SETTLEMENT AND LICENSE AGREEMENT AND MUTUAL GENERAL RELEASE

Exhibit 10.3

SETTLEMENT AND LICENSE AGREEMENT

AND

MUTUAL GENERAL RELEASE

This Settlement and License Agreement and Mutual General Release (the "Agreement") is made and entered into by and between MCKESSON INFORMATION SOLUTIONS LLC ("McKesson"), a Delaware Corporation with its principal offices at 5995 Windward Parkway, Alpharetta, Georgia 30005, and THE TRIZETTO GROUP, INC. ("TriZetto"), a Delaware corporation with its principal offices at 567 San Nicolas Drive, Suite 360, Newport Beach, California 92660. The Agreement is effective as of the date last executed by the parties as set forth next to its signature below, whichever date is later (the "Effective Date"). Where appropriate, McKesson and TriZetto are collectively referred to herein as the "Parties."

RECITALS

A. On October 12, 1993, U.S. Patent No. 5,253,164 (the "‘164 patent"), titled "System and Method For Detecting Fraudulent Medical Claims Via Examination Of Service Codes," was issued by the United States Patent and Trademark Office, naming Don C. Holloway, Robert D. Hertenstein, George A. Goldberg, and Kelli A. Dugan as inventors. The ‘164 patent has an effective filing date of September 30, 1988, and it will expire on October 12, 2010. The ‘164 patent was assigned to Health Payment Review, Inc. ("HPR") by the named inventors.

B. HPR was acquired by HBO & Company ("HBOC") effective December 1997. HBOC previously acquired Gabrieli Medical Information Systems, Inc. ("GMIS") effective December, 1996. McKesson Corporation completed a merger with HBOC in January 1999. McKesson is a subsidiary of McKesson Corporation and is the current assignee of the ‘164

patent. References herein to McKesson shall include its predecessors in interest, HPR, HBOC and GMIS.

C. TriZetto acquired Erisco Managed Care Technologies, Inc. ("Erisco") effective October 2000. TriZetto acquired Resource Information Management Systems, Inc. ("RIMS") effective December 2000. TriZetto makes and sells in the United States software products under the names ClaimFacts, Facets, and QicLink. References herein to TriZetto shall include its predecessors in interest, Erisco and RIMS.

D. On September 13, 2004, McKesson filed a complaint against TriZetto in the District Court for the District of Delaware captioned McKesson Information Solutions LLC v. The TriZetto Group, Inc., Civil Action No. 04-1258-SLR (the "Action"), alleging one cause of action for infringement of the ‘164 patent (the "Complaint").

E. On November 1, 2004, TriZetto answered the Complaint, denying the material allegations therein, and filed a counterclaim for declaratory judgment of non-infringement, invalidity, and unenforceability of the ‘164 patent (the "Answer and Counterclaim"). The Complaint, Answer and Counterclaim and all submissions made by the Parties in the Action are hereinafter referred to as the "Pleadings and Filings."

F. The Parties desire to settle and resolve the Action and enter into a settlement agreement which provides for dismissal of the Action. This Settlement is made to avoid the uncertainty, time, and expense associated with further litigation and appeals, and neither party makes any admissions whatsoever, including without limitation any admissions or acknowledgements of liability, infringement, or validity of the ‘164 Patent.

2

G. In connection with the settlement of the Action, TriZetto desires to obtain, and McKesson is willing to grant, a non-exclusive license to the ‘164 Patent, subject to all of the terms and conditions of this Agreement.

NOW THEREFORE, it is understood and agreed by the Parties that in full, sufficient, and complete consideration of the mutual promises and covenants contained herein, the Parties hereby agree as follows:

AGREEMENT

• For purposes of this Agreement, all terms not otherwise defined are defined below, which definitions are expressly incorporated herein by this reference.

  1.1 Clinical Editing Database . A database containing information on medical procedure codes, including relationships among two or more medical procedure codes defining whether selected ones of the medical procedure codes are appropriate for payment when input with other selected ones of the medical procedure codes.

