MIIX GROUP INC
<DOCUMENT>
<TYPE>EX-10.85
<SEQUENCE>12
<FILENAME>ex10-85_d12268.txt
<TEXT>
                                                                   Exhibit 10.85

                             REIMBURSEMENT AGREEMENT

     THIS REIMBURSEMENT AGREEMENT (this "Agreement") dated as of August 28,
2002, ("Effective Date") is by and among MIIX Advantage Insurance Company of New
Jersey, a New Jersey corporation ("MIIX Advantage"), MIIX Advantage Holdings,
Inc., a New Jersey corporation ("Holdings"), and MIIX Insurance Company, a New
Jersey corporation ("MIIX Insurance").

                                   Background

     A. Holdings and MIIX Advantage (collectively, "Advantage"), were formed to
issue to (i) certain physicians, osteopaths, surgeons, dentists and podiatrists
(collectively, "Physicians") who are licensed to practice medicine, dentistry or
podiatry in New Jersey and who conduct at least 51% of such practice in New
Jersey and (ii) entities formed for the purpose of such Physicians' practices
which are not wholly-owned by one or more Institutional Providers, as defined in
Section 5.1 hereof (those persons described in clauses (i) and (ii) collectively
referred to as "New Jersey Physicians") medical professional liability and
associated general liability insurance policies (the "Insurance Business"). MIIX
Advantage is a wholly owned subsidiary of MIIX Holdings. Pursuant to a
Preliminary Offering Letter dated May 24, 2002, as supplemented by a letter
dated August 5, 2002, MIIX Holdings is seeking to raise certain funds, which
will be used to capitalize MIIX Advantage (the "Offering").

     B. Pursuant to a Management Services Agreement (the "Management Agreement")
entered into by and among The MIIX Group, Inc. ("MIIX Group"), New Jersey State
Medical Underwriters, Inc. ("Underwriter"), and Advantage, MIIX Group and
Underwriter will provide to Advantage certain management services in connection
with the Insurance Business.

     C. Pursuant to a Non-competition and Renewal Rights Agreement entered into
by and among MIIX Group, Underwriter, MIIX Insurance Company ("MIIX Insurance"),
and Advantage contemporaneously herewith (the "Renewal Rights Agreement"), MIIX
Group will inform New Jersey Physicians that MIIX Insurance can no longer issue
policies and advise such physicians that MIIX Advantage may issue new policies
provided certain conditions are satisfied.

     D. Pursuant to an Intellectual Property License Agreement entered into by
and among Underwriter and Advantage contemporaneously herewith (the "License
Agreement"), the "MIIX" name and associated marks will be licensed to Advantage
for use in connection with the Insurance Business.

<PAGE>

     E. MIIX Insurance has incurred and will continue to incur on behalf of
Advantage substantial costs and expenses in connection with the Offering and
other organizational matters.

     F. Advantage desires to reimburse such costs and expenses pursuant to the
terms and conditions set forth in this Agreement.

     NOW, THEREFORE, in consideration of the foregoing background recitals and
the mutual covenants and agreements contained herein, and for other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the parties hereby agree as follows:

     1. Advancement of Organizational Expenses. MIIX Insurance hereby agrees to
pay all costs and expenses (currently estimated at approximately $1.5 million)
incurred by Advantage in connection with, and reasonably allocable to, the
Offering and all other organizational matters, which costs and expenses are
listed on Schedule A, and include, without limitation, legal, regulatory,
accounting, investment banking, administrative and miscellaneous expenses
(collectively, "Organizational Expenses"). Schedule A shall also set forth the
allocation of the Organizational Expenses between, and as mutually agreed to by,
Holdings and MIIX Advantage. Any dispute regarding such allocation shall be
resolved by an independent auditor mutually agreed upon by the parties, the cost
of such auditor to be borne by the non-prevailing party.

     2. Reimbursement of Organizational Expenses. Advantage agrees to reimburse
MIIX Insurance for the Organizational Expenses paid by MIIX Insurance hereunder,
as follows:

          (a) On the Effective Date of this Agreement, Advantage shall pay to
MIIX Insurance thirty-five percent (35%) of the total principal amount of the
Organizational Expenses paid by MIIX Insurance pursuant to the terms of this
Agreement.

          (b) The remainder of the principal amount of the Organizational
Expenses shall be paid in three installments, as follows:

                                                    Percentage of Organizational
                  Repayment Date                     Expenses to be Reimbursed
                  --------------                    ----------------------------
                  September 30, 2003                            30%

                  September 30, 2004                            25%

                  September 30, 2005                            10%


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<PAGE>

          (c) The Organizational Expenses may be prepaid, in advance of the
foregoing repayment schedule, in whole or in part, without penalty to Advantage,
provided, that any such prepayment shall be in an amount equal to $100,000 or an
even multiple thereof, or the remaining balance of the Organizational Expenses.

          (d) From and after the ninetieth (90th) day after the Effective Date,
the outstanding balance of the Organizational Expenses shall bear interest,
payable on each payment date set forth in subparagraph 2(a) hereof based on the
daily outstanding balance of the Organizational Expenses, at a rate per annum
equal to two percent (2%) above the prime rate reported in the Wall Street
Journal, determined as of a date that is thirty (30) days prior to each such
payment date. Such interest shall be calculated based on the actual number of
days elapsed over a year of 364 or 365 days, as applicable.

     3. Additional Organizational Expenses. Any Organizational Expenses that
arise after the date hereof (as reflected on an amendment to Schedule A) shall
be paid and amortized over the remaining Term in accordance with the schedule
set forth in Section 2. If any payment to be made under this Agreement is due on
a Saturday, Sunday or federal banking holiday, such payment may be made on the
next succeeding business day.

