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87-- 103276 3. The interest rate on the Note is hereby modified effective May 1, 1987 to equal (a) the Champlain Valley Federal Savings and Loan Association cost of funds, as quoted from time to time, plus (b) 250 basis points. On May 1, 1988, and upon the firs*_ day of May in each succeeding year thereafter, the interest rate payable on the Note shall be readjusted and shall be based upon 250 basis points over the Champlain Valley Federal Savings and Loan Association's cost of funds, plus an additional 50 basis points in each succeeding year during this loan until May 1, 1990. The interest rate on the Note commencing May 1, 1990 and in each year thereafter during the remaining term of this loan shall be 400 basis points above Champlain Valley Federal Savings and Loan Association's costs of funds. The first payment due and owing under the Note in this agreement shall be made on June 1, 1987 and on the first day of each month thereafter. Payments of principal and interest shall be based upon an amortization period of 25 years. The monthly payment amount shall be adjusted annually on the date that the interest rate is adjusted, as herein provided, such that the amount of the regular monthly payment of principal and interest on the Note will be adjusted to be sufficient so as to amortize the remaining principal balance of the Note from the payment date immediately prior to the adjustment date over an amortization period equal to 300 months less the number of months which have elapsed from the date of this agreement as of the adjustment date at the adjusted rate of interest as if such adjusted rate of interest were to continue in effect throughout such amortization. All principal, accrued interest, and other sums advanced or payable under the Note or this agreement shall be payable in full on or before May 1, 1997. 4. Champlain Valley and Teak agree that the obligation of Teak to establish and maintain a reserve fund of $50,000.00 under paragraph 7 of the Deed of Trust shall be suspended until the earlier of (a) the "Due Date" as that term is defined in the Promissory Note between Continental Mortgage Company and Teak, a copy of which is attached hereto as Exhibit "B "; or (b) the date all sums due under such note are paid in full. On the first day of the month immediately followingthe occurrence of (a) or (b), Teak shall commence payments to the reserve fund in accordance with paragraph 7 of the Deed of Trust. 5. Champlain and Teak agree that Teak shall, within ninety (90) days from the date of this agreement, negotiate and execute a new motel franchise agreement with respect to the property. Upon Teak's failure to comply with this condition, Champlain may in its sole discretion declare a default in this agreement and the Deed of Trust and pursue all available remedies for such default. 6. The Note and Deed of Trust, except as modified herein, shall remain in full force and effect and the Deed of Trust shall