  1.2 Clinical Editing Product. Software that includes and/or uses a Clinical Editing Database in connection with the processing of medical claims for payment. For purposes of this Agreement, and without limiting the foregoing, software that does not include or use a Clinical Editing Database shall not be considered a Clinical Editing Product even if such software includes or performs code validation and/or duplicate code functionality.

  1.3 Covered Products . The terms "Covered Facets Product," "Covered QicLink Product," and "Covered ClaimFacts Product" (collectively, "Covered Products") refer to any version of Facets, QicLink, or ClaimFacts (including successor products thereto), respectively, that contains a TriZetto Clinical Editing Product.

3

• 1.4 Enhancements . Modifications, revisions, additions, or supplements to a TriZetto Clinical Editing Product (including, without limitation, its Clinical Editing Database) which enables the TriZetto Clinical Editing Product to provide or perform material services or functions it could not previously perform, or materially improves the manner in which the TriZetto Clinical Editing Product performs existing functions. Enhancements shall not include updates to a TriZetto Clinical Editing Product that are made to stay current with industry coding changes (e.g., changes to the CPT and ICD codes and/or rules), regulatory requirements, as well as other minor upgrades, minor improvements, and/or fixes to such Product. Notwithstanding the foregoing, the term Enhancements shall include any modification, revision, addition or supplementation to a TriZetto Clinical Editing Product that results in the addition, incorporation, inclusion or use of any part of or functionality from a non-TriZetto Clinical Editing Product, including, without limitation, its source code and/or some or all of the contents of its Clinical Editing Database.

  1.5 Existing TriZetto Customer . This definition includes two categories of customers: (1) any and all ClaimFacts, QicLink or Facets customers that have acquired rights as of the Effective Date to use ClaimFacts, QicLink, or Facets on a licensed and/or hosted basis; and (2) any prospective customer of ClaimFacts, QicLink, or Facets that is included in a TriZetto sales cycle as of the Effective Date and which customer enters into a license and/or hosting agreement for ClaimFacts, QicLink, or Facets with TriZetto on or prior to October 31, 2006. The customers in the first category are identified on Exhibit 1 hereto, and prospective customers included in a TriZetto sales cycle as of the Effective Date are identified on Exhibit 2 hereto. Exhibit 2 of this Agreement shall be replaced by a final list of customers in the second category that will be provided by TriZetto to McKesson no later than November 30, 2006. When

4

• referring to Existing TriZetto Customers of a particular product, such customers shall be referred to as Existing ClaimFacts Customers (in the case of ClaimFacts), Existing Facets Customers (in the case of Facets), and Existing QicLink Customers (in the case of QicLink).

  1.6 Facets-ClaimCheck Interface . The software that enables transmission of data between Facets and ClaimCheck (including ClaimReview).

  1.7 McKesson Products . McKesson’s products known individually as ClaimCheck, ClaimReview, Clear Claim Connection, and ClaimsXten; provided, however, that ClaimsXten shall be included in the definition of McKesson Products only in the event that an interface is developed by TriZetto as set forth in Section 5.2 of this Agreement.

  1.8 Net Licensing Revenue . The money actually received by TriZetto for licensing (including on a hosted basis) a Covered QicLink Product or Covered Facets Product. Net Licensing Revenue includes only base QicLink or Facets license fees actually paid by customers to TriZetto; i.e., Net Licensing Revenue shall include fees paid by customers to use and access the Covered Products (including access provided on a hosted basis), but not fees paid for other products and services provided by TriZetto, including the portion of hosted services related to the provision of servers, equipment and other infrastructure. For purposes of clarification only, and not as a limitation, Net Licensing Revenue does not include fees or expenses paid by customers for (i) other products offered by TriZetto, such as Sybase, NetworX, Workflow, and/or Care Advance Enterprise, or (ii) any services provided by TriZetto, such as hosting, support, consulting, and/or maintenance services. For purposes of this Agreement, fees or expenses for hosting services provided by TriZetto excludes fees for licensing a Covered QicLink Product or Covered Facets Product on a hosted basis.