     4. Late Payments. Any payment required to be made hereunder which is not
paid when and as due and payable hereunder shall accrue and bear interest from
the date such payment is due and payable until the date such payment is made at
the rate set forth in Section 2 above and, in the event that such a payment is
sixty (60) days or more past due, from and after such 60th day at a rate equal
to three percent (3%) in excess of the rate otherwise applicable pursuant to
Section 2 above.

     5. Default. Upon the failure of Advantage to pay any payment when due,
which failure is not cured within sixty (60) days after written notice thereof,
the entire principal balance and any and all interest accrued thereon shall, at
the option of MIIX Insurance, become immediately due and payable.

     6. Access to Records. Upon request, MIIX Insurance shall provide Advantage
access during regular business hours to any and all records reasonably related
to the Organizational Expenses paid by MIIX Insurance pursuant to this
Agreement.

     7. Parties in Interest. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns.
Nothing in this Agreement, express or implied, is intended to confer upon any
person or entity not a party to this Agreement any rights or remedies under or
by reason of this Agreement.

     8. No Assignment. No party hereto may assign or delegate any of the rights
or obligations hereunder without the express written consent of the other party.

     9. Notices. Any notice required or which may be given hereunder shall be in
writing and shall be deemed to have been given (i) when delivered to the
addressee in

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<PAGE>

person, (ii) if telexed or faxed, then on the date shown on the confirming
receipt, and, if notice is telexed or faxed, a copy shall be mailed by
registered or certified mail, return receipt requested and postage prepaid,
(iii) when sent by registered or certified mail, return receipt requested and
postage prepaid, on the date shown on the receipt or (iv) when sent by express
mail or courier service, postage or charges prepaid, on the date of delivery as
shown on the receipt or confirmation therefor, in each case, addressed to the
parties as set forth below or at such other address as the party may specify in
a notice complying with this Section 9; provided that notice sent by any other
method shall be effective only when received by the party to which such notice
was addressed.::

               MIIX Advantage Insurance Company of New Jersey
               Two Princess Road, Lawrenceville, New Jersey 08648
               Attention:  Corporate Secretary

               MIIX Advantage Holdings, Inc.
               Two Princess Road, Lawrenceville, New Jersey 08648
               Attention:  Corporate Secretary

               MIIX Insurance Company
               Two Princess Road, Lawrenceville, New Jersey 08648
               Attention:  Corporate Secretary

     10. Governing Law. This Agreement shall be governed by the laws of the
State of New Jersey without regard to conflict of law principles.

     11. Headings. The headings in this Agreement are for convenience of
reference only and are not part of the substance of this Agreement and
references to the masculine, feminine, singular, plural or neuter shall apply in
all cases.

     12. Entire Agreement. This Agreement, the Management Agreement, the License
Agreement and the Renewal Rights Agreement contain the entire agreement between
the parties with respect to the subject matter hereof and thereof and shall
supercede any and all prior agreements and understandings, whether oral or
written, relating to the subject matter hereof or thereof. This Agreement may be
changed or supplemented only by a written agreement signed by the parties
hereto.

     13. Severability. It is the intention of the parties that the provisions of
this Agreement shall be enforced to the fullest extent permissible under the
laws and public policies of each state and jurisdiction in which such
enforcement is sought, but that the non-enforceability of any provisions hereof
shall not render non-enforceable or impair the remainder of this Agreement.
Accordingly, if any provisions of this Agreement shall be determined to be
invalid or non-enforceable, either in whole or in part, this Agreement shall be
deemed amended to delete or modify, as necessary, the offending provisions and
to alter the balance of this Agreement in order to render the same valid and
enforceable to the fullest extent permissible.


                                                                               4
<PAGE>

     14. Counterparts. This Agreement may be executed in several counterparts
each of which shall be deemed an original but when taken together shall
constitute one and the same agreement.


                                                                               5
<PAGE>

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

                                              MIIX INSURANCE COMPANY

                                              By: ______________________________
                                                     Name:
                                                     Title:

                                              MIIX ADVANTAGE INSURANCE COMPANY
                                              OF NEW JERSEY

                                              By: ______________________________
                                                     Name:
                                                     Title:

                                              MIIX ADVANTAGE HOLDINGS, INC.

                                              By: ______________________________
                                                     Name:
                                                     Title:


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<PAGE>

                                   SCHEDULE A

                             Organizational Expenses

Description                                                            Amount
-----------                                                            ------
Advertising                                                          $179,432.85
Directors Compensation - Monthly Stipend                                1,666.67
Meals & Entertainment                                                   9,330.92
Travel                                                                  2,247.64
EDP Maintenance                                                        10,234.00
Copying                                                                    70.25
Public & Shareholder Relations                                          1,270.25
Printing                                                               24,929.04
Office Supplies                                                           466.32
EDP Supplies/Equipment                                                    177.26
Delivery Service                                                        7,026.75
Postage                                                                31,987.40
Telephone - long distance                                                 150.28
Telephone - cellular, pagers & misc.                                      918.77
Professional Services Legal                                           389,827.93
License & Fees - State Specific                                           284.00
Professional Services Consulting                                      614,935.88
IS Professional Consulting Service                                      6,900.00
Meeting & Company Functions                                               644.85
Bank Service Fees                                                       4,000.00
                                                                   -------------
TOTAL                                                              $1,286,501.06


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</DOCUMENT>
