Forms

You can provide a self-insured medical plan to officers and employees. The business simply reimburses employees for expenses incurred. You can put a floor or cap on the amount of the reimbursement. The amounts should not be income to the employees. If you discriminate in favor of highly compensated employees, some or all of the reimbursement will be taxable. In the second section we've restricted the eligibility to full-time employees who are age 25 or older and have completed 3 years of service. You don't have to include any restrictions. We've also put a $1,000 limit on the reimbursements. You can set any limit you want.

1. Benefits

The Corporation will reimburse all eligible employees for expenses incurred by themselves and their dependents (as defined in IRC Sec. 152) for medical care (as defined in IRC Sec. 213) subject to the conditions and limitations set forth below. The Corporation intends that the benefits shall qualify under IRC Sec. 105 so as to be be excludable from the gross income of the employees covered by the plan.

2. Eligibility

The plan shall be open to all full-time workers (those who customarily work 35 or more hours in a given week), who have attained the age of 25, and have completed three years of service with the Corporation.

3. Limitations

(a) The Corporation shall reimburse any eligible employee no more than $1,000 in any calendar year for medical expenses.

(b) The Corporation shall only be liable for the reimbursement of expenses that are not covered under any insurance policy(ies), whether owned by the corporation or the employee.

4. Submission of Claims

Any eligible employee seeking reimbursement under this Plan shall submit to the Corporation, at least quarterly, all bill for medical care, including those for accident or health insurance. Such bills and other claims for reimbursement shall be verified by the Corporation prior to reimbursement. The Corporation, in its sole discretion, may terminate the employee's right to reimbursement if the employee fails to comply.

5. Termination

This Plan may be terminated at any time by a vote of the board of directors of the Corporation. Medical expenses incurred prior to the date of termination shall be reimbursed by the Corporation. The Corporation is under no obligation to provide advance notice of termination.

6. Determination

The president shall determine all questions arising from the administration of the Plan except where reimbursement is claimed by the president. In such case, determination of any question shall by made by the board of directors.

Adopted by the Board of Directors
on November 10, 1998

_____________________
Secretary

Promissory Note

$20,000

December 15, 1998

For value received, the undersigned Madison, Inc. (the 'Promissor') promises to pay to the order of Fred Flood (the 'payee'), at 4231 Hudson Way, Chatham, Vermont the sum of $20,000 with interest from December 15, 1998, on the unpaid principal at the rate of 6.0 percent annually.

The unpaid principal and accrued interest shall be payable in monthly installments of $886.41, beginning on January 15, 1999 until the principal amount is fully amortized. All payments on this Note shall be applied first in payment of accrued interest and any remainder in payment of principal.

The Promisor promises to pay a late charge of $10.00 for each installment that remains unpaid more than 15 days after the due date.

The Promisor reserves the right to prepay this Note (in whole or in part) prior to the Due Date with no prepayment penalty.

In the event of a default, this Note shall become due immediately. Any one of the following shall be considered a default:

1. the filing of bankruptcy proceedings by the Promisor;
   
2. the insolvency of the promisor;
   
3. the death of the promisor;
   
4. the sale, transfer, assignment or any other disposition of any assets pledged as security for this note;
   
5. the failure of the Promisor to pay the principal and any accrued interest that is overdue by more than 30 days; or
   
6. the misrepresentation of the Promisor to the Payee for the purpose of obtaining or extending credit.

This Note is secured by a 1998 Blazer, vin 8999699999.

If any one or more of the provisions of this Note are determined to be unenforceable, for any reason, in whole or in part, the remaining provisions shall remain fully operative.

This note shall be construed in accordance with the laws of the State of Vermont.

Dated this 15th day of December 1998

By: ________________________________

Madison, Inc.

Board Resolution Authorizing Borrowing from Shareholder

RESOLVED, As the Corporation is in need of additional debt capital for expansion and operating capital, that the treasurer of Madison, Inc.be authorized, in the name of and for the account of the Corporation, and on such terms and conditions as he may deem proper, to borrow from Fred Flood up to $10,000.

______________________
  Secretary

______________________
  Chairman

Stock basis at start of year                                 _________
Excess deductions/losses from prior years                    _________
   Net                                                       _________


Plus--Increases:

Ordinary business income                                     _________
Net income from rental activities                            _________
Interest income                                              _________
Dividend income                                              _________
Royalty income                                               _________
Net short-term capital gain                                  _________
Net long-term capital gain                                   _________
Net gain under Section 1231                                  _________
Tax-exempt interest income                                   _________
Other income                                                 _________
Section 179 recapture on disposition of assets               _________
Depletion (but not oil and gas) in excess of basis           _________
Life insurance proceeds                                      _________
Other increases                                              _________

Contributions to capital                                     _________


Less--Decreases:

Ordinary loss                                                _________
50% of meals and entertainment (1)                           _________
Section 179 expense deduction                                _________
Charitable contributions                                     _________
Deductions related to interest, dividends, etc.              _________
Interest expense on investment debt                          _________
Other nondeductible expenses (2)                             _________
Net loss from rental activities                              _________
Net short-term capital loss                                  _________
Net long-term capital loss                                   _________
Net loss under Section 1231                                  _________
Foreign taxes                                                _________
Oil and gas depletion                                        _________
Other decreases                                              _________

Distributions (not in excess of stock basis) (3)             _________

     Basis                                                   _________

Debt basis at start of year                                  _________

Plus:

Loans made during the year                                   _________

Less:

Loan repayments                                              _________
Excess losses/deductions from prior years                    _________
Losses/deductions in excess of stock basis                   _________
Distributions (not in excess of debt basis)                  _________

     Basis in debt                                           _________

--Last update 04/26/99