5

• 1.9 New Facets or ClaimFacts Customer. Any customer that is sold Facets or ClaimFacts on a licensed and/or hosted basis during the Term and that is not an Existing Facets or ClaimFacts Customer or a Small Facets Customer.

  1.10 New QicLink Customer . Any customer that is sold QicLink on a licensed and/or hosted basis during the Term and that is not an Existing QicLink Customer.

  1.11 Term . The period commencing on the Effective Date and ending on October 12, 2010, unless the Agreement is terminated earlier as permitted herein. This Agreement and all the rights and obligations set forth herein shall remain in effect notwithstanding that the ‘164 Patent may be held invalid and/or unenforceable in any other proceeding at a later date.

  1.12 Small Facets Customer . Any customer other than an Existing Facets Customer that, at the time of first contracting with TriZetto, contracts to use Facets for only those of its affiliates, divisions and/or product lines with aggregate membership at such time of 100,000 active medical lives or less. If a customer subsequently modifies its initial contract with TriZetto to allow for the use of Facets by additional affiliates, divisions and/or product lines, and the total membership of all such contracted affiliates, divisions and/or product lines exceeds 100,000 active medical lives at the time of such modification, then none of the additional affiliates, divisions and/or product lines will be deemed to be a Small Facets Customer.

  1.13 TriZetto Clinical Editing Product . A Clinical Editing Product developed by TriZetto, including, without limitation, ClinicaLogic (also sometimes referred to as, among other things, Clinical Editing, Clinical Editor, and Clinical Edits). In the event TriZetto assigns or otherwise transfers this Agreement pursuant to Section 2.3(b) below, the term TriZetto Clinical Editing Product shall be limited to those TriZetto Clinical Editing Products that existed

6

• prior to said assignment or transfer and shall not include any Clinical Editing Product owned by the assignee or transferee at the time of the assignment or transfer or thereafter acquired or developed by said assignee or transferee.

  1.14 ‘164 Patent . The ‘164 patent as well as all foreign counterparts, continuations, divisionals, reexams, and reissues thereof, if any.

• 2.1 In exchange for the promises, covenants, and obligations set forth in this Agreement, TriZetto will pay McKesson a one-time royalty fee of fifteen million dollars ($15,000,000) (the "Upfront Royalty Fee") to license the ‘164 Patent with respect to all TriZetto’s sales of ClaimFacts, Facets, and QicLink as permitted herein. The Upfront Royalty Fee shall be payable in two equal installments of $7,500,000 each, the first to be paid by September 30, 2006, and the second to be paid by September 30, 2007.

  2.2 (a) McKesson hereby grants to TriZetto a non-exclusive, non-transferable (except as provided herein), non-assignable (except as provided herein), and non-sublicensable license under the ‘164 Patent to make, have made, use, import, license, sell, lease, offer for sale, support, host, maintain, and otherwise transfer within the United States and its territories (i) Covered ClaimFacts, Facets, and QicLink Products to or for Existing ClaimFacts, Facets, and QicLink Customers; (ii) Covered Facets Products to or for Small Facets Customers; and (iii) Covered QicLink Products to or for New QicLink Customers; and

  2.2 (b) McKesson hereby grants a non-transferable (except as provided herein), non-assignable (except as provided herein), non-sublicensable and non-exclusive license under the ‘164 Patent within the United States and its territories to (i) Existing ClaimFacts, Facets, and QicLink Customers to use Covered ClaimFacts, Facets, and QicLink Products; (ii)

7

• Small Facets Customers to use Covered Facets Products; and (iii) New QicLink Customers to use Covered QicLink Products.

  2.3 (a) The licenses set forth in Section 2.2(b) are non-assignable and non-transferable by TriZetto’s customers except (i) with the prior written consent of McKesson which shall not be unreasonably withheld; (ii) in connection with the sale of all or substantially all of the stock or assets of a TriZetto Customer; or (iii) to a purchaser of all or substantially all of the assets of the business relating to the license. By way of clarification, and not as a limitation, if an Existing TriZetto Customer sells the business that is utilizing a licensed TriZetto product for the processing of medical claims for payments, such license shall be transferable and/or assignable to the purchaser of such Customer’s business.

