10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED May 28, 2011

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM              TO            

Commission File No. 1-12879

GRIFFIN LAND & NURSERIES, INC.

(Exact name of registrant as specified in its charter)

Delaware	06-0868496
(state or other jurisdiction of incorporation or organization)	(IRS Employer Identification Number)
One Rockefeller Plaza, New York, New York	10020
(Address of principal executive offices)	(Zip Code)

Registrant’s Telephone Number including Area Code (212) 218-7910

(Former name, former address and former fiscal year, if changed since last report)

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 whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨  No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See the definitions of  “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨	Accelerated filer x
Non-accelerated filer ¨	Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ¨  No x

Number of shares of Common Stock outstanding at June 30, 2011: 5,134,204

GRIFFIN LAND & NURSERIES, INC.

FORM 10-Q

Index

PART I -		FINANCIAL INFORMATION
	ITEM 1	Financial Statements
		Consolidated Statements of Operations (unaudited) 13 and 26 Weeks Ended May 28, 2011 and May 29, 2010	3
		Consolidated Balance Sheets (unaudited) May 28, 2011 and November 27, 2010	4
		Consolidated Statements of Changes in Stockholders’ Equity (unaudited) 26 Weeks Ended May 28, 2011 and May 29, 2010	5
		Consolidated Statements of Cash Flows (unaudited) 26 Weeks Ended May 28, 2011 and May 29, 2010	6
		Notes to Consolidated Financial Statements (unaudited)	7-22
	ITEM 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23-34
	ITEM 3	Quantitative and Qualitative Disclosures About Market Risk	34
	ITEM 4	Controls and Procedures	35
PART II -		OTHER INFORMATION
	ITEM 1	Not Applicable
	ITEM 1A	Risk Factors	36
	ITEMS 2-5	Not Applicable
	ITEM 6	Exhibits	36-38
		SIGNATURES	39

PART I                  FINANCIAL INFORMATION

ITEM 1.FINANCIAL STATEMENTS

GRIFFIN LAND & NURSERIES, INC.

Consolidated Statements of Operations

(dollars in thousands, except per share data)

(unaudited)

	For the 13 Weeks Ended,						For the 26 Weeks Ended,
	May 28, 2011			May 29, 2010			May 28, 2011			May 29, 2010
Rental revenue and property sales	$	4,846		$	4,623		$	9,659		$	9,150
Landscape nursery net sales and other revenue	9,262			10,868			9,445			11,147
Total revenue	14,108			15,491			19,104			20,297
Costs related to rental revenue and property sales	3,075			3,147			6,899			6,664
Costs of landscape nursery sales and other revenue	8,035			9,620			8,916			9,939
Total costs of goods sold and costs related to rental revenue and property sales	11,110			12,767			15,815			16,603
Gross profit	2,998			2,724			3,289			3,694
Selling, general and administrative expenses	2,994			2,912			5,826			5,886
Gain on insurance recovery	—			—			(200		)	—
Operating profit (loss)	4			(188		)	(2,337		)	(2,192		)
Interest expense	(1,056		)	(1,141		)	(2,132		)	(2,182		)
Investment income	80			70			91			174
Loss before income tax benefit	(972		)	(1,259		)	(4,378		)	(4,200		)
Income tax benefit	343			474			1,620			1,571
Net loss	$	(629	)	$	(785	)	$	(2,758	)	$	(2,629	)
Basic net loss per common share	$	(0.12	)	$	(0.15	)	$	(0.54	)	$	(0.52	)
Diluted net loss per common share	$	(0.12	)	$	(0.15	)	$	(0.54	)	$	(0.52	)

See Notes to Consolidated Financial Statements.

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GRIFFIN  LAND & NURSERIES, INC.

Consolidated Balance Sheets

(dollars in thousands, except per share data)

(unaudited)

	May 28, 2011			November 27, 2010
ASSETS
Current Assets:
Cash and cash equivalents	$	3,782		$	9,260
Accounts receivable, less allowance of $256 and $148	6,680			1,673
Inventories, net	14,305			15,528
Deferred income taxes	423			439
Other current assets	2,557			4,235
Total current assets	27,747			31,135
Real estate held for sale or lease, net	129,967			132,038
Available-for-sale securities - Investment in Centaur Media plc	4,787			5,102
Property and equipment, net	2,258			2,363
Deferred income taxes	2,814			1,142
Other assets	11,783			11,371
Total assets	$	179,356		$	183,151
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Current portion of long-term debt	$	8,605		$	1,742
Accounts payable and accrued liabilities	4,652			3,587
Deferred revenue	796			1,406
Total current liabilities	14,053			6,735
Long-term debt	53,568			61,295
Other noncurrent liabilities	6,075			6,054
Total liabilities	73,696			74,084
Commitments and contingencies (Note 11)
Stockholders’ Equity:
Common stock, par value $0.01 per share, 10,000,000 shares authorized, 5,521,170 and 5,510,503 shares issued, respectively, and 5,134,204 and 5,123,537 shares outstanding, respectively	55			55
Additional paid-in capital	106,083			105,620
Retained earnings	12,027			15,811
Accumulated other comprehensive income, net of tax	921			1,007
Treasury stock, at cost, 386,966 shares	(13,426		)	(13,426		)
Total stockholders’ equity	105,660			109,067
Total liabilities and stockholders’ equity	$	179,356		$	183,151

See Notes to Consolidated Financial Statements.

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GRIFFIN LAND & NURSERIES, INC.

Consolidated Statements of Changes in Stockholders’ Equity

For the Twenty-Six Weeks Ended May 28, 2011 and May 29, 2010

(dollars in thousands)

(unaudited)

	Shares of Common Stock  Issued	Common Stock		Additional  Paid-in  Capital		Retained Earnings			Accumulated Other  Comprehensive Income			Treasury  Stock			Total			Total  Comprehensive Loss
Balance at November 28, 2009	5,479,402	$	55	$	104,849	$	22,342		$	926		$	(13,426	)	$	114,746
Exercise of stock options	12,000	—		136		—			—			—			136
Stock-based compensation expense	—	—		186		—			—			—			186
Dividends declared, $0.20 per share	—	—		—		(1,021		)	—			—			(1,021		)
Net loss	—	—		—		(2,629		)	—			—			(2,629		)	$	(2,629	)
Other comprehensive loss from cash flow hedging transactions, net of tax	—	—		—		—			(16		)	—			(16		)	(16		)
Other comprehensive loss from Centaur Media plc, net of tax	—	—		—		—			(645		)	—			(645		)	(645		)
Balance at May 29, 2010	5,491,402	$	55	$	105,171	$	18,692		$	265		$	(13,426	)	$	110,757		$	(3,290	)
Balance at November 27, 2010	5,510,503	$	55	$	105,620	$	15,811		$	1,007		$	(13,426	)	$	109,067
Exercise of stock options	10,667	—		186		—			—			—			186
Stock-based compensation expense	—	—		277		—			—			—			277
Dividends declared, $0.20 per share	—	—		—		(1,026		)	—			—			(1,026		)
Net loss	—	—		—		(2,758		)	—			—			(2,758		)	$	(2,758	)
Other comprehensive income from cash flow hedging transactions, net of tax	—	—		—		—			119			—			119			119
Other comprehensive loss from Centaur Media plc, net of tax	—	—		—		—			(205		)	—			(205		)	(205		)
Balance at May 28, 2011	5,521,170	$	55	$	106,083	$	12,027		$	921		$	(13,426	)	$	105,660		$	(2,844	)

See Notes to Consolidated Financial Statements.

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GRIFFIN LAND & NURSERIES, INC.

Consolidated Statements of Cash Flows

(dollars in thousands)

(unaudited)

	For the 26 Weeks Ended,
	May 28, 2011			May 29, 2010
Operating activities:
Net loss	$	(2,758	)	$	(2,629	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization	3,440			3,546
Deferred income taxes	(1,615		)	(1,571		)
Provision for inventory losses	400			—
Stock-based compensation expense	277			186
Amortization of debt issuance costs	127			138
Provision for bad debts	20			2
Income from equity investment	(6		)	(2		)
Changes in assets and liabilities:
Short-term investments	—			454
Accounts receivable	(5,027		)	(4,461		)
Inventories	823			4,014
Other current assets	1,678			1,466
Accounts payable and accrued liabilities	1,055			870
Deferred revenue	(772		)	(668		)
Other noncurrent assets and noncurrent liabilities, net	(253		)	(1,051		)
Net cash (used in) provided by operating activities	(2,611		)	294
Investing activities:
Additions to real estate held for sale or lease	(773		)	(2,735		)
Additions to property and equipment	(131		)	(96		)
Building acquisition	—			(5,440		)
Net cash used in investing activities	(904		)	(8,271		)
Financing activities:
Dividends paid to stockholders	(1,025		)	(1,019		)
Payments of debt	(864		)	(753		)
Debt issuance costs	(260		)	(100		)
Exercise of stock options	186			136
Proceeds from debt	—			4,524
Net cash (used in) provided by financing activities	(1,963		)	2,788
Net decrease in cash and cash equivalents	(5,478		)	(5,189		)
Cash and cash equivalents at beginning of period	9,260			9,149
Cash and cash equivalents at end of period	$	3,782		$	3,960

See Notes to Consolidated Financial Statements.

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GRIFFIN LAND & NURSERIES, INC.

Notes to Consolidated Financial Statements

(dollars in thousands unless otherwise noted, except per share data)

(unaudited)

1.     Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited consolidated financial statements of Griffin Land & Nurseries, Inc. (“Griffin”) include the accounts of Griffin’s real estate division (“Griffin Land”) and Griffin’s wholly-owned subsidiary in the landscape nursery business, Imperial Nurseries, Inc. (“Imperial”), and have been prepared in conformity with the standards of accounting measurement set forth by the Financial Accounting Standards Board (“FASB”) ASC 270, “ Interim Reporting.”

The accompanying financial statements have been prepared in accordance with the accounting policies stated in Griffin’s audited financial statements for the fiscal year ended November 27, 2010 included in Griffin’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission, and should be read in conjunction with the Notes to Consolidated Financial Statements appearing in that report. All adjustments, comprising only normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of results for the interim periods, have been reflected and all intercompany transactions have been eliminated.  The consolidated balance sheet data as of November 27, 2010 was derived from Griffin’s audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America (“U.S. GAAP”).

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses in the reporting period.  Griffin regularly evaluates estimates and assumptions related to the useful life and recoverability of long-lived assets, stock-based compensation expense, deferred income tax asset valuations, valuation of derivative instruments, the recoverability of its accounts receivable and inventory reserves.  Griffin bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by Griffin may differ materially and adversely from Griffin’s estimates.  To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

Griffin is a party to two interest rate swap agreements to hedge its interest rate exposures.  Griffin does not use derivatives for speculative purposes.  Griffin applied FASB ASC 815-10, “Derivatives and Hedging,” (“ASC 815-10”) as amended, which establishes accounting and reporting standards for derivative instruments and hedging activities.  ASC 815-10 requires Griffin to recognize all derivatives as either assets or liabilities on its consolidated balance sheet and measure those instruments at fair value.  The changes in the fair values of the interest rate swap agreements are assessed in accordance with ASC 815-10 and reflected in the carrying values of the interest rate swap agreements on Griffin’s consolidated balance sheet.

Griffin applies cash flow hedge accounting to its interest rate swap agreements that are designated as hedges of the variability of future cash flows from floating rate liabilities based on the benchmark interest rates.  The change in fair values of Griffin’s interest rate swap agreements are recorded as

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components of accumulated other comprehensive income in stockholders’ equity, to the extent they are effective.  Any ineffective portions of the change in fair value of these instruments would be recorded as interest expense.

The results of operations for the thirteen weeks ended May 28, 2011 (the “2011 second quarter”) and the twenty-six weeks ended May 28, 2011 (the “2011 six month period”) are not necessarily indicative of the results to be expected for the full year. The thirteen weeks ended May 29, 2010 is referred to herein as the “2010 second quarter” and the twenty-six weeks ended May 29, 2010 is referred to herein as the “2010 six month period.”

Certain amounts from the prior year have been reclassified to conform to the current presentation.

Recent Accounting Pronouncements

In January 2010, the FASB issued Accounting Standards Update No. 2010-06, “Fair Value Measurements and Disclosures,” which requires new disclosures and provides clarification of existing disclosures about fair value measurements.  More specifically, this update requires: (a) an entity to disclose separately the amounts of significant transfers in and out of Levels 1 and 2 fair value measurements and to describe the reasons for the transfers; and (b) information about purchases, sales, issuances and settlements to be presented separately in the reconciliation for fair value measurements using significant unobservable inputs (Level 3 inputs).  This guidance clarifies existing disclosure requirements for the level of disaggregation used for classes of assets and liabilities measured at fair value and requires disclosures about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements using Level 2 and Level 3 inputs.  The update is effective for Griffin in the 2011 second quarter, except for the disclosure requirements related to the purchases, sales, issuances and settlements in the rollforward activity of Level 3 fair value measurements.  Those disclosure requirements will be effective for Griffin in fiscal 2012.  The adoption of this guidance did not have a material impact on Griffin’s consolidated financial statements.

In May 2011, the FASB issued Accounting Standards Update No. 2011-04, “Fair Value Measurement,” which aligns disclosures related to fair value between U.S. GAAP and International Financial Reporting Standards.  The standards update includes changes to the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and changes to the disclosure of information about fair value measurements.  More specifically, the changes clarify the intent of the FASB regarding the application of existing fair value measurements and disclosures as well as changing some particular principles or requirements for measuring fair value or for disclosing information about fair value measurements.   This update is effective for Griffin in the 2012 second quarter.  Griffin is evaluating the impact that the application of this update will have on its consolidated financial statements.

2.     Industry Segment Information

Griffin defines its reportable segments by their products and services, which are comprised of the real estate and landscape nursery segments.  Management operates and receives reporting based upon these segments.  Griffin has no operations outside the United States.  Griffin’s export sales and transactions between segments are not material.

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	For the 13 Weeks Ended,						For the 26 Weeks Ended,
	May 28,  2011			May 29,  2010			May 28,  2011			May 29,  2010
Total net sales and other revenue:
Rental revenue and property sales	$	4,846		$	4,623		$	9,659		$	9,150
Landscape nursery net sales and other revenue	9,262			10,868			9,445			11,147
	$	14,108		$	15,491		$	19,104		$	20,297
Operating profit (loss):
Real estate	$	1,108		$	876		$	1,384		$	836
Landscape nursery	82			33			(1,120		)	(750		)
Industry segment totals	1,190			909			264			86
General corporate expense	(1,186		)	(1,097		)	(2,601		)	(2,278		)
Operating profit (loss)	4			(188		)	(2,337		)	(2,192		)
Interest expense	(1,056		)	(1,141		)	(2,132		)	(2,182		)
Investment income	80			70			91			174
Loss before income tax benefit	$	(972	)	$	(1,259	)	$	(4,378	)	$	(4,200	)

	May 28, 2011		November 27, 2010
Identifiable assets:
Real estate	$	141,259	$	144,458
Landscape nursery	26,668		22,662
Industry segment totals	167,927		167,120
General corporate	11,429		16,031
Total assets	$	179,356	$	183,151

The real estate segment had no revenue from property sales in either the 2011 or 2010 six month periods.  Other revenue of the landscape nursery segment includes $118 and $235 in the 2011 second quarter and 2011 six month period, respectively, from the rental of Imperial’s Florida farm. Other revenue of the landscape nursery segment includes $122 and $244 in the 2010 second quarter and 2010 six month period, respectively, from the rental of Imperial’s Florida farm.  Imperial shut down operations of its Florida farm in fiscal 2009.

3.     Fair Value

Griffin applies the provisions of FASB ASC 820, “Fair Value Measurements and Disclosures” (“ASC 820”), which establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.  An asset or liability’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement.   ASC 820 establishes three levels of inputs that may be used to measure fair value, as follows:

Level 1 applies to assets or liabilities for which there are quoted market prices in active markets for identical assets or liabilities.  Griffin’s available-for-sale securities are considered Level 1 within the fair value hierarchy.

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Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, such as quoted prices for similar assets or liabilities in active markets; quoted prices for assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.  Level 2 liabilities include Griffin’s two interest rate swap derivatives (see Note 8).  The fair values of Griffin’s interest rate swap derivative instruments are based on discounted cash flow models that incorporate the cash flows of the derivatives as well as the current LIBOR rate and swap curve along with other market data.  These inputs are readily available in public markets or can be derived from information available in publicly quoted markets, therefore, Griffin has categorized these derivative instruments as Level 2 within the fair value hierarchy.

On January 8, 2010, Griffin closed on the acquisition of a 120,000 square foot industrial building located in Breinigsville, Pennsylvania (see Note 5).  The acquisition was accounted for in accordance with ASC 805-10 whereby the assets acquired were recorded at their fair values. The fair value of the real estate assets acquired was based upon an independent appraisal, which included the utilization of publicly available data for similar properties.  Therefore, Griffin categorized the real estate assets acquired as Level 2 within the fair value hierarchy.

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.  As of May 28, 2011 and November 27, 2010, Griffin’s consolidated balance sheets include acquired intangible assets related to the building acquisition in Breinigsville, Pennsylvania.  These assets are comprised of the value of the in-place lease and the associated tenant relationship.  Griffin derived these values at the date of acquisition based on a discounted cash flow analysis using assumptions that included the rental rate of the in-place lease, the commission percentage expected to be paid on the leasing of vacant space and other data contained in the independent appraisal.  Therefore, Griffin categorized the acquired intangible assets related to this transaction as Level 3 within the fair value hierarchy.

During the 2011 six month period, Griffin did not transfer any assets or liabilities in or out of Levels 1 and 2. The following are Griffin’s financial assets and liabilities carried at fair value and measured at fair value on a recurring basis:

	May 28, 2011
	Quoted Prices in		Significant		Significant
	Active Markets for		Observable		Unobservable
	Identical Assets		Inputs		Inputs
	(Level 1)		(Level 2)		(Level 3)
Marketable equity securities	$	4,787	$	—	$	—
Interest rate swap liabilities	$	—	$	1,293	$	—

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	November 27, 2010
	Quoted Prices in		Significant		Significant
	Active Markets for		Observable		Unobservable
	Identical Assets		Inputs		Inputs
	(Level 1)		(Level 2)		(Level 3)
Marketable equity securities	$	5,102	$	—	$	—
Interest rate swap liabilities	$	—	$	1,481	$	—

The carrying and estimated fair values of Griffin’s financial instruments are as follows:

	May 28, 2011				November 27, 2010
	Carrying		Estimated		Carrying		Estimated
	Value		Fair Value		Value		Fair Value
Financial assets:
Cash and cash equivalents	$	3,782	$	3,782	$	9,260	$	9,260
Available-for-sale securities	4,787		4,787		5,102		5,102
Financial liabilities:
Revolving line of credit	—		—		—		—
Mortgage debt	62,153		64,221		62,999		65,277
Interest rate swaps	1,293		1,293		1,481		1,481

The fair values of the available-for-sale securities are based on quoted market prices.  The fair values of the mortgage debt are estimated based on current rates offered to Griffin for similar debt of the same remaining maturities, and additionally, Griffin considers its credit worthiness in determining the fair value of its debt.  The fair values of the interest rate swaps (used for purposes other than trading) are determined based on discounted cash flow models that incorporate the cash flows of the derivatives as well as the current LIBOR rate and swap curve along with other market data, taking into account current interest rates and the credit worthiness of the counterparty for assets and the credit worthiness of Griffin for liabilities.

The fair values of Griffin’s nonfinancial assets related to the building acquisition in Breinigsville, Pennsylvania on January 8, 2010, the acquisition date, are listed below.  There were no liabilities assumed in connection with this acquisition.  These assets were initially recorded at fair value but will not be re-measured at fair value unless the assets are deemed to be impaired.

	Quoted Prices in		Significant		Significant
	Active Markets for		Observable		Unobservable
	Identical Assets		Inputs		Inputs
	(Level 1)		(Level 2)		(Level 3)
Real estate held for lease	$	—	$	5,381	$	—
Intangible assets	$	—	$	—	$	1,019

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4.     Inventories

Inventories consist of:

	May 28, 2011		November 27, 2010
Nursery stock	$	13,044	$	14,347
Materials and supplies	1,261		1,181
	$	14,305	$	15,528

In the 2011 six month period, a net charge of $400 is included in costs of landscape nursery sales for excess plant losses, primarily due to the collapse from snow load, during this past winter, of some of Imperial’s hoop houses in which the plants were stored.  In the 2011 first quarter, a charge of $550 was included in costs of landscape nursery sales based on the number of plants estimated at that time that had become unsaleable due to the collapsed hoop houses.  Upon removal of the damaged hoop houses during the 2011 second quarter, which could not have been done earlier due to the winter conditions that existed at the end of the first quarter, management determined that the number of plants affected by the hoop house collapses was lower than previously estimated.  Accordingly, a $250 reduction of the charge for plants that became unsaleable due to hoop house collapses is reflected in costs of landscape nursery sales in the 2011 second quarter.  Costs of landscape nursery sales in the 2011 second quarter also includes a charge of $100 for certain starter plants that were lost due to a plant disease issue.  There were no charges recorded for the damaged hoop houses because they were fully depreciated prior to fiscal 2011.  Initial insurance proceeds of $200, related to the hoop house damage, were received and are reflected as a gain on insurance recovery in the 2011 six month consolidated statement of operations (see Notes 7 and 10).  Imperial continues to work with its insurance carrier to obtain additional recoveries for the losses incurred, and while Imperial believes that additional recoveries are likely to be received, they are not assured at this time.  Additional gain from insurance recoveries would be recorded when it becomes probable that such additional insurance proceeds will be received.

5.     Real Estate Assets

On January 8, 2010, Griffin Land closed on the purchase of a 120,000 square foot industrial building in Breinigsville, Pennsylvania.  Griffin Land paid $6.4 million in cash for the building, including approximately $1.0 million paid as a deposit in the 2009 fourth quarter.  The building is located in a major industrial area of Pennsylvania’s Lehigh Valley and was under a full building lease to Olympus Corporation of the Americas (“Olympus”) at the time of the acquisition.  Griffin Land incurred approximately $0.3 million of acquisition costs on the purchase of this building, which are included in selling, general and administrative expenses on Griffin’s consolidated statement of operations in the 2010 six month period.  Subsequent to the purchase of this building, Griffin Land completed a lease amendment with Olympus that extended the lease term through 2025.  On January 29, 2010, Griffin closed on a $4.3 million nonrecourse mortgage on this building (see Note 8).  This was Griffin Land’s first real estate purchase outside of the Hartford, Connecticut market, where Griffin Land’s core real estate holdings are located.

Based on an independent appraisal of the building acquired, Griffin determined that the fair value of the assets acquired approximated the purchase price.  Of the $6.4 million purchase price, approximately $5.4 million represented the fair value of the real estate held for lease and approximately $1.0 million represented the fair value of the acquired intangible assets, comprised of the value of the in-place lease at the time of purchase and a tenant relationship intangible asset.  The intangible assets are included in other assets on Griffin’s consolidated balance sheets.

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On March 17, 2010, Griffin Land closed on the purchase of approximately 51 acres of undeveloped land in Lower Nazareth, Pennsylvania.  Griffin Land paid approximately $1.8 million in cash plus acquisition expenses, including approximately $0.3 million paid as a deposit in the 2009 fourth quarter.  The undeveloped land is located in a major industrial area of Pennsylvania’s Lehigh Valley and has approvals for the development of two industrial buildings totaling approximately 530,000 square feet.

Real estate held for sale or lease consists of:

	Estimated	May 28, 2011
	Useful Lives	Held for Sale		Held for Lease			Total
Land		$	1,614	$	10,964		$	12,578
Land improvements	10 to 30 years	638		13,374			14,012
Buildings and improvements	10 to 40 years	—		128,729			128,729
Tenant improvements	Shorter of useful life or terms of related lease	—		14,083			14,083
Development costs		6,938		4,645			11,583
		9,190		171,795			180,985
Accumulated depreciation		—		(51,018		)	(51,018		)
		$	9,190	$	120,777		$	129,967

	Estimated	November 27, 2010
	Useful Lives	Held for Sale		Held for Lease			Total
Land		$	1,625	$	10,953		$	12,578
Land improvements	10 to 30 years	691		13,316			14,007
Buildings and improvements	10 to 40 years	—		128,437			128,437
Tenant improvements	Shorter of useful life or terms of related lease	—		13,922			13,922
Development costs		6,798		4,461			11,259
		9,114		171,089			180,203
Accumulated depreciation		—		(48,165		)	(48,165		)
		$	9,114	$	122,924		$	132,038

Included in real estate held for lease as of May 28, 2011 and November 27, 2010 was $2,298 and $2,458, respectively, reflecting the net book value of Imperial’s Florida farm that was shut down in fiscal 2009 and is being leased to another landscape nursery grower.

Total depreciation expense related to real estate held for sale or lease was $1,419 and $1,498 in the 2011 and 2010 second quarters, respectively, and $2,853 and $2,937 in the 2011 and 2010 six month periods, respectively.  There was no capitalized interest in the 2011 and 2010 six month periods.

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6.     Investments

Short-Term Investments

In the 2010 six month period, Griffin sold its remaining short-term investments.  Griffin’s short-term investments were comprised of debt securities and were accounted for as trading securities under FASB ASC 320-10, “Investments - Debt and Equity Securities” (“ASC 320-10”).  Accordingly, the securities were recorded at their fair values based upon quoted market prices at the balance sheet date and net realized and unrealized gains and losses on those investments were included in investment income on Griffin’s consolidated statements of operations.  Investment income in the 2011 and 2010 six month periods consists solely of interest and dividend income.

Centaur Media plc

Griffin’s investment in the common stock of Centaur Media plc (“Centaur Media”) is accounted for as an available-for-sale security under ASC 320.  Accordingly, changes in the fair value of Centaur Media, net of income taxes, along with the effect of changes in the foreign currency exchange rate, net of income taxes, are included in accumulated other comprehensive income (see Note 9).

As of May 28, 2011, the cost, gross unrealized gain and fair value of Griffin’s investment in Centaur Media were $2,677, $2,110 and $4,787, respectively.  As of November 27, 2010, the cost, gross unrealized gain and fair value of Griffin’s investment in Centaur Media were $2,677, $2,425 and $5,102, respectively.

7.     Property and Equipment

Property and equipment consist of:

	Estimated Useful  Lives	May 28, 2011			November 27, 2010
Land		$	437		$	437
Land improvements	10 to 20 years	1,561			1,561
Buildings and improvements	10 to 40 years	1,842			1,842
Machinery and equipment	3 to 20 years	11,980			11,849
		15,820			15,689
Accumulated depreciation		(13,562		)	(13,326		)
		$	2,258		$	2,363

In the 2011 first quarter, as a result of winter storms, some of Imperial’s hoop houses collapsed and a portion of the plants stored in the damaged hoop houses became unsaleable.  There was no charge to earnings for the damaged hoop houses because they were fully depreciated prior to the start of fiscal 2011.  A gain on insurance recovery of $200 related to insurance proceeds received for the damaged hoop houses is included in Griffin’s 2011 six month consolidated statement of operations.  Imperial continues to work with its insurance carrier to obtain additional recoveries for the losses incurred, and while Imperial believes that additional recoveries are likely to be received, they are not assured at this time.

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Additional gain from insurance recoveries would be recorded when it becomes probable that such additional proceeds will be received (see Notes 4 and 10).

Griffin did not incur any new capital lease obligations in either the 2011 or 2010 six month periods.

8.     Long-Term Debt

Long-term debt includes:

	May 28, 2011			November 27, 2010
Nonrecourse mortgages:
6.08%, due January 1, 2013	$	7,069		$	7,190
6.30%, due May 1, 2014	552			635
5.73%, due July 1, 2015	19,581			19,758
8.13%, due April 1, 2016	4,405			4,547
7.0%, due October 1, 2017	6,343			6,444
Variable rate mortgage, due February 1, 2019*	11,738			11,845
Variable rate mortgage, due July 1, 2019*	8,262			8,333
5.25%, due January 28, 2020	4,203			4,247
Total nonrecourse mortgages	62,153			62,999
Revolving line of credit	—			—
Capital leases	20			38
Total	62,173			63,037
Less: current portion	(8,605		)	(1,742		)
Total long-term debt	$	53,568		$	61,295

* Griffin entered into interest rate swap agreements effectively to fix the interest rates on these loans (see below).

On April 28, 2011, Griffin closed on a new $12.5 million revolving line of credit (the “2011 Credit Line”) with Doral Bank.  This 2011 Credit Line replaced the $10 million revolving line of credit with Doral Bank that was originally scheduled to expire on March 1, 2011, but was extended until the 2011 Credit Line was completed.  The 2011 Credit Line has a two year term with a company option for a third year and interest at the higher of prime plus 1.5% or 5.875%.  The 2011 Credit Line is collateralized by the same properties that collateralized the expired revolving line of credit plus a 40,000 square foot office building in Griffin Center South that was unencumbered.  In the 2011 six month period, there were no outstanding borrowings under the $10 million revolving line of credit that expired during the period or under the new 2011 Credit Line.

On January 29, 2010, Griffin closed on a $4.3 million nonrecourse mortgage with First Niagara Bank (formerly NewAlliance Bank), collateralized by the 120,000 square foot industrial building in Breinigsville, Pennsylvania that was acquired earlier that month.  This mortgage has a ten-year term and originally had a fixed interest rate of 6.5% with monthly principal and interest payments based on a twenty-five year amortization schedule.  Effective November 1, 2010, based on a request by Griffin to reduce the interest rate on the loan in a more favorable interest rate environment, Griffin and First Niagara Bank entered into a loan modification agreement, whereby the interest rate was reduced from 6.5% to 5.25% for the remainder of the loan in exchange for a payment of $0.2 million by Griffin.  The loan modification did not change the loan’s maturity date.

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Through January 31, 2010, the variable rate mortgage due February 1, 2019 with Berkshire Bank (the “Berkshire Bank Loan”) functioned as a construction loan, with Griffin Land drawing funds as construction progressed on a new warehouse in New England Tradeport (“Tradeport”), Griffin Land’s industrial park in Windsor and East Granby, Connecticut.  The interest rate during the construction period of the loan was the greater of 2.75% above the thirty day LIBOR rate or 4%.  Payments during that period were for interest only.  On February 1, 2010, the Berkshire Bank Loan converted to a nine-year nonrecourse mortgage collateralized by the new warehouse facility built in Tradeport, with monthly payments of principal and interest starting on March 1, 2010, based on a twenty-five year amortization schedule.  At the time Griffin closed the Berkshire Bank Loan, Griffin also entered into an interest rate swap agreement with the bank for a notional principal amount of $12 million at inception to fix the interest rate at 6.35% for the final nine years of the loan.  Payments under the swap agreement commenced on March 1, 2010 and will continue monthly until February 1, 2019, which is also the termination date of the Berkshire Bank Loan.

Griffin is also party to an interest rate swap agreement related to its nonrecourse mortgage, due on July 1, 2019, on four industrial buildings in Tradeport.   Griffin accounts for both of its interest rate swap agreements as effective cash flow hedges (see Note 3).  No ineffectiveness on the cash flow hedges was recognized as of May 28, 2011 and none is anticipated over the term of the agreements.  Amounts in other comprehensive income will be reclassified into interest expense over the term of the swap agreements to achieve fixed rates on each mortgage.  Neither of the interest rate swap agreements contains any credit risk related contingent features.  In the 2011 six month period, Griffin recognized a gain of $188 and in the 2010 six month period, Griffin recognized a loss of $27 (included in other comprehensive income), before taxes, on its interest rate swap agreements.  In the 2011 second quarter and 2011 six month period, the amounts of loss recognized on the effective portion of the interest rate swap agreements were $165 and $335, respectively.  In the 2010 second quarter and 2010 six month period, the amounts of loss recognized on the effective portion of the interest rate swap agreements were $170 and $240, respectively.  As of May 28, 2011, $652 is expected to be reclassified over the next twelve months from other comprehensive income to interest expense.  As of May 28, 2011, the liability for Griffin’s interest rate swap agreements was $1,293 and is included in other noncurrent liabilities on Griffin’s consolidated balance sheet.

As of May 28, 2011, the entire balance (approximately $7.1 million) of Griffin’s 6.08% nonrecourse mortgage due January 1, 2013 is included in the current portion of long-term debt.  Griffin has classified this mortgage as current because, for the twelve month period ending December 31, 2011, Griffin expects that the ratio of the net operating income, as defined in the mortgage agreement, of the buildings that collateralize the mortgage, to the debt service of the mortgage (the “debt service coverage covenant”) will be less than the 1.25 required under the mortgage.  The debt service coverage covenant for the twelve months ended December 31, 2010 was waived by the bank as Griffin would not have been in compliance at that measurement date.  Griffin currently expects to obtain a waiver from the bank for the debt service coverage covenant for the twelve months ending December 31, 2011, prior to that date, although there can be no such assurance that the bank will grant such a waiver.

9.     Stockholders’ Equity

Earnings Per Share

Basic and diluted per share results were based on the following:

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	For the 13 Weeks Ended,						For the 26 Weeks Ended,
	May 28, 2011			May 29, 2010			May 28, 2011			May 29, 2010
Net loss as reported for computation of basic and diluted per share results	$	(629	)	$	(785	)	$	(2,758	)	$	(2,629	)
Weighted average shares outstanding for computation of basic and diluted per share results (a)	5,128,000			5,103,000			5,126,000			5,101,000

(a) Incremental shares from the assumed exercise of Griffin stock options are not included in periods where the inclusion of such shares would be anti-dilutive. The incremental shares from the assumed exercise of stock options in the thirteen and twenty-six weeks ended May 28, 2011 would have been 9,000 for each period, respectively. The incremental shares from the assumed exercise of stock options in the thirteen and twenty-six weeks ended May 29, 2010 would have been 19,000 and 20,000, respectively.

