform, discharge, defend, indemnify and hold harmless Banc One Leasing from
any and all claims, orders, demands, causes of notion, proceedings, judgments,
or suits and all liabilities, losses, costs or expenses (including, without
limitation, technical consultant fees, court costs, expenses paid to third
parties and reasonable legal fees) and damages arising out of, or as a result of
(i) any release, discharge, deposit, dump, spill, leak or placement of any
Hazardous Material into or on any Collateral or property owned, leased rented or
used by Debtor (the "Property") at any time; (ii) any contamination of the soil
or ground water of the Property or damage to the environment and natural
resources of the Property or the result of actions whether arising under any
Hazardous Materials Law, or common law; or (iii) any toxic, explosive or
otherwise dangerous Hazardous Materials which have been buried beneath or
concealed with the Property. The indemnities set forth in this paragraph shall
survive termination of this Agreement and shall be effective for the full dollar
amount of any said cost, expense, etc., regardless of the actual dollar amount
of any Obligation(s).

12. Miscellaneous. (a) Any notice, statement, request, demand, consent, or
other document required to be given hereunder (any of which may be referred to
as "notice") by either party shall be in writing and shall be delivered
personally or by certified or registered mail, postage prepaid, return receipt
requested, to the last known address of said party. When personally delivered,
any notice shall be deemed given when actually received. Except as otherwise
provided herein, a notice shall be deemed given when mailed. Any mailed notice
given pursuant to this section shall be deemed reasonable and shall be
effective, regardless of whether actually received. (b) This Agreement shall be
construed and interpreted under the laws of the State of Ohio. (c) This
Agreement shall be binding upon Debtor, Debtor's personal representatives,
heirs, successors and assigns, as the case may be, and shall be binding upon the
inure to the benefit of Banc One Leasing and its successors and assigns. Debtor
cannot assign this Agreement. (d) The Agreement may be amended, but only by a
written amendment signed by Banc One Leasing and Debtor. (e) If any provisions
of this Agreement or the application of any provision to any party or
circumstance shall, to any extent, be adjudged invalid or unenforceable, the
application of the remainder of such provision to such party or circumstance,
the application of such provision to other parties or circumstances, and the
application of the remainder of this Agreement shall not be affected thereby.
(f) The headings contained in this Agreement have been inserted for convenience
of reference only and are not to be used to interpreting this Agreement. (g)
Where appropriate, the number of all words in this Agreement shall be both
singular and plural, and the gender of all pronouns shall be masculine,
feminine, neuter, or any combination thereof. (h) A carbon, photographic or
other reproduction of this Agreement or a financing statement shall be
sufficient as a financing statement and may be filed as such whenever necessary
or desirable, in Banc One Leasing's opinion, to perfect the security interest
granted by this Agreement. (i) Banc One Leasing may correct patent errors
herein, may fill in any blank spaces herein and may date this Agreement. (j) If
more than one signer executes this instrument, the word "Debtor" as used herein
shall be deemed to include all such signers, and all of the warranties,
representations, covenants and obligations hereof shall be joint and several of
and for all such signers. (k) This Agreement shall take effect when signed by
Debtor. (l) Time is of the essence of all requirements of Debtor hereunder.

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<PAGE> 12
[BANK 1 ONE. LOGO]

ALL PARTIES TO THIS AGREEMENT, INCLUDING DEBTOR AND BANC ONE LEASING,
IRREVOCABLY CONSENT TO THE JURISDICTION AND VENUE OF ANY STATE OR FEDERAL COURT
IN FRANKLIN COUNTY, OHIO, AND WAIVE ALL RIGHTS TO TRIAL BY JURY, IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY ON ANY
MATTER WHATSOEVER ARISING OUT OF, IN CONNECTION WITH OR IN ANY WAY RELATED TO
THIS AGREEMENT.