  2.3 (b) This Agreement is assignable and transferable by TriZetto (i) with the prior written consent of McKesson which shall not be unreasonably withheld; (ii) in connection with the sale of all or substantially all of the stock or assets of TriZetto; or (iii) to a purchaser of all or substantially all of the assets of the TriZetto business relating to the Agreement. Notwithstanding the foregoing, this Agreement is not assignable and not transferable by TriZetto to Ingenix, Inc. or iHealth Technologies, Inc., including their respective parents, subsidiaries, affiliates, successors and assigns (each, a "Restricted Transferee"), under any circumstances. In the event a Restricted Transferee acquires substantially all of the stock or assets of TriZetto, and TriZetto desires to transfer this Agreement to such Restricted Transferee, McKesson shall have the option to consent to or reject such a transfer. If McKesson elects to reject the transfer, this Agreement shall terminate and the provisions of Section 9 shall apply. If TriZetto desires to transfer this Agreement to such Restricted Transferee, TriZetto shall give McKesson written notice of its intent to transfer the Agreement. Within 15 calendar days of its

8

• receipt of such notice, McKesson shall give TriZetto written notice of its election to consent to or reject the transfer. If McKesson does not respond within said 15 days, TriZetto will give McKesson a second written notice. If McKesson does not provide TriZetto with its written election within 15 calendar days after the second notice, it will be deemed to have rejected the transfer and this Agreement will terminate and the provisions of Section 9 shall apply. In connection with an assignment or other transfer of this Agreement by TriZetto under this Section 2.3(b), the assignee or transferee must expressly assume in writing all of TriZetto’s obligations hereunder. This Agreement is assignable and transferable by McKesson (i) with TriZetto’s prior written consent, which shall not be unreasonably withheld; (ii) in connection with the sale of all or substantially all of the stock or assets of McKesson; (iii) to a purchaser of all or substantially all of the assets of the McKesson business relating to this Agreement; or (iv) to any direct or indirect wholly owned subsidiary of McKesson Corporation including McKesson Health Solutions, LLC.

  2.4 As of the Effective Date, TriZetto (i) shall not sell or offer for sale on a licensed and/or hosted basis any TriZetto Clinical Editing Product (whether alone or with another product) to any New ClaimFacts or New Facets Customer within the United States of America and its territories; and (ii) shall remove any TriZetto Clinical Editing Product from any version of ClaimFacts or Facets (or any product that replaces Facets) that is sold on a licensed and/or hosted basis to any such New Facets or New ClaimFacts Customer within the United States of America or its territories. Such removal shall be performed prior to the delivery of ClaimFacts or Facets to the New Facets or New ClaimFacts Customer. This Section 2.4 shall not preclude TriZetto from selling or licensing Facets with a TriZetto Clinical Editing Product to an Existing ClaimFacts Customer if that Customer was licensed to use ClinicaLogic as of the date

9

• of this Agreement, and the royalty fee in Section 2.5 shall not apply to any such sales or licenses. Nothing in this Agreement shall preclude Existing ClaimFacts or QicLink Customers who convert to Facets from electing to license ClaimCheck or ClaimsXten.

  2.5 In addition to the Upfront Royalty Fee, in the event that TriZetto (whether on its own or through its vendor, distributor, partner, subsidiary, agent, or other representative) transfers, sells, hosts, or licenses a Covered Facets Product to a Small Facets Customer or a Covered QicLink Product to a New QicLink Customer, TriZetto will pay McKesson a royalty of five percent (5%) of the Net Licensing Revenue from such Small Facets Customer or New QicLink Customer. Such royalties will be payable within forty-five (45) days after the close of the calendar quarter in which such Net Licensing Revenue is actually received by TriZetto.