Griffin Stock Option Plan

Stock options are granted by Griffin under the Griffin Land & Nurseries, Inc. 2009 Stock Option Plan (the “2009 Stock Option Plan”).  Options granted under the 2009 Stock Option Plan may be either incentive stock options or non-qualified stock options issued at fair market value on the date approved by Griffin’s Compensation Committee. Vesting of all of Griffin’s previously issued stock options is solely based upon service requirements and does not contain market or performance conditions.  Stock options issued will expire ten years from the grant date.  In accordance with the 2009 Stock Option Plan, stock options issued to non-employee directors upon their initial election to the board of directors are fully exercisable immediately upon the date of the option grant. Stock options issued to non-employee directors upon their reelection to the board of directors vest on the second anniversary from the date of grant. Stock options issued to employees vest in equal installments on the third, fourth and fifth anniversaries from the date of grant. None of the stock options outstanding at May 28, 2011 may be exercised as stock appreciation rights.

In the 2011 six month period, 113,212 stock options were granted by Griffin under the 2009 Stock Option Plan, reflecting 104,500 stock options granted to employees and 8,712 stock options granted to non-employee directors upon their re-election to Griffin’s Board of Directors at the 2011 Annual Meeting of Stockholders.  There were 8,202 stock options issued in the 2010 six month period to non-employee directors upon their reelection to Griffin’s Board of Directors at the 2010 Annual Meeting of Stockholders.  The fair values of the stock options granted in the 2011 six month period were $12.88 for 87,500 options, $10.37 for 17,000 options and $12.03 for 8,712 stock options.  The fair value of the stock options granted in the 2010 six month period was $13.48 each.  The fair values of all options granted were estimated as of the grant date using the Black-Scholes option-pricing model.  Assumptions used in determining the fair value of the stock options granted in the 2011 and 2010 six month periods were as follows:

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	For the 26 Weeks Ended,
	May 28, 2011	May 29, 2010
Expected volatility	42.0% to 43.4%	42.3%
Risk free interest rate	2.06% to 2.81%	3.0%
Expected option term	5 to 8.5 years	8.5 years
Annual dividend yield	$0.40	$0.40

Activity under the Griffin Stock Option Plan is summarized as follows:

	For the 26 Weeks Ended,
	May 28, 2011				May 29, 2010
Vested Options	Number of  Shares		Weighted  Avg.  Exercise  Price		Number of  Shares		Weighted  Avg.  Exercise  Price
Outstanding at beginning of period	45,730		$	23.18	71,133		$	17.61
Exercised	(10,667	)	$	17.45	(12,000	)	$	11.35
Vested	16,847		$	31.08	3,528		$	34.00
Outstanding at end of period	51,910		$	26.92	62,661		$	19.73

Range of Exercise  Prices for Vested  Options	Outstanding at May 28, 2011	Weighted Avg. Exercise Price		Weighted Avg. Remaining  Contractual Life  (in years)	Total  Intrinsic  Value		Total  Grant Date  Fair Value
$11.00-$14.00	6,776	$	11.81	2.0	$	90	$	35
$15.00-$18.00	5,322	$	15.03	1.0	53		38
$24.00-$39.00	39,812	$	31.09	6.1	—		597
	51,910	$	26.92	5.1	$	143	$	670

	For the 26 Weeks Ended,
	May 28, 2011				May 29, 2010
Nonvested Options	Number of  Shares		Weighted  Avg.  Exercise  Price		Number of  Shares		Weighted  Avg.  Exercise  Price
Nonvested at beginning of period	103,881		$	32.56	101,377		$	32.84
Granted	113,212		$	28.68	8,202		$	29.25
Vested	(16,847	)	$	31.08	(3,528	)	$	34.00
Nonvested at end of period	200,246		$	30.49	106,051		$	32.52

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Range of Exercise  Prices for  Nonvested Options	Outstanding at  May 28, 2011	Weighted Avg. Exercise Price		Weighted Avg.  Remaining  Contractual Life  (in years)	Total  Intrinsic  Value		Total  Grant Date  Fair Value
$27.00-$31.00	123,579	$	28.75	9.6	$	—	$	1,553
$33.00-$35.00	76,667	$	33.28	7.4	—		1,064
	200,246	$	30.49	8.7	$	—	$	2,617

Number of option holders at May 28, 2011 19

Compensation expense for stock options recognized in the 2011 second quarter and 2011 six month period was $162 and $277, respectively, with related tax benefits of $41 and $71, respectively.  Compensation expense for stock options recognized in the 2010 second quarter and 2010 six month period was $94 and $186, respectively, with related tax benefits of $24 and $47, respectively.  As of May 28, 2011, the unrecognized compensation expense related to nonvested stock options that will be recognized during future periods is as follows:

Balance of Fiscal 2011	$	320
Fiscal 2012	514
Fiscal 2013	376
Fiscal 2014	199
Fiscal 2015	91
Fiscal 2016	13
	$	1,513

Accumulated Other Comprehensive Income

Changes in accumulated other comprehensive income in the 2011 and 2010 six month periods consist of the following:

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	For the 26 Weeks Ended,
	May 28, 2011			May 29, 2010
Balance at beginning of period	$	1,007		$	926
Increase (decrease) in fair value of cash flow hedges, net of taxes of $69 and ($11), respectively	119			(16		)
Decrease in fair value of Centaur Media, net of taxes of ($201) and ($167), respectively	(374		)	(311		)
Increase (decrease) in fair value of Centaur Media due to exchange gain (loss), net of taxes of $91 and ($180), respectively	169			(334		)
Balance at end of period	$	921		$	265
Accumulated other comprehensive income is comprised of the following:
	May 28, 2011			November 27, 2010
Unrealized gain on investment in Centaur Media	$	1,417		$	1,622
Unrealized loss on cash flow hedges	(815		)	(934		)
Actuarial gain on postretirement benefits plan	319			319
	$	921		$	1,007

Cash Dividend

In both the 2011 and 2010 six month periods, Griffin declared two cash dividends of $0.10 per common share each.

10.   Supplemental Financial Statement Information

Gain on Insurance Recovery

In the 2011 six month period, snow load from winter storms caused the collapse of some of Imperial’s hoop houses and some of the plants stored in the hoop houses to become unsaleable.  A charge of $300 is included in costs of landscape nursery sales in the 2011 six month period to reserve for the book value of inventory that became unsaleable.  There was no charge to earnings related to the damage to the hoop houses because they were fully depreciated prior to fiscal 2011.  Initial insurance proceeds of $200, related to the hoop house damage, have been received and are reflected as a gain on insurance recovery on the 2011 six month consolidated statement of operations.   Imperial continues to work with its insurance carrier to obtain additional recoveries for the losses incurred, and while Imperial believes that additional recoveries are likely to be received, they are not assured at this time.  Additional gain from insurance recoveries would be recorded when it becomes probable that such additional insurance proceeds will be received (see Notes 4 and 7).

Supplemental Cash Flow Information

Decreases of $315 and $992, respectively, in the 2011 and 2010 six month periods in Griffin’s Investment in Centaur Media reflect the mark to market adjustments of this investment and did not affect Griffin’s cash.

Included in accounts payable and accrued liabilities at May 28, 2011 and November 27, 2010 were $203 and $194, respectively, for additions to real estate held for sale or lease.  Accounts payable and

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accrued liabilities related to additions to real estate held for sale or lease increased by $9 and $384 in the 2011 and 2010 six month periods, respectively.

As of May 28, 2011, included in Griffin’s accrued liabilities is a dividend payable of $513 reflecting a dividend on Griffin’s common stock declared prior to the end of the 2011 second quarter that was paid subsequent to the end of Griffin’s 2011 second quarter.  As of November 27, 2010, Griffin’s accrued liabilities included $512 for a dividend on Griffin’s common stock that was declared prior to the end of fiscal 2010 and paid in the 2011 first quarter.

Interest payments, net of capitalized interest, were $1,023 and $1,062 in the 2011 and 2010 second quarters, respectively, and $2,023 and $1,974 in the 2011 and 2010 six month periods, respectively.

Income Taxes

Griffin’s effective income tax benefit rate was 37.0% in the 2011 six month period as compared to 37.4% in the 2010 six month period.  The effective tax benefit rate used in the 2011 six month period is based on management’s projections for the balance of the year.  To the extent that actual results differ from current projections, the effective income tax rate may change.

Increases to deferred tax assets of $110 and $347, respectively, in the 2011 and 2010 six month periods relate to the mark to market adjustment on Griffin’s investment in Centaur Media.  A decrease to deferred tax assets of $69 in the 2011 six month period and an increase to deferred tax assets of $11 in the 2010 six month period relate to the fair value adjustment of Griffin’s cash flow hedges.  These increases and decreases to deferred tax assets are included as charges and credits, respectively, in Griffin’s total comprehensive loss for the 2011 and 2010 six month periods.

As of May 28, 2011, Griffin’s consolidated balance sheet includes a net current deferred tax asset of $423 and a net noncurrent deferred tax asset of $2,814.  Although Griffin has incurred pretax losses for the fiscal years ended November 29, 2008, November 28, 2009 and November 27, 2010, management has concluded that a valuation allowance against those net deferred tax assets is not required, because management believes it is more likely than not that these deferred tax assets will be realized.

Examinations of Griffin’s fiscal 2009 Federal income tax return, Griffin’s fiscal 2007, fiscal 2008 and fiscal 2009 New York state income tax returns and Griffin’s fiscal 2007 Connecticut state income tax return are currently being performed.

Postretirement Benefits

Griffin maintains a postretirement benefits program that provides principally health and life insurance benefits to certain of its retirees. The liability for postretirement benefits is included in other noncurrent liabilities on Griffin’s consolidated balance sheets. Griffin’s postretirement benefits program is unfunded, with benefits to be paid from Griffin’s general assets.  Griffin’s contributions to its postretirement benefits program were $1 and $2, respectively, in the 2011 and 2010 six month periods with an expected contribution of $2 for the fiscal 2011 full year.  The components of Griffin’s postretirement benefits expense are immaterial for all periods presented.

11.   Commitments and Contingencies

As of May 28, 2011, Griffin had committed purchase obligations of $1.0 million, principally for the purchase of plants and raw materials by Imperial and for master planning of Griffin Land’s industrial properties.

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Griffin is involved, as a defendant, in various litigation matters arising in the ordinary course of business.  In the opinion of management, based on the advice of counsel, the ultimate liability, if any, with respect to these matters is not expected to be material, individually or in the aggregate, to Griffin’s consolidated financial position, results of operations or cash flows.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

The unaudited consolidated financial statements of Griffin Land & Nurseries, Inc. (“Griffin”) include the accounts of Griffin’s real estate business (“Griffin Land”) and Griffin’s wholly-owned subsidiary in the landscape nursery business, Imperial Nurseries, Inc. (“Imperial”).

The significant accounting policies and methods used in the preparation of Griffin’s consolidated financial statements included in Item 1 are consistent with those used in the preparation of Griffin’s audited financial statements for the fiscal year ended November 27, 2010 included in Griffin’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission.

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses in the reporting period.  Griffin regularly evaluates estimates and assumptions related to the useful life and recoverability of long-lived assets, stock-based compensation expense, deferred income tax asset valuations, valuation of derivative instruments, the recoverability of its accounts receivable and inventory reserves.  Griffin bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by Griffin may differ materially and adversely from Griffin’s estimates.  To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.  The significant accounting estimates used by Griffin in preparation of its financial statements for the thirteen and twenty-six weeks ended May 28, 2011 are consistent with those used by Griffin to prepare its fiscal 2010 financial statements.

Summary

Griffin incurred a net loss of approximately $0.6 million in the thirteen weeks ended May 28, 2011 (the “2011 second quarter”) as compared to a net loss of approximately $0.8 million in the thirteen weeks ended May 29, 2010 (“2010 second quarter”).  The lower net loss in the 2011 second quarter as compared to the 2010 second quarter reflects an increase in consolidated operating results and slightly lower interest expense, partially offset by a lower income tax benefit in the 2011 second quarter.  The improved consolidated operating results reflects an increase of approximately $0.2 million in operating profit at Griffin Land, partially offset by an increase of approximately $0.1 million in general corporate expense in the 2011 second quarter as compared to the 2010 second quarter.  Imperial’s operating results were slightly higher in the 2011 second quarter as compared to the 2010 second quarter.  The increase in operating profit at Griffin Land in the 2011 second quarter was principally due to higher rental revenue.  Griffin’s general corporate expense was higher in the 2011 second quarter principally due to higher expenses related to Griffin’s non-qualified deferred compensation plan.  The lower interest expense in the 2011 second quarter reflects lower outstanding debt in the 2011 second quarter.   The lower income tax benefit in the 2011 second quarter reflects the lower pretax loss in the 2011 second quarter.

Griffin incurred a net loss of approximately $2.8 million for the twenty-six weeks ended May 28, 2011 (the “2011 six month period”) as compared to a net loss of approximately $2.6 million for the twenty-six weeks ended May 29, 2010 (the “2010 six month period”).  The higher net loss in the 2011 six

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month period as compared to the 2010 six month period principally reflects a higher consolidated operating loss incurred by Griffin and lower investment income, partially offset by lower interest expense and a higher income tax benefit.  Griffin’s higher consolidated operating loss in the 2011 six month period as compared to the 2010 six month period reflects an increase of approximately $0.4 million in the operating loss incurred by Imperial and an increase of approximately $0.3 million in general corporate expense, partially offset by an increase of approximately $0.5 million in operating profit at Griffin Land.  The higher operating loss incurred by Imperial in the 2011 six month period principally reflects charges for plants that became unsaleable, primarily due to the collapse, from snow load, of certain hoop houses in which those plants were stored over the winter.  The higher operating profit at Griffin Land in the 2011 six month period principally reflects higher rental revenue from its leasing operations.  The higher general corporate expense in the 2011 six month period principally reflects higher costs related to Griffin’s non-qualified deferred compensation plan.  The lower investment income in the 2011 six month period principally reflects timing of dividend income from Centaur.  The lower interest expense in the 2011 six month period reflects lower outstanding debt in the 2011 six month period.   The higher income tax benefit in the 2011 six month period reflects the higher pretax loss in the 2011 six month period.

Results of Operations

Thirteen Weeks Ended May 28, 2011 Compared to the Thirteen Weeks Ended May 29, 2010

Griffin’s consolidated total revenue decreased from approximately $15.5 million in the 2010 second quarter to approximately $14.1 million in the 2011 second quarter.  The net decrease of approximately $1.4 million reflects a decrease of approximately $1.6 million in revenue at Imperial, partially offset by an increase of approximately $0.2 million in revenue at Griffin Land.

Total revenue at Griffin Land increased from approximately $4.6 million in the 2010 second quarter to $4.8 million in the 2011 second quarter.  The increase of approximately $0.2 million was due to an increase in rental revenue, reflecting: (a) approximately $0.4 million of rental revenue from space under lease for the entire 2011 second quarter as compared to that space being leased for only a portion of the 2010 second quarter or having leases that started subsequent to the end of the 2010 second quarter; partially offset by (b) an approximately $0.2 million reduction in rental revenue as a result of leases that expired subsequent to the 2010 second quarter and were not renewed.

A summary of the square footage of Griffin Land’s real estate portfolio is as follows:

	TotalSquareFootage	SquareFootageLeased	PercentageLeased
As of May 28, 2011	2,540,000	2,031,000	80%
As of November 27, 2010	2,540,000	2,029,000	80%
As of May 29, 2010	2,540,000	2,067,000	81%

The slight increase in square footage leased as of May 28, 2011 as compared to November 27, 2010 reflects a new lease for approximately 11,000 square feet of previously vacant office/flex space that was completed in the 2011 second quarter, partially offset by a reduction of approximately 9,000 square feet of office space under a lease that had been for the entire approximately 23,000 square foot building in Griffin Center South.  That tenant remains in approximately 14,000 square feet in that building on a short-term lease.  In the first half of fiscal 2011, Griffin Land renewed several leases of industrial space aggregating approximately 164,000 square feet and two leases of office/flex space aggregating approximately 19,000 square feet, although one of the lease renewals for office/flex space will result in a reduction of approximately 5,000 square feet under that lease in the 2011 third quarter.  All of the leases

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that were renewed were scheduled to expire this year, except for a lease of approximately 9,000 square feet of office/flex space that was not scheduled to expire until the end of next year.  Although market activity for industrial and office/flex space has been weak over the past two years, recently, Griffin Land has had an increase in market activity, as evidenced by an increase in requests for proposals from prospective tenants.  There is no guarantee that the recent increase in requests for proposals from prospective tenants will result in the signing of new leases for currently vacant office/flex or industrial space.

Griffin Land had no property sales revenue in either the 2011 or the 2010 second quarters.  Property sales occur periodically and changes in revenue from year to year from those transactions may not be indicative of any trends in the real estate business.

Net sales and other revenue at Imperial decreased from approximately $10.9 million in the 2010 second quarter to approximately $9.3 million in the 2011 second quarter.  Imperial’s landscape nursery business is highly seasonal, with second quarter sales historically comprising a majority of its annual sales.  The lower net sales in the 2011 second quarter as compared to the 2010 second quarter principally reflects a change in the product mix available for sale in the 2011 second quarter as compared to the 2010 second quarter and an 11% decline in unit sales volume in the 2011 second quarter as compared to the 2010 second quarter.  The change in product mix reflects an increase in smaller size plants with longer bloom times that provide more color, such as perennials, and a decrease in larger size plants, particularly rhododendron.  The reduction in larger size plants reflects planned changes made to Imperial’s production of such product over the past couple of years, which due to their longer growing cycles first affected the current year.  Additionally, smaller size plants generally have lower selling prices, which is reflected in the decrease in net sales from the 2010 second quarter to the 2011 second quarter. The changes in product mix were made to bring Imperial’s inventory level and plant varieties offered for sale more in line with expected demand.  The effect on net sales of the decrease in unit sales volume and selling, on average, smaller size plants in the 2011 second quarter as compared to the 2010 second quarter was partially offset by improved pricing in the 2011 second quarter.  The improved pricing reflects having more product with longer bloom time and having fewer larger size units available for sale.  This enabled Imperial to ship a higher percentage of its product to its garden center customer segment, which generally provides Imperial higher pricing than other customer segments.  Net sales to Imperial’s garden center customer segment increased from 58% in the 2010 second quarter to 64% in the 2011 second quarter.

Griffin’s consolidated operating results, including general corporate expense, were break-even in the 2011 second quarter, as compared to a consolidated operating loss, including general corporate expense, of approximately $0.2 million in the 2010 second quarter.  Imperial had an operating profit of approximately $0.1 million in the 2011 second quarter, as compared to essentially break-even operating results in the 2010 second quarter.  Griffin Land had an operating profit of approximately $1.1 million in the 2011 second quarter as compared to approximately $0.9 million in the 2010 second quarter.  Griffin’s general corporate expense increased to approximately $1.2 million in the 2011 second quarter from approximately $1.1 million in the 2010 second quarter.

Operating profit at Griffin Land in the 2011 and 2010 second quarters were as follows:

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	2011			2010
	Second Qtr.			Second Qtr.
	(amounts in thousands)
Rental revenue	$	4,846		$	4,623
Costs related to rental revenue excluding depreciation and amortization expense (a)	(1,553		)	(1,560		)
Profit from leasing activities before general and administrative expenses and before depreciation and amortization expense (a)	3,293			3,063
Revenue from property sales	—			—
Costs related to property sales	—			—
Gain from property sales	—			—
Profit from leasing activities and gain from property sales before general and administrative expenses and before depreciation and amortization expense (a)	3,293			3,063
General and administrative expenses excluding depreciation and amortization expense and excluding acquisition expenses (a)	(658		)	(593		)
Acquisition expenses	—			—
Total general and administrative expenses excluding depreciation and amortization expense (a)	(658		)	(593		)
Profit before depreciation and amortization expense (a)	2,635			2,470
Depreciation and amortization expense related to costs of rental revenue	(1,522		)	(1,587		)
Depreciation and amortization expense - other	(5		)	(7		)
Operating profit	$	1,108		$	876

(a)The costs related to rental revenue excluding depreciation and amortization expense, profit from leasing activities before general and administrative expenses and before depreciation and amortization expense, profit from leasing activities and gain from property sales before general and administrative expenses and before depreciation and amortization expense, general and administrative expenses excluding depreciation and amortization expense and excluding acquisition expenses, total general and administrative expenses excluding depreciation and amortization expense and profit before depreciation and amortization expense are disclosures not in conformity with accounting principles generally accepted in the United States of America.  They are presented because Griffin believes they are useful financial indicators for measuring results of its real estate business segment.  However, they should not be considered as an alternative to operating profit as a measure of operating results in accordance with accounting principles generally accepted in the United States of America.  The aggregate of: (i) costs related to rental revenue excluding depreciation and amortization expense; (ii) costs related to property sales; and (iii) depreciation and amortization expense related to costs of rental revenue, equals the costs related to rental revenue and property sales as reported on Griffin’s consolidated statement of operations.

Profit from leasing activities before general and administrative expenses and before depreciation and amortization expense increased by approximately $0.2 million in the 2011 second quarter as compared to the 2010 second quarter, due principally to the increase in rental revenue.  Costs related to

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rental revenue excluding depreciation and amortization expense were essentially unchanged in the 2011 second quarter as compared to the 2010 second quarter.

Griffin Land’s general and administrative expenses were slightly higher in the 2011 second quarter as compared to the 2010 second quarter due principally to the timing of the expenses.  Depreciation and amortization expense at Griffin Land decreased slightly in the 2011 second quarter as compared to the 2010 second quarter, due principally to certain tenant improvements becoming fully depreciated.

Imperial’s operating results in the 2011 and 2010 second quarters were as follows:

	2011			2010
	Second Qtr.			Second Qtr.
	(amounts in thousands)
Net sales and other revenue	$	9,262		$	10,868
Cost of goods sold	8,035			9,620
Gross profit	1,227			1,248
Selling, general and administrative expenses	(1,145		)	(1,215		)
Operating profit	$	82		$	33

The slight increase in operating results at Imperial in the 2011 second quarter as compared to the 2010 second quarter principally reflects an approximately $0.1 million decrease in selling, general and administrative expenses.  Imperial’s gross profit was essentially unchanged in the 2011 second quarter as compared to the 2010 second quarter.  The effect on gross profit from the approximately $1.6 million decrease in net sales and other revenue in the 2011 second quarter as compared to the 2010 second quarter was offset by several factors:  (a) overall pricing improvement in the 2011 second quarter as compared to the 2010 second quarter;  (b) cost of goods sold in the 2011 second quarter included a net credit of approximately $0.2 million to reduce the charge of approximately $0.6 million recorded in the first quarter for the estimated number of plants that became unsaleable due to the collapse of hoop houses from  snow load this past winter because the actual number of plants that became unsaleable was lower than previously estimated and; (c) the 2010 second quarter cost of goods sold included approximately $0.1 million for retrospective insurance charges for workers’ compensation policies for previous years; partially offset by higher costs of plants sold.  Gross margins on sales from its Connecticut farm, excluding the effect of the net credit of approximately $0.2 million included in the 2011 second quarter, decreased from 12.7% in the 2010 second quarter to 11.4% in the 2011 second quarter, as the effect of higher costs more than offset the benefit from improved pricing.  The higher costs reflect an increase in both per unit plant costs and per unit loading and handling costs, as cost reductions were not proportional to the reduction in sales value from the change in product mix.

Imperial’s selling, general and administrative expenses were lower in the 2011 second quarter as compared to the 2010 second quarter due principally to lower commission expenses as a result of the lower net sales in the 2011 second quarter and the inclusion in the 2010 second quarter of severance costs related to reduction of Imperial’s sales force.

Griffin’s general corporate expense increased from approximately $1.1 million in the 2010 second quarter to approximately $1.2 million in the 2011 second quarter, principally due to an increase in expenses related to Griffin’s non-qualified deferred compensation plan.  The higher expenses of the non-qualified deferred compensation plan reflect an increase in participants’ account balances due to a general increase in overall stock market performance, which is reflected in the value of participants’ balances.

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Griffin’s consolidated interest expense decreased from approximately $1.1 million in the 2010 second quarter to approximately $1.0 million in the 2011 second quarter.  The lower interest expense reflects Griffin’s average outstanding debt being approximately $62.4 million in the 2011 second quarter as compared to approximately $66.6 million in the 2010 second quarter.  The lower average debt principally reflects there not being any borrowings outstanding under Griffin’s revolving line of credit in the 2011 second quarter as compared to $2.5 million of borrowings outstanding under Griffin’s revolving line of credit during the 2010 second quarter.

Griffin’s investment income of approximately $0.1 million in the 2011 second quarter was essentially unchanged from the 2010 second quarter.

Griffin’s effective income tax benefit rate was 35.3% in the 2011 second quarter as compared to 37.6% in the 2010 second quarter.  The slightly lower effective income tax benefit rate in the 2011 second quarter is due to the effect of changes in state income taxes.  The effective income tax benefit rate for the 2011 second quarter is based on management’s projections of operating results for the full year.  To the extent that actual results differ from current projections, the effective income tax benefit rate may change.

Twenty-Six Weeks Ended May 28, 2011 Compared to the Twenty-Six Weeks Ended May 29, 2010

Griffin’s consolidated total revenue decreased from approximately $20.3 million in the 2010 six month period to approximately $19.1 million in the 2011 six month period.   The net decrease of approximately $1.2 million reflects a decrease of approximately $1.7 million in revenue at Imperial, partially offset by an increase of approximately $0.5 million in revenue at Griffin Land.

Total revenue at Griffin Land increased from approximately $9.2 million in the 2010 six month period to approximately $9.7 million in the 2011 six month period. The increase of approximately $0.5 million was due to an increase in rental revenue, reflecting: (a) approximately $0.7 million of rental revenue from space under lease in the 2011 six month period that was vacant for part or all of the 2010 six month period; and (b) an increase of approximately $0.1 million of rental revenue from owning the 120,000 square foot industrial building in Pennsylvania for the entire 2011 six month period as compared to a portion of the 2010 six month period; partially offset by (c) an approximately $0.3 million reduction in rental revenue as a result of leases that expired subsequent to the 2010 six month period and were not renewed.

Griffin Land had no property sales revenue in either the 2011 or the 2010 six month periods.  Property sales occur periodically and changes in revenue from year to year from those transactions may not be indicative of any trends in the real estate business.

Net sales and other revenue at Imperial decreased from approximately $11.1 million in the 2010 six month period to approximately $9.4 million in the 2011 six month period.  Due to the seasonality of the landscape nursery business, Imperial’s total sales and other revenue in the second quarter, which is comprised of the spring months of March, April and May, accounts for approximately 98% of Imperial’s total net sales and other revenue for the six month period.  Accordingly, the factors that affected the decrease in Imperial’s net sales and other revenue in the 2011 six month period as compared to the 2010 six month period are the same as those discussed above with respect to the decrease in revenue in the 2011 second quarter as compared to the 2010 second quarter.

Griffin incurred a consolidated operating loss, including general corporate expense, of approximately $2.3 million in the 2011 six month period as compared to a consolidated operating loss, including general corporate expense, of approximately $2.2 million in the 2010 six month period.  The slightly higher operating loss in the 2011 six month period principally reflects an increase of approximately $0.4 million in the operating loss incurred by Imperial and an increase of approximately

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$0.3 million in general corporate expense, partially offset by an increase of approximately $0.5 million in operating profit at Griffin Land.

Operating profit at Griffin Land in the 2011 and 2010 six month periods were as follows:

	2011			2010
	Six Month			Six Month
	Period			Period
	(amounts in thousands)
Rental revenue	$	9,659		$	9,150
Costs related to rental revenue excluding depreciation and amortization expense (a)	(3,842		)	(3,555		)
Profit from leasing activities before general and administrative expenses and before depreciation and amortization expense (a)	5,817			5,595
Revenue from property sales	—			—
Costs related to property sales	—			—
Gain from property sales	—			—
Profit from leasing activities and gain from property sales before general and administrative expenses and before depreciation and amortization expense (a)	5,817			5,595
General and administrative expenses excluding depreciation and amortization expense and excluding acquisition expenses (a)	(1,366		)	(1,336		)
Acquisition expenses	—			(301		)
Total general and administrative expenses excluding depreciation and amortization expense (a)	(1,366		)	(1,637		)
Profit before depreciation and amortization expense (a)	4,451			3,958
Depreciation and amortization expense related to costs of rental revenue	(3,057		)	(3,109		)
Depreciation and amortization expense - other	(10		)	(13		)
Operating profit	$	1,384		$	836

(a)The costs related to rental revenue excluding depreciation and amortization expense, profit from leasing activities before general and administrative expenses and before depreciation and amortization expense, profit from leasing activities and gain from property sales before general and administrative expenses and before depreciation and amortization expense, general and administrative expenses excluding depreciation and amortization expense and excluding acquisition expenses, total general and administrative expenses excluding depreciation and amortization expense and profit before depreciation and amortization expense are disclosures not in conformity with accounting principles generally accepted in the United States of America.  They are presented because Griffin believes they are useful financial indicators for measuring the results of its real estate business segment.  However, they should not be considered as an alternative to operating profit as a measure of operating results in accordance with accounting

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principles generally accepted in the United States of America.  The aggregate of: (i) costs related to rental revenue excluding depreciation and amortization expense; (ii) costs related to property sales; and (iii) depreciation and amortization expense related to costs of rental revenue, equals the costs related to rental revenue and property sales as reported on Griffin’s consolidated statement of operations.

The increase of approximately $0.2 million in Griffin Land’s profit from leasing activities before general and administrative expenses and before depreciation and amortization expense principally reflects the approximately $0.5 million increase in rental revenue, partially offset by an increase of approximately $0.3 million in costs related to rental revenue excluding depreciation and amortization expense.  The increase in costs related to rental revenue excluding depreciation and amortization expense principally reflects higher snow removal expenses incurred during the winter months in the early part of the 2011 six month period, higher utility expenses and an increase in real estate taxes.

Griffin Land’s total general and administrative expenses in the 2011 six month period decreased by approximately $0.3 million from total general and administrative expenses in the 2010 six month period due principally to the inclusion in the 2010 six month period of $0.3 million of acquisition expenses incurred for the purchase of the 120,000 square foot industrial building that closed in January 2010.  Depreciation and amortization expense at Griffin Land was essentially unchanged in the 2011 six month period as compared to the 2010 six month period.

Imperial’s operating losses for the 2011 and the 2010 six month periods were as follows:

	2011			2010
	Six Month  Period			Six Month  Period
	(amounts in thousands)
Net sales and other revenue	$	9,445		$	11,147
Cost of goods sold	8,916			9,939
Gross profit	529			1,208
Selling, general and administrative expenses	(1,849		)	(1,958		)
Gain on insurance recovery	200			—
Operating loss	$	(1,120	)	$	(750	)

Imperial’s operating loss in the 2011 six month period was approximately $0.4 million higher than the operating loss incurred in the 2010 six month period, reflecting an approximate $0.7 million decrease in gross profit, partially offset by a $0.2 million gain on insurance recovery and a decrease of approximately $0.1 million in selling, general and administrative expenses in the 2011 six month period.

The decrease in gross profit principally reflects a net charge of approximately $0.4 million in the 2011 six month period for plants that became unsaleable, approximately $0.3 million of which was from the collapse, due to snow load, of certain hoop houses in which the plants are stored over the winter and $0.1 million as a result of the loss of certain starter plants due to a disease issue.  There were no charges included in cost of goods sold to increase inventory reserves for unsaleable plants in the 2010 six month period.  In addition to the inventory charges for unsaleable plants in the 2011 six month period, the lower gross profit also reflects the lower net sales and other revenue in the 2011 six month period as compared to the 2010 six month period and higher costs of plants sold.  These items were partially offset by improved pricing in the 2011 six month period as compared to the 2010 six month period.  Due to increased costs, gross margins on sales from Imperial’s Connecticut farm in the 2011 six month period were 11.3% (excluding the effect of the charge for inventory losses) as compared to 12.0% in the 2010 six

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month period. The higher costs reflect an increase in both per unit plant costs and per unit loading and handling costs, as cost reductions were not proportional to the reduction in sales value from the change in product mix.

Imperial’s selling, general and administrative expenses decreased from approximately $2.0 million in the 2010 six month period to approximately $1.8 million in the 2011 six month period.  The lower selling, general and administrative expenses in the 2011 six month period as compared to the 2010 six month period principally reflect lower sales commission expenses in the 2011 six month period and severance costs included in the 2010 six month period related to a reduction in Imperial’s sales force.  As a percentage of net sales, Imperial’s selling, general and administrative expenses increased from 17.6% in the 2010 six month period to 19.6% in the 2011 six month period.

Griffin’s general corporate expense increased from approximately $2.3 million in the 2010 six month period to approximately $2.6 million in the 2011 six month period, principally due to an increase in expenses related to Griffin’s non-qualified deferred compensation plan.  The higher expenses of the non-qualified deferred compensation plan reflect the increase in participants’ balances due to a general increase in overall stock market performance, which is reflected in the value of participants’ balances.