THE TRIZETTO GROUP, INC.
(Debtor)

By: /s/ MJ SUNDERLAND
------------------------------

Title: Sr. VP, CFO
---------------------------

Witness:
-------------------------

Address:
-------------------------

-------------------------

Accepted and Agreed to:

BANC ONE LEASING CORPORATION

By:
------------------------------

Title:
---------------------------

Page 6 of 6

<PAGE> 13

[BANK 1 ONE. LOGO]

EXHIBIT A

Description of Collateral

All of the property of THE TRIZETTO GROUP, INC. ("Debtor") described below, now
or at any time hereafter owned or acquired by Debtor, wherever located, whether
in possession of Debtor, warehousemen, bailees or any other person and whether
located on Debtor's premises or elsewhere and all replacements, substitutions,
attachments, accessions and additions to any such property of Debtor together
with all Proceeds (all of the foregoing referred to, collectively, as the
"Collateral"). "Proceeds" shall mean whatever is received or receivable when
any of the Collateral is (or proceeds thereof are) sold, leased, collected,
exchanged or otherwise disposed of, whether such disposition is voluntary or
involuntary, including, without limitation, (a) all cash and non-cash proceeds
and products of any of the foregoing, including all monies and deposit
accounts, and (b) all accounts, chattel paper, instruments, general intangibles
and rights to payment of every kind now or at any time hereafter arising out of
any such sale, lease, collection, exchange or other disposition of any of the
foregoing.

1. All equipment, tools, machinery, furnishings, furniture, and other goods
and fixtures (and all manufacturer's manuals and maintenance books and records
relating to any of the foregoing) and all improvements, replacements,
substitutions, attachments, accessions and additions thereto.

2. All accounts, general intangibles, chattel paper, instruments, and other
forms of obligations and receivables, and all books and records of Debtor
relating to any of the foregoing.

Page 1 of 1
<PAGE> 14
[BANK 1 ONE. LOGO]

EXHIBIT B

Permitted Locations of Collateral

The Trizetto Group, Inc.
569 San Nicolas Drive
Suite 360
Newport Beach, CA 92660

Page 1 of 1

<PAGE> 15
[BANK 1 ONE. LOGO]

EXHIBIT C

Permitted Liens on Collateral

Bank One, Colorado, NA
Corporate Lending -- Boulder
1125 17th Street
Denver, CO 80217

Page 1 of 1

<PAGE> 1
EXHIBIT 21.1

SUBSIDIARIES OF THE TRIZETTO GROUP, INC.

<TABLE>
<CAPTION>
STATE OR OTHER
JURISDICTION OF
ENTITY NAME INCORPORATION
- -------------------------------------------------------- ---------------
<S> <C>
Creative Business Solutions, Inc. Texas

Finserv Health Care Systems, Inc. New York

Healthcare Media Enterprises, Inc. Delaware
- Healthcare Media Private Ltd. India

HealthWeb, Inc. Delaware

Margolis Health Enterprises, Inc. California

Novalis Corporation Delaware
- Digital Insurance Systems Corporation Ohio
- Health Networks of America, Inc. Maryland
- Novalis Development Corporation Delaware
- Novalis Development & Licensing Corporation Indiana
- Novalis Services Corporation Delaware

TriZetto Application Services, Inc. (f/k/a
Croghan & Associates, Inc.) Colorado
</TABLE>

<PAGE> 1

EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 of The Trizetto Group, Inc. of our report dated February
16, 2000 relating to the financial statements and financial statement schedule,
which appears in this Form 10-K.

PricewaterhouseCoopers LLP

San Jose, California
March 30, 2000

<ARTICLE> 5
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 18,849
<SECURITIES> 5,957
<RECEIVABLES> 8,825
<ALLOWANCES> (597)
<INVENTORY> 0
<CURRENT-ASSETS> 35,275
<PP&E> 12,202
<DEPRECIATION> 1,405
<TOTAL-ASSETS> 68,418
<CURRENT-LIABILITIES> 14,394
<BONDS> 0
0
0
<COMMON> 20
<OTHER-SE> 51,276
<TOTAL-LIABILITY-AND-EQUITY> 68,418
<SALES> 0
<TOTAL-REVENUES> 32,926
<CGS> 0
<TOTAL-COSTS> 26,808
<OTHER-EXPENSES> 14,529
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 256
<INCOME-PRETAX> (8,140)
<INCOME-TAX> (213)
<INCOME-CONTINUING> (7,927)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,927)
<EPS-BASIC> ($0.85)
<EPS-DILUTED> ($0.85)

</TABLE>