  2.6 During the Term, TriZetto agrees that it will not make any Enhancements to any TriZetto Clinical Editing Product.

  2.7 Notwithstanding any other provision of this Agreement, nothing in this Agreement shall preclude TriZetto from making, having made, using, importing, licensing, selling, leasing, offering for sale, supporting, hosting, maintaining, and otherwise transferring any version of Facets that does not include a Clinical Editing Product. In the event TriZetto does sell versions of Facets described in this Section 2.7, McKesson shall not be entitled to any portion of the resulting revenue received from such customer(s).

  2.8 All royalty payments hereunder shall be noncreditable and nonrefundable, except in connection with an overpayment of such royalties. All royalty payments hereunder shall be in United States dollars in immediately available funds and shall be made by wire transfer to such bank account as may be designated from time to time by McKesson.

10

• 2.9 If TriZetto fails to timely make any payment due to McKesson under this Agreement, then interest shall accrue on a daily basis at a compound annual rate of ten percent (10%) or at the maximum rate permitted by applicable law, whichever is lower, thirty (30) days from the time the payment was due until the time the payment is made.

  2.10 Other than the licenses granted in this Section 2 of this Agreement, nothing in this Agreement shall grant to TriZetto, its customers, or any other person, by implication, estoppel, or otherwise, any right or license to the ‘164 Patent in general, or any other intellectual property rights owned by McKesson.

  2.11 TriZetto shall mark any new versions of the Covered Products with the word "Patent" or the abbreviation "Pat.," and the full number of the ‘164 patent (or, if marking the Covered Products cannot be done, by affixing to the Covered Products or their packaging a label with such information). All such versions of Covered Products shall be marked permanently and legibly in the manner as reasonably practical and directed by McKesson. Within sixty (60) days of the Effective Date or the release of any new version of a Covered Product (whichever is sooner), TriZetto shall certify to McKesson in writing that it has complied with this Section 2.11.

  2.12 The Parties grant each other limited permission to use the trademarks of the other Party solely to identify themselves as working with the other Party pursuant to this Agreement and to advertise and promote the McKesson Products, the Facets-ClaimCheck Interface, and (if applicable) the Facets-ClaimsXten Interface to New and Existing Facets Customers. Each Party shall provide to the other Party a sample of any proposed use of the other Party’s trademarks pursuant to this Section prior to such use. If the other Party objects to such

11

• use, said Party must provide its objection and/or any proposed revisions to the Party proposing such use within fifteen (15) business days of service.

  2.13 THE LICENSES GRANTED HEREUNDER BY MCKESSON ARE PROVIDED WITHOUT WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER WARRANTY, EXPRESS OR IMPLIED. EXCEPT AS SET FORTH IN THIS AGREEMENT, MCKESSON MAKES NO WARRANTY THAT TRIZETTO’S ACTIVITIES UNDER SAID LICENSES WILL NOT INFRINGE ANY PATENT OR OTHER PROPRIETARY RIGHT. MCKESSON WILL NOT BE LIABLE FOR ANY SUCH INFRINGEMENT, OR ALLEGATION THEREOF.

  2.14 EXCEPT AS SET FORTH IN THIS AGREEMENT, NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY, ITS CUSTOMERS, THE USERS OF ANY PRODUCT, OR ANY THIRD PARTIES FOR INDIRECT, SPECIAL, CONSEQUENTIAL, OR PUNITIVE DAMAGES, INCLUDING, WITHOUT LIMITATION, ANY DAMAGE OR INJURY TO BUSINESS EARNINGS, PROFITS, OR GOODWILL SUFFERED BY ANY PERSON ARISING FROM ANY BREACH OF THIS AGREEMENT OR WARRANTY THEREIN, ANY EXERCISE OF RIGHTS UNDER THIS AGREEMENT, OR ANY USE OF THE ‘164 PATENT OR ANY PRODUCT, IN EACH CASE EVEN IF SUCH PARTY IS ADVISED OF THE POSSIBILITY OF SUCH DAMAGE OR INJURY.