Griffin’s consolidated interest expense decreased from approximately $2.2 million in the 2010 six month period to approximately $2.1 million in the 2011 six month period due principally to a lower average debt level in the 2011 six month period as compared to the 2010 six month period.  Griffin’s average outstanding debt in the 2011 six month period was approximately $62.6 million as compared to $65.4 million in the 2010 six month period, principally reflecting there not being any borrowings outstanding under Griffin’s revolving line of credit in the 2011 six month period as compared to $2.5 million of borrowings outstanding under Griffin’s revolving line of credit in the 2010 six month period.

Griffin’s investment income decreased from approximately $0.2 million in the 2010 six month period to approximately $0.1 million in the 2011 six month period due principally to lower dividend income from Centaur in the 2011 six month period.  The lower dividend income from Centaur reflects a change in timing of dividends by Centaur.

Griffin’s effective income tax benefit rate was 37.0% for the 2011 six month period, as compared to 37.4% for the 2010 six month period.  The slightly lower effective income tax benefit tax rate in the 2011 six month period reflects the effect of state income taxes.  Griffin’s effective tax benefit rate for the 2011 six month period is based on management’s projections for the balance of the year.  To the extent that actual results differ from current projections, the effective income tax rate may change.

Off Balance Sheet Arrangements

Griffin does not have any material off balance sheet arrangements.

Liquidity and Capital Resources

In the 2011 six month period, Griffin had net cash used in operating activities of approximately $2.6 million as compared to net cash provided by operating activities of approximately $0.3 million in the 2010 six month period.  Net cash provided by operating activities in the 2010 six month period included approximately $0.5 million of cash generated from the liquidation of short-term investments.  Excluding the reduction of short-term investments in the 2010 six month period, Griffin had net cash used in operating activities of approximately $0.2 million in the 2010 six month period.  The higher amount of net cash used in operating activities in the 2011 six month period, as compared to the 2010 six month period, principally reflects a smaller decrease in Imperial’s inventory in the 2011 six month period as

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compared to the 2010 six month period, principally due to the lower sales volume at Imperial in the 2011 six month period as compared to the 2010 six month period.

Net cash used in investing activities was approximately $0.9 million in the 2011 six month period as compared to approximately $8.3 million in the 2010 six month period.  The net cash used in investing activities in the 2011 six month period principally reflects approximately $0.8 million of spending on tenant improvements related to new leases and lease renewals in the current year and additional development costs for Griffin Land’s real estate assets and approximately $0.1 million of additions to equipment at Imperial.  The net cash used in investing activities in the 2010 six month period principally reflected approximately $5.4 million paid for the acquisition of the fully leased 120,000 square foot industrial building in Breinigsville, Pennsylvania and approximately $2.7 million of additions to Griffin’s real estate assets, including approximately $2.1 million to acquire undeveloped land in Pennsylvania.  The total purchase price of the building was approximately $6.4 million, of which approximately $1.0 million was paid as a deposit in the previous year.  Net cash used in investing activities in the 2010 six month period also included approximately $0.1 million of additions to equipment at Imperial.

Net cash used in financing activities was approximately $2.0 million in the 2011 six month period as compared to net cash provided by financing activities of approximately $2.8 million in the 2010 six month period.  The net cash used in financing activities in the 2011 six month period reflects approximately $1.0 million for quarterly dividend payments on Griffin’s common stock, approximately $0.9 million for payments of principal on Griffin Land’s nonrecourse mortgages and approximately $0.2 million for debt issuance costs related to Griffin’s new revolving credit agreement (see below), partially offset by approximately $0.2 million of proceeds from the exercise of stock options.  The net cash provided by financing activities in the 2010 six month period included approximately $4.5 million of proceeds from borrowings, including approximately $4.3 million from a new nonrecourse mortgage with First Niagara Bank (formerly NewAlliance Bank) on the 120,000 square foot industrial building in Breinigsville, Pennsylvania that was acquired in the 2010 six month period and approximately $0.2 million from the final borrowings under a construction to permanent mortgage loan with Berkshire Bank. In addition, Griffin received approximately $0.1 million of cash from the exercise of stock options in the 2010 six month period.  The proceeds from debt and cash received from the exercise of stock options in the 2010 six month period were partially offset by approximately $1.0 million for quarterly dividend payments on Griffin’s common stock, approximately $0.8 million for payments of principal on Griffin Land’s nonrecourse mortgages and approximately $0.1 million of debt issuance costs.

On April 28, 2011, Griffin closed on a new $12.5 million revolving line of credit with Doral Bank (the “2011 Credit Line”) that replaced the $10 million revolving line of credit with Doral Bank that was originally scheduled to expire on March 1, 2011, but was extended until the 2011 Credit Line was completed.  The 2011 Credit Line has a two year term with a company option for a third year and interest at the higher of prime plus 1.5% or 5.875%.  The 2011 Credit Line is collateralized by the same properties that collateralized the expiring revolving line of credit plus a 40,000 square foot office building in Griffin Center South that was unencumbered.  In the 2011 six month period, there were no outstanding borrowings under the $10 million revolving line of credit that expired or the 2011 Credit Line.

As of May 28, 2011, the entire balance of Griffin’s 6.08% nonrecourse mortgage due January 1, 2013 (approximately $7.1 million) is included in the current portion of long-term debt.  Griffin has classified this mortgage as current because, for the twelve month period ending December 31, 2011, Griffin expects that the ratio of the net operating income, as defined in the mortgage agreement, of the buildings that collateralize the mortgage, to the debt service of the mortgage (the “debt service coverage covenant”) will be less than the 1.25 required under the mortgage.  The debt service coverage covenant for the twelve months ended December 31, 2010 was waived by the bank as Griffin would not have been in compliance at that measurement date.  Griffin expects to obtain a waiver from the bank for the debt service coverage covenant for the twelve months ending December 31, 2011, prior to that date, although

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there can be no such assurance that the bank will grant such a waiver.

On April 14, 2011, Griffin Land entered into an agreement to sell approximately ten acres of undeveloped land in Southwick, Massachusetts for $0.4 million. Griffin Land expects this sale to close in the 2011 third quarter.  In addition, as previously reported, Griffin Land has two other land sales under agreement, the closing of which are subject to a number of conditions.  The sale of its remaining twenty-one residential lots in Stratton Farms, a residential development in Suffield, Connecticut, is under contract with a private company homebuilder.  If the homebuilder elects to exercise its option to purchase the remaining lots, Griffin Land would receive proceeds that would range from approximately $2.3 million to approximately $2.5 million, depending on the timing of the lot purchases, which are scheduled annually in fiscal 2011 through fiscal 2013.  The buyer’s failure to complete any scheduled purchase on a timely basis would terminate the buyer’s option.

Griffin Land also has an agreement with a local homebuilder to sell approximately 57 acres of undeveloped land (much of which is wetlands) held in Granby, Connecticut for development into approximately twelve residential lots.  The buyer has obtained all required land use approvals for its residential development plans.  Proceeds from this transaction would be approximately $0.6 million, and a closing could take place in the latter part of fiscal 2011.  There is no assurance that any of these potential land sale transactions will be completed under their current terms, or at all.

Griffin’s payments (including principal and interest) under contractual obligations as of May 28, 2011 are as follows:

	Total		Due Within One Year		Due From  1-3 Years		Due From  3-5 Years		Due in More Than 5 Years
	(in millions)
Mortgages	$	82.5	$	4.4	$	17.0	$	28.8	$	32.3
Revolving Line of Credit	—		—		—		—		—
Capital Lease Obligations	—		—		—		—		—
Operating Lease Obligations	0.5		0.2		0.3		—		—
Purchase Obligations (1)	1.0		0.9		0.1		—		—
Other (2)	2.6		—		—		—		2.6
	$	86.6	$	5.5	$	17.4	$	28.8	$	34.9

(1)Includes obligations for the purchase of plants and raw materials by Imperial and for master planning of Griffin Land’s industrial properties.

(2)Includes Griffin’s deferred compensation plan and other postretirement benefit liabilities.

In the near-term, Griffin plans to continue to invest in its real estate business, including expenditures to build out interiors of its buildings as new leases are signed, infrastructure improvements required for future development of its real estate holdings and the potential acquisition of properties outside of the Hartford, Connecticut market.  Griffin does not expect to commence any speculative construction projects for its Connecticut real estate portfolio until a substantial portion of Griffin Land’s currently vacant space is leased.  Griffin Land may commence speculative construction of a building on the undeveloped Lehigh Valley land that was acquired in 2010 if management believes that such development would be sufficiently profitable.  Griffin Land may also commence construction of a new building on any of its undeveloped land if it is able to secure a tenant for a build-to-suit facility.

As of May 28, 2011, Griffin had cash and cash equivalents of approximately $3.8 million.  Management believes that its cash and cash equivalents and borrowing capacity under the 2011 Credit Line will be sufficient to meet Griffin’s liquidity needs over the next twelve months.  Over the long-term,

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management believes that in addition to its cash and cash equivalents, borrowing capacity under the 2011 Credit Line, cash generated from operations, including property sales, and proceeds from other nonrecourse mortgage placements on its properties would be sufficient to meet Griffin’s seasonal working capital needs, the continued investment in Griffin’s real estate assets and payment of quarterly dividends on its common stock.  Griffin Land’s real estate portfolio currently includes six buildings aggregating approximately 720,000 square feet that are not mortgaged.  Griffin also expects to continue to seek to purchase either or both land and buildings in markets principally outside of the Hartford, Connecticut area.  Real estate acquisitions may or may not occur based on many factors, including real estate pricing.

Forward-Looking Information

The above information in Management’s Discussion and Analysis of Financial Condition and Results of Operations includes “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act.  Although Griffin believes that its plans, intentions and expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such plans, intentions or expectations will be achieved, particularly with respect to leasing of currently vacant space, construction of additional facilities in the real estate business, the completion of property sales currently under agreement, the ability to obtain additional mortgage financing, development of the 51 acre land parcel in the Lehigh Valley that was acquired in 2010, expected receipt of additional insurance proceeds and Griffin’s anticipated future liquidity.  The projected information disclosed herein is based on assumptions and estimates that, while considered reasonable by Griffin as of the date hereof, are inherently subject to significant business, economic, competitive and regulatory uncertainties and contingencies, many of which are beyond the control of Griffin.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk represents the risk of changes in value of a financial instrument, derivative or non-derivative, caused by fluctuations in interest rates, foreign exchange rates and equity prices.  Changes in these factors could cause fluctuations in earnings and cash flows.

For fixed rate mortgage debt, changes in interest rates generally affect the fair market value of the debt instrument, but not earnings or cash flows.  Griffin does not have an obligation to prepay any fixed rate debt prior to maturity, and therefore, interest rate risk and changes in the fair market value of fixed rate debt should not have a significant impact on earnings or cash flows until such debt is refinanced, if necessary.  Griffin’s mortgage interest rates are described in Note 8 to the unaudited consolidated financial statements included in Item 1.

For variable rate debt, changes in interest rates generally do not impact the fair market value of the debt instrument, but do affect future earnings and cash flows.  As of May 28, 2011, Griffin had $20.0 million of variable rate debt outstanding, for which Griffin had entered into interest rate swap agreements which effectively fix the interest rate on that debt.  There were no other variable rate borrowings outstanding as of May 28, 2011.

Griffin is exposed to market risks from fluctuations in interest rates and the effects of those fluctuations on the market values of Griffin’s cash equivalents.  These investments generally consist of money market securities that are not significantly exposed to interest rate risk.

Griffin does not have foreign currency exposure related to its operations.  Griffin does have an investment in a public company, Centaur Media plc, based in the United Kingdom.  The amount to be realized from the ultimate liquidation of that investment and conversion of proceeds into United States currency is subject to future foreign currency exchange rates.

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ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Griffin maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in its Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to Griffin’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.  In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As required by SEC Rule 13a-15(b), Griffin carried out an evaluation, under the supervision and with the participation of Griffin’s management, including Griffin’s Chief Executive Officer and Griffin’s Chief Financial Officer, of the effectiveness of Griffin’s disclosure controls and procedures as of the end of the fiscal period covered by this report.  Based on the foregoing, Griffin’s Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There has been no change in Griffin’s internal control over financial reporting during Griffin’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, Griffin’s internal control over financial reporting.

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PART II OTHER INFORMATION

ITEM 1A.RISK FACTORS

There have been no material changes from risk factors as previously disclosed in Item 1A of the Company’s Annual Report on Form 10-K for the year ended November 27, 2010.

ITEM 6.EXHIBITS

Exhibit No.	Description
3.1	Form of Amended and Restated Certificate of Incorporation of Griffin Land & Nurseries, Inc. (incorporated by reference to the Form 10 of Griffin Land & Nurseries, Inc., filed April 8, 1997, as amended)
3.2	Form of Bylaws of Griffin Land & Nurseries, Inc. (incorporated by reference to the Form 10 of Griffin Land & Nurseries, Inc., filed April 8, 1997, as amended)
10.7	Form of 401(k) Plan of Griffin Land & Nurseries, Inc. (incorporated by reference to the Form 10 of Griffin Land & Nurseries, Inc., filed April 8, 1997, as amended)
10.21	Mortgage Deed, Security Agreement, Financing Statement and Fixture Filing with Absolute Assignment of Rents and Leases dated September 17, 2002 between Tradeport Development I, LLC and Farm Bureau Life Insurance Company (incorporated by reference to Form 10-Q dated August 31, 2002, filed October 11, 2002)
10.24	Mortgage Deed and Security Agreement dated December 17, 2002 between Griffin Center Development IV, LLC and Webster Bank (incorporated by reference to Form 10-K dated November 30, 2002, filed February 28, 2003)
10.28	Secured Installment Note and First Amendment of Mortgage and Loan Documents dated April 16, 2004 among Tradeport Development I, LLC, Griffin Land & Nurseries, Inc. and Farm Bureau Life Insurance Company (incorporated by reference to Form 10-Q dated May 29, 2004, filed July 13, 2004)
10.29	Mortgage Deed Security Agreement, Fixture Filing, Financing Statement and Assignment of Leases and Rents dated July 6, 2005 by Tradeport Development II, LLC in favor of First Sunamerica Life Insurance Company (incorporated by reference to Form 10-Q dated May 28, 2005, filed on November 2, 2005)
10.30	Promissory Note dated July 6, 2005 (incorporated by reference to Form 10-Q dated May 28, 2005, filed on November 2, 2005)

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10.31	Guaranty Agreement as of July 6, 2005 by Griffin Land & Nurseries, Inc. in favor of Sunamerica Life Insurance Company (incorporated by reference to Form 10-Q dated May 28, 2005, filed on November 2, 2005)
10.32	Amended and Restated Mortgage Deed Security Agreement, Fixture Filing, Financing Statement and Assignment of Leases and Rents dated November 16, 2006 by Tradeport Development II, LLC in favor of First Sunamerica Life Insurance Company (incorporated by reference to Form 10-K dated December 2, 2006, filed February 15, 2007)
10.33	Amended and Restated Promissory Note dated November 16, 2006 (incorporated by reference to Form 10-K dated December 2, 2006, filed February 15, 2007)
10.34	Guaranty Agreement as of November 16, 2006 by Griffin Land & Nurseries, Inc. in favor of Sunamerica Life Insurance Company (incorporated by reference to Form 10-K dated December 2, 2006, filed February 15, 2007)
10.35	Employment Agreement by and between Imperial Nurseries, Inc. and Gregory Schaan dated January 1, 2001, as amended April 9, 2008 (incorporated by reference to Form 10-Q dated March 1, 2008, filed April 10, 2008)
10.36	Construction Loan and Security Agreement dated February 6, 2009 by and between Tradeport Development III, LLC, Griffin Land & Nurseries, Inc., and Berkshire Bank (incorporated by reference to Form 10-Q dated February 28, 2009, filed April 9, 2009)
10.37	$12,000,000 Construction Note dated February 6, 2009 (incorporated by reference to Form 10-Q dated February 28, 2009, filed April 9, 2009)
10.38	Revolving Line of Credit Loan Agreement dated February 27, 2009 between Griffin Land & Nurseries, Inc. and Doral Bank, FSB (incorporated by reference to Form 10-Q dated February 28, 2009, filed April 9, 2009)
10.39	$10,000,000 Promissory Note (Revolving Line of Credit) dated February 27, 2009 (incorporated by reference to Form 10-Q dated February 28, 2009, filed April 9, 2009)
10.40	Loan and Security Agreement dated July 9, 2009 between Griffin Land & Nurseries, Inc. and People’s United Bank (incorporated by reference to Form 10-Q dated August 29, 2009, filed October 8, 2009)
10.41	$10,500,000 Promissory Note dated July 9, 2009 (incorporated by reference to Form 10-Q dated August 29, 2009, filed October 8, 2009)

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10.42	Mortgage and Security Agreement dated January 27, 2010 between Riverbend Crossings III Holdings, LLC and NewAlliance Bank (incorporated by reference to Form 10-Q dated August 28, 2010, filed October 6, 2010)
10.43	$4,300,000 Promissory Note dated January 27, 2010 (incorporated by reference to Form 10-Q dated February 27, 2010, filed April 8, 2010)
10.44	First Modification of Promissory Note, Mortgage Deed and Security Agreement and Other Loan Documents between Riverbend Crossings III Holdings, LLC and NewAlliance Bank dated October 27, 2010 (incorporated by reference to Form 10-K dated November 27, 2010, filed February 10, 2011)
10.45 *	Revolving Line of Credit Loan Agreement with Doral Bank, FSB dated April 28, 2011
10.46 *	Open-End Mortgage and Security Agreement dated April 28, 2011 between Griffin Land & Nurseries, Inc., as Mortgagor and Doral Bank, FSB, as Mortgagee
10.47 *	Open-End Mortgage and Security Agreement dated April 28, 2011 between Griffin Land & Nurseries, Inc., as Mortgagor and Doral Bank, FSB, as Mortgagee
31.1 *	Certifications of Chief Executive Officer Pursuant to Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 *	Certifications of Chief Financial Officer Pursuant to Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 *	Certifications of Chief Executive Officer Pursuant to 18 U.S.C Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2 *	Certifications of Chief Financial Officer Pursuant to 18 U.S.C Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

*  Filed herewith.

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SIGNATURES

Pursuant to the requirements 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.

	GRIFFIN LAND & NURSERIES, INC.
	BY:	/s/ FREDERICK M. DANZIGER
DATE: July 7, 2011	Frederick M. Danziger
	President and Chief Executive Officer
	BY:	/s/ ANTHONY J. GALICI
DATE: July 7, 2011	Anthony J. Galici
	Vice President, Chief Financial Officer and Secretary,
	Chief Accounting Officer

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EX-10.45

Exhibit 10.45

DORAL BANK, FSB

REVOLVING LINE OF CREDIT LOAN AGREEMENT

April 28, 2011

THIS REVOLVING LINE OF CREDIT LOAN AGREEMENT (this “Agreement”), made as of the above date, by and between GRIFFIN LAND & NURSERIES, INC., a Delaware corporation, having an address at One Rockefeller Plaza, Suite 2301, New York, New York 10020 (“Borrower”), and DORAL BANK, FSB, a Federal savings bank, with an address at 623 Fifth Avenue, New York, New York 10022 (the “Bank”).

Borrower and the Bank agree as follows:

1.             The Credit Loan. In reliance on the representations and warranties contained herein, and upon the fulfillment of all conditions set forth herein, the Bank agrees to make advances (each an “Advance”; collectively, the “Advances”) to Borrower at any time and from time to time on or after the date hereof to and including the Maturity Date (as hereinafter defined) or the Extended Maturity Date (as hereinafter defined), as the case may be, pursuant to that certain Promissory Note, dated the date hereof (the “Note”), made by Borrower in favor of the Bank, provided that the aggregate unpaid principal amount of the Advances shall not exceed Twelve Million Five Hundred Thousand and 00/100 Dollars ($12,500,000.00) (the “Credit Loan”). Notwithstanding anything contained herein to the contrary, no Advance shall be made if at any time there is an Event of Default (hereinafter defined) or any event has occurred which with the passage of time or the giving of notice, or both, would constitute an Event of Default. All Advances made to Borrower hereunder shall be payable in full upon demand of the Bank on the Maturity Date or the Extended Maturity Date, as the case may be. The Credit Loan is subject to the terms and conditions of this Agreement and the Note. Each Advance made by the Bank hereunder and each payment of principal or interest under the Note shall be noted by the Bank on its records provided that any failure to record any such information on such records shall not in any manner affect the obligation of the Borrower to make payments of principal and interest in accordance with the terms of this Agreement or the Note. Borrower hereby agrees to repay the outstanding Advances under the Credit Loan together with interest thereon as set forth in Section 2 herein. Proceeds of the Credit Loan are to be used only for general corporate purposes and Borrower’s letter of credit requirements.

2.             Interest Rate and Payments.

A.              During the initial term (the “Initial Term”):

(i) Commencing May 1, 2011 and on the first day of each calendar month thereafter up to and including May 1, 2013, Borrower shall make monthly payments of interest only on any Advances outstanding under the Credit Loan, calculated at the Applicable Interest Rate (hereinafter defined), as well as any other sums that may be due pursuant to the Note, this Agreement or the Mortgage. Said payments, as and when received by the Bank, shall be applied by it first, to the payment of any late charges due hereunder; second, to the payment of interest computed at the Applicable Interest Rate; and the balance, if any, toward the satisfaction of the outstanding Advances under the Credit Loan; and

(ii) The entire outstanding Advances under the Credit Loan, together with all interest accrued and unpaid thereon calculated at the Applicable Interest Rate and all other sums due under the Note, this Agreement, the Mortgage or any other document executed and delivered by Borrower to the Bank in connection with the Credit Loan (collectively, the “Other Security Documents”), shall be due and payable on May 1, 2013 (the “Maturity Date”), unless extended in accordance with Section 6 hereof, or sooner as provided herein.

B.              If the Credit Loan is extended for one (1) additional period of one (1) year (the “Extended Term”) in accordance with Section 6 hereof:

(i)              Commencing May 1, 2013 and on the first day of each calendar month of the Extended Term up to and including May 1, 2014, Borrower shall make monthly payments of interest only on any Advances outstanding under the Credit Loan, calculated at the Applicable Interest Rate, as well as any other sums that may be due pursuant to the Note, this Agreement or the Mortgage. Said payments, as and when received by the Bank, shall be applied by it first, to the payment of any late charges due hereunder; second, to the payment of interest computed at the Applicable Interest Rate; and the balance, if any, toward the satisfaction of the outstanding Advances under the Credit Loan; and

(ii)           The entire outstanding Advances under the Credit Loan, together with all interest accrued and unpaid thereon calculated at the Applicable Interest Rate and all other sums due under the Note, this Agreement, the Mortgage or the Other Security Documents shall be due and payable on May 1, 2014 (the “Extended Maturity Date”) or sooner as provided herein.

C.              Interest shall be calculated on the basis of the actual number of days elapsed in a 360-day year.

D. The term “Applicable Interest Rate” shall mean the Prime Rate (as hereinafter defined) plus 1.50% per annum, but in no event less than 5.875% per annum. As used herein, the “Prime Rate” is the rate of interest (or if more than one, the highest rate of interest) published from time to time by The Wall Street Journal in the “Money Rates” section, or any equivalent section of that newspaper, and identified as the “Prime Rate”. Each change in the interest rate hereunder resulting from a change in the Prime Rate shall become effective as of the opening of business on the day on which such change in the Prime Rate is announced. In no event shall the Applicable Interest Rate exceed the maximum rate permitted by applicable law. Any payments in excess of such maximum rate permitted by applicable law shall be deemed a prepayment of outstanding Advances under the Credit Loan, to be applied in accordance with this Agreement.

3.             Prepayments. Borrower shall have the right to prepay outstanding Advances under the Credit Loan in whole at any time or in part from time to time, without premium or penalty and principal amounts repaid may be re-borrowed, in whole or in part, up to the Credit Loan and subject to the terms of this Agreement. Prepayments shall be applied first, to the payment of any late charges due hereunder; second, to the payment of interest computed at the Applicable Interest Rate; and the balance, if any, toward the outstanding principal balance of the Advances in the inverse order of their date of advancement. Prepayments shall not affect the duty of Borrower to pay interest when due or change the amount of such interest payments and shall not affect or impair the right of the Bank to pursue all remedies available to the Bank under this

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Agreement, the Note, the Mortgage or the Other Security Documents.

4.               Notice of Borrowing. Borrower shall give the Bank two (2) Business Days’ prior notice of its intention to request an Advance under the Credit Loan and shall deliver to the Bank with respect thereto a written request (a “Request”). Each Request shall constitute a representation and warranty by Borrower that (i) no default or Event of Default or event which with the passing of time or the giving of notice, or both, would constitute a default has occurred and (ii) the representations and warranties of Borrower under this Agreement shall be deemed true and correct as of the effective date of such Advance unless otherwise disclosed to the Bank in writing prior thereto. If any day on which an Advance is to be made is a day on which banks in the New York City area are permitted to close, such Advance will be made on the next succeeding Business Day. A “Business Day” shall mean a day on which commercial banks are not authorized or required by law to close in New York, New York.

5.             Annual Fee. Borrower shall pay on each anniversary of the date hereof the following fee: (i) 1/2 of one percent (0.50%) of the portion of the Credit Loan not advanced if the average outstanding Advances of the Credit Loan, calculated on a twelve (12) month basis for the preceding twelve (12) months, is equal to or less than fifty percent (50%) of the Credit Loan (calculated as if the Credit Loan was fully advanced); or (ii) 1/4 of 1 percent (0.25%) of the portion of the Credit Loan not advanced if the average outstanding Advances of the Credit Loan, calculated on a twelve (12) month basis for the preceding twelve (12) months, is greater than fifty percent (50%) and less than seventy-five percent (75%) of the Credit Loan (calculated as if the Credit Loan was fully advanced); provided, however, if the average outstanding Advances of the Credit Loan, calculated on a twelve (12) month basis for the preceding twelve (12) months, is equal to or greater than seventy-five percent (75%) of the Credit Loan (calculated as if the Credit Loan was fully advanced), then no such payment shall be due as to the respective anniversary date. Borrower hereby acknowledges that the Bank shall pay itself the foregoing fee each anniversary of the date hereof following prior written notice to Borrower of the amount of such fee.

6.             Extension Option. The Credit Loan shall expire on the Maturity Date. Notwithstanding the foregoing, Borrower shall have the option to extend the Credit Loan for one (1) additional period of one (1) year (the “Extension Option”), but only if (a) no default exists under this Agreement, the Note, the Mortgage or the Other Security Documents at the time the Extension Notice (as hereinafter defined) is given, and on the Maturity Date, (b) in order to elect the Extension Option, Borrower so elects by written notice (the “Extension Notice”) to the Bank delivered in accordance with the requirements of this Agreement not later than thirty (30) nor earlier than ninety (90) days prior to the Maturity Date, (c) Borrower shall execute all documents the Bank determines are reasonably necessary to extend the Credit Loan, (d) Borrower shall obtain and deliver to the Bank, all at the sole cost and expense of Borrower, an updated title report for the Property, together with a “date down” title insurance endorsement insuring the security interest of the Mortgage as a first lien on the Property, (e) there shall be no material adverse change in the Property or the financial or other condition of Borrower, in each instance determined by the Bank in its sole discretion, and (f) Borrower shall pay all costs and expenses incurred in connection with such extension, including, but not limited to, the Bank’s attorneys’ fees and disbursements, title charges and recording fees, and an extension fee equal to $62,500.00, payable simultaneously with the delivery of the Extension Notice.

7. Security.  The Credit Loan, together with interest thereon and all other charges and amounts payable by, and all other obligations of Borrower to the Bank, with respect to the Property (as

3

hereinafter defined), whenever incurred, direct or indirect, absolute or contingent shall be secured by the following “Security” which Borrower agrees to provide and maintain:

(a)           Windsor Mortgage.  A first priority open-end mortgage and security agreement, given by Borrower in favor of the Bank, dated the date hereof (the “Windsor Mortgage”), on Borrower’s right, title and interest in and to (i) Borrower’s fee estate in certain property located at 21-25 Griffin Road North, Windsor, Connecticut, as more particularly described therein (the “Windsor Property”), (ii) all land, improvements, furniture, fixtures, equipment, and other assets (including, without limitation, contracts, contract rights, accounts, licenses and permits and general intangibles), including all after-acquired property, owned, or in which Borrower has or obtains any interest, in connection with the Windsor Property, (iii) all insurance proceeds and other proceeds therefrom, and (iv) all other assets of Borrower whether now owned or hereafter acquired and related to the Windsor Property as specified in the Windsor Mortgage.

(b)         Bloomfield Mortgage.  A first priority open-end mortgage and security agreement, given by Borrower in favor of the Bank, dated the date hereof (the “Bloomfield Mortgage”; the Windsor Mortgage and the Bloomfield Mortgage shall collective be referred to herein as the “Mortgage”), on Borrower’s right, title and interest in and to (i) Borrower’s fee estate in certain property located at 29-35 Griffin Road South and 204, 206, 210, 310, 320, 330 and 340 West Newberry Road, Bloomfield, Connecticut and 55 Griffin Road South, Bloomfield, Connecticut, as more particularly described therein (collectively, the “Bloomfield Property”; the Windsor Property and the Bloomfield Property shall be collectively referred to herein as the “Property”), (ii) all land, improvements, furniture, fixtures, equipment, and other assets (including, without limitation, contracts, contract rights, accounts, licenses and permits and general intangibles), including all after-acquired property, owned, or in which Borrower has or obtains any interest, in connection with the Bloomfield Property, (iii) all insurance proceeds and other proceeds therefrom, and (iv) all other assets of Borrower whether now owned or hereafter acquired and related to the Bloomfield Property as specified in the Bloomfield Mortgage.

(c)          Assignment of Leases and Rents-Windsor Property. A first priority collateral assignment of leases and rents, with respect to all leases, subleases and occupancy rights of the Windsor Property and all income and profits to be derived from the operation and leasing of the Windsor Property.

(d)        Assignment of Leases and Rents-Bloomfield Property. A first priority collateral assignment of leases and rents, with respect to all leases, subleases and occupancy rights of the Bloomfield Property and all income and profits to be derived from the operation and leasing of the Bloomfield Property.

(e)        Environmental Indemnification Agreement. An environmental indemnification agreement with respect to environmental matters from Borrower.

(f)         Assignment of Contracts and Permits. A collateral assignment of all contracts, including, but not limited to, development contracts, operating agreements, licenses, insurance proceeds, management agreements, and other agreements and plans, specifications and permits affecting the Property from Borrower.

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(f)          Financing Statements. Uniform Commercial Code Financing Statements in favor of the Bank giving notice of a security interest, which Financing Statements are to be filed in the appropriate public records on or about the date hereof.

8. Representations and Warranties.  Borrower makes the following representations and warranties, all of which shall be deemed to be continuing representations and warranties so long as any part of the Credit Loan is unpaid or as otherwise specifically provided herein below:

(a)           Good Standing and Authority.  Borrower is corporation, duly organized, validly existing and in good standing under the laws of the State of Delaware, authorized to do business in the State of Connecticut. Borrower has the power and authority to transact the business in which it is engaged; is duly licensed or qualified and in good standing in each jurisdiction in which the conduct of its business or ownership of property requires such licensing or such qualification; and has all necessary power and authority to enter into this Agreement and to execute, deliver and perform this Agreement, the Note, the Mortgage and the Other Security Documents, all of which have been duly authorized by all proper and necessary corporate and shareholder action, as appropriate. The execution and delivery of this Agreement, the Note, the Mortgage and the Other Security Documents is not and will not be in violation of any agreement to which Borrower is a party. No consent of any kind is required for Borrower to enter into or perform this Agreement or to execute and deliver the Note.

(b)         Financial Condition.  Borrower has furnished to the Bank its most current financial statements, which represent correctly and fairly the results of the operations and transactions of Borrower and the condition of the Property as of the dates and for the period referred to therein, and have been prepared in accordance with generally accepted accounting principles consistently applied (“GAAP”) during each interval involved and from interval to interval. From the date hereof through (and including) the one year anniversary of such date, there have not been any materially adverse changes in the condition of the Property or in the financial or other condition of Borrower which has a material adverse impact on Borrower’s ability to perform its obligations with respect to the Credit Loan, as determined by the Bank in its reasonable discretion.

(c)          Taxes.  Borrower has duly filed all consolidated federal and other tax returns required to be filed and has duly paid all taxes required by such returns. Borrower has not received any notice from the Internal Revenue Service or any other taxing authority proposing additional unpaid taxes, except as otherwise disclosed to the Bank.

(d)        Litigation.  There are not any actions, suits, proceedings or investigations pending or, to the knowledge of Borrower, threatened against Borrower or any basis therefor, which, if adversely determined, would, in any case or in the aggregate, adversely affect the Property, assets, financial condition or business of Borrower or impair the right of Borrower to carry on its operations, substantially as now conducted.

(e)          Environmental Laws.  Borrower has performed all of its obligations under, has obtained all necessary approvals, permits, authorization or other consents required by, and is not in material violation of, any applicable local, state or federal health or environmental law, ordinance, rule, regulation or order.

(f)          No Event of Default.  No Event of Default has occurred and no event has

5

occurred which with the giving of notice or lapse of time or both would constitute an Event of Default.

(g)         Use of Proceeds.  Borrower shall not use any part of the proceeds of the Credit Loan to purchase or carry any margin stock within the meaning of Regulation U of the Board of Governors of the Federal Reserve System or to extend credit to others for the purpose of purchasing or carrying any margin stock.

(h)         Valid and Binding. This Agreement, the Note, the Mortgage and the Other Security Documents constitute legal, valid and binding obligations of Borrower, and each constitute legal, valid and binding obligations of the parties thereto, enforceable in accordance with the respective terms thereof, subject to bankruptcy, insolvency and similar laws of general application affecting the rights and remedies of creditors and, with respect to the availability of the remedies of specific enforcement, subject to the discretion of the court before which any proceeding therefor may be brought.

9. Affirmative Covenants.  So long as any part of the Credit Loan is unpaid, Borrower shall:

(a)           Net Operating Income.  Maintain net operating income of the Property (excluding depreciation and amortization), as determined in accordance with GAAP, equal to or greater than one hundred twenty-five percent (125%) of the interest due on the Credit Loan (calculated as if the Credit Loan was fully advanced), subject to certain adjustments as to the amount of the Credit Loan, as the case may be, in accordance with the terms and conditions of Section 16 hereof. If Borrower breaches this covenant and fails to cure such breach within ninety (90) days after written notice from Lender, such breach shall constitute an Event of Default.

(b)           Future Financial Statements.  Furnish to the Bank all financial statements and other information, books and records as required in accordance with the terms and conditions of Section 3.11 of the Mortgage.

(c)           Taxes.  Promptly pay and discharge all of its taxes, assessments and other governmental charges (including any charged or assessed on the issuance of the Note) prior to the date on which penalties are attached thereto, establish adequate reserves for the payment of taxes and assessments and make all required withholding and other tax deposits.

(d)         Insurance.  As required in accordance with the terms and conditions of the Mortgage, keep all of the Property so insurable insured at all times with responsible insurance carriers against fire, theft and other risks, in coverage, form and amount satisfactory to the Bank.

(e)          Litigation.   Promptly notify the Bank in writing as soon as Borrower has knowledge thereof, of the institution or filing of any litigation, or governmental or regulatory proceeding against, or investigation of, Borrower: a) the outcome of which may materially and adversely affect the finances or operations of Borrower, or Borrower’s ability to fulfill its obligations hereunder, or which involves more than $250,000.00, unless fully covered by insurance; or b) which questions the validity of this Agreement, the Note, the Mortgage or the Other Security Documents, or any action taken pursuant thereto; and furnish or cause to be furnished to the Bank such information regarding any such matter as the Bank may request.

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(f)          Good Standing; Business. Maintain its corporate existence in good standing and remain or become duly licensed or qualified and in good standing in each jurisdiction in which the conduct of its business or ownership of its property requires such qualification or licensing; and engage only in the business conducted by it on the date of this Agreement.

10. Negative Covenants. So long as any part of the Credit Loan is unpaid, Borrower shall not:

(a)           Borrowed Money. Borrower may not enter into additional loan agreements or guaranty any loan facilities during the Credit Loan without prior written consent of the Bank, other than trade payables in the ordinary course of Borrower’s business which are paid within thirty (30) days of when due. Notwithstanding the foregoing, Borrower may take on additional indebtedness unrelated to the Property without the prior written consent of the Bank provided Borrower is not in default under the Note, this Agreement, the Mortgage or the Other Security Documents at the time of the initial closing for such indebtedness. If Borrower is in default under the Note, this Agreement, the Mortgage or the Other Security Documents, the Bank’s prior written consent shall be required, which consent can be withheld for any reason or no reason. Borrower’s breach of the foregoing covenant shall constitute an Event of Default of this Agreement.

(b)         Encumbrances. Create, incur, assume or suffer to exist any mortgage, lien, security interest, pledge or other encumbrance on the Property, except in favor of the Bank.

(c)          Sale of the Property. Convey, sell, transfer, lease (except as otherwise permitted in accordance with the terms of Section 3.7(a) of the Mortgage), or sell-and-lease-back all or any substantial portion of the Property or Borrower’s business to any other person, firm or corporation except in the ordinary course of business.

11.           Event of Default. The term “Event of Default” as used herein shall mean an Event of Default as defined in the Mortgage.

12.           Remedies. Upon the happening of one or more Events of Default which continues beyond any applicable notice, grace or cure periods, the Note shall become immediately due and payable, without presentation, demand or notice of any kind to Borrower, and the Bank may pursue any and all remedies provided for hereunder, or under the Note, the Mortgage or any one or more of the Other Security Documents.

13.           Default Rate. Upon the occurrence of an Event of Default which continues beyond any applicable notice, grace or cure periods, the Bank shall be entitled to receive and Borrower shall pay interest on the entire unpaid principal balance of the Note at a rate that is the lesser of twenty-one percent (21%) per annum or the maximum rate permitted by applicable law (the “Default Rate”). The Default Rate shall be computed from the occurrence of the Event of Default until the earlier of (i) the date upon which the Event of Default is cured or (ii) the date upon which the outstanding Advances are paid in full. Interest calculated at the Default Rate shall be added to the balance of the outstanding Advances, and shall be deemed secured by the Mortgage.

14.              Late Payment Charge. If any monthly installment of principal and interest is not paid on or prior to the tenth (10th) day after the date on which it is due, Borrower shall pay to the Bank upon

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demand an amount equal to the lesser of five percent (5%) of such unpaid portion of the outstanding monthly installment of principal and interest then due or the maximum amount permitted by applicable law, to defray the expense incurred by the Bank in handling and processing such delinquent payment and to compensate the Bank for the loss of the use of such delinquent payment, and such amount shall be secured by the Mortgage and the Other Security Documents.

15.             Termination Right; Continuation of Obligation. Borrower shall have the right at any time and from time to time upon at least five (5) Business Days’ prior written notice to the Bank to (i) pay the entire outstanding Advances under the Credit Loan, together with all interest accrued and unpaid thereon calculated at the Applicable Interest Rate and all other sums due under the Note, this Agreement, the Mortgage or the Other Security Documents in order to terminate the Credit Loan, in which event the Bank will have no further obligation to fund further Advances, or (ii) permanently reduce the Credit Loan available under this Agreement to an amount selected by Borrower, subject to the Bank’s prior written approval and provided the reduced Credit Loan amount shall not exceed sixty-five percent (65%) of the then current appraised fair market value of the Property, on a “leased fee interest” basis, as determined by the Bank in its sole discretion, in which event the Bank shall have no further obligation to fund any Advances above the reduced Credit Loan amount. Notwithstanding the foregoing, no termination of the Credit Loan and no refusal by the Bank to make future Advances hereunder shall affect Borrower’s obligations and liabilities hereunder, under the Note, the Mortgage or the Other Security Documents or the Bank’s rights, powers or remedies with respect thereto, including, without limitation, the Bank’s rights with respect to the Property or otherwise arising following such termination. All of the Bank’s rights, liens and security interests shall continue after any termination until all obligations of Borrower to the Bank shall have been finally paid and satisfied in full.

16.           Partial Release; Substitute Property.

(a) Partial Release. Borrower shall be entitled to a partial release of the Property from the lien of the Mortgage (a “Partial Release”) provided that (i) the Credit Loan and the Bank’s commitment to fund the Credit Loan shall be simultaneously reduced to an amount which shall not exceed sixty-five percent (65%) of the then current appraised fair market value of the balance of the Property which is not to be released from the lien of the Mortgage, on a “leased fee interest” basis, as determined by the Bank in its sole discretion, and (ii) the Release Conditions (as defined below) shall be satisfied in all respects.

(b)           Release Conditions. It shall be a condition precedent to the Bank’s obligation to issue and deliver the Partial Release that all of the following conditions be satisfied as determined by the Bank in its sole discretion (collectively, the “Release Conditions”): (i) no Event of Default exists under this Agreement, the Note, the Mortgage or the Other Security Documents which remains uncured at the time the Release Notice (as hereinafter defined) is received by the Bank and at the time the Bank issues and delivers the Partial Release, (ii) Borrower delivers to the Bank a written request for the Partial Release (the “Release Notice”), (iii) the Bank delivers to the Borrower the Bank’s written consent to the Partial Release, which consent will not be unreasonably withheld, (iv) the Bank receives all third party reports as the Bank reasonably requires in connection with the Partial Release, including, without limitation, updated appraisals, title reports, surveys, and the like, each acceptable to the Bank in its sole discretion, (v) Borrower shall execute and deliver to the Bank all documents and instruments as the Bank or the Bank’s counsel in their judgment deems necessary to document the Partial Release, which shall be in form and substance satisfactory to the Bank, and (vi) Borrower pays all expenses incurred by the Bank in connection

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with the Partial Release, including, but not limited to, recording charges, title charges and reasonable attorneys’ fees. In addition to all of the above, it shall be a condition precedent to the Bank’s obligation to issue and deliver the Partial Release that the Bank shall be satisfied that in granting any Partial Release the balance of the Property shall continue to be subject to the lien of the Mortgage and will not be affected in any way which, in the sole judgment of the Bank or the Bank’s counsel, would adversely affect the security position of the Bank under the Mortgage.

(c)          Substitute Property. Provided that the Substitution Conditions (as defined below) are satisfied in all respects, Borrower shall be entitled, either simultaneously or after the Bank issues any Partial Release in accordance with the terms and conditions of Subsections 16(a) and (b) herein above, to substitute or add properties owned by the Borrower or any of its subsidiaries (each such property a “Substitute Property”) to the Property securing the Credit Loan, thereby increasing the Credit Loan (and the Bank’s commitment to fund the Credit Loan) to an amount which shall not exceed the lesser of (i) $12,500,000.00; or (ii) 65.00% of the then current aggregate appraised fair market value of the Property and each Substitute Property, on a “leased fee interest” basis, as determined by the Bank in its sole discretion (the “Modified Credit Loan”).

(d)        Substitution Conditions. It shall be a condition precedent to the Bank’s obligation to substitute or add any Substitute Property to the Property securing the Credit Loan that the following conditions be satisfied as determined by the Bank in its sole discretion (collectively, the “Substitution Conditions”): (i) no Event of Default exists under this Agreement, the Note, the Mortgage or the Other Security Documents which remains uncured at the time the Substitution Notice (as hereinafter defined) is received by the Bank and at the time of the closing of the Modified Credit Loan, (ii) Borrower delivers to the Bank a written request to substitute or add the Substitute Property to the Property securing the Credit Loan (the “Substitution Notice”), (iii) the Bank delivers to the Borrower the Bank’s written approval of the Substitute Property and the Modified Credit Loan, including, but not limited to, the Bank’s review of the Modified Credit Loan and approval from the Bank’s credit department, which approval may be withheld for any reason or no reason, (iv) the Bank receives all third party reports as the Bank reasonably requires in connection with the Substitute Property and the Modified Credit Loan, including, without limitation, updated appraisals, title reports, surveys which meet the Bank’s survey requirements previously furnished to Borrower in connection with the original closing of the Credit Loan, and Phase I Environmental Assessment Reports, and the like, each acceptable to the Bank and its counsel in their discretion, (v) the Bank receives with respect to each Substitute Property a mortgagee’s title insurance policy which meets the Bank’s title insurance requirements, to the satisfaction of the Bank and its counsel, (vi) Borrower shall execute and deliver to the Bank with respect to each Substitute Property the following documents and instruments, each in form and substance satisfactory to the Bank: (a) all documents and instruments as the Bank or the Bank’s counsel in their judgment deems necessary to provide the Bank with a first mortgage lien on each Substitute Property, including, but not limited to, an open-end mortgage and security agreement or a modification of the Mortgage, each securing the Modified Credit Loan, (b) a first priority collateral assignment of leases and rents, with respect to all leases, subleases and occupancy rights of the Substitute Property and all income and profits to be derived from the operation and leasing of the Substitute Property, (c) one or more UCC financing statements as the Bank may reasonably require, (d) an environmental indemnification agreement with respect to environmental matters with respect to the Substitute Property, and (e) a collateral assignment of all contracts, including, but not limited to, development contracts, operating agreements, licenses, insurance proceeds, management agreements, and other agreements and plans, specifications and permits affecting the Substitute Property, (vii) Borrower shall deliver to

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the Bank with respect to each Substitute Property or in connection with the Modified Credit Loan such other documents, certificates, opinions and assurances as the Bank or the Bank’s counsel may request in their sole discretion reasonably exercised, in form and substance acceptable to the Bank, including, but not limited to, such documents, certificates, opinions and assurances and requirements that were delivered by Borrower to the Bank in connection with the original Credit Loan Facility, and (vii) Borrower pays all expenses incurred by the Bank in connection with the Substitute Property, the Modified Credit Loan or the foregoing, including, but not limited to, recording charges, title charges and reasonable attorneys’ fees. In addition to all of the above, it shall be a condition precedent to the Bank’s obligation to substitute or add any Substitute Property to the Property securing the Credit Loan that the Bank shall be satisfied that the Property shall continue to be subject to the lien of the Mortgage and will not be affected in any way which, in the sole judgment of the Bank, would adversely affect the security position of the Bank under the Mortgage.

17. Expenses and Counsel Fees. Borrower shall reimburse the Bank promptly for all of its out-of-pocket expenses incurred in connection with this Agreement or the Credit Loan, including, without limitation, filing fees, recording fees, any taxes (other than income taxes payable by the Bank) which the Bank may be required to pay in connection with the execution and delivery of this Agreement, the Note, the Note and the Other Security Documents. Borrower shall also pay: (i) all costs and expenses of the Bank (including, without limitation, reasonable fees and disbursements of counsel) incidental to the preparation and negotiation of this Agreement and the documents referred to herein, and (ii) all costs and expenses of the Bank (including, without limitation, fees and disbursements of counsel) incidental to the protection of the rights of the Bank hereunder and the enforcement of the Bank’s rights, powers and remedies hereunder and thereunder, whether by judicial proceedings or otherwise, including, without limitation, such costs and expenses incurred in the course of bankruptcy or liquidation proceedings. The obligations of Borrower hereunder shall survive the termination of this Agreement and the final and indefeasible payment in full of the outstanding Advances under the Credit Loan.

18.Miscellaneous.

(a)           Amendments and Waivers. No modification, rescission, waiver, release or amendment of any provision of this Agreement shall be made except by a written agreement signed by a duly authorized officer of Borrower and duly authorized officer of the Bank.

(b)           Delays and Omissions. No delay or omission by the Bank in exercising any right or remedy hereunder or with respect to the Credit Loan shall operate as a waiver thereof or of any other right or remedy, and no single or partial exercise thereof shall preclude any other or further exercise thereof or the exercise of any other right or remedy. The Bank may remedy any default by Borrower hereunder or with respect to the Credit Loan in any reasonable manner without waiving the default remedied and without waiving any other prior or subsequent default by Borrower, and shall be reimbursed for its expenses in so remedying such default. All rights and remedies of the Bank hereunder, under the Note and the Other Security Documents, under any other agreement and otherwise are cumulative; if any provision of this Agreement is inconsistent with any provision of any other agreement between the Bank and Borrower, the provisions of this Agreement shall control.

(c)           Successors and Assigns. Borrower and the Bank as used herein shall include the legal representatives, successors and assigns of those parties.

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(d)         Governing Law. This Agreement shall be construed and interpreted in accordance with, and governed by, the laws of the State of New York without regard to its principles of conflicts or choice of laws.

(e)          Usury Law. The Note and this Agreement are subject to the express condition that at no time shall Borrower be obligated or required to pay interest oil the principal balance due under the Note at a rate which could subject the Bank to either civil or criminal liability as a result of being in excess of the maximum interest rate which Borrower is permitted by applicable law to contract or agree to pay. If by the terms of the Note or this Agreement, Borrower is at any time required or obligated to pay interest on the principal balance due hereunder at a rate in excess of such maximum rate, the Applicable Interest Rate or the Default Rate, as the case may be, shall be deemed to be immediately reduced to such maximum rate and all previous payments in excess of the maximum rate shall be deemed to have been payments in reduction of principal and not on account of the interest due hereunder. All sums paid or agreed to be paid to the Bank for the use, forbearance, or detention of the Credit Loan, shall, to the extent permitted by applicable law, be amortized, prorated, allocated, and spread throughout the full stated term of the Note until payment in full so that the rate or amount of interest on account of the outstanding Advances does not exceed the maximum lawful rate of interest from time to time in effect and applicable to the Credit Loan for so long as the Advances are outstanding.

(f)          Inapplicable Provisions. If any provision hereof or of any other agreement made in connection herewith is held to be illegal or unenforceable, such provision shall be fully severable, and the remaining provisions of the applicable agreement shall remain in full force and effect and shall not be affected by such provision’s severance; provided,  however, in lieu of any such provision, there shall be added automatically as a part of the applicable agreement a legal and enforceable provision as similar in terms to the severed provision as may be possible.

(g)           Further Assurances. At any time and from time to time, upon the reasonable request of the Bank, Borrower shall execute, deliver and acknowledge, or cause to be executed, delivered and acknowledged, such other documents or instruments and do such other acts and things as the Bank may reasonably request in order to fully effectuate the terms of this Agreement and the Other Security Documents. The foregoing may include, without limitation, executing documents to confirm the amount of the Advances outstanding under the Credit Loan from time to time, and the date and amount of payments made in respect of the Credit Loan. All such requests shall receive the full cooperation and compliance by Borrower within seven (7) Business Days of the Bank making such requests. The failure of Borrower to comply with the obligations set forth in this Subsection 18(g) shall constitute an Event of Default.

(h)         No Assignment. The rights and obligations of Borrower under this Agreement shall not be assigned or delegated, in whole or in part, without the prior written consent of the Bank, and any purported assignment or delegation without the prior written consent of the Bank shall be void.

(i)           Notices. All notices requests, reports or other communications (each, a “Notice”) required hereunder or under the Note or any Other Security Document shall be in writing and shall be deemed to have been properly given (i) upon delivery, if delivered in person, (ii) one (1) Business Day after having been deposited for overnight delivery with any reputable overnight courier service, or (iii) three (3) Business Days after having been deposited in any post office or mail depository regularly maintained by the U.S. Postal Service and sent by certified mail, postage

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prepaid, return receipt requested, addressed as follows:

If to Borrower:	Griffin Land & Nurseries, Inc.
	One Rockefeller Plaza, Suite 2301
	New York, New York 10020
	Attention: Mr. Frederick M. Danziger
	President and Chief Executive Officer

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With a copy to:	Imperial Nurseries, Inc.
	90 Salmon Brook Street
	Granby, Connecticut 06035
	Attention: Mr. Anthony J. Galici
	Vice President and Chief Financial Officer
	and
	Murtha Cullina LLP
	CityPlace I
	185 Asylum Street
	Hartford, Connecticut 06103-3469
	Attention: Thomas M. Daniells, Esq.
If to the Bank:	Doral Bank, FSB
	623 Fifth Avenue
	New York, New York 10022
	Attention: Mortgage Servicing Department
With a copy to:	Granoff, Walker & Forlenza, P.C.
	747 Third Avenue
	New York, New York 10017
	Attention: Lee A. Forlenza, Esq.,

or to such other address as any party may designate for itself by like notice.

Either party by notice to the other may designate additional or different addresses for subsequent notices or communications.

19.           Right of Offset. Upon the occurrence and during the continuance of any Event of Default, the Bank is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by the Bank to or for the credit or the account of Borrower against any and all of the obligations of Borrower now or hereafter existing under this Agreement or the other obligations to the Bank by Borrower, whether or not the Bank shall have made any demand under this Agreement or otherwise and even if such obligation may be unmatured upon reasonable notice to Borrower. The rights of the Bank under this provision are in addition to any and all other rights and remedies available to the Bank.

20.           No Oral Modification. This Agreement embodies the entire agreement and understanding between Borrower and the Bank and supersede all prior agreements and understandings relating to the subject matter hereof. Any modification, amendment or waiver of or with respect to any provision of this Agreement must be made in a writing signed by both the Bank and Borrower and their respective successors and, subject to the terms hereof with respect to Borrower, assigns. This Agreement may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements of the parties hereto. There are no unwritten oral agreements among the parties. Borrower and the Bank acknowledge that each has had the benefit of legal counsel of its own choice and has been afforded an opportunity to review this

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Agreement and the other loan documents in connection herewith with its legal counsel and that this Agreement and the other loan documents shall be consulted as if jointly drafted by Borrower and the Bank.

21.          WAIVER OF TRIAL BY JURY. THE BANK AND BORROWER EACH HEREBY ABSOLUTELY, IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF THIS AGREEMENT, ANY OTHER LOAN INSTRUMENTS, OR ANY OTHER INSTRUMENT OR DOCUMENT EXECUTED OR DELIVERED PURSUANT TO OR OTHERWISE IN CONNECTION WITH THIS AGREEMENT. BORROWER AND THE BANK EACH AGREES THAT THE COURTS OF THE STATE OF NEW YORK LOCATED IN NEW YORK CITY, NEW YORK COUNTY AND THE FEDERAL COURTS LOCATED IN THE SOUTHERN DISTRICT OF NEW YORK, COUNTY OF NEW YORK, HAVE EXCLUSIVE JURISDICTION OVER ANY ACTIONS AND PROCEEDINGS INVOLVING THIS AGREEMENT OR ANY OTHER AGREEMENT MADE IN CONNECTION HEREWITH EXCEPT AS SPECIFICALLY PROVIDED IN SUCH OTHER AGREEMENT AND BORROWER AND THE BANK HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES TO SUBMIT TO THE JURISDICTION OF SUCH COURTS FOR PURPOSES OF ANY SUCH ACTION OR PROCEEDING. BORROWER AND THE BANK EACH HEREBY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO SERVICE OF PROCESS PROVIDED THE SAME IS GIVEN IN ACCORDANCE WITH THIS AGREEMENT. FINAL JUDGMENT IN ANY SUCH PROCEEDING SHALL BE CONCLUSIVE, SUBJECT TO ANY RIGHT OF APPEAL, AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT.

THE PARTIES HERETO have signed this Agreement on the date written above.

BORROWER:
GRIFFIN LAND & NURSERIES, INC.,
a Delaware corporation
By:	/s/ Anthony J. Galici
Name:	Anthony J. Galici
Title:	Vice President and Secretary
BANK:
DORAL BANK, FSB,
a Federal savings bank
By:	/s/ Kenneth DiGregorio
Name:	Kenneth DiGriegorio
Title:	Senior Vice President and Chief Lending Officer

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EX-10.46

Exhibit 10.46

OPEN-END MORTGAGE AND SECURITY AGREEMENT

GRIFFIN LAND & NURSERIES, INC., as Mortgagor

to

DORAL BANK, FSB, as Mortgagee

Dated:	April 28, 2011
Location:	29-35 Griffin Road South and 204, 206, 210, 310, 320, 330 and 340 West Newberry Road; and
	55 Griffin Road South
	Bloomfield, Connecticut
Town:	Bloomfield
County:	Hartford

PREPARED BY AND UPON RECORDATION RETURN TO:

Granoff, Walker & Forlenza, P.C.

747 Third Avenue, Suite 4C

New York, New York 10017

Attention: Lee A. Forlenza, Esq.

Chicago Title Insurance Company

Title No.: CT3467808

OPEN-END MORTGAGE AND SECURITY AGREEMENT

$12,500,000.00

THIS OPEN-END MORTGAGE AND SECURITY AGREEMENT, made as of the 28th day of April, 2011 (hereinafter referred to as this “Mortgage” or this “Security Instrument”), by GRIFFIN LAND & NURSERIES, INC., a Delaware corporation, having an address at One Rockefeller Plaza, Suite 2301, New York, New York 10020 (hereinafter referred to as the “Borrower” or “Mortgagor”), to DORAL BANK, FSB, a Federal savings bank, with an address at 623 Fifth Avenue, New York, New York 10022 (hereinafter referred to as the “Lender” or “Mortgagee”).

RECITALS:

WITNESSETH, that to secure the payment of an indebtedness evidenced by that certain Promissory Note, dated as of the date hereof, in the principal sum of up to Twelve Million Five Hundred Thousand and 00/100 Dollars ($12,500,000.00) lawful money of the United States, as the same may be modified, renewed or extended (the “Note”) which sum, with interest thereon is to be paid by Borrower to Lender in accordance with the terms of the Note and the Loan Agreement (hereinafter defined), and also to secure the payment by Borrower to Lender of all sums expended or advanced by Lender pursuant to any covenant, term or provision of this Mortgage, the Loan Agreement and any other document executed in connection with the Note, the Loan Agreement or this Mortgage (together with the Note, the Loan Agreement and this Mortgage, the “Loan Documents”), and to secure the performance of each covenant, term and provision by Borrower to be performed pursuant to this Mortgage or any other Loan Document, Borrower hereby mortgages to Lender, its successors and assigns, the following described property (collectively, the “Property”) whether now owned or held or hereafter acquired:

(a)           Land. The real property described in Exhibit A attached hereto and made a part hereof (the “Land”);

(b)           Improvements. The buildings, structures, fixtures (except with respect to fixtures used by Borrower at 204 and 210 West Newberry Road, Bloomfield, Connecticut), additions, enlargements, extensions, modifications, repairs, replacements and improvements now or hereafter erected or located on the Land (the “Improvements”);

(c)           Easements. All easements, rights-of-way or use, rights, strips and gores of land, streets, ways, alleys, passages, sewer rights, water, water courses, water rights and powers, air rights and development rights, and all estates, rights, titles, interests, privileges, liberties, servitudes, tenements, hereditaments and appurtenances of any nature whatsoever, in any way now or hereafter belonging, relating or pertaining to the Land and the Improvements and the reversion and reversions, remainder and remainders, and all land lying in the bed of any street, road or avenue, opened or proposed, in front of or adjoining the Land, to the center line thereof and all the estates, rights, titles, interests, dower and rights of dower, courtesy and rights of courtesy, property, possession, claim and demand whatsoever, both at law and in equity, of Borrower of, in and to the Land and the Improvements and every part and parcel thereof, with the appurtenances thereto;

(d)           Fixtures and Personal Property.   All machinery, equipment, fixtures (including, but not limited to, all heating, air conditioning, plumbing, lighting, communications and elevator fixtures) and other property of every kind and nature whatsoever owned by Borrower, or in which Borrower has or shall have an interest, now or hereafter located upon the Land and the Improvements, or appurtenant thereto, and usable in connection with the present or future operation and occupancy of the Land and the Improvements and all building equipment, materials and supplies of any nature whatsoever owned by Borrower, or in which Borrower has or shall have an interest, now or hereafter located upon the Land and the Improvements, or appurtenant thereto, or usable in connection with the present or future operation and occupancy of the Land and the Improvements (collectively, the “Personal Property”), except to the extent such Personal Property is owned by tenants under Leases (as hereinafter defined) and to the extent such Personal Property is used by Borrower at 204 and 210 West Newberry Road, Bloomfield, Connecticut, and the right, title and interest of Borrower in and to any of the Personal Property which may be subject to any security interests, as defined in the Uniform Commercial Code, as adopted and enacted by the state or states where any of the Property is located (the “Uniform Commercial Code”), superior in lien to the lien of this Security Instrument and all proceeds and products of the above;

(e)           (e) Leases and Rents. All leases, subleases and other agreements affecting the use, enjoyment or occupancy of the Land or the Improvements heretofore or hereafter entered into and all extensions, amendments and modifications thereto, whether before or after the filing by or against Borrower of any petition for relief under 11 U.S.C. §101 et seq., as the same may be amended from time to time (the “Bankruptcy Code”) (collectively, the “Leases”) and all right, title and interest of Borrower, its successors and assigns therein and thereunder, including, without limitation, cash or securities deposited thereunder to secure the performance by the lessees of their obligations thereunder and all rents, additional rents, revenues, issues and profits (including all oil and gas or other mineral royalties and bonuses) from the Land and the Improvements whether paid or accruing before or after the filing by or against Borrower of any petition for relief under the Bankruptcy Code (collectively, the “Rents”) and all proceeds from the sale or other disposition of the Leases and the right to receive and apply the Rents to the payment of the Debt (as defined in Section 2.2);

(f)            Condemnation Awards. All awards or payments, including interest thereon, which may heretofore and hereafter be made with respect to the Property, whether from the exercise of the right of eminent domain (including, but not limited to, any transfer made in lieu of or in anticipation of the exercise of the right), or for a change of grade, or for any other injury to or decrease in the value of the Property;

(g)           Insurance Proceeds. All proceeds of and any unearned premiums on any insurance policies covering the Property, including, without limitation, the right to receive and apply the proceeds of any insurance, judgments, or settlements made in lieu thereof, for damage to the Property;

(h)           Tax Certiorari. All refunds, rebates or credits in connection with a reduction in real estate taxes and assessments charged against the Property as a result of tax certiorari or any applications or proceedings for reduction;

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(i)            Conversion. All proceeds of the conversion, voluntary or involuntary, of any of the foregoing including, without limitation, proceeds of insurance and condemnation awards, into cash or liquidation claims;

(j)             Rights. The right, in the name and on behalf of Borrower, to appear in and defend any action or proceeding brought with respect to the Property and to commence any action or proceeding to protect the interest of Lender in the Property;

(k)           Contracts. All contracts with property managers, surveyors, real estate advisors and consultants, real estate brokers, and other like agents and professionals that relate to any of the Land or any improvements constructed or to be constructed on the Land, and all maps, reports, surveys and studies of or relating to any of the Land or any improvements constructed or to be constructed on the Land, now or hereafter in the possession of Borrower or any such agent or professional; and

(l)            Other Rights. Any and all other rights of Borrower in and to the items set forth in Subsections (a) through (k) above.

ARTICLE 1— GRANTS OF SECURITY

Section 1.1 ASSIGNMENT OF RENTS. Borrower hereby absolutely and unconditionally assigns to Lender Borrower’s right, title and interest in and to all current and future Leases and Rents; it being intended by Borrower that this assignment constitutes a present, absolute assignment and not an assignment for additional security only. Nevertheless, subject to the terms of this Section 1.1 and Section 3.7, Lender grants to Borrower a revocable license to collect and receive the Rents. Borrower shall hold the Rents, or a portion thereof sufficient to discharge all current sums due on the Debt, for use in the payment of such sums.

Section 1.2 SECURITY AGREEMENT; FINANCING STATEMENT. This Security Instrument is both a real property mortgage and a “security agreement” within the meaning of the Uniform Commercial Code. The Property includes both real and personal property and all other rights and interests, whether tangible or intangible in nature, of Borrower in the Property. By executing and delivering this Security Instrument, Borrower hereby grants to Lender, as security for the Obligations (as defined in Section 2.4), a security interest in the Personal Property to the full extent that the Personal Property may be subject to the Uniform Commercial Code. This Security Instrument shall serve as a financing statement with respect to the property described in Subsection (b) and Subsection (d) in the Recitals hereinabove pursuant to Section 9-402(6) of The Uniform Commercial Code.

Section 1.3 PLEDGE OF MONIES HELD. Borrower hereby pledges to Lender any and all monies now or hereafter held by Lender, including, without limitation, any sums deposited in the Escrow Fund (as defined in Section 3.4), Net Proceeds (as defined in Section 4.1) and condemnation awards or payments described in Section 3.6, as additional security for the Obligations until expended or applied as provided in this Security Instrument.

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CONDITIONS TO GRANT

TO HAVE AND TO HOLD the above granted and described Property unto and to the use and benefit of Lender, and the successors and assigns of Lender, forever;

PROVIDED, HOWEVER, these presents are upon the express condition that, if Borrower shall well and truly pay to Lender the Debt at the time and in the manner provided in the Note, the Loan Agreement and this Security Instrument, shall well and truly perform the Other Obligations as set forth in this Security Instrument and shall well and truly abide by and comply with each and every covenant and condition set forth herein and in the Note and Loan Agreement, these presents and the estate hereby granted shall cease, terminate and be void.

ARTICLE 2 —DEBT AND OBLIGATIONS SECURED

Section 2.1 WAIVER. Borrower and all others who may become liable for the payment of all or any part of the Debt do hereby severally waive presentment and demand for payment, notice of dishonor, protest and notice of protest and non-payment and all other notices of any kind. No release of any security for the Debt or extension of time for payment of the Note or any installment thereof, and no alteration, amendment or waiver of any provision of the Note, this Security Instrument or the Other Security Documents (as defined in Section 3.2) made by agreement between Lender or any other person or party shall release, modify, amend, waive, extend, change, discharge, terminate or affect the liability of Borrower, and any other person or entity who may become liable for the payment of all or any part of the Debt, under the Note, the Loan Agreement, this Security Instrument or the Other Security Documents. No notice to or demand on Borrower shall be deemed to be a waiver of the obligation of Borrower or of the right of Lender to take further action without further notice or demand as provided for in the Note, the Loan Agreement, this Security Instrument or the Other Security Documents. If Borrower is a partnership, the agreements herein contained shall remain in force and applicable, notwithstanding any changes in the individuals comprising the partnership, and the term “Borrower,” as used herein, shall include any alternate or successor partnership, but any predecessor partnership and their partners shall not thereby be released from any liability. If Borrower is a corporation, the agreements contained herein shall remain in full force and applicable notwithstanding any changes in the shareholders comprising, or the officers and directors relating to, the corporation, and the term “Borrower” as used herein, shall include any alternative or successor corporation, but any predecessor corporation shall not be relieved of liability hereunder. (Nothing in the foregoing sentence shall be construed as a consent to, or a waiver of, any prohibition or restriction on transfers of interests in such partnership which may be set forth in this Security Instrument or any Other Security Document.)

Section 2.2 DEBT. This Security Instrument and the grants, assignments and transfers made in Article 1 are given for the purpose of securing the following, in such order of priority as Lender may determine in its sole discretion (collectively, the “Debt” or the “Loan”):

(a)           the payment of the indebtedness evidenced by the Note in lawful money of the United States of America;

(b)           the payment of interest, default interest, late charges and other sums, as provided in the Note, the Loan Agreement, this Security Instrument or the Other Security Documents;

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(c)           the payment of all other moneys agreed or provided to be paid by Borrower in the Note, the Loan Agreement, this Security Instrument or the Other Security Documents;

(d)           the payment of all sums advanced pursuant to this Security Instrument to protect and preserve the Property and the lien and the security interest created hereby; and

(e) the payment of all sums advanced and costs and expenses incurred by Lender in connection with the Debt or any part thereof, any renewal, extension, or change of or substitution for the Debt or any part thereof, or the acquisition or perfection of the security therefor, whether made or incurred at the request of Borrower or Lender.