  2.15 TriZetto shall keep and maintain proper books and records as are required accurately to determine the royalties payable to McKesson for two (2) years following the calendar quarter on which such royalties were paid or reported. Once a year, and upon a two-week written notice to TriZetto, McKesson may have an independent third-party accountant, at McKesson’s expense, examine TriZetto’s books and records solely for the purpose of verifying

12

• the accuracy of royalties paid or reported by TriZetto. TriZetto shall assist the accountant in conducting such examination, without charge, and shall make such documents available for inspection and copying, shall make TriZetto’s personnel available for interviews, and shall make TriZetto’s facilities available for inspection as may be reasonably necessary to allow the accountant to perform the examination. If such examination reveals an underpayment by TriZetto, then TriZetto shall promptly make up such underpayment with interest pursuant to Section 2.8, and, if the underpayment exceeds ten percent (10%) of the amount actually owed to McKesson under this Agreement during the period under examination, TriZetto shall reimburse McKesson for the actual cost of the examination. If such examination reveals an overpayment by TriZetto, then McKesson shall promptly refund such overpayment without interest to TriZetto.

  2.16 As part of each royalty payment made pursuant to Section 2.5, TriZetto shall provide McKesson with a quarterly report identifying each product sold and the date of such sale. If any Net Licensing Revenue has been received by TriZetto for such sale, the report shall also identify the amount of such Revenue and the date on which TriZetto received such Revenue.

  2.17 Each Party receiving monies under this Agreement shall be solely responsible for all withholding, sales, use, excise and property taxes, and all duties, levies and assessments (other than those based on the net income of the other paying Party) imposed with respect to such receiving Party’s receipt of payments pursuant to this Agreement.

• 3.1 During the Term, TriZetto shall use reasonable good faith efforts to promote the use and implementation of McKesson Products to Existing Facets Customers and New Facets Customers on a non-exclusive basis in accordance with Section 4 below. TriZetto

13

• will have no obligation to promote McKesson Products to ClaimFacts, QicLink or Small Facets Customers, unless such customers become Facets Customers.

  3.2 Provided that TriZetto is in compliance with its obligations set forth in this Agreement, including Sections 2.4, 3, 4 and 5, TriZetto bears no responsibility and incurs no liability for the decision made by any TriZetto customer to purchase or license a Clinical Editing Product from any third-party source.

  3.3 TriZetto will not be entitled to share any revenue derived by McKesson relating to McKesson Products, including revenue derived as a result of any sale or license of McKesson Products to any TriZetto customers, provided however, that TriZetto may charge reasonable, standard and customary fees to license and support the Facets-ClaimCheck Interface and (if applicable) the Facets-ClaimsXten Interface for any Existing TriZetto Customer that acquires ClaimCheck or ClaimsXten.

  3.4 McKesson agrees that all fees and service charges charged to any Facets customer for the sale or license of a McKesson Product will be consistent with the fees and services generally charged and provided to similar non-TriZetto customers.

  3.5 McKesson will be solely responsible for all selling, contracting and collection efforts associated with the sales of McKesson Products to Facets customers.

  3.6 As of the Effective Date, McKesson will become a TriZetto "Preferred Alliance Partner." As a "Preferred Alliance Partner," McKesson shall be invited and provided a bona fide opportunity to exhibit McKesson Products at TriZetto’s annual payor conference at TriZetto’s standard exhibition cost, which may vary based upon level of customer exposure and publicity sought by McKesson. Such costs shall be payable by McKesson in accordance with TriZetto’s standard exhibitor payment policy.

14

• 3.7 This Agreement shall not affect the four current TriZetto customers that use ClaimCheck as of the Effective Date; the Parties shall continue their current relationship and practices with regard to those four customers. All interfaces developed under this Agreement will, however, be made available to those customers.

• 4.1 When referring to clinical editing in its promotional materials, TriZetto will refer to McKesson Products for which interface(s) are created in accordance with Section 5 as a preferred clinical editing solution for prospectiv