Section 2.3 OTHER OBLIGATIONS. This Security Instrument and the grants, assignments and transfers made in Article I are also given for the purpose of securing the following (the “Other Obligations”):

(a)          the performance of all other obligations of Borrower contained herein;

(b)         the performance of each obligation of Borrower contained in any other agreement given by Borrower to Lender which is for the purpose of further securing the obligations secured hereby, and any amendments, modifications and changes thereto; and

(c)          the performance of each obligation of Borrower contained in any renewal, extension, amendment, modification, consolidation, change of, or substitution or replacement for, all or any part of the Note, the Loan Agreement, this Security Instrument or the Other Security Documents.

Section 2.4 DEBT AND OTHER OBLIGATIONS. Borrower’s obligations for the payment of the Debt and the performance of the Other Obligations shall be referred to collectively below as the “Obligations.”

Section 2.5 PAYMENTS. Unless payments are made in the required amount in immediately available funds at the place where the Note is payable, remittances in payment of all or any part of the Debt shall not, regardless of any receipt or credit issued therefor, constitute payment until the required amount is actually received by Lender in funds immediately available at the place where the Note is payable (or any other place as Lender, in Lender’s sole discretion, may have established by delivery of written notice thereof to Borrower) and shall be made and accepted subject to the condition that any check or draft may be handled for collection in accordance with the practice of the collecting bank or banks. Acceptance by Lender of any payment in an amount less than the amount then due shall be deemed an acceptance on account only, and the failure to pay the entire amount then due shall be and continue to be an Event of Default (as defined in Section 9.1).

ARTICLE 3 - BORROWER COVENANTS

Borrower covenants and agrees that:

Section 3.1 PAYMENT OF DEBT. Borrower will pay the Debt at the time and in the manner provided in the Note, the Loan Agreement and in this Security Instrument.

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Section 3.2 INCORPORATION BY REFERENCE. All the covenants, conditions and agreements contained in (a) the Note and (b) all and any of the documents other than the Note, the Loan Agreement or this Security Instrument now or hereafter executed by Borrower or others and by or in favor of Lender, which wholly or partially secure or guaranty payment of the Note (the “Other Security Documents”), are hereby made a part of this Security Instrument to the same extent and with the same force as if fully set forth herein.

Section 3.3        INSURANCE.

(a)           Borrower shall obtain and maintain, or cause to be maintained, insurance for Borrower and the Property providing at least the following coverages:

(i)            comprehensive all risk insurance on the Improvements and the Personal Property, in each case (A) in an amount equal to 100% of the “Full Replacement Cost,” which for purposes of this Security Instrument shall mean actual replacement value (exclusive of costs of excavations, foundations, underground utilities and footings), but the amount shall in no event be less than the outstanding principal balance of the Note; and (B) containing an agreed amount endorsement with respect to the Improvements and Personal Property waiving all co-insurance provisions;

(ii)           commercial general liability insurance against claims for personal injury, bodily injury, death or property damage occurring upon, in or about the Property, such insurance to be on the so-called “occurrence” form with a combined single limit of not less than $1,000,000.00 and $2,000,000.00 in the aggregate;

(iii)          if any portion of the Improvements is at any time located in an area identified by the Secretary of Housing and Urban Development or any successor thereto as an area having special flood hazards pursuant to the National Flood Insurance Act of 1968, the Flood Disaster Protection Act of 1973 or the National Flood Insurance Reform Act of 1994, as each may be amended, or any successor law (the “Flood Insurance Acts”), flood hazard insurance in an amount equal to the lesser of (A) the principal balance of the Note, or (B) the maximum limit of coverage available for the Property under the Flood Insurance Acts;

(iv)         At all times that the Note is outstanding, Borrower shall maintain insurance with respect to the Land and the Improvements against such risks and for such amounts as are customarily insured against by businesses of like size and type paying, as the same become due and payable, all premiums in respect thereto, including, but not limited to:

(a)   Boiler and machinery insurance covering physical damage to the Improvements and to the major components of any central heating, air conditioning or ventilation systems and such other equipment as Lender shall designate.

(b)    Workers’ compensation insurance, disability benefits insurance, and such other form of insurance which the Borrower is required by law to provide, covering loss resulting from injury, sickness, disability or death of employees of Borrower who are located at or assigned to the Land.

(c)     Insurance protecting Borrower and Lender against loss or losses from liabilities imposed by law or assumed in any written contract and arising from personal injury and

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death or damage to the property of others caused by accident or occurrence, in such amounts as may be designated from time to time by Lender, excluding liability imposed upon the Borrower by any applicable workers’ compensation law, or such other amounts as may be required in writing by the Lender; and a blanket excess liability policy in an amount reasonably satisfactory to the Lender protecting Borrower and Lender against any loss or liability or damage for personal injury or property damage.

(v) such other insurance and in such amounts as Lender from time to time may reasonably request against such other insurable hazards which at the time are commonly insured against for property similar to the Property located in or around the region in which the Property is located.

(b)           All insurance provided for in Subsection (a) hereof shall be obtained under valid and enforceable policies (the “Policies” or in the singular, the “Policy”), in such forms and, from time to time after the date hereof, in such amounts as may from time to time be satisfactory to Lender, issued by financially sound and responsible insurance companies authorized to do business in the state in which the Property is located and approved by Lender. The insurance companies must have a general policy rating of A or better and a financial class of VI or better by A.M. Best Company, Inc., and if there are any Securities (as defined in Section 17.1 below) issued which have been assigned a rating by a credit rating agency approved by Lender (a “Rating Agency”), the insurance company shall have a claims paying ability rating by such Rating Agency of not lower than one rating category below the highest rating at any time assigned to the Securities, but in no event less than BBB by Standard & Poor’s Corp. or such comparable rating by such other Rating Agency (each such insurer shall be referred to below as a “Qualified Insurer”). Not less than two (2) days prior to the expiration dates of the Policies theretofore furnished to Lender pursuant to Subsection 3.3(a), certified copies of the Policies marked “premium paid” or accompanied by evidence satisfactory to Lender of payment of the premiums due thereunder (the “Insurance Premiums”), shall be delivered by Borrower to Lender; provided, however, that in the case of renewal Policies, Borrower may furnish Lender with binders therefor to be followed by the original Policies when issued.

(c)          Borrower shall not obtain (i) any umbrella or blanket liability or casualty Policy unless, in each case, Lender’s interest is included in such Policy as provided in Subsection 3.3(d) hereof, with respect to each individual property address in connection with the Property, the individual coverage amounts are listed in such Policy for each individual property address in connection with the Property and such Policy is issued by a Qualified Insurer, or (ii) separate insurance concurrent in form or contributing in the event of loss with that required in Subsection 3.3(a) to be furnished by, or which may be reasonably required to be furnished by, Borrower. In the event Borrower obtains separate insurance or an umbrella or a blanket Policy, Borrower shall notify Lender of the same and shall cause certified copies of each Policy to be delivered as required in Subsection 3.3(a). Any blanket insurance Policy shall specifically allocate to the Property the amount of coverage from time to time required hereunder and shall otherwise provide the same protection as would a separate Policy insuring only the Property in compliance with the provisions of Subsection 3.3(a).

(d)         All Policies of insurance provided for or contemplated by Subsection 3.3(a) shall name Borrower as the insured and Lender as mortgagee or additional insured, as their respective interests may appear, and in the case of property damage, and flood insurance, shall contain a so-called New York standard non-contributing mortgagee clause in favor of Lender providing that the loss thereunder shall be payable to Lender.

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(e)          All Policies of insurance provided for in Subsection 3.3(a) shall contain clauses or endorsements to the effect that:

(i)            no act or negligence of Borrower, or anyone acting for Borrower, or of any tenant under any Lease or other occupant, or failure to comply with the provisions of any Policy which might otherwise result in a forfeiture of the insurance or any part thereof, shall in any way affect the validity or enforceability of the insurance insofar as Lender is concerned;

(ii)           the Policy shall not be materially changed (other than to increase the coverage provided thereby) or canceled without at least 30 days’ written notice to Lender and any other party named therein as an insured;

(iii)          each Policy shall provide that the issuers thereof shall give written notice to Lender if the Policy has not been renewed thirty (30) days prior to its expiration; and

(iv)          Lender shall not be liable for any Insurance Premiums thereon or subject to any assessments thereunder.

(f)            If at any time Lender is not in receipt of written evidence that all insurance required hereunder is in full force and effect, Lender shall have the right, without notice to Borrower to take such action as Lender deems necessary to protect its interest in the Property, including, without limitation, the obtaining of such insurance coverage as Lender in its sole discretion deems appropriate, and all expenses incurred by Lender in connection with such action or in obtaining such insurance and keeping it in effect shall be paid by Borrower to Lender upon demand and until paid shall be secured by this Security Instrument and shall bear interest in accordance with Section 9.3 hereof.

(g)           If the Property shall be damaged or destroyed, in whole or in part, by fire or other casualty, Borrower shall give prompt notice of such damage to Lender and shall promptly commence and diligently prosecute the completion of the repair and restoration of the Property as nearly as possible to the condition the Property was in immediately prior to such fire or other casualty, with such alterations as may be approved by Lender (the “Restoration”) and otherwise in accordance with Section 4.1 of this Security Instrument. Borrower shall pay all costs of such Restoration whether or not such costs are covered by insurance.

Section 3.4           PAYMENT OF TAXES AND ESCROW FUND.

(a)           Borrower shall: (i) pay, when due, all real estate taxes, water charges and sewer rents, and (ii) furnish to Lender, promptly after payment of the same, certificates, receipts or other evidence satisfactory to Lender of such payment.

(b)           Provided an Event of Default has occurred, which Event of Default was not (1) the direct result of any condemnation or eminent domain proceeding, or (2) a breach of a specific covenant hereunder due solely to a breach by a lessee under a Lease, Lender may require Borrower, upon ten (10) days notice to Borrower, to pay to Lender, on the first day of each

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calendar month: (i) one-twelfth of an amount which would be sufficient to pay the annual real estate taxes, water charges and sewer rents payable, or estimated by Lender to be payable, during the next ensuing twelve (12) months, and (ii) one-twelfth of an amount which would be sufficient to pay the fire and extended coverage premiums due for the renewal of the coverage afforded by the Policies upon the expiration thereof (the amounts in (i) and (ii) above shall be called the “Escrow Fund”).

(c)           All sums deposited into the Escrow Fund shall be held by Lender without interest for the purposes of paying such real estate taxes, water charges, sewer rents or insurance premiums. The sums deposited with Lender for this purpose may be adjusted from time to time, either upward or downward, in the event that the estimated amount shall prove to be more or less than the actual amount required to be paid by the Borrower on the next ensuing due date. If at any time during the term of the Loan (or, if applicable, during the extended term of the Loan), advances are made by Lender, its successor or assigns, on behalf of Borrower, a service fee of two percent (2%) per month will be levied on any amount advanced until the advance is repaid.

(d)           The Escrow Fund and the payments of interest or principal or both, payable pursuant to the Note shall be added together and shall be paid as an aggregate sum by Borrower to Lender. Lender will apply the Escrow Fund to payments of real estate taxes, water charges, sewer rents and Insurance Premiums required to be made by Borrower pursuant to Sections 3.3 and 3.4 hereof. If the amount of the Escrow Fund shall exceed the amounts due for taxes and Insurance Premiums pursuant to Sections 3.3 and 3.4 hereof, Lender shall, in its discretion, return any excess to Borrower or credit such excess against future payments to be made to the Escrow Fund. In allocating such excess, Lender may deal with the person shown on the records of Lender to be the owner of the Property. If the Escrow Fund is not sufficient to pay the items set forth in (i) and (ii) above, Borrower shall promptly pay to Lender, upon demand, an amount which Lender shall estimate as sufficient to make up the deficiency. The Escrow Fund shall not constitute a trust fund and may be commingled with other monies held by Lender. No earnings or interest on the Escrow Fund shall be payable to Borrower.

(e)           Borrower agrees to notify Lender immediately of any changes to the amounts, schedules and instructions for payment of any real estate taxes, water charges, sewer rents and Insurance Premiums of which it has or obtains knowledge and authorizes Lender or its agent to obtain the bills for taxes directly from the appropriate taxing authority.

Section 3.5            [Intentionally omitted].

Section 3.6 CONDEMNATION. Borrower shall promptly give Lender notice of the actual or threatened commencement of any condemnation or eminent domain proceeding and shall deliver to Lender copies of any and all papers served in connection with such proceedings. Notwithstanding any taking by any public or quasi-public authority through eminent domain or otherwise (including, but not limited to, any transfer made in lieu of or in anticipation of the exercise of such taking), Borrower shall continue to pay the Debt at the time and in the manner provided for its payment in the Note, the Loan Agreement and in this Security Instrument and the Debt shall not be reduced until any award or payment therefor shall have been actually received and applied by Lender, after the deduction of expenses of collection, to the reduction or discharge of the Debt. Lender shall not be limited to the interest paid on the award by the condemning authority but shall be entitled to receive out of the award interest at the rate or rates provided herein or in the Note. Lender may apply any award or payment to the reduction or discharge of the Debt whether or not then due and payable. If the Property is sold, through foreclosure or otherwise, prior to the receipt by Lender of

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the award or payment, Lender shall have the right, whether or not a deficiency judgment on the Note shall have been sought, recovered or denied, to receive the award or payment, or a portion thereof sufficient to pay the Debt.

Section 3.7           OCCUPANCY BY BORROWER; LEASES AND RENTS.

(a)           After the date hereof, Borrower shall not enter into any Lease for 25,000 or more square feet (hereinafter a “Major Lease”) or any modification, renewal or amendment of a Major Lease without Lender’s prior written approval of the terms and conditions thereof. Notwithstanding the foregoing, during any period when Borrower fails to maintain the required net operating income as set forth in Section 9(a) of the Loan Agreement, Borrower shall not enter into any Lease or any modification, renewal or amendment of any Lease without Lender’s prior written approval of the terms and conditions thereof. Borrower shall furnish Lender with executed copies of all Leases and all modifications, renewals or amendments thereto within thirty (30) days following execution of such Lease or such modification, renewal or amendment. In addition, all renewals of Leases and all proposed Leases shall provide for rental rates and terms comparable to existing local market rates and terms and shall be arms-length transactions with bona fide, independent third party tenants. All Leases shall provide that they are subordinate to this Security Instrument and that the lessee agrees to attorn to Lender. Borrower (i) shall observe and perform all the obligations imposed upon the lessor under the Leases and shall not do or permit to be done anything to impair the value of any of the Leases as security for the Debt; (ii) shall promptly send copies to Lender of all notices of default which Borrower shall send or receive thereunder; (iii) shall not collect any of the Rents more than one (1) month in advance; and (iv) shall not execute any other assignment of the lessor’s interest in any of the Leases or the Rents.

(b)            Provided an Event of Default has occurred, Borrower shall promptly deposit with Lender any and all monies representing security deposits under the Leases (the “Security Deposits”), whether or not Borrower actually received such monies. Borrower shall also provide Lender with the names of all tenants, their social security numbers or tax identification numbers and the amount of security being held for each tenant. Subject to the terms of this Subsection, Lender shall hold the Security Deposits in accordance with the terms of the respective Lease, and shall only release the Security Deposits in order to return a tenant’s Security Deposit to such tenant if such tenant is entitled to the return of the Security Deposit under the terms of the Lease and is not otherwise in default under the Lease. To the extent required by Applicable Laws (as defined in Section 3.10), Lender shall hold the Security Deposits in an interest bearing account selected by Lender in its sole discretion. In the event Lender is not permitted by Applicable Law to hold the Security Deposits, Borrower shall deposit the Security Deposits into a segregated interest bearing account with a federally insured institution as approved by Lender.

Section 3.8 MAINTENANCE OF PROPERTY. Borrower shall cause the Property to be maintained in a good and safe condition and repair. The Improvements and the Personal Property shall not be removed, demolished or materially altered (except for normal replacement of the Personal Property) without the prior written consent of Lender. Borrower shall promptly repair, replace or rebuild any part of the Property which may be destroyed by any casualty, or become damaged, worn or dilapidated or which may be affected by any proceeding of the character referred to in Section 3.6 hereof and shall complete and pay for any structure at any time in the process of construction or repair on the Land. Borrower shall not initiate, join in, acquiesce in, or consent to

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any change in any private restrictive covenant, zoning law or other public or private restriction, limiting or defining the uses which may be made of the Property or any part thereof. If under applicable zoning provisions the use of all or any portion of the Property is or shall become a nonconforming use, Borrower will not cause or pen-nit the nonconforming use to be discontinued or abandoned without the express written consent of Lender.

Section 3.9 WASTE. Borrower shall not commit or suffer any waste of the Property or make any change in the use of the Property which will in any way materially increase the risk of fire or other hazard arising out of the operation of the Property, or take any action that might invalidate or give cause for cancellation of any Policy, or do or permit to be done thereon anything that may in any way impair the value of the Property or the security of this Security Instrument. Borrower will not, without the prior written consent of Lender, permit any drilling or exploration for or extraction, removal, or production of any minerals from the surface or the subsurface of the Land, regardless of the depth thereof or the method of mining or extraction thereof.

Section 3.10 COMPLIANCE WITH LAWS. Borrower shall promptly comply with all existing and future federal, state and local laws, orders, ordinances, governmental rules and regulations or court orders affecting or which may be interpreted to affect the Property, or the use thereof (“Applicable Laws”). Borrower shall from time to time, upon Lender’s request, provide Lender with evidence satisfactory to Lender that the Property complies with all Applicable Laws or is exempt from compliance with Applicable Laws. Borrower shall give prompt notice to Lender of the receipt by Borrower of any notice related to a violation of any Applicable Laws and of the commencement of any proceedings or investigations which relate to compliance with Applicable Laws.

Section 3.11 BOOKS AND RECORDS.

(a)           Borrower and any Guarantors (as defined in Subsection 9.1(f)), if any, and Indemnitor(s) (as defined in Subsection 9.1(q)), if any, shall keep adequate books and records of account in accordance with generally accepted accounting principles (“GAAP”), or in accordance with other methods acceptable to Lender in its sole discretion, consistently applied. Lender shall have the right from time to time upon reasonable prior notice during normal business hours to examine such books, records and accounts at the office of Borrower and to make copies or extracts thereof as Lender shall desire.

(b)           Borrower will furnish Lender, all in accordance with generally accepted accounting principles, consistently applied (“GAAP”) during the term of the Loan: (i) within fifteen (15) days after Borrower files its Form 10-K with the Securities and Exchange Commission, or any successor agency or commission thereto, audited consolidated financial statements of Borrower, including, but not limited to, balance sheets, income statements and cash flow statements for Borrower’s respective fiscal year (or calendar year, if applicable), audited by McGladrey & Pullen, LLP, Borrower’s independent certified public accountant (“McGladrey”), which such financial statements and information shall indicate no material adverse change from such statements and information provided to Lender in connection with the application of the Loan. Notwithstanding the foregoing, upon Lender’s written request, Borrower shall retain other independent certified public accountants acceptable to Lender, in its reasonable discretion, to prepare such financial statements if Lender determines, in its reasonable discretion, that McGladrey is no longer acceptable to Lender; (ii) promptly following Lender’s request: (a) a “rent roll,” so-called, stating with respect to each Lease the name of the tenant, the

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rent paid by such tenant, the date to which such rent is paid, the date on which such tenant’s leasehold interest terminates and the security deposit required under the respective Lease from each such tenant (the “Rent Roll”), and (b) a written confirmation from Borrower as to the status of any Lease or any extension thereof, and the Rent Roll, confirmation and information certified to by an officer of Borrower as being true, complete and accurate, which the Rent Roll, confirmation and information shall indicate that there has been no material adverse change from the Rent Roll, confirmation, if any, or information provided to Lender in connection with the application of the Loan; and (iii) within ninety (90) days of the end of each fiscal year of Borrower, annual financial information statements for the Property, including, but not limited to, income and expense statements, a statement of operations, and a cash flow statement and such statements and information certified to by an officer of Borrower as being true, complete and accurate, which such statements and information shall indicate that there has been no material adverse change from the statements and information provided to Lender in connection with the application of the Loan; and (iv) within a reasonable period of time and from time to time, such other financial data or information with respect to the Borrower, the Property or any Guarantor, if any, as may be reasonably requested by Lender from time to time.

Section 3.12 PAYMENT FOR LABOR AND MATERIALS. Borrower will promptly pay when due all bills and costs for labor, materials, and specifically fabricated materials incurred in connection with the Property and never permit to exist beyond the due date thereof in respect of the Property or any part thereof any lien or security interest, even though inferior to the liens and the security interests hereof, and in any event never permit to be created or exist in respect of the Property or any part thereof any other or additional lien or security interest other than the liens or security interests hereof, except for the Permitted Exceptions (as defined below).

Section 3.13 PERFORMANCE OF OTHER AGREEMENTS. Borrower shall observe and perform each and every term to be observed or performed by Borrower pursuant to the terms of any agreement or recorded instrument affecting or pertaining to the Property, or given by Borrower to Lender for the purpose of further securing an Obligation and any amendments, modifications or changes thereto.

ARTICLE 4 - RESTORATION

Section 4.1              RESTORATION.

(a)             If the Net Proceeds (as defined below) shall be less than $75,000 and the costs of completing the Restoration shall be less than $75,000, the Net Proceeds will be disbursed by Lender to Borrower upon receipt, provided that all of the conditions set forth in Subsection 4.1(b)(i) are met and Borrower delivers to Lender a written undertaking to expeditiously commence and to satisfactorily complete with due diligence the Restoration in accordance with the terms of this Security Instrument.

(b)             If the Net Proceeds are equal to or greater than $75,000 or the costs of completing the Restoration is equal to or greater than $75,000, Lender shall make the net amount of all insurance proceeds received by Lender pursuant to Subsection 3.3(a) of this Security Instrument as a result of such damage or destruction, after deduction of its reasonable costs and expenses (including, but not limited to, reasonable counsel fees), if any, in collecting the same (the “Net Proceeds”) available for the Restoration in accordance with the

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provisions of this Subsection 4.1(b).

(i)              The Net Proceeds shall be made available to Borrower for the Restoration provided that each of the following conditions are met:

(A)          no Event of Default shall have occurred and be continuing under the Note, the Loan Agreement, this Security Instrument or any of the Other Security Documents;

(B)           [intentionally omitted];

(C)           Borrower or the tenant subsidiary, if any, will continue to utilize the Property following Restoration and covenants and agrees with Lender to do so (upon the same terms and conditions as existed prior to the fire or other casualty) prior to receipt of the Net Proceeds;

(D)          Borrower shall commence the Restoration as soon as reasonably practicable (but in no event later than thirty (30) days after such damage or destruction occurs) and shall diligently pursue the same to satisfactory completion;

(E)          Lender shall be satisfied that any operating deficits, which will be incurred with respect to the Property as a result of the occurrence of any such fire or other casualty will be covered out of (1) the Net Proceeds, or (2) by other funds of Borrower;

(F)          Lender shall be satisfied that the Restoration will be completed on or before the earliest to occur of (1) three (3) months prior to the Maturity Date (as defined in the Loan Agreement) or the Extended Maturity Date (as defined in the Loan Agreement), as the case may be, (2) nine (9) months after the occurrence of such fire or other casualty or (3), such time as may be required under applicable zoning law, ordinance, rule or regulation in order to repair and restore the Property to the condition it was in immediately prior to such fire or other casualty;

(G)         Borrower shall execute and deliver to Lender a completion guaranty in form and substance satisfactory to Lender and its counsel pursuant to the provisions of which Borrower shall guaranty to Lender the lien-free completion by Borrower of the Restoration in accordance with the provisions of this Subsection 4.1(b);

(H)         the Property and the use thereof after the Restoration will be in compliance with and permitted under all applicable zoning laws, ordinances, rules and regulations; and

(I)           the Restoration shall be done and completed by Borrower in an expeditious and diligent fashion and in compliance with all applicable governmental laws, rules and regulations (including, without limitation, all applicable Environmental Laws (as defined below).

(ii)The Net Proceeds shall be held by Lender and, until disbursed in accordance with the provisions of this Subsection 4.1(b), shall constitute additional security for the Obligations. The Net Proceeds shall be disbursed by Lender to, or as directed by, Borrower from time to time during the course of the Restoration, upon receipt of evidence satisfactory to Lender that (A) all materials installed and work and labor performed (except to the extent that they are to be paid for out of the requested disbursement) in connection with the Restoration have been paid for in full, and (B) there exist no notices of pendency, stop orders, mechanic’s or materialman’s liens or notices of intention to file same, or any other liens or encumbrances of any nature

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whatsoever on the Property arising out of the Restoration which have not either been fully bonded to the satisfaction of Lender and discharged of record or in the alternative fully insured to the satisfaction of Lender by the title company insuring the lien of this Security Instrument.

(iii)          All plans and specifications required in connection with the Restoration shall be subject to prior review and acceptance in all respects by Lender and by an independent consulting engineer selected by Lender (the “Casualty Consultant”), whose fees are to be paid out of Net Proceeds.

(iv)          In no event shall Lender be obligated to make disbursements of the Net Proceeds in excess of an amount equal to the costs actually incurred from time to time for work in place as part of the Restoration, as certified by the Casualty Consultant, minus an amount equal to 10% of the costs actually incurred for work in place as part of the Restoration.

(v)           Lender shall not be obligated to make disbursements of the Net Proceeds more frequently than once every calendar month.

(vi)          If at any time the Net Proceeds or the undisbursed balance thereof shall not, in the opinion of Lender, be sufficient to pay in full the balance of the costs which are estimated by the Casualty Consultant to be incurred in connection with the completion of the Restoration, Borrower shall deposit the deficiency (the “Net Proceeds Deficiency”) with Lender before any further disbursement of the Net Proceeds shall be made. The Net Proceeds Deficiency deposited with Lender shall be held by Lender and shall be disbursed for costs actually incurred in connection with the Restoration on the same conditions applicable to the disbursement of the Net Proceeds, and until so disbursed pursuant to this Subsection 4.1(b) shall constitute additional security for the Obligations.

(vii)         The excess, if any, of the Net Proceeds and the remaining balance, if any, of the Net Proceeds Deficiency deposited with Lender after the Casualty Consultant certifies to Lender that the Restoration has been completed in accordance with the provisions of this Subsection 4.1(b), and the receipt by Lender of evidence satisfactory to Lender that all costs incurred in connection with the Restoration have been paid in full, shall be remitted by Lender to Borrower, provided no Event of Default shall have occurred and shall be continuing under the Note, the Loan Agreement, this Security Instrument or any of the Other Security Documents.

(c)             All Net Proceeds not required hereunder to be made available for the Restoration may be retained and applied by Lender toward the payment of the Debt whether or not then due and payable in such order, priority and proportions as Lender in its discretion shall deem proper. If Lender shall receive and retain Net Proceeds, the lien of this Security Instrument shall be reduced only by the amount thereof received and retained by Lender and actually applied by Lender in reduction of the Debt.

ARTICLE 5 - REPRESENTATIONS AND WARRANTIES

Borrower represents and warrants to Lender that:

Section 5.1 WARRANTY OF TITLE. Borrower has good title to the Property and has the right to mortgage, grant, bargain, sell, pledge, assign, warrant, transfer and convey the same and that Borrower possesses an unencumbered fee simple absolute estate in the Land and the Improvements and that it owns the Property free and clear of all liens, encumbrances and charges

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whatsoever except for those exceptions shown in the title insurance policy insuring the lien of this Security Instrument (the “Permitted Exceptions”). Borrower shall forever warrant, defend and preserve the title and the validity and priority of the lien of this Security Instrument and shall forever warrant and defend the same to Lender against the claims of all persons whomsoever.

Section 5.2 AUTHORITY.  Borrower (and the undersigned representative of Borrower, if any) has full power, authority and legal right to execute this Security Instrument, and to mortgage, grant, bargain, sell, pledge, assign, warrant, transfer and convey the Property pursuant to the terms hereof and to keep and observe all of the terms of this Security Instrument on Borrower’s part to be performed. Borrower (a) is duly organized, validly existing and in good standing under the laws of its state of organization or incorporation; (b) is duly qualified to transact business and is in good standing in the State where the Property is located; and (c) has all necessary approvals, governmental and otherwise, and full power and authority to own the Property and carry on its business as now conducted and proposed to be conducted. Borrower now has and shall continue to have the full right, power and authority to operate and lease the Property, to encumber the Property as provided herein and to perform all of the other obligations to be performed by Borrower under the Note, the Loan Agreement, this Security Instrument and the Other Security Documents.

Section 5.3            STATUS OF PROPERTY.

(a)           No portion of the Improvements is located in an area identified by the Secretary of Housing and Urban Development or any successor thereto as an area having special flood hazards pursuant to the Flood Insurance Acts or, if any portion of the Improvements is located within such area, Borrower has obtained and will maintain the insurance prescribed in Section 3.3 hereof.

(b)           Borrower has obtained all necessary certificates, licenses and other approvals, governmental and otherwise, necessary for the operation of the Property and the conduct of its business and all required zoning, building code, land use, environmental and other similar permits or approvals, all of which are in full force and effect as of the date hereof and not subject to revocation, suspension, forfeiture or modification.

(c)           The Property and the present and contemplated use and occupancy thereof are or shall be in full compliance with all applicable zoning ordinances, building codes, land use and environmental laws and other similar laws.

(d)          The Property is served by all utilities required for the current or contemplated use thereof. All utility service is provided by public utilities and the Property has accepted or is equipped to accept such utility service.

(e)             All public roads and streets necessary for service of and access to the Property for the current or contemplated use thereof have been completed, are serviceable and all-weather and are physically and legally open for use by the public.

(f)              The Property is served by public water and sewer systems.

(g)             The Property is free from damage caused by fire or other casualty.

(h)             Borrower has paid in full for, and is the owner of, all furnishings, fixtures and

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equipment (other than tenants’ property) used in connection with the operation of the Property, free and clear of any and all security interests, liens or encumbrances, except the lien and security interest created hereby.

(i)              All liquid and solid waste disposal, septic and sewer systems located on the Property are in a good and safe condition and repair and in compliance with all Applicable Laws.

Section 5.4 NOFOREIGN PERSON. Borrower is not a “foreign person” within the meaning of Section 1445(f)(3) of the Internal Revenue Code of 1986, as amended and the related Treasury Department regulations, including temporary regulations.

Section 5.5 SEPARATE TAX LOT. The Property is assessed for real estate tax purposes as one or more wholly independent tax lot or lots, separate from any adjoining land or improvements not constituting a part of such lot or lots, and no other land or improvements is assessed and taxed together with the Property or any portion thereof.

Section 5.6 LEASES. (a) Borrower is the sole owner of the entire lessor’s interest in the Leases; (b) the Leases are valid and enforceable and in full force and effect; (c) all of the Leases are arms-length agreements with bona fide, independent third parties; (d) no party under any Lease is in default; (e) all Rents due have been paid in full, except as set forth in the Rent Roll; (f) the terms of all alterations, modifications and amendments to the Leases are reflected in the certified occupancy statement delivered to and approved by Lender; (g) none of the Rents reserved in the Leases have been assigned or otherwise pledged or hypothecated; (h) none of the Rents have been collected for more than one (1) month in advance; (i) the premises demised under the Leases have been completed and the tenants under the Leases have accepted the same and have taken possession of the same on a rent-paying basis; (j) there exist no offsets or defenses to the payment of any portion of the Rents; (k) no Lease contains an option to purchase, right of first refusal to purchase, or any other similar provision; (1) no person or entity has any possessory interest in, or right to occupy, the Property except under and pursuant to a Lease; (m) each Lease is subordinate to this Security Instrument, either pursuant to its terms or a recorded subordination agreement; and (n) no Lease has the benefit of a non-disturbance agreement, except those entered into on or about the date hereof with Lender in connection with the Loan.

Section 5.7             FINANCIAL CONDITION.

(a) (i) Borrower is solvent, and no bankruptcy, reorganization, insolvency or similar proceeding under any state or federal law with respect to Borrower has been initiated, and (ii) Borrower has received reasonably equivalent value for the granting of this Security Instrument.

(b) No petition in bankruptcy has ever been filed by or against Borrower, any Guarantor, any Indemnitor or any related entity, or any principal, general partner or member thereof, in the last seven (7) years, and neither Borrower, any Guarantor, any Indemnitor nor any related entity, or any principal, general partner or member thereof, in the last seven (7) years has ever made any assignment for the benefit of creditors or taken advantage of any insolvency act or any act for the benefit of debtors.

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ARTICLE 6 - FURTHER ASSURANCES

Section 6.1 RECORDING OF SECURITY INSTRUMENT, ETC. Borrower forthwith upon the execution and delivery of this Security Instrument and thereafter, from time to time, will cause this Security Instrument and any of the Other Security Documents creating a lien or security interest or evidencing the lien hereof upon the Property and each instrument of further assurance to be filed, registered or recorded in such manner and in such places as may be required by any present or future law in order to publish notice of and fully to protect and perfect the lien or security interest hereof upon, and the interest of Lender in, the Property. Borrower will pay all taxes, filing, registration or recording fees, and all expenses incident to the preparation, execution, acknowledgment or recording of the Note, the Loan Agreement, this Security Instrument, the Other Security Documents, any note or mortgage supplemental hereto, any security instrument with respect to the Property and any instrument of further assurance, and any modification or amendment of the foregoing documents, and all federal, state, county and municipal taxes, duties, imposts, assessments and charges arising out of or in connection with the execution and delivery of this Security Instrument, any mortgage supplemental hereto, any security instrument with respect to the Property or any instrument of further assurance, and any modification or amendment of the foregoing documents, except where prohibited by law so to do.

Section 6.2 FURTHER ACTS, ETC. Borrower will, at the cost of Borrower, and without expense to Lender, do, execute, acknowledge and deliver all and every such further acts, deeds, conveyances, mortgages, assignments, notices of assignments, transfers and assurances as Lender shall, from time to time, require, for the better assuring, conveying, assigning, transferring, and confirming unto Lender the Property and rights hereby mortgaged, granted, bargained, sold, conveyed, confirmed, pledged, assigned, warranted and transferred or intended now or hereafter so to be, or which Borrower may be or may hereafter become bound to convey or assign to Lender, or for carrying out the intention or facilitating the performance of the terms of this Security Instrument or for filing, registering or recording this Security Instrument, or for complying with all Applicable Laws. Borrower, on demand, will execute and deliver and hereby authorizes Lender to execute in the name of Borrower or without the signature of Borrower to the extent Lender may lawfully do so, one or more financing statements, chattel mortgages or other instruments, to evidence more effectively the security interest of Lender in the Property. Borrower grants to Lender an irrevocable power of attorney coupled with an interest for the purpose of exercising and perfecting any and all rights and remedies available to Lender at law and in equity, including, without limitation, such rights and remedies available to Lender pursuant to this Section 6.2.

Section 6.3CHANGES IN TAX, DEBT CREDIT AND DOCUMENTARY STAMP LAWS.

(a)           If any law is enacted or adopted or amended after the date of this Security Instrument which deducts the Debt from the value of the Property for the purpose of taxation or which imposes a tax, either directly or indirectly, on the Debt or Lender’s interest in the Property, Borrower will pay the tax, with interest and penalties thereon, if any. If Lender is advised by counsel chosen by it that the payment of tax by Borrower would be unlawful or taxable to Lender or unenforceable or provide the basis for a defense of usury, then Lender shall have the option by written notice of not less than ninety (90) days to declare the Debt immediately due and payable.

(b)           Borrower will not claim or demand or be entitled to any credit or credits on account of the Debt for any part of the Taxes or Other Charges assessed against the Property, or any part thereof, and no deduction shall otherwise be made or claimed from the assessed value

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of the Property, or any part thereof, for real estate tax purposes by reason of this Security Instrument or the Debt. If such claim, credit or deduction shall be required by law, Lender shall have the option, by written notice of not less than ninety (90) days, to declare the Debt immediately due and payable.

(c)           If at any time the United States of America, any State thereof or any subdivision of any such State shall require revenue or other stamps to be affixed to the Note, the Loan Agreement, this Security Instrument, or any of the Other Security Documents or impose any other tax or charge on the same, Borrower will pay for the same, with interest and penalties thereon, if any.

Section 6.4            SNDA AND ESTOPPEL CERTIFICATES.

(a)             After request by Lender, Borrower, within ten (10) days, shall furnish Lender or any proposed assignee with a statement, duly acknowledged and certified by Borrower, setting forth (i) the amount of the original principal amount of the Note, (ii) the unpaid principal amount of the Note, (iii) the rate of interest of the Note, (iv) the terms of payment and maturity date of the Note, (v) the date installments of interest or principal were last paid, (vi) that, except as provided in such statement, there are no defaults or events which with the passage of time or the giving of notice or both, would constitute an event of default under the Note, the Loan Agreement or this Security Instrument, (vii) that the Note, the Loan Agreement and this Security Instrument are valid, legal and binding obligations and have not been modified or if modified, giving particulars of such modification, (viii) whether any offsets or defenses exist against the obligations secured hereby and, if any are alleged to exist, a detailed description thereof, (ix) that all Leases are in full force and effect and have not been modified (or if modified, setting forth all modifications), (x) the date to which the Rents thereunder have been paid pursuant to the Leases, (xi) whether or not, to the best knowledge of Borrower, any of the lessees under the Leases are in default under the Leases, and, if any of the lessees are in default, setting forth the specific nature of all such defaults, (xii) the amount of security deposits held by Borrower under each Lease and that such amounts are consistent with the amounts required under each Lease, and (xiii) as to any other matters reasonably requested by Lender and reasonably related to the Leases, the obligations secured hereby, the Property or this Security Instrument.

(b)           Borrower shall deliver to Lender, promptly upon request, duly executed estoppel certificates from any one or more lessees as required by Lender attesting to such facts regarding the Lease as Lender may require, including, but not limited to, attestations that each Lease covered thereby is in full force and effect with no defaults thereunder on the part of any party, that none of the Rents have been paid more than one month in advance, and that the lessee claims no defense or offset against the full and timely performance of its obligations under the Lease.

(c)           Upon any transfer or proposed transfer contemplated by Section 17.1 hereof, at Lender’s written request, Borrower, any Guarantors and any Indemnitor(s) shall provide an estoppel certificate to the Investor (as defined in Section 17.1) or any prospective Investor in such form, substance and detail as Lender, such Investor or prospective Investor may require.

Section 6.5 SPLITTING OF SECURITY INSTRUMENT. This Security Instrument

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and the Note shall, at any time until the same shall be fully paid and satisfied, at the sole election of Lender, be split or divided into two or more notes and two or more security instruments, each of which shall cover all or a portion of the Property to be more particularly described therein. To that end, Borrower, upon written request of Lender, shall execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered by the then owner of the Property, to Lender or its designee or designees substitute notes and security instruments in such principal amounts, aggregating not more than the then unpaid principal amount of this Security Instrument, and containing terms, provisions and clauses similar to those contained herein and in the Note, and such other documents and instruments as may be required by Lender.

Section 6.6 REPLACEMENT DOCUMENTS. Upon receipt of an affidavit of an officer of Lender as to the loss, theft, destruction or mutilation of the Note, the Loan Agreement or any Other Security Document which is not of public record, and, in the case of any such mutilation, upon surrender and cancellation of such Note, Loan Agreement or Other Security Document, Borrower will issue, in lieu thereof, a replacement Note, Loan Agreement or Other Security Document, dated the date of such lost, stolen, destroyed or mutilated Note, Loan Agreement or Other Security Document in the same principal amount thereof and otherwise of like tenor.

ARTICLE 7 - DUE ON SALE/ENCUMBRANCE

Section 7.1 LENDER RELIANCE. Borrower acknowledges that Lender has examined and relied on the experience of Borrower and its directors, members, general partners, principals and (if Borrower is a trust) beneficial owners in owning and operating properties such as the Property in agreeing to make the loan secured hereby, has relied on the covenant of Borrower contained in Section 3.7(a) hereof, and will continue to rely on Borrower’s ownership and occupancy of the Property as a means of maintaining the value of the Property as security for repayment of the Debt and the performance of the Other Obligations. Borrower acknowledges that Lender has a valid interest in maintaining the value of the Property so as to ensure that, should Borrower default in the repayment of the Debt or the performance of the Other Obligations, Lender can recover the Debt by a sale of the Property.

Section 7.2 NO SALE/ENCUMBRANCE AND SUBORDINATE FINANCING. Borrower agrees that Borrower shall not, without the prior written consent of Lender, (i) sell, convey, mortgage, grant, bargain, encumber, pledge, assign, or otherwise transfer the Property or any part thereof or permit the Property or any part thereof to be sold, conveyed, mortgaged, granted, bargained, encumbered, pledged, assigned, or otherwise transferred and (ii) permit any subordinate financing or any other form of lien or encumbrance placed on the Property which is not removed or bonded within sixty (60) days after such filing.

Section 7.3             SALE/ENCUMBRANCE DEFINED. A sale, conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment, or transfer within the meaning of this Article 7 shall be deemed to include, but not limited to, (a) an installment sales agreement wherein Borrower agrees to sell the Property or any part thereof for a price to be paid in installments; (b) an agreement by Borrower leasing all or a substantial part of the Property for other than actual occupancy by a space

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tenant thereunder or a sale, assignment or other transfer of, or the grant of a security interest in, Borrower’s right, title and interest in and to any Leases or any Rents; (c) if Borrower, any Guarantor, any Indemnitor, or any general or limited partner or member of Borrower, any Guarantor or any Indemnitor is a corporation, the voluntary or involuntary sale, conveyance, transfer or pledge of such corporation’s stock (or the stock of any corporation directly or indirectly controlling such corporation by operation of law or otherwise) or the creation or issuance of new stock by which an aggregate of more than 35% of such corporation’s stock shall be vested in a party or parties who are not now stockholders; (d) if Borrower, any Guarantor or any Indemnitor or any general or limited partner or member of Borrower, any Guarantor or any Indemnitor is a limited or general partnership or joint venture, the change, removal or resignation of a general partner or managing partner or the transfer or pledge of the partnership interest of any general partner or managing partner or any profits or proceeds relating to such partnership interest or the voluntary or involuntary sale, conveyance, transfer or pledge of limited partnership interests (or the limited partnership interests of any limited partnership directly or indirectly controlling such limited partnership by operation of law or otherwise) or the creation or issuance of new limited partnership interests, by which an aggregate of more than 10% of such limited partnership interests are held by parties who are not currently limited partners; and (e) if Borrower, any Guarantor, any Indemnitor or any general or limited partner or member of Borrower, any Guarantor or any Indemnitor is a limited liability company, the change, removal or resignation of a managing member or the transfer of the membership interest of any managing member or any profits or proceeds relating to such membership interest or the voluntary or involuntary sale, conveyance, transfer or pledge of membership interests (or the membership interests of any limited liability company directly or indirectly controlling such limited liability company by operation of law or otherwise) or the creation or issuance of new membership interests, by which an aggregate of more than 10% of such membership interests are held by parties who are not currently members.

Section 7.4 LENDER’S RIGHTS. Lender reserves the right to condition the consent required hereunder upon a modification of the terms hereof and on assumption of the Note, the Loan Agreement, this Security Instrument and the Other Security Documents as so modified by the proposed transferee, payment of a transfer fee of not less than one percent (1%) of the principal balance of the Note, a $500.00 processing fee, and all of Lender’s expenses incurred in connection with such transfer (including, but not limited to reasonable attorneys’ fees and expenses), the approval by a Rating Agency of the proposed transferee, the proposed transferee’s continued compliance with the covenants set forth in this Security Instrument, or such other conditions as Lender shall determine in its sole discretion to be in the interest of Lender. All of Lender’s expenses incurred and the $500.00 processing fee shall be payable by Borrower whether or not Lender consents to the transfer. Lender shall not be required to demonstrate any actual impairment of its security or any increased risk of default hereunder in order to declare the Debt immediately due and payable upon Borrower’s sale, conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment, or transfer of the Property without Lender’s consent. This provision shall apply to every sale, conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment, or transfer of the Property regardless of whether voluntary or not, or whether or not Lender has consented to any previous sale, conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment, or transfer of the Property.

ARTICLE 8 - PREPAYMENT

Section 8.1 PREPAYMENT BEFORE EVENT OF DEFAULT. The Debt may be prepaid only in strict accordance with the express terms and conditions of the Note including the payment of any prepayment premium or consideration.

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Section 8.2 PREPAYMENT AFTER EVENT OF DEFAULT. If a Default Prepayment (as defined below) occurs, Borrower shall pay to Lender the entire Debt, including, without limitation, the sums referred to in Article 5 of the Note, if any, as if such payment were a voluntary prepayment referred to in such Article 5. For purposes of this Section 8.2, the term “Default Prepayment” shall mean a prepayment of the principal amount of the Note made after the occurrence of any Event of Default or an acceleration of the Maturity Date under any circumstances, including, without limitation, a prepayment occurring in connection with reinstatement of this Security Instrument provided by statute under foreclosure proceedings or exercise of a power of sale, any statutory right of redemption exercised by Borrower or any other party having a statutory right to redeem or prevent foreclosure, any sale in foreclosure or under exercise of a power of sale or otherwise.

ARTICLE 9 - DEFAULT

Section 9.1 EVENTS OF DEFAULT. The occurrence of any one or more of the following events shall constitute an “Event of Default”:

(a)             if any portion of the Debt is not paid when due and continues for a period of ten (10) days after notice thereof by Lender, provided, however, Lender shall not be obligated to provide more than two (2) such notices in any continuous twelve (12) month period during the term of the Loan with respect to any failure by Borrower to make any payment of interest or principal due under the Note;

(b)             if the entire Debt is not paid on or before the Maturity Date or the Extended Maturity Date, as the case may be;

(c)             if any of the Taxes or Other Charges is not paid when the same is due and payable and continues for a period of ten (10) days after notice thereof by Lender, except to the extent sums sufficient to pay such Taxes and Other Charges have been deposited with Lender in accordance with the terms of this Security Instrument;

(d)             if the Policies are not kept in full force and effect, or if the Policies are not delivered to Lender upon request;

(e)             if Borrower violates or does not comply with any of the provisions of Section 3.7 or Article 11 within thirty (15) days after notice from Lender or if Borrower violates or does not comply with any of the provisions of Article 7;

(f)            if any representation or warranty of Borrower, any Indemnitor or any person guaranteeing payment of the Debt or any portion thereof or performance by Borrower of any of the terms of this Security Instrument (a “Guarantor”), or any director, member, general partner, principal or beneficial owner of any of the foregoing, made herein or in the Environmental Indemnity (as defined below) or any guaranty, or in any certificate, report, financial statement or other instrument or document furnished to Lender shall have been false or misleading in any material respect when made;

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(g)             if (i) Borrower or any Guarantor or Indemnitor shall commence any case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization, conservatorship or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets, or Borrower or any managing member or general partner of Borrower, or any Guarantor or Indemnitor shall make a general assignment for the benefit of its creditors; or (ii) there shall be commenced against Borrower or any managing member or general partner of Borrower, or any Guarantor or Indemnitor any case, proceeding or other action of a nature referred to in clause (i) above which (A) results in the entry of an order for relief or any such adjudication or appointment or (B) remains undismissed, undischarged or unbonded for a period of sixty (60) days; or (iii) Borrower or any director, managing member or general partner of Borrower, or any Guarantor or Indemnitor shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i) or (ii) above; or (iv) Borrower or any managing member or general partner of Borrower, or any Guarantor or Indemnitor shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due;

(h)             if (i) a writ of execution or attachment or any similar process shall be issued or levied against all or any part of, or interest in the Property, any of the Borrower’s other properties or assets (collectively, the “Other Borrower Assets”) or any Guarantor’s or any Indemnitor’s properties or assets, or any judgment involving monetary damages shall be entered against Borrower which shall become a lien on all or any part of, or interest in the Property or any Other Borrower Assets, or entered against any Guarantor or any Indemnitor which shall become a lien on all or any part of, or interest in such Guarantor’s or Indemnitor’s properties or assets, and an appeal shall not be taken and actively prosecuted with respect to such judgment within thirty (30) days of its entry, or such execution, attachment or similar process shall not be released, bonded, satisfied, vacated or stayed within sixty (60) days after its entry or levy, and with respect to the Other Borrower Assets only, said writ of execution, attachment levy or judgment shall involve monetary damages aggregating more than $50,000,00; or (ii) Borrower or any director, managing member or general partner of Borrower, or any Guarantor or Indemnitor shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i) above;

(i)              if Borrower or any other person or entity shall be in default under the Note, the Loan Agreement or the other Loan Documents or under any other mortgage, instrument, deed of trust, deed to secure debt or other security agreement covering any part of the Property whether it be superior or junior in lien to this Security Instrument, or otherwise executed and delivered in connection with the Note, the Loan Agreement, or the other Loan Documents or the loan evidenced and secured thereby;

(j)              if Borrower shall be in default under the Windsor Mortgage (as

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hereinafter defined) and any and all documents executed in connection with the Windsor Mortgage;

(k)             if the Property becomes subject to any mechanic’s, materialman’s or other lien other than a lien for local real estate taxes and assessments not then due and payable and the lien shall remain undischarged of record (by payment, bonding or otherwise) for a period of sixty (60) days or if the same is not fully insured to the satisfaction of Lender by the title company insuring the lien of this Security Instrument;

(l)              if any federal tax lien is filed against Borrower, any Guarantor, any Indemnitor or the Property and same is not discharged of record within thirty (30) days after same is filed;

(m)            if any condemnation or eminent domain proceeding has been finally concluded and adjudicated which renders the use or occupancy of the Property economically unfeasible;

(n)             if Borrower shall fail to reimburse Lender on demand, with interest calculated at the Default Rate, for all Insurance Premiums or Taxes, together with interest and penalties imposed thereon, paid by Lender pursuant to this Security Instrument;

(o)             if Borrower shall fail to deliver to Lender, within ten (10) days after request by Lender, the estoppel certificates required pursuant to the terms of Subsections 6.4(a) and (c);

(p)             if Borrower shall fail to deliver to Lender, within ten (10) days after request by Lender, the statements referred to in Section 3.11 in accordance with the terms thereof;

(q)             if any default occurs under that certain environmental indemnity agreement dated the date hereof given by Borrower and the Guarantor (at times hereinafter and hereinbefore collectively referred to as “Indemnitor”) to Lender (the “Environmental Indemnity”) and such default continues after the expiration of applicable notice and grace periods, if any;

(r)              [intentionally omitted];

(s)             if the Borrower shall have entered into any secondary financing, guaranteed any other loan, other than trade payables in the ordinary course of its business which are paid within thirty (30) days of when due, or shall have consented to the placing of any lien, mortgage or other encumbrance upon the Property without the prior written consent of Lender. Notwithstanding the foregoing, the Borrower may take on additional indebtedness or guarantees unrelated to the Property without the prior written consent of Lender provided Borrower is not in default under the Note, the Loan Agreement, this Mortgage, the Windsor Mortgage or the other Loan Documents at the time of the initial closing of such indebtedness. If Borrower is in default under the Note, the Loan Agreement, this Mortgage, the Windsor Mortgage or the other Loan Documents, Lender’s prior written consent shall be required, which consent can be withheld for any reason or no reason;

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(t)              the dissolution or the sale, assignment, hypothecation, gift or other transfer of all or substantially all of the assets of Borrower;

(u)             any failure of Borrower to adhere to any governmental rules or regulations after notice from Lender or any applicable governmental authority and beyond the same cure periods as provide in Subsection 9.1(x) hereof;

(v)             if Borrower shall be in a declared default in the payment of any indebtedness for borrowed money, including without limitation, any other indebtedness owed to Lender, or shall be in a declared default in the performance of any term, covenant, condition or agreement of any such indebtedness if the effect of such default would be that the holder of such indebtedness elects to accelerate the maturity thereof, provided, however, that any declared default with respect to non-recourse mortgage obligations of Borrower which is held by any other party or parties other than Lender shall not constitute an Event of Default hereunder;

(w)            the sale, transfer, encumbrance, conveyance or assignment of the Property, directly or indirectly, except as permitted under Section 16 of the Loan Agreement; or

(x)             if for more than ten (10) days after notice from Lender, Borrower shall continue to be in default under any other term, covenant or condition of the Note, the Loan Agreement, this Security Instrument or the Other Security Documents in the case of any default which can be cured by the payment of a sum of money or for thirty (30) days after notice from Lender in the case of any other default, provided that if such default cannot be cured within such thirty (30) day period and Borrower shall have commenced to cure such default within such thirty (30) day period and thereafter diligently and expeditiously proceeds to cure the same, such thirty (30) day period shall be extended for so long as it shall require Borrower in the exercise of due diligence to cure such default, it being agreed, however, that no such extension shall be for a period in excess of ninety (90) days.

Section 9.2 LATE PAYMENT CHARGE. If any monthly installment of principal and interest is not paid on or prior to the tenth (10th) day after the date on which it is due, Borrower shall pay to Lender upon demand an amount equal to the lesser of five percent (5%) of such unpaid portion of the outstanding monthly installment of principal and interest then due or the maximum amount permitted by applicable law, to defray the expense incurred by Lender in handling and processing such delinquent payment and to compensate Lender for the loss of the use of such delinquent payment, and such amount shall be secured by this Security Instrument and the Other Security Documents.

Section 9.3 DEFAULT INTEREST RATE. Upon the occurrence of an Event of Default and its continuing beyond any applicable notice, grace or cure periods, Lender shall be entitled to receive and Borrower shall pay interest on the entire unpaid principal balance of the Note at a rate that is the lesser of twenty-one percent (21%) per annum or the maximum rate permitted by applicable law (the “Default Rate”). The Default Rate shall be computed from the occurrence of the Event of Default until the earlier of (i) the date prior to the day upon which the Event of Default is cured or (ii) the date upon which the Debt is paid in full. Interest calculated at the Default Rate shall be added to the Debt, and shall be deemed secured by this Mortgage.

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ARTICLE 10 - RIGHTS AND REMEDIES

Section 10.1 REMEDIES. Upon the occurrence of any Event of Default, Borrower agrees that Lender may take such action, without notice or demand, as it deems advisable to protect and enforce its rights against Borrower and in and to the Property, including, but not limited to, the following actions, each of which may be pursued concurrently or otherwise, at such time and in such order as Lender may determine, in its sole discretion, without impairing or otherwise affecting the other rights and remedies of Lender:

(a)             declare the entire unpaid Debt to be immediately due and payable;

(b)             institute proceedings, judicial or otherwise, for the complete foreclosure of this Security Instrument under any applicable provision of law in which case the Property or any interest therein may be sold for cash or upon credit in one or more parcels or in several interests or portions and in any order or manner. It is expressly acknowledged and agreed that the Default Rate shall be in effect at all times after an Event of Default shall have occurred and be continuing until the full principal amount of the Debt shall have been finally and indefeasibly paid in full, and that such Default Rate shall continue in effect after the entry of any money judgment or decree or other judgment or decree which may be entered in any action or proceeding under this Security Instrument, the Loan Agreement or the Note (including any deficiency proceeding) notwithstanding any provision of law or rule providing for post-judgment interest at a lower rate, unless interest at the higher rate provided for herein shall be expressly prohibited by specific provision of any applicable statute, rule or regulation of the State of Connecticut. It is further expressly agreed and acknowledged by Borrower that the Default Rate shall apply to any such judgment or decree until the final and indefeasible payment in full of all amounts due under such judgment or decree is received by Lender. As such, the Default Rate shall survive the entry of any such judgment or decree and any merger, or claim of merger, of the Note, the Loan Agreement or this Mortgage into any such judgment or decree.

(c)               with or without entry, to the extent permitted and pursuant to the procedures provided by applicable law, institute proceedings for the partial foreclosure of this Security Instrument for the portion of the Debt then due and payable, subject to the continuing lien and security interest of this Security Instrument for the balance of the Debt not then due, unimpaired and without loss of priority;

(d)              sell for cash or upon credit the Property or any part thereof and all estate, claim, demand, right, title and interest of Borrower therein and rights of redemption thereof, pursuant to power of sale or otherwise, at one or more sales, as an entity or in parcels, at such time and place, upon such terms and after such notice thereof as may be required or permitted by law;

(e)               institute an action, suit or proceeding in equity for the specific performance of any covenant, condition or agreement contained herein, in the Note, the Loan Agreement or in the Other Security Documents;

(f)               recover judgment on the Note either before, during or after any proceedings for the enforcement of this Security Instrument or the Other Security Documents;

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(g)              apply for the appointment of a receiver, trustee, liquidator or conservator of the Property, without notice and without regard for the adequacy of the security for the Debt and without regard for the solvency of Borrower, any Guarantor, Indemnitor or of any person, firm or other entity liable for the payment of the Debt;

(h)           subject to any applicable law, the license granted to Borrower under Section 1.2 shall automatically be revoked and Lender may enter into or upon the Property, either personally or by its agents, nominees or attorneys and dispossess Borrower and its agents and servants therefrom, without liability for trespass, damages or otherwise and exclude Borrower and its agents or servants wholly therefrom, and take possession of all books, records and accounts relating thereto and Borrower agrees to surrender possession of the Property and of such books, records and accounts to Lender upon demand, and thereupon Lender may (i) use, operate, manage, control, insure, maintain, repair, restore and otherwise deal with all and every part of the Property and conduct the business thereat; (ii) complete any construction on the Property in such manner and form as Lender deems advisable; (iii) make alterations, additions, renewals, replacements and improvements to or on the Property; (iv) exercise all rights and powers of Borrower with respect to the Property, whether in the name of Borrower or otherwise, including, without limitation, the right to make, cancel, enforce or modify Leases, obtain and evict tenants, and demand, sue for, collect and receive all Rents of the Property and every part thereof, (v) require Borrower to pay monthly in advance to Lender, or any receiver appointed to collect the Rents, the fair and reasonable rental value for the use and occupation of such part of the Property as may be occupied by Borrower; (vi) require Borrower to vacate and surrender possession of the Property to Lender or to such receiver and, in default thereof, Borrower may be evicted by summary proceedings or otherwise; and (vii) apply the receipts from the Property to the payment of the Debt, in such order, priority and proportions as Lender shall deem appropriate in its sole discretion after deducting therefrom all expenses (including reasonable attorneys’ fees) incurred in connection with the aforesaid operations and all amounts necessary to pay the Taxes, Other Charges, Insurance Premiums and other expenses in connection with the Property, as well as just and reasonable compensation for the services of Lender, its counsel, agents and employees;

(i)            exercise any and all rights and remedies granted to a secured party upon default under the Uniform Commercial Code, including, without limiting the generality of the foregoing: (i) the right to take possession of the Personal Property or any part thereof, and to take such other measures as Lender may deem necessary for the care, protection and preservation of the Personal Property, and (ii) request Borrower at Borrower’s expense to assemble the Personal Property and make it available to Lender at a convenient place acceptable to Lender. Any notice of sale, disposition or other intended action by Lender with respect to the Personal Property sent to Borrower in accordance with the provisions hereof at least five (5) days prior to such action, shall constitute commercially reasonable notice to Borrower;

(j)            apply any sums then deposited in the Escrow Fund and any other sums held in escrow or otherwise by Lender in accordance with the terms of this Security Instrument or any Other Security Document to the payment of the following items in any order in its sole and absolute discretion:

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(i)            Taxes and Other Charges;

(ii)           Insurance Premiums;

(iii)          Interest on the unpaid principal balance of the Note;

(iv)          Amortization of the unpaid principal balance of the Note;

(v)           All other sums payable pursuant to the Note, the Loan Agreement, this Security Instrument and the Other Security Documents, including without limitation advances made by Lender pursuant to the terms of this Security Instrument;

(k)           surrender the Policies maintained pursuant to Article 3 hereof, collect the unearned Insurance Premiums and apply such sums as a credit on the Debt in such priority and proportion as Lender in its discretion shall deem proper, and in connection therewith, Borrower hereby appoints Lender as agent and attorney-in-fact (which is coupled with an interest and is therefore irrevocable) for Borrower to collect such Insurance Premiums;

(l)            pursue such other remedies as Lender may have under applicable law; or

(m)          apply the undisbursed balance of any Net Proceeds Deficiency deposit, together with interest thereon, to the payment of the Debt in such order, priority and proportions as Lender shall deem to be appropriate in its discretion.

In the event of a sale, by foreclosure, power of sale, or otherwise, of less than all of the Property, this Security Instrument shall continue as a lien and security interest on the remaining portion of the Property unimpaired and without loss of priority. Notwithstanding the provisions of this Section 10.1 to the contrary, if any Event of Default as described in clause (i) or (ii) of Subsection 9.1(g) shall occur, the entire unpaid Debt shall be automatically due and payable, without any further notice, demand or other action by Lender.

Section 10.2 APPLICATION OF PROCEEDS. The purchase money, proceeds and avails of any disposition of the Property, or any part thereof, or any other sums collected by Lender pursuant to the Note, the Loan Agreement, this Security Instrument or the Other Security Documents, may be applied by Lender to the payment of the Debt in such priority and proportions as Lender in its discretion shall deem proper.

Section 10.3 RIGHT TO CURE DEFAULTS. Upon the occurrence of any Event of Default or if Borrower fails to make any payment or to do any act as herein provided, Lender may, but without any obligation to do so and without notice to or demand on Borrower and without releasing Borrower from any obligation hereunder, make or do the same in such manner

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and to such extent as Lender may deem necessary to protect the security hereof. Lender is authorized to enter upon the Property for such purposes, or appear in, defend, or bring any action or proceeding to protect its interest in the Property or to foreclose this Security Instrument or collect the Debt, and the cost and expense thereof (including reasonable attorneys’ fees to the extent permitted by law), with interest as provided in this Section 10.3, shall constitute a portion of the Debt and shall be due and payable to Lender upon demand. All such costs and expenses incurred by Lender in remedying such Event of Default or such failed payment or act or in appearing in, defending, or bringing any such action or proceeding shall bear interest at the Default Rate, for the period after notice from Lender that such cost or expense was incurred to the date of payment to Lender. All such costs and expenses incurred by Lender together with interest thereon calculated at the Default Rate shall be deemed to constitute a portion of the Debt and be secured by this Security Instrument and the Other Security Documents and shall be immediately due and payable upon demand by Lender therefor.

Section 10.4 ACTIONS AND PROCEEDINGS. Lender has the right to appear in and defend any action or proceeding brought with respect to the Property and to bring any action or proceeding, in the name and on behalf of Borrower, which Lender, in its discretion, decides should be brought to protect its interest in the Property.

Section 10.5 RECOVERY OF SUMS REQUIRED TO BE PAID. Lender shall have the right from time to time to take action to recover any sum or sums which constitute a part of the Debt as the same become due, without regard to whether or not the balance of the Debt shall be due, and without prejudice to the right of Lender thereafter to bring an action of foreclosure, or any other action, for a default or defaults by Borrower existing at the time such earlier action was commenced.

Section 10.6 OTHER RIGHTS, ETC.

(a)           The failure of Lender to insist upon strict performance of any term hereof shall not be deemed to be a waiver of any term of this Security Instrument. Borrower shall not be relieved of Borrower’s obligations hereunder by reason of (i) the failure of Lender to comply with any request of Borrower, any Guarantor or any Indemnitor to take any action to foreclose this Security Instrument or otherwise enforce any of the provisions hereof or of the Note, the Loan Agreement or the Other Security Documents, (ii) the release, regardless of consideration, of the whole or any part of the Property, or of any person liable for the Debt or any portion thereof, or (iii) any agreement or stipulation by Lender extending the time of payment or otherwise modifying or supplementing the terms of the Note, the Loan Agreement, this Security Instrument or the Other Security Documents.

(b)           It is agreed that the risk of loss or damage to the Property is on Borrower, and Lender shall have no liability whatsoever for decline in value of the Property, for failure to maintain the Policies, or for failure to determine whether insurance in force is adequate as to the amount of risks insured. Possession by Lender shall not be deemed an election of judicial relief, if any such possession is requested or obtained, with respect to any Property or collateral not in Lender’s possession.

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(c)           Lender may resort for the payment of the Debt to any other security held by Lender in such order and manner as Lender, in its discretion, may elect. Lender may take action to recover the Debt, or any portion thereof, or to enforce any covenant hereof without prejudice to the right of Lender thereafter to foreclose this Security Instrument. The rights of Lender under this Security Instrument shall be separate, distinct and cumulative and none shall be given effect to the exclusion of the others. No act of Lender shall be construed as an election to proceed under any one provision herein to the exclusion of any other provision. Lender shall not be limited exclusively to the rights and remedies herein stated but shall be entitled to every right and remedy now or hereafter afforded at law or in equity.

Section 10.7 RIGHT TO RELEASE ANY PORTION OF THE PROPERTY. Lender may release any portion of the Property for such consideration as Lender may require without, as to the remainder of the Property, in any way impairing or affecting the lien or priority of this Security Instrument, or improving the position of any subordinate lienholder with respect thereto, except to the extent that the obligations hereunder shall have been reduced by the actual monetary consideration, if any, received by Lender for such release, and may accept by assignment, pledge or otherwise any other property in place thereof as Lender may require without being accountable for so doing to any other lienholder. This Security Instrument shall continue as a lien and security interest in the remaining portion of the Property.

Section 10.8 VIOLATION OF LAWS. If the Property is not in compliance with Applicable Laws, Lender may impose additional requirements upon Borrower in connection herewith including, without limitation, monetary reserves or financial equivalents.

Section 10.9 RECOURSE AND CHOICE OF REMEDIES. Notwithstanding any other provision of this Security Instrument, Lender and other Indemnified Parties (as defined in Section 12.1 below) are entitled to enforce the obligations of Borrower, Guarantor and Indemnitor contained in Section 12.2 and in the Environmental Indemnity without first resorting to or exhausting any security or collateral and without first having recourse to the Note or any of the Property, through foreclosure or acceptance of a deed in lieu of foreclosure or otherwise, and in the event Lender commences a foreclosure action against the Property, Lender is entitled to pursue a deficiency judgment with respect to such obligations against Borrower, any Guarantor or Indemnitor. The liability of Borrower, Guarantor and Indemnitor is not limited to the original principal amount of the Note. Notwithstanding the foregoing, nothing herein shall inhibit or prevent Lender from foreclosing pursuant to this Security Instrument or exercising any other rights and remedies pursuant to the Note, the Loan Agreement, this Security Instrument and the Other Security Documents, whether simultaneously with foreclosure proceedings or in any other sequence. A separate action or actions may be brought and prosecuted against Borrower, whether or not action is brought against any other person or entity or whether or not any other person or entity is joined in the action or actions. In addition, Lender shall have the right but not the obligation to join and participate in, as a party if it so elects, any administrative or judicial proceedings or actions initiated in connection with any matter addressed in Article 11 or in the Environmental Indemnity.

Section 10.10 RIGHT OF ENTRY. Lender and its agents shall have the right to enter and inspect the Property at all reasonable times.

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ARTICLE 11 - ENVIRONMENTAL HAZARDS

Section 11.1 ENVIRONMENTAL REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants, that to the best of its knowledge and based upon information that Borrower knows or should reasonably have known (a) there are no Hazardous Substances (as defined below) or underground storage tanks in, on, or under the Property, except those that are both (i) in compliance with Environmental Laws (as defined below) and with permits issued pursuant thereto and (ii) fully disclosed to Lender in writing pursuant to the written reports resulting from the environmental assessments of the Property delivered to Lender (the “Environmental Report”); (b) there are no past, present or threatened Releases (as defined below) of Hazardous Substances in, on, under or from the Property except as described in the Environmental Report; (c) there is no threat of any Release of Hazardous Substances migrating to the Property except as described in the Environmental Report; (d) there is no past or present non-compliance with Environmental Laws, or with permits issued pursuant thereto, in connection with the Property except as described in the Environmental Report; (e) Borrower does not know of, and has not received, any written or oral notice or other communication from any person or entity (including, but not limited to, a governmental entity) relating to Hazardous Substances or Remediation (as defined below) thereof, of possible liability of any person or entity pursuant to any Environmental Law, other environmental conditions in connection with the Property, or any actual or potential administrative or judicial proceedings in connection with any of the foregoing; and (f) Borrower has truthfully and fully provided to Lender, in writing, any and all information relating to conditions in, on, under or from the Property that is known to Borrower and that is contained in Borrower’s files and records, including, but not limited to, any reports relating to Hazardous Substances in, on, under or from the Property or to the environmental condition of the Property. “Environmental Law” means any present and future federal, state and local laws, statutes, ordinances, rules, regulations and the like, as well as common law, relating to protection of human health or the environment, relating to Hazardous Substances, relating to liability for or costs of Remediation or prevention of Releases of Hazardous Substances or relating to liability for or costs of other actual or threatened danger to human health or the environment. “Environmental Law” includes, but is not limited to, the following statutes, as amended, any successor thereto, and any regulations promulgated pursuant thereto, and any state or local statutes, ordinances, rules, regulations and the like addressing similar issues: the Comprehensive Environmental Response, Compensation and Liability Act; the Emergency Planning and Community Right-to-Know Act; the Hazardous Substances Transportation Act; the Resource Conservation and Recovery Act (including, but not limited to, Subtitle I relating to underground storage tanks); the Solid Waste Disposal Act; the Clean Water Act; the Clean Air Act; the Toxic Substances Control Act; the Safe Drinking Water Act; the Occupational Safety and Health Act; the Federal Water Pollution Control Act; the Federal Insecticide, Fungicide and Rodenticide Act; the Endangered Species Act; the National Environmental Policy Act; and the River and Harbors Appropriation Act. “Environmental Law” also includes, but is not limited to, any present and future federal, state and local laws, statutes, ordinances, rules, regulations and the like, as well as common law; conditioning transfer of property upon a negative declaration or other approval of a governmental authority of the environmental condition of the property; requiring notification or disclosure of Releases of Hazardous Substances or other environmental condition of the Property to any governmental authority or other person or entity, whether or not in connection with transfer of title to or interest in property; imposing conditions or requirements in connection with permits or other authorization for lawful activity; relating to nuisance, trespass or other causes of action related to the Property; and relating to wrongful death, personal injury, or property or other damage in connection with any

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physical condition or use of the Property. “Hazardous Substances” include but are not limited to any and all substances (whether solid, liquid or gas) defined, listed, or otherwise classified as pollutants, hazardous wastes, hazardous substances, hazardous materials, extremely hazardous wastes, or words of similar meaning or regulatory effect under any present or future Environmental Laws or that may have a negative impact on human health or the environment, including, but not limited to, petroleum and petroleum products, asbestos and asbestos-containing materials, polychlorinated biphenyls, lead, radon, radioactive materials, flammables and explosives. “Release” of any Hazardous Substance includes but is not limited to any release, deposit, discharge, emission, leaking, spilling, seeping, migrating, injecting, pumping, pouring, emptying, escaping, dumping, disposing or other movement of Hazardous Substances. “Remediation” includes but is not limited to any response, remedial, removal, or corrective action, any activity to cleanup, detoxify, decontaminate, contain or otherwise remediate any Hazardous Substance, any actions to prevent, cure or mitigate any Release of any Hazardous Substance, any action to comply with any Environmental Laws or with any permits issued pursuant thereto, any inspection, investigation, study, monitoring, assessment, audit, sampling and testing, laboratory or other analysis, or evaluation relating to any Hazardous Substances or to anything referred to in Article 12.

Section 11.2 ENVIRONMENTAL COVENANTS. Borrower covenants and agrees that: (a) all uses and operations on or of the Property, whether by Borrower or any other person or entity, shall be in compliance with all Environmental Laws and permits issued pursuant thereto; (b) there shall be no Releases of Hazardous Substances in, on, under or from the Property; (c) there shall be no Hazardous Substances in, on, or under the Property, except those that are both (i) in compliance with all Environmental Laws and with permits issued pursuant thereto and (ii) fully disclosed to Lender in writing; (d) Borrower shall keep the Property free and clear of all liens and other encumbrances imposed pursuant to any Environmental Law, whether due to any act or omission of Borrower or any other person or entity (the “Environmental Liens”); (e) Borrower shall, at its sole cost and expense, fully and expeditiously cooperate in all activities pursuant to Section 11.3 below, including, but not limited to, providing all relevant information and making knowledgeable persons available for interviews; (f) Borrower shall, at its sole cost and expense, perform any environmental site assessment or other investigation of environmental conditions in connection with the Property, pursuant to any reasonable written request of Lender (including, but not limited to, sampling, testing and analysis of soil, water, air, building materials and other materials and substances whether solid, liquid or gas), and share with Lender the reports and other results thereof, and Lender and other Indemnified Parties shall be entitled to rely on such reports and other results thereof; (g) Borrower shall, at its sole cost and expense, comply with all reasonable written requests of Lender to (i) reasonably effectuate Remediation of any condition (including, but not limited to, a Release of a Hazardous Substance) in, on, under or from the Property; (ii) comply with any Environmental Law; (iii) comply with any directive from any governmental authority; and (iv) take any other reasonable action necessary or appropriate for protection of human health or the environment; (h) Borrower shall not do or allow any tenant or other user of the Property to do any act that materially increases the dangers to human health or the environment, poses an unreasonable risk of harm to any person or entity (whether on or off the Property), impairs or may impair the value of the Property, is contrary to any requirement of any insurer, constitutes a public or private nuisance, constitutes waste, or violates any covenant, condition, agreement or easement applicable to the Property; and (i) Borrower shall immediately notify Lender in writing of (A) any presence or Releases or threatened Releases of Hazardous Substances in, on, under, from or migrating towards the Property; (B) any noncompliance with any Environmental Laws related in any way to the Property; (C) any actual or potential Environmental Lien; (D) any required or proposed Remediation of environmental conditions relating to the Property; and (E) any written or oral notice or other communication which Borrower

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becomes aware from any source whatsoever (including, but not limited to, a governmental entity) relating in any way to Hazardous Substances or Remediation thereof, possible liability of any person or entity pursuant to any Environmental Law, other environmental conditions in connection with the Property, or any actual or potential administrative or judicial proceedings in connection with anything referred to in this Article. Any failure of Borrower to perform its obligations pursuant to this Section 11.2 shall constitute bad faith waste with respect to the Property.

Section 11.3 LENDER’S RIGHTS. Lender and any other person or entity designated by Lender, including, but not limited to, any receiver, any representative of a governmental entity, and any environmental consultant, shall have the right, but not the obligation, to enter upon the Property at all reasonable times to assess any and all aspects of the environmental condition of the Property and its use, including, but not limited to, conducting any environmental assessment or audit (the scope of which shall be determined in Lender’s sole and absolute discretion) and taking samples of soil, groundwater or other water, air, or building materials, and conducting other invasive testing. Borrower shall cooperate with and provide access to Lender and any such person or entity designated by Lender.

ARTICLE 12 — INDEMNIFICATION

Section 12.1 GENERAL INDEMNIFICATION. Borrower shall, at its sole cost and expense, protect, defend, indemnify, release and hold harmless the Indemnified Parties from and against any and all claims, suits, liabilities (including, without limitation, strict liabilities), actions, proceedings, obligations, debts, damages, losses, costs, expenses, fines, penalties, charges, fees, judgments, awards, amounts paid in settlement, punitive damages, foreseeable and unforeseeable consequential damages, of whatever kind or nature (including, but not limited to, attorneys’ fees and other costs of defense) (collectively, the “Losses”) imposed upon or incurred by or asserted against any Indemnified Parties and directly or indirectly arising out of or in any way relating to any one or more of the following: (a) ownership of this Security Instrument, the Property or any interest therein or receipt of any Rents, except in connection with any Losses to the extent caused by the gross negligence or willful misconduct of Lender; (b) any amendment to, or restructuring of, the Debt, and the Note, the Loan Agreement, this Security Instrument, or any Other Security Documents, except in connection with any Losses to the extent caused by the gross negligence or willful misconduct of Lender; (c) any and all lawful action that may be taken by Lender in connection with the enforcement of the provisions of this Security Instrument or the Note, the Loan Agreement or any of the Other Security Documents, whether or not suit is filed in connection with same, or in connection with Borrower, any Guarantor or Indemnitor or any member, partner, joint venturer or shareholder thereof becoming a party to a voluntary or involuntary federal or state bankruptcy, insolvency or similar proceeding; (d) any accident, injury to or death of persons or loss of or damage to property occurring in, on or about the Property or any part thereof or on the adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways; (e) any use, nonuse or condition in, on or about the Property or any part thereof or on the adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways; (f) any failure on the part of Borrower to perform or be in compliance with any of the terms of this Security Instrument; (g) performance of any labor or services or the furnishing of any materials or other property in respect of the Property or any part thereof, (h) the failure of any person to file timely with the Internal Revenue Service an accurate Form 1099-B, Statement for Recipients of Proceeds from Real Estate, Broker and Barter Exchange Transactions, which may be required in connection with this Security Instrument, or to supply a copy thereof in a timely fashion to the recipient of the proceeds of the transaction in connection with which this Security Instrument is made; (i) any failure of the Property to be in compliance with any Applicable Laws; (j) the enforcement by any Indemnified

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Party of the provisions of this Article 12; (k) any and all claims and demands whatsoever which may be asserted against Lender by reason of any alleged obligations or undertakings on its part to perform or discharge any of the terms, covenants, or agreements contained in any Lease; (1) the payment of any commission, charge or brokerage fee to anyone which may be payable in connection with the funding of the Loan evidenced by the Note, the Loan Agreement and secured by this Security Instrument; or (m) any misrepresentation made by Borrower in this Security Instrument or any Other Security Document. Any amounts payable to Lender by reason of the application of this Section 12,1 shall become immediately due and payable and shall bear interest at the Default Rate from the date loss or damage is sustained by Lender until paid. For purposes of this Article 12, the term “Indemnified Parties” means Lender, any person or entity who is or will have been involved in the servicing of the Loan, any person or entity in whose name the encumbrance created by this Security Instrument is or will have been recorded, persons and entities who may hold or acquire or will have held a full or partial interest in the Loan (including, but not limited to, Investors or prospective Investors in the Securities, as well as custodians, trustees and other fiduciaries who hold or have held a full or partial interest in the Loan for the benefit of third parties) as well as the respective directors, officers, shareholders, partners, members, employees, agents, servants, representatives, contractors, subcontractors, affiliates, subsidiaries, participants, successors and assigns of any and all of the foregoing (including, but not limited to, any other person or entity who holds or acquires or will have held a participation or other full or partial interest in the Loan or the Property, whether during the term of the Loan or as a part of or following a foreclosure of the Loan and including, but not limited to, any successors by merger, consolidation or acquisition of all or a substantial portion of Lender’s assets and business).

Section 12.2 MORTGAGE AND INTANGIBLE TAX. Borrower shall, at its sole cost and expense, protect, defend, indemnify, release and hold harmless the Indemnified Parties from and against any and all Losses imposed upon or incurred by or asserted against any Indemnified Parties and directly or indirectly arising out of or in any way relating to any tax on the making or recording of this Security Instrument, the Note, the Loan Agreement or any of the Other Security Documents.

Section 12.3 DUTY TO DEFEND, ATTORNEYS’ FEES AND OTHER FEES AND EXPENSES. Upon written request by any Indemnified Party, Borrower shall defend such Indemnified Party (if requested by any Indemnified Party, in the name of the Indemnified Party) by attorneys and other professionals approved by the Indemnified Parties. Notwithstanding the foregoing, any Indemnified Parties may, in their sole and absolute discretion, engage their own attorneys and other professionals to defend or assist them, and, at the option of Indemnified Parties, their attorneys shall control the resolution of any claim or proceeding. Upon demand, Borrower shall pay or, in the sole and absolute discretion of the Indemnified Parties, reimburse, the Indemnified Parties for the payment of reasonable fees and disbursements of attorneys, engineers, environmental consultants, laboratories and other professionals in connection therewith.

ARTICLE 13 - WAIVERS

Section 13.1 WAIVER OF COUNTERCLAIM. Borrower hereby waives the right to assert a counterclaim, other than a mandatory or compulsory counterclaim, in any action or proceeding brought against it by Lender arising out of or in any way connected with this Security Instrument, the Note, the Loan Agreement, any of the Other Security Documents, or the Obligations.

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Section 13.2 MARSHALLING AND OTHER MATTERS. Borrower hereby waives, to the extent permitted by law, the benefit of all appraisement, valuation, stay, extension, reinstatement and redemption laws now or hereafter in force and all rights of marshalling in the event of any sale hereunder of the Property or any part thereof or any interest therein. Further, Borrower hereby expressly waives any and all rights of redemption from sale under any order or decree of foreclosure of this Security Instrument on behalf of Borrower, and on behalf of each and every person acquiring any interest in or title to the Property subsequent to the date of this Security Instrument and on behalf of all persons to the extent permitted by Applicable Law.

Section 13.3 WAIVER OF NOTICE. Borrower shall not be entitled to any notices of any nature whatsoever from Lender except with respect to matters for which this Security Instrument specifically and expressly provides for the giving of notice by Lender to Borrower and except with respect to matters for which Lender is required by Applicable Law to give notice, and Borrower hereby expressly waives the right to receive any notice from Lender with respect to any matter for which this Security Instrument does not specifically and expressly provide for the giving of notice by Lender to Borrower.

Section 13.4 WAIVER OF STATUTE OF LIMITATIONS. Borrower hereby expressly waives and releases to the fullest extent permitted by law, the pleading of any statute of limitations as a defense to payment of the Debt or performance of its Other Obligations.

Section 13.5 SOLE DISCRETION OF LENDER. Wherever pursuant to this Security Instrument (a) Lender exercises any right given to it to approve or disapprove, (b) any arrangement or term is to be satisfactory to Lender, or (c) any other decision or determination is to be made by Lender, the decision of Lender to approve or disapprove, all decisions that arrangements or terms are satisfactory or not satisfactory and all other decisions and determinations made by Lender, shall be in the sole and absolute discretion of Lender and shall be final and conclusive, except as may be otherwise expressly and specifically provided herein.

Section 13.6 SURVIVAL. The indemnifications made pursuant to Subsections 12.2 and 12.3 and the representations and warranties, covenants, and other obligations arising under Article 11, shall continue indefinitely in full force and effect and shall survive and shall in no way be impaired by: any satisfaction or other termination of this Security Instrument, any assignment or other transfer of all or any portion of this Security Instrument or Lender’s interest in the Property (but, in such case, shall benefit both Indemnified Parties and any assignee or transferee), any exercise of Lender’s rights and remedies pursuant hereto including, but not limited to, foreclosure or acceptance of a deed in lieu of foreclosure, any exercise of any rights and remedies pursuant to the Note or any of the Other Security Documents, any transfer of all or any portion of the Property (whether by Borrower or by Lender following foreclosure or acceptance of a deed in lieu of foreclosure or at any other time), any amendment to this Security Instrument, the Note, the Loan Agreement or the Other Security Documents, and any act or omission that might otherwise be construed as a release or discharge of Borrower from the obligations pursuant hereto.

SECTION 13.7 WAIVER OF TRIAL BY JURY. BORROWER

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HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE LOAN EVIDENCED BY THE NOTE, THE APPLICATION FOR THE LOAN EVIDENCED BY THE NOTE, THE LOAN AGREEMENT, THIS SECURITY INSTRUMENT OR THE OTHER SECURITY DOCUMENTS OR ANY ACTS OR OMISSIONS OF LENDER, ITS OFFICERS, EMPLOYEES, DIRECTORS OR AGENTS IN CONNECTION THEREWITH.

ARTICLE 14 - NOTICES

Section 14.1 NOTICES. All notices shall be in writing and shall be deemed to have been properly given (i) upon delivery, if delivered in person, (ii) one (1) Business Day (as defined below) after having been deposited for overnight delivery with any reputable overnight courier service, or (iii) three (3) Business Days after having been deposited in any post office or mail depository regularly maintained by the U.S. Postal Service and sent by registered or certified mail, postage prepaid, return receipt requested, addressed as follows:

If to Borrower:	Griffin Land & Nurseries, Inc.
	One Rockefeller Plaza, Suite 2301
	New York, New York 10020
	Attention: Mr. Frederick M. Danziger
	President and Chief Executive Officer
With a copy to:	Imperial Nurseries, Inc,
	90 Salmon Brook Street
	Granby, Connecticut 06035
	Attention:	Mr. Anthony J. Galici
		Vice President and Chief Financial Officer
and	Murtha Cullina LLP
	CityPlace I, 185 Asylum Street
	Hartford, Connecticut 06103-3469
	Attention: Thomas M. Daniells, Esq.
If to Lender:	Doral Bank, FSB
	623 Fifth Avenue
	New York, New York 10022
	Attention: Mortgage Servicing Department
with a copy to:	Granoff, Walker & Forlenza, P.C.
	747 Third Avenue, Suite 4C
	New York, New York 10017
	Attention: Lee A. Forlenza, Esq.,

or addressed as such party may from time to time designate by written notice to the other parties.

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Either party by notice to the other may designate additional or different addresses for subsequent notices or communications.

For purposes of this Subsection, “Business Day” shall mean a day on which commercial banks are not authorized or required by law to close in New York, New York.

ARTICLE 15 - SERVICE OF PROCESS; JURISDICTION

Section 15.1 CONSENT TO SERVICE. Borrower will maintain a place of business or an agent for service of process in the State of Connecticut and give prompt notice to Lender of the address of such place of business and of the name and address of any new agent appointed by it, as appropriate. Borrower further agrees that the failure of its agent for service of process to give it notice of any service of process will not impair or affect the validity of such service or of any judgment based thereon. If, despite the foregoing, there is for any reason no agent for service of process of Borrower available to be served, and if it at that time has no place of business in the State of Connecticut, then Borrower irrevocably consents to service of process by registered or certified mail, postage prepaid, to it at its address given in or pursuant to the first paragraph hereof

Section 15.2 SUBMISSION TO JURISDICTION. With respect to any claim or action arising hereunder or under the Note, the Loan Agreement or the Other Security Documents, Borrower (a) irrevocably submits to the nonexclusive jurisdiction of the courts of the State of New York in New York County or in the State of Connecticut in the county in which the Land is situated, the United States District Court for the Southern District of New York or for the judicial district in which the Land is situated and appellate courts from any thereof, and (b) irrevocably waives any objection which it may have at any time to the laying of venue of any suit, action or proceeding arising out of or relating to this Security Instrument brought in any such court, irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.

ARTICLE 16 - APPLICABLE LAW

Section 16.1 CHOICE OF LAW.   THIS SECURITY INSTRUMENT SHALL BE DEEMED TO BE A CONTRACT ENTERED INTO PURSUANT TO THE LAWS OF THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED, CONSTRUED, APPLIED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, PROVIDED, HOWEVER, THAT WITH RESPECT TO THE CREATION, VALIDITY, ATTACHMENT, PERFECTION, PRIORITY AND ENFORCEMENT OF THE LIEN OF THIS SECURITY INSTRUMENT, AND THE DETERMINATION OF DEFICIENCY OF JUDGMENTS, THE LAWS OF THE STATE WHERE THE LAND IS SITUATED SHALL APPLY.

Section 16.2 USURY LAWS This Security Instrument and the Note are subject to the express condition that at no time shall Borrower be obligated or required to pay interest on the Debt at a rate which could subject the holder of the Note to either civil or criminal liability as a result of being in excess of the maximum interest rate which Borrower is permitted by applicable law to contract or agree to pay. If by the terms of this Security Instrument, the Loan Agreement or the Note, Borrower is at any time required or obligated to pay interest on the Debt at a rate in excess of such maximum rate, the rate of interest under this Security Instrument, the Loan Agreement and the Note shall be deemed to be immediately reduced to such maximum rate and the interest payable shall be computed at such maximum rate and all prior interest payments in excess of such maximum rate

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shall be applied and shall be deemed to have been payments in reduction of the principal balance of the Note. All sums paid or agreed to be paid to Lender for the use, forbearance, or detention of the Debt shall, to the extent permitted by applicable law, be amortized, prorated, allocated, and spread throughout the full stated term of the Note until payment in full so that the rate or amount of interest on account of the Debt does not exceed the maximum lawful rate of interest from time to time in effect and applicable to the Debt for so long as the Debt is outstanding.

Section 16.3 PROVISIONS SUBJECT TO APPLICABLE LAW. All rights, powers and remedies provided in this Security Instrument may be exercised only to the extent that the exercise thereof does not violate any applicable provisions of law and are intended to be limited to the extent necessary so that they will not render this Security Instrument invalid, unenforceable or not  entitled to be recorded, registered or filed under the provisions of any Applicable Law. If any term of this Security Instrument or any application thereof shall be invalid or unenforceable, the remainder of this Security Instrument and any other application of the term shall not be affected thereby.

ARTICLE 17 - SECONDARY MARKET

Section 17.1 TRANSFER OF LOAN.  Lender may, at any time, sell, transfer or assign the Note, the Loan Agreement, this Security Instrument and the Other Security Documents, and any or all servicing rights with respect thereto, or grant participations therein (the “Participations”) or issue mortgage pass-through certificates or other securities evidencing a beneficial interest in a rated or unrated public offering or private placement (the “Securities”). Lender may forward to each purchaser, transferee, assignee, servicer, participant, or investor in such Participations or Securities (collectively, the “Investor”) or any Rating Agency rating such Securities and each prospective Investor, all documents and information which Lender now has or may hereafter acquire relating to the Debt and to Borrower, any Guarantor, any Indemnitor(s) and the Property, whether furnished by Borrower, any Guarantor, any Indemnitor(s) or otherwise, as Lender determines necessary or desirable. Borrower, any Guarantor and any Indemnitor agree to cooperate with Lender in connection with any transfer made or any Securities created pursuant to this Section, including, without limitation, the delivery of an estoppel certificate required in accordance with Subsection 6.4(c) hereof and such other documents as may be reasonably requested by Lender. Borrower shall also furnish and Borrower, any Guarantor and any Indemnitor consent to Lender furnishing to such Investors or such prospective Investors or such Rating Agency any and all information concerning the Property, the Leases, the financial condition of Borrower, any Guarantor and any Indemnitor as may be requested by Lender, any Investor, any prospective Investor or any Rating Agency in connection with any sale, transfer, Participations or Securities, provided the disclosure of such information does not violate any applicable federal securities law, rule or regulation.

ARTICLE 18 - COSTS

Section 18.1 PERFORMANCE AT BORROWER’S EXPENSE. Borrower acknowledges and confirms that Lender shall impose certain administrative processing or commitment fees in connection with (a) the extension, renewal, modification, amendment and termination of the Loan, (b) the release or substitution of collateral therefor, (c) obtaining certain consents, waivers and approvals with respect to the Property, or (d) the review of any Lease or proposed Lease or the preparation or review of any subordination, non-disturbance agreement (the occurrence of any of the above shall be called an “Event”). Borrower further acknowledges and confirms that it shall be responsible for the payment of all costs of reappraisal of the Property or any part thereof, whether required by law, regulation, Lender or any governmental or quasi-governmental authority. Borrower

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hereby acknowledges and agrees to pay, immediately, with or without demand, all such fees (as the same may be increased or decreased from time to time), and any additional fees of a similar type or nature which may be imposed by Lender from time to time, upon the occurrence of any Event or otherwise. Wherever it is provided for herein that Borrower pay any costs and expenses, such costs and expenses shall include, but not be limited to, all legal fees and disbursements of Lender, whether with respect to external or in-house counsel, whether or not suit is brought.

Section 18.2 ATTORNEYS’ FEES FOR ENFORCEMENT. (a) Borrower shall pay all legal fees incurred by Lender in connection with (i) the preparation of the Note, the Loan Agreement, this Security Instrument and the Other Security Documents and (ii) the items set forth in Section 18.1 above, and (b) Borrower shall pay to Lender on demand any and all expenses, including legal expenses and attorneys’ fees, incurred or paid by Lender in protecting its interest in the Property or Personal Property or in collecting any amount payable hereunder or under the Note or in enforcing its rights hereunder, including by way of foreclosure proceeding, with respect to the Property or Personal Property, whether or not any legal proceeding is commenced hereunder or thereunder and whether or not any default or Event of Default shall have occurred and is continuing, together with interest thereon at the Default Rate from the date paid or incurred by Lender until such expenses are paid by Borrower.

ARTICLE 19 - DEFINITIONS

Section 19.1 GENERAL DEFINITIONS. Unless the context clearly indicates a contrary intent or unless otherwise specifically provided herein, words used in this Security Instrument may be used interchangeably in singular or plural form and the word “Borrower” shall mean “each Borrower and any subsequent owner or owners of the Property or any part thereof or any interest therein,” the word “Lender” shall mean “Lender and any subsequent holder of the Note,” the word “Note” shall mean “the Note and any other evidence of indebtedness secured by this Security Instrument,” the word “person” shall include an individual, corporation, partnership, limited liability company, trust, unincorporated association, government, governmental authority, and any other entity, the word “Property” shall include any portion of the Property and any interest therein, and the phrases “attorneys’ fees” and “counsel fees” shall include any and all attorneys’, paralegal and law clerk fees and disbursements, including, but not limited to, fees and disbursements at the pre-trial, trial and appellate levels incurred or paid by Lender in protecting its interest in the Property, the Leases and the Rents and enforcing its rights hereunder, including, but not limited to, foreclosure proceeding.

ARTICLE 20 - MISCELLANEOUS PROVISIONS

Section 20.1 No ORAL CHANGE. This Security Instrument, and any provisions hereof, may not be modified, amended, waived, extended, changed, discharged or terminated orally or by any act or failure to act on the part of Borrower or Lender, but only by an agreement in writing signed by the party against whom enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought.

Section 20.2 LIABILITY If Borrower consists of more than one person, the obligations and liabilities of each such person hereunder shall be joint and several. This Security Instrument shall be binding upon and inure to the benefit of Borrower and Lender and their respective successors and assigns forever.

Section 20.3 INAPPLICABLE PROVISIONS. If any term, covenant or condition of the Note, the Loan Agreement or this Security Instrument is held to be invalid, illegal or

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unenforceable in any respect, the Note, the Loan Agreement and this Security Instrument shall be construed without such provision.

Section 20.4 HEADINGS, ETC. The headings and captions of various Sections of this Security Instrument are for convenience of reference only and are not to be construed as defining or limiting, in any way, the scope or intent of the provisions hereof.

Section 20.5 DUPLICATE ORIGINALS, COUNTERPARTS. This Security Instrument may be executed in any number of duplicate originals and each duplicate original shall be deemed to be an original. This Security Instrument may be executed in several counterparts, each of which counterparts shall be deemed an original instrument and all of which together shall constitute a single Security Instrument. The failure of any party hereto to execute this Security Instrument, or any counterpart hereof, shall not relieve the other signatories from their obligations hereunder.

Section 20.6 NUMBER AND GENDER. Whenever the context may require, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural and vice versa.

Section 20.7 SUBROGATION. If any or all of the proceeds of the Note have been used to extinguish, extend or renew any indebtedness heretofore existing against the Property, then, to the extent of the funds so used, Lender shall be subrogated to all of the rights, claims, liens, titles, and interests existing against the Property heretofore held by, or in favor of, the holder of such indebtedness and such former rights, claims, liens, titles, and interests, if any, are not waived but rather are continued in full force and effect in favor of Lender and are merged with the lien and security interest created herein as cumulative security for the repayment of the Debt, the performance and discharge of Borrower’s obligations hereunder, under the Note, the Loan Agreement and the Other Security Documents and the performance and discharge of the Other Obligations.

Section 20.8 WINDSOR MORTGAGE. The Debt is also secured by that certain open-end mortgage and security agreement (the “Windsor Mortgage”), dated as of the date hereof, in the principal amount of up to $12,500,000.00, executed by Borrower in favor of Lender, encumbering certain property located at 21-25 Griffin Road North, Windsor, Connecticut, as more particularly described therein (the “Windsor Property”), and intended to be recorded in the Office of the Town Clerk of Windsor, Hartford County, State of Connecticut. Borrower covenants to comply with all of the terms, covenants and conditions of the Windsor Mortgage, and agrees that any default under the Windsor Mortgage shall be a default under this Security Instrument. If there shall be a default in any sums due under the Windsor Mortgage, or in the payment of real estate taxes, water rates, sewer rents, assessments or ground rents, or any other liens encumbering the Windsor Property, Lender shall have the right, but not the obligation, to pay the same and any amounts so paid shall bear interest as calculated in this Security Instrument and shall be secured by this Security Instrument.

Section 20.9 REVOLVING LINE OF CREDIT LOAN AGREEMENT. This Security Instrument is subject to all of the terms, covenants and conditions of a certain revolving line of credit loan agreement, dated as of the date hereof, between Borrower and Lender (the “Loan

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Agreement”), which Loan Agreement is by this reference incorporated herein. The proceeds of the revolving line of credit loan secured hereby and by the Windsor Mortgage are to be advanced or re-advanced by Lender to Borrower solely in accordance with the Loan Agreement. Borrower shall perform and comply with all of the terms, covenants and conditions of the Loan Agreement and agrees that any default under the Loan Agreement shall be a default under this Security Instrument. All advances or re-advances made and all indebtedness arising and accruing under the Loan Agreement from time to time shall be secured hereby and by the Windsor Mortgage. In the event of any conflict or ambiguity between the terms of this Mortgage and the Loan Agreement, the terms which shall enlarge the rights and remedies of Lender and the interest of Lender in the Property, afford Lender greater financial security in the Property and better assure payment of the Debt in full, shall control.

Section 20.10 RECITALS, The above recitals are incorporated herein and made a part hereof.

ARTICLE 21 - SPECIAL CONNECTICUT PROVISIONS

Section 21.1 MATURITY DATE AND EXTENDED MATURITY DATE. The Note is payable no later than May 1, 2013 or, if extended in accordance with the Loan Agreement, May 1, 2014.

Section 21.2 FUTURE ADVANCES. This is an “OPEN-END MORTGAGE” and the holder hereof shall have all the rights, powers and protection to which the holder of an OPEN-END MORTGAGE is entitled. Upon request of the Borrower and subject to the terms of the Loan Agreement, the Lender, in whole or in part, may make future advances to the Borrower. Such future advances, with interest thereon, made in accordance with the Loan Agreement and evidenced by the Note shall be secured by this Mortgage and by the Windsor Mortgage. At no time shall the principal amount of the indebtedness secured by this Mortgage exceed Twelve Million Five Hundred Thousand and 00/100 Dollars ($12,500,000.00), which is the full amount authorized and the original amount of the Note secured hereby. Under no circumstances shall Lender be obligated to make any future advances or re-advances which will result in an unpaid principal balance in excess of the above-stated maximum amount to be secured by this Mortgage and the Windsor Mortgage.

Section 21.2 NOTE AND LOAN AGREEMENT. The Note and Loan Agreement are on file in the offices of Lender and shall be made available for inspection upon request.

ARTICLE 22 — PARTIAL RELEASE/SUBSTITUTE PROPERTY

Section 22.1 PARTIAL RELEASE AND SUBSTITUTE PROPERTY.  Subject to the strict compliance of the express terms and conditions contained in the Loan Agreement, Borrower shall be entitled to: (i) receive a partial release of certain Land from the lien of this Mortgage, and (ii) either simultaneously with or some time after any release, add certain other real property owned by Borrower and provide Lender with a first mortgage lien on such real property as additional collateral

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to secure the Loan.

ARTICLE 23 — ADDITIONAL SPECIAL PROVISIONS

Section 23.1 COMPLIANCE WITH ANTI-TERRORISM, EMBARGO, SANCTIONS AND ANTI-MONEY LAUNDERING LAWS.

(a)           Borrower shall comply with all Requirements of Law (as defined herein) relating to money laundering, anti-terrorism, trade embargos and economic sanctions, now or hereafter in effect. Upon the Lender’s written request from time to time during the term of the loan evidenced by the Note, Borrower shall certify in writing to the Lender that Borrower’s representations, warranties and obligations under this Section 23.1 remain true and correct and have not been breached. Borrower shall immediately notify the Lender in writing if any of such representations, warranties or covenants are no longer true or have been breached or if Borrower has a reasonable basis to believe that they may no longer be true or have been breached. In connection with such an event, Borrower shall comply with all Requirements of Law and directives of Governmental Authorities (as defined herein) and, at the Lender’s written request, provide to the Lender copies of all notices, reports and other communications exchanged with, or received from, Governmental Authorities relating to such an event. Borrower shall also reimburse the Lender any expense incurred by the Lender in evaluating the effect of such an event on the loan evidenced by the Note and the Lender’s interest in the collateral for the loan evidenced by the Note, in obtaining any necessary license from Governmental Authorities as may be necessary for the Lender to enforce its rights under this Mortgage, the Loan Agreement, the Note or the Other Security Documents, and in complying with all Requirements of Law applicable to the Lender as a result of the existence of such an event and for any penalties or fines imposed upon the Lender as a result hereof. In connection herewith, “Governmental Authority” means any nation or government, any state or other political subdivision thereof, and any person exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to such government. In connection herewith, “Requirements of Law” means (a) the organizational documents of an entity, and (b) any law, regulation, ordinance, code, decree, treaty, ruling or determination of an arbitrator, court or other Governmental Authority, or any Executive Order issued by the President of the United States, in each case applicable to or binding upon such person or to which such person, any of its property or the conduct of its business is subject including, without limitation, laws, ordinances and regulations pertaining to the zoning, occupancy and subdivision of real property.

(b) Borrower, and to the best of Borrower’s knowledge, but without independent review or verification, (a) each person owning an interest of 20% or more in Borrower, (b) each Guarantor, (c) the property manager, and (d) each tenant at the Property: (i) is not currently identified on the OFAC List, and (ii) is not a person with whom a citizen of the United States is prohibited to engage in transactions by any trade embargo, economic sanction or other prohibition of United States law, regulation or Executive Order of the President of the United States. Borrower has implemented procedures, and will consistently apply those procedures throughout the term of the loan evidenced by the Note, to ensure the foregoing representations and warranties remain true and correct during the term of the Loan. “OFAC List” means the list of specially designated nationals and blocked persons subject to financial sanctions that is maintained by the U.S. Treasury Department, Office of Foreign Assets Control and any other similar list maintained by the U.S. Treasury Department, Office of Foreign Assets Control pursuant to any Requirements of Law, including, without limitation, trade embargo, economic sanctions or other prohibitions imposed by Executive Order of the President of the United States. The OFAC List currently is accessible through the internet website www.treas.gov/ofac/tllsdn.pdf.

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IN WITNESS WHEREOF, THIS SECURITY INSTRUMENT has been executed by Borrower the day and year first above written.

WITNESSES:			GRIFFIN LAND & NURSERIES, INC.,
			a Delaware corporation
/s/ Thomas M. Daniells			By:	/s/ Anthony J. Galici
Thomas M. Daniells			Name:	Anthony J. Galici
			Title:	Vice President and Secretary
/s/ Denise M. Boucher
Denise M. Boucher
STATE OF CONNECTICUT	)
	)	ss:  Hartford	April 28, 2011
COUNTY OF HARTFORD	)

Personally appeared Anthony J. Galici, Vice President and Secretary of Griffin Land & Nurseries, Inc., a Delaware corporation, signer of the foregoing instrument and acknowledged the same to be his free act and deed and the free act of said corporation, before me.

/s/ Thomas M. Daniells

Commissioner of the Superior Court

Thomas M. Daniells

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EXHIBIT A

FIRST PIECE:  310-340 West Newberry Road, Bloomfield, Connecticut

All that certain piece or parcel of land, with the buildings and improvements thereon, situated on the westerly side of Griffin Road South and West Newberry Road in the Town of Bloomfield, County of Hartford and State of Connecticut, being shown on a certain survey entitled “ALTA/ACSM Land Title Survey Plan Prepared for Griffin Land & Nurseries, Inc. 310, 320, 330, & 340 West Newberry Road Bloomfield, Conn. Proj.: 01-342 Date: 01-10-02 Scale: 1”=40’ Sheet No. 1 of 2 Sheet No. 2 of 2” made by Meehan & Goodin, Engineers — Surveyors, P.C., on file in the Office of the Town Clerk of the said Town of Bloomfield.  Said premises are more particularly bounded and described as follows:

Beginning at a point on the westerly line of Griffin Road South, which point is located 523.31 feet, more or less, from the intersection of the westerly line of Griffin Road South and the southerly line of West Newberry Road, and which point marks the southeasterly corner of the herein described parcel;

Thence N 89° 48’ 40” W along land now or formerly of Fremont/JMI Bloomfield, LLC, a distance of 566.56 feet to a point;

Thence N 00° 11’ 20” E along land now or formerly of CDOT (Operator Central New England Railroad, Inc.), a distance of 1745.20 feet to a point;

Thence S 75° 38’ 20” E along land now or formerly of CDOT (Operator Central New England Railroad, Inc.) a distance of 15.72 feet to a point;

Thence N 00° 11’ 20” E along land now or formerly of CDOT (Operator Central New England Railroad, Inc.), a distance of 129.22 feet to a point;

Thence N 68° 20’ 35” E along land now or formerly of Otis Elevator Company, a distance of 568.29 feet to a point

Thence by a curve to the left having a radius of 437.50 feet, and a central angle of 20° 17’ 57” along land now or formerly of Otis Elevator Company, an arc distance of 155.00 feet to a point;

Thence S 14° 57’ 03” E along land now or formerly of Otis Elevator Company, a distance of 111.04 feet to a point;

Thence by a curve to the left having a radius of 280.00 feet and a central angle of 51° 19’ 05” along the westerly line of West Newberry Road, an arc distance of 250.79 feet to a point;

Thence S 10° 50’ 00” W along the westerly line of West Newberry Road, a distance of 713.75 feet to a point;

Thence by a curve to the left having a radius of 280.00 feet and a central angle of 78° 20’ 00” along the westerly line of West Newberry Road, an arc distance of 382.81 feet to a point;

Thence S 67° 30’ 00” E along the southwesterly line of West Newberry Road, a distance of 174.73 feet to a point;

Thence by a curve to the right having a radius of 30.00 feet and a central angle of 90° 00’ 00” along an arc connecting the southerly line of West Newberry Road and the westerly line of Griffin Road South, an arc distance of 47.12 feet to a point;

Thence by a curve to the left having a radius of 800.00 feet and a central angle of 22° 15’ 46” along the westerly line of Griffin Road South, an arc distance of 310.85 feet to a point;

Thence S 00° 14’ 14” W along the westerly line of Griffin Road South, a distance of 125.69 feet to a point;

Thence by a curve to the right having a radius of 60.00 feet and a central angle of 41° 24’ 35” along the westerly line of Griffin Road South, an arc distance of 43.36 feet to a point;

Thence by a curve to the left having a radius of 60.00 feet and a central angle of 41° 27’ 29” along the westerly line of Griffin Road South, an arc distance of 43.41 feet to the point or place of beginning.

Together with all rights, privileges and easements, if any, set forth in a certain Easement and Agreement by and between Otis Elevator Company and Culbro Land Resources, Inc. dated March 27, 1986 and recorded in Volume 334 at Page 518 of the Bloomfield Land Records; as modified and amended pursuant to an Agreement dated May 10, 1989 and recorded in Volume 454 at Page 175 of said Land Records.

SECOND PIECE:  204 — 206 West Newberry Road, Bloomfield, Connecticut

All that certain piece or parcel of land, with the buildings and improvements located therein, situated on the northerly side of West Newberry Road in the Town of Bloomfield, County of Hartford and State of Connecticut, being shown on a certain survey entitled “Plan Prepared for Griffin Land & Nurseries, Inc. 204-206 West Newberry Road Bloomfield, CT. ALTA/ACSM Land Title Survey Scale: 1”=40’ Date: 01-8-2002 Draft: FS Project: 01-343 Sheet No. 1 of 1” made by Meehan & Goodin, Engineers-Surveyors, P.C., which survey is on file in the Office of the Town Clerk of the said Town of Bloomfield.  Said premises are more particularly bounded and described as follows:

Beginning at a point on the northerly line of West Newberry Road, which point is located at the intersection of the easterly line of Griffin Road South and the northerly line of West Newberry Road;

Thence N 75° 15’ 20” W along the northerly line of West Newberry Road, a distance of 5.00 feet to a point;

Thence by a curve to the right having a radius of 30.00 feet and a central angle of 90° 00’ 00” along the northerly line of West Newberry Road, an arc distance of 47.12 feet to a point;

Thence N 75° 15’ 20” W along the northerly line of West Newberry Road, a distance of 429.01 feet to a point;

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Thence by a curve to the left having a radius of 280.0 feet and a central angle of 16° 47’ 50” along the northerly line of West Newberry Road, an arc distance of 82.09 feet to a point;

Thence N 14° 57’ 03” W along land now or formerly of Otis Elevator Company, a distance of 111.04 feet to a point;

Thence by a curve to the right having a radius of 312.50 feet and a central angle of 31° 04’ 40” along land now or formerly of Otis Elevator Company, an arc distance of 169.50 feet to a point;

Thence N 16° 07’ 41” E along land now or formerly of Otis Elevator Company, a distance of 95.80 feet to a point;

Thence S 73° 51’ 19” E partly along land now or formerly of Otis Elevator Company and partly along Griffin Land & Nurseries, Inc., in all, a distance of 188.59 feet to a point;

Thence S 16° 07’ 41” W along land now or formerly of Griffin Land & Nurseries, Inc., a distance of 76.05 feet to a point;

Thence S 73° 52’ 19” E along land now or formerly of Griffin Land & Nurseries, Inc., a distance of 452.00 feet to a point;

Thence S 14° 44’ 40” W along the westerly line of Griffin Road South, a distance of 221.14 feet to the point or place of beginning.

Together with a Storm Drainage Easement dated June 12, 1979 and recorded in Volume 241 at Page 259 of the Bloomfield Land Records.

Together with the benefits set forth in an Easement and Agreement by and between Otis Elevator Company and Culbro Land Resources, Inc. dated March 27, 1986 and recorded in Volume 334 at Page 518 of the Bloomfield Land Records; as modified and amended pursuant to an Agreement dated May 10, 1989 and recorded in Volume 454 at Page 175 of said Land Records.

THIRD PIECE:  29-35 Griffin Road South and 219 West Newberry Road, Bloomfield, Connecticut

All that certain piece or parcel of land, with the buildings and improvements thereon, situated on the westerly side of Griffin Road South in the Town of Bloomfield, County of Hartford and State of Connecticut, being shown on a certain survey entitled “Plan Prepared for Griffin Land & Nurseries, Inc. 29-35 Griffin Road South Bloomfield, Conn.  ALTA/ACSM Land Title Survey Scale: 1”=40’ Date; 01-10-2002 Draft: FS Project: 01-345 Sheet No. 1 of 1” made by Meehan & Goodin, Engineers-Surveyors, P.C. on file in the Office of the Town Clerk of the said Town of Bloomfield.  Said premises are more particularly bounded and described as follows:

Beginning at a point on the westerly line of Griffin Road South, which point is located 926.00 feet, more or less, southerly of the southerly line of Prospect Hill Road, and which point marks the northeasterly corner of the herein described parcel;

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Thence S 16° 09’ 50” W along the westerly line of Griffin Road South, a distance of 216.64 feet to a point;

Thence S 14° 44’ 40” W along the westerly line of Griffin Road South, a distance of 487.77 feet to a point;

Thence N 73° 52’ 19” W along land now or formerly of Griffin Land & Nurseries, Inc., a distance of 452.00 feet to a point;

Thence N 16° 07’ 41” E along land now or formerly of Griffin Land & Nurseries, Inc., a distance of 76.05 feet to a point;

Thence N 73° 52’ 19” W along land now or formerly of Griffin Land & Nurseries, Inc., a distance of 78.59 feet to a point;

Thence N 16° 07’ 41” E along land now or formerly of Griffin Land & Nurseries, Inc., a distance of 613.98 feet to a point;

Thence S 75° 26’ 35” E along land now or formerly of Hartford Fire Insurance Company, a distance of 519.15 feet to the point or place of beginning.

Together with a Storm Drainage Easement dated June 12, 1979 and recorded in Volume 241 at Page 259 of the Bloomfield Land Records.

FOURTH PIECE:  55 Griffin Road South, Bloomfield, Connecticut

All that certain piece or parcel of land, with the buildings and improvements thereon, situated on the westerly side of Griffin Road South In the Town of Bloomfield, County of Hartford and State of Connecticut, being shown on a certain survey entitled “Plan Prepared for Griffin Land & Nurseries, Inc. 55 Griffin Road South Bloomfield, Conn.  ALTA/ACSM Land Title Survey Scale: 1”=40’ Date: 01-04-02 Draft: FS Project: 01-344 Sheet No. 1 of 1” made by Meehan & Goodin, Engineers-Surveyors, P.C., which survey is on file in the Bloomfield Town Clerk’s Office.  Said premises are more particularly bounded and described as follows:

Beginning at a point on the easterly line of West Newberry Road, which point is the southwesterly corner of land now or formerly of Lanakam LLC and which point marks the northwesterly corner of the herein described parcel;

Thence S 73° 49’ 31” E along land now or formerly of Lanakam LLC, a distance of 508.67 feet to a point;

Thence S 35° 15’ 23” W along the westerly line of Griffin Road South, a distance of 42.88 feet to a point;

Thence by a curve to the left having a radius of 1060.00 feet and central angle of 12° 45’ 00” along the westerly line of Griffin Road South, an arc distance of 235.88 feet to a point;

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Thence S 22° 30’ 00” W along the westerly line of Griffin Road South, a distance of 166.90 feet to a point;

Thence by a curve to the right having a radius of 30.00 feet and a central angle of 90° 00’ 00” along the northeasterly line of West Newberry Road, an arc distance of 47.12 feet to a point;

Thence N 67° 30’ 00” W to a point in the northerly line of West Newberry Road a distance of 174.73 feet to a point;

Thence by a curve to the right having a radius of 220.00 feet and a central angle of 78° 20’ 00” along the northerly line of West Newberry Road, an arc distance of 300.78 feet to a point;

Thence N 10° 50’ 00” E along the easterly line of West Newberry Road, a distance of 246.19 feet to the point or place of beginning.

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EX-10.47

Exhibit 10.47

OPEN-END MORTGAGE AND SECURITY AGREEMENT

GRIFFIN LAND & NURSERIES, INC., as Mortgagor

to

DORAL BANK, FSB, as Mortgagee

Dated:	April 28, 2011
Location:	21-25 Griffin Road North
	Windsor, Connecticut
Town:	Windsor
County:	Hartford

PREPARED BY AND UPON RECORDATION RETURN TO:

Granoff, Walker & Forlenza, P.C.

747 Third Avenue, Suite 4C

New York, New York 10017

Attention: Lee A. Forlenza, Esq.

Chicago Title Insurance Company

Title No.: CT3467808

OPEN-END MORTGAGE AND SECURITY AGREEMENT

$12,500,000.00

THIS OPEN-END MORTGAGE AND SECURITY AGREEMENT, made as of the 28th day of April, 2011 (hereinafter referred to as this “Mortgage” or this “Security Instrument”), by GRIFFIN LAND & NURSERIES, INC., a Delaware corporation, having an address at One Rockefeller Plaza, Suite 2301, New York, New York 10020 (hereinafter referred to as the “Borrower” or “Mortgagor”), to DORAL BANK, FSB, a Federal savings bank, with an address at 623 Fifth Avenue, New York, New York 10022 (hereinafter referred to as the “Lender” or “Mortgagee”).

RECITALS:

WITNESSETH, that to secure the payment of an indebtedness evidenced by that certain Promissory Note, dated as of the date hereof, in the principal sum of up to Twelve Million Five Hundred Thousand and 00/100 Dollars ($12,500,000.00) lawful money of the United States, as the same may be modified, renewed or extended (the “Note”) which sum, with interest thereon is to be paid by Borrower to Lender in accordance with the terms of the Note and the Loan Agreement (hereinafter defined), and also to secure the payment by Borrower to Lender of all sums expended or advanced by Lender pursuant to any covenant, term or provision of this Mortgage, the Loan Agreement and any other document executed in connection with the Note, the Loan Agreement or this Mortgage (together with the Note, the Loan Agreement and this Mortgage, the “Loan Documents”), and to secure the performance of each covenant, term and provision by Borrower to be performed pursuant to this Mortgage or any other Loan Document, Borrower hereby mortgages to Lender, its successors and assigns, the following described property (collectively, the “Property”) whether now owned or held or hereafter acquired:

(a)           Land. The real property described in Exhibit A attached hereto and made a part hereof (the “Land”);

(b)           Improvements. The buildings, structures, fixtures, additions, enlargements, extensions, modifications, repairs, replacements and improvements now or hereafter erected or located on the Land (the “Improvements”);

(c)           Easements. All easements, rights-of-way or use, rights, strips and gores of land, streets, ways, alleys, passages, sewer rights, water, water courses, water rights and powers, air rights and development rights, and all estates, rights, titles, interests, privileges, liberties, servitudes, tenements, hereditaments and appurtenances of any nature whatsoever, in any way now or hereafter belonging, relating or pertaining to the Land and the Improvements and the reversion and reversions, remainder and remainders, and all land lying in the bed of any street, road or avenue, opened or proposed, in front of or adjoining the Land, to the center line thereof and all the estates, rights, titles, interests, dower and rights of dower, courtesy and rights of courtesy, property, possession, claim and demand whatsoever, both at law and in equity, of Borrower of, in and to the Land and the Improvements and every part and parcel thereof, with the appurtenances thereto;

(d)           Fixtures and Personal Property.   All machinery, equipment, fixtures (including,

but not limited to, all heating, air conditioning, plumbing, lighting, communications and elevator fixtures) and other property of every kind and nature whatsoever owned by Borrower, or in which Borrower has or shall have an interest, now or hereafter located upon the Land and the Improvements, or appurtenant thereto, and usable in connection with the present or future operation and occupancy of the Land and the Improvements and all building equipment, materials and supplies of any nature whatsoever owned by Borrower, or in which Borrower has or shall have an interest, now or hereafter located upon the Land and the Improvements, or appurtenant thereto, or usable in connection with the present or future operation and occupancy of the Land and the Improvements (collectively, the “Personal Property”), except to the extent such Personal Property is owned by tenants under Leases (as hereinafter defined), and the right, title and interest of Borrower in and to any of the Personal Property which may be subject to any security interests, as defined in the Uniform Commercial Code, as adopted and enacted by the state or states where any of the Property is located (the “Uniform Commercial Code”), superior in lien to the lien of this Security Instrument and all proceeds and products of the above;

(e)           Leases and Rents. All leases, subleases and other agreements affecting the use, enjoyment or occupancy of the Land or the Improvements heretofore or hereafter entered into and all extensions, amendments and modifications thereto, whether before or after the filing by or against Borrower of any petition for relief under 11 U.S.C. §101 et seq., as the same may be amended from time to time (the “Bankruptcy Code”) (collectively, the “Leases”) and all right, title and interest of Borrower, its successors and assigns therein and thereunder, including, without limitation, cash or securities deposited thereunder to secure the performance by the lessees of their obligations thereunder and all rents, additional rents, revenues, issues and profits (including all oil and gas or other mineral royalties and bonuses) from the Land and the Improvements whether paid or accruing before or after the filing by or against Borrower of any petition for relief under the Bankruptcy Code (collectively, the “Rents”) and all proceeds from the sale or other disposition of the Leases and the right to receive and apply the Rents to the payment of the Debt (as defined in Section 2.2);

(f)            Condemnation Awards. All awards or payments, including interest thereon, which may heretofore and hereafter be made with respect to the Property, whether from the exercise of the right of eminent domain (including, but not limited to, any transfer made in lieu of or in anticipation of the exercise of the right), or for a change of grade, or for any other injury to or decrease in the value of the Property;

(g)           Insurance Proceeds. All proceeds of and any unearned premiums on any insurance policies covering the Property, including, without limitation, the right to receive and apply the proceeds of any insurance, judgments, or settlements made in lieu thereof, for damage to the Property;

(h)           Tax Certiorari. All refunds, rebates or credits in connection with a reduction in real estate taxes and assessments charged against the Property as a result of tax certiorari or any applications or proceedings for reduction;

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(i)            Conversion. All proceeds of the conversion, voluntary or involuntary, of any of the foregoing including, without limitation, proceeds of insurance and condemnation awards, into cash or liquidation claims;

(j)             Rights. The right, in the name and on behalf of Borrower, to appear in and defend any action or proceeding brought with respect to the Property and to commence any action or proceeding to protect the interest of Lender in the Property;

(k)           Contracts. All contracts with property managers, surveyors, real estate advisors and consultants, real estate brokers, and other like agents and professionals that relate to any of the Land or any improvements constructed or to be constructed on the Land, and all maps, reports, surveys and studies of or relating to any of the Land or any improvements constructed or to be constructed on the Land, now or hereafter in the possession of Borrower or any such agent or professional; and

(l)            Other Rights. Any and all other rights of Borrower in and to the items set forth in Subsections (a) through (k) above.

ARTICLE 1— GRANTS OF SECURITY

Section 1.1 ASSIGNMENT OF RENTS. Borrower hereby absolutely and unconditionally assigns to Lender Borrower’s right, title and interest in and to all current and future Leases and Rents; it being intended by Borrower that this assignment constitutes a present, absolute assignment and not an assignment for additional security only. Nevertheless, subject to the terms of this Section 1.1 and Section 3.7, Lender grants to Borrower a revocable license to collect and receive the Rents. Borrower shall hold the Rents, or a portion thereof sufficient to discharge all current sums due on the Debt, for use in the payment of such sums.

Section 1.2 SECURITY AGREEMENT; FINANCING STATEMENT. This Security Instrument is both a real property mortgage and a “security agreement” within the meaning of the Uniform Commercial Code. The Property includes both real and personal property and all other rights and interests, whether tangible or intangible in nature, of Borrower in the Property. By executing and delivering this Security Instrument, Borrower hereby grants to Lender, as security for the Obligations (as defined in Section 2.4), a security interest in the Personal Property to the full extent that the Personal Property may be subject to the Uniform Commercial Code. This Security Instrument shall serve as a financing statement with respect to the property described in Subsection (b) and Subsection (d) in the Recitals hereinabove pursuant to Section 9-402(6) of The Uniform Commercial Code.

Section 1.3 PLEDGE OF MONIES HELD. Borrower hereby pledges to Lender any and all monies now or hereafter held by Lender, including, without limitation, any sums deposited in the Escrow Fund (as defined in Section 3.4), Net Proceeds (as defined in Section 4.1) and condemnation awards or payments described in Section 3.6, as additional security for the Obligations until expended or applied as provided in this Security Instrument.

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CONDITIONS TO GRANT

TO HAVE AND TO HOLD the above granted and described Property unto and to the use and benefit of Lender, and the successors and assigns of Lender, forever;

PROVIDED, HOWEVER, these presents are upon the express condition that, if Borrower shall well and truly pay to Lender the Debt at the time and in the manner provided in the Note, the Loan Agreement and this Security Instrument, shall well and truly perform the Other Obligations as set forth in this Security Instrument and shall well and truly abide by and comply with each and every covenant and condition set forth herein and in the Note and Loan Agreement, these presents and the estate hereby granted shall cease, terminate and be void.

ARTICLE 2 —DEBT AND OBLIGATIONS SECURED

Section 2.1 WAIVER. Borrower and all others who may become liable for the payment of all or any part of the Debt do hereby severally waive presentment and demand for payment, notice of dishonor, protest and notice of protest and non-payment and all other notices of any kind. No release of any security for the Debt or extension of time for payment of the Note or any installment thereof, and no alteration, amendment or waiver of any provision of the Note, this Security Instrument or the Other Security Documents (as defined in Section 3.2) made by agreement between Lender or any other person or party shall release, modify, amend, waive, extend, change, discharge, terminate or affect the liability of Borrower, and any other person or entity who may become liable for the payment of all or any part of the Debt, under the Note, the Loan Agreement, this Security Instrument or the Other Security Documents. No notice to or demand on Borrower shall be deemed to be a waiver of the obligation of Borrower or of the right of Lender to take further action without further notice or demand as provided for in the Note, the Loan Agreement, this Security Instrument or the Other Security Documents. If Borrower is a partnership, the agreements herein contained shall remain in force and applicable, notwithstanding any changes in the individuals comprising the partnership, and the term “Borrower,” as used herein, shall include any alternate or successor partnership, but any predecessor partnership and their partners shall not thereby be released from any liability. If Borrower is a corporation, the agreements contained herein shall remain in full force and applicable notwithstanding any changes in the shareholders comprising, or the officers and directors relating to, the corporation, and the term “Borrower” as used herein, shall include any alternative or successor corporation, but any predecessor corporation shall not be relieved of liability hereunder. (Nothing in the foregoing sentence shall be construed as a consent to, or a waiver of, any prohibition or restriction on transfers of interests in such partnership which may be set forth in this Security Instrument or any Other Security Document.)

Section 2.2 DEBT. This Security Instrument and the grants, assignments and transfers made in Article 1 are given for the purpose of securing the following, in such order of priority as Lender may determine in its sole discretion (collectively, the “Debt” or the “Loan”):

(a)           the payment of the indebtedness evidenced by the Note in lawful money of the United States of America;

(b)           the payment of interest, default interest, late charges and other sums, as provided in the Note, the Loan Agreement, this Security Instrument or the Other Security Documents;

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(c)           the payment of all other moneys agreed or provided to be paid by Borrower in the Note, the Loan Agreement, this Security Instrument or the Other Security Documents;

(d)           the payment of all sums advanced pursuant to this Security Instrument to protect and preserve the Property and the lien and the security interest created hereby; and

(e) the payment of all sums advanced and costs and expenses incurred by Lender in connection with the Debt or any part thereof, any renewal, extension, or change of or substitution for the Debt or any part thereof, or the acquisition or perfection of the security therefor, whether made or incurred at the request of Borrower or Lender.

Section 2.3 OTHER OBLIGATIONS. This Security Instrument and the grants, assignments and transfers made in Article I are also given for the purpose of securing the following (the “Other Obligations”):

(a)          the performance of all other obligations of Borrower contained herein;

(b)         the performance of each obligation of Borrower contained in any other agreement given by Borrower to Lender which is for the purpose of further securing the obligations secured hereby, and any amendments, modifications and changes thereto; and

(c)          the performance of each obligation of Borrower contained in any renewal, extension, amendment, modification, consolidation, change of, or substitution or replacement for, all or any part of the Note, the Loan Agreement, this Security Instrument or the Other Security Documents.

Section 2.4 DEBT AND OTHER OBLIGATIONS. Borrower’s obligations for the payment of the Debt and the performance of the Other Obligations shall be referred to collectively below as the “Obligations.”

Section 2.5 PAYMENTS. Unless payments are made in the required amount in immediately available funds at the place where the Note is payable, remittances in payment of all or any part of the Debt shall not, regardless of any receipt or credit issued therefor, constitute payment until the required amount is actually received by Lender in funds immediately available at the place where the Note is payable (or any other place as Lender, in Lender’s sole discretion, may have established by delivery of written notice thereof to Borrower) and shall be made and accepted subject to the condition that any check or draft may be handled for collection in accordance with the practice of the collecting bank or banks. Acceptance by Lender of any payment in an amount less than the amount then due shall be deemed an acceptance on account only, and the failure to pay the entire amount then due shall be and continue to be an Event of Default (as defined in Section 9.1).

ARTICLE 3 - BORROWER COVENANTS

Borrower covenants and agrees that:

Section 3.1      PAYMENT OF DEBT. Borrower will pay the Debt at the time and in the manner provided in the Note, the Loan Agreement and in this Security Instrument.

Section 3.2      INCORPORATION BY REFERENCE. All the covenants, conditions and agreements contained in (a) the Note and (b) all and any of the documents other than the Note, the

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Loan Agreement or this Security Instrument now or hereafter executed by Borrower or others and by or in favor of Lender, which wholly or partially secure or guaranty payment of the Note (the “Other Security Documents”), are hereby made a part of this Security Instrument to the same extent and with the same force as if fully set forth herein.

Section 3.3           INSURANCE.

(a)           Borrower shall obtain and maintain, or cause to be maintained, insurance for Borrower and the Property providing at least the following coverages:

(i)            comprehensive all risk insurance on the Improvements and the Personal Property, in each case (A) in an amount equal to 100% of the “Full Replacement Cost,” which for purposes of this Security Instrument shall mean actual replacement value (exclusive of costs of excavations, foundations, underground utilities and footings), but the amount shall in no event be less than the outstanding principal balance of the Note; and (B) containing an agreed amount endorsement with respect to the Improvements and Personal Property waiving all co-insurance provisions;

(ii)           commercial general liability insurance against claims for personal injury, bodily injury, death or property damage occurring upon, in or about the Property, such insurance to be on the so-called “occurrence” form with a combined single limit of not less than $1,000,000.00 and $2,000,000.00 in the aggregate;

(iii)          if any portion of the Improvements is at any time located in an area identified by the Secretary of Housing and Urban Development or any successor thereto as an area having special flood hazards pursuant to the National Flood Insurance Act of 1968, the Flood Disaster Protection Act of 1973 or the National Flood Insurance Reform Act of 1994, as each may be amended, or any successor law (the “Flood Insurance Acts”), flood hazard insurance in an amount equal to the lesser of (A) the principal balance of the Note, or (B) the maximum limit of coverage available for the Property under the Flood Insurance Acts;

(iv)         At all times that the Note is outstanding, Borrower shall maintain insurance with respect to the Land and the Improvements against such risks and for such amounts as are customarily insured against by businesses of like size and type paying, as the same become due and payable, all premiums in respect thereto, including, but not limited to:

(a)   Boiler and machinery insurance covering physical damage to the Improvements and to the major components of any central heating, air conditioning or ventilation systems and such other equipment as Lender shall designate.

(b)    Workers’ compensation insurance, disability benefits insurance, and such other form of insurance which the Borrower is required by law to provide, covering loss resulting from injury, sickness, disability or death of employees of Borrower who are located at or assigned to the Land.

(c)     Insurance protecting Borrower and Lender against loss or losses from liabilities imposed by law or assumed in any written contract and arising from personal injury and death or damage to the property of others caused by accident or occurrence, in such amounts as may be designated from time to time by Lender, excluding liability imposed upon the

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Borrower by any applicable workers’ compensation law, or such other amounts as may be required in writing by the Lender; and a blanket excess liability policy in an amount reasonably satisfactory to the Lender protecting Borrower and Lender against any loss or liability or damage for personal injury or property damage.

(v) such other insurance and in such amounts as Lender from time to time may reasonably request against such other insurable hazards which at the time are commonly insured against for property similar to the Property located in or around the region in which the Property is located.

(b)             All insurance provided for in Subsection (a) hereof shall be obtained under valid and enforceable policies (the “Policies” or in the singular, the “Policy”), in such forms and, from time to time after the date hereof, in such amounts as may from time to time be satisfactory to Lender, issued by financially sound and responsible insurance companies authorized to do business in the state in which the Property is located and approved by Lender. The insurance companies must have a general policy rating of A or better and a financial class of VI or better by A.M. Best Company, Inc., and if there are any Securities (as defined in Section 17.1 below) issued which have been assigned a rating by a credit rating agency approved by Lender (a “Rating Agency”), the insurance company shall have a claims paying ability rating by such Rating Agency of not lower than one rating category below the highest rating at any time assigned to the Securities, but in no event less than BBB by Standard & Poor’s Corp. or such comparable rating by such other Rating Agency (each such insurer shall be referred to below as a “Qualified Insurer”). Not less than two (2) days prior to the expiration dates of the Policies theretofore furnished to Lender pursuant to Subsection 3.3(a), certified copies of the Policies marked “premium paid” or accompanied by evidence satisfactory to Lender of payment of the premiums due thereunder (the “Insurance Premiums”), shall be delivered by Borrower to Lender; provided, however, that in the case of renewal Policies, Borrower may furnish Lender with binders therefor to be followed by the original Policies when issued.

(c)           Borrower shall not obtain (i) any umbrella or blanket liability or casualty Policy unless, in each case, Lender’s interest is included in such Policy as provided in Subsection 3.3(d) hereof, with respect to each individual property address in connection with the Property, the individual coverage amounts are listed in such Policy for each individual property address in connection with the Property and such Policy is issued by a Qualified Insurer, or (ii) separate insurance concurrent in form or contributing in the event of loss with that required in Subsection 3.3(a) to be furnished by, or which may be reasonably required to be furnished by, Borrower. In the event Borrower obtains separate insurance or an umbrella or a blanket Policy, Borrower shall notify Lender of the same and shall cause certified copies of each Policy to be delivered as required in Subsection 3.3(a). Any blanket insurance Policy shall specifically allocate to the Property the amount of coverage from time to time required hereunder and shall otherwise provide the same protection as would a separate Policy insuring only the Property in compliance with the provisions of Subsection 3.3(a).

(d)           All Policies of insurance provided for or contemplated by Subsection 3.3(a) shall name Borrower as the insured and Lender as mortgagee or additional insured, as their respective interests may appear, and in the case of property damage, and flood insurance, shall contain a so-called New York standard non-contributing mortgagee clause in favor of Lender providing that the loss thereunder shall be payable to Lender.

(e)           All Policies of insurance provided for in Subsection 3.3(a) shall contain clauses or endorsements to the effect that:

7

(i)            no act or negligence of Borrower, or anyone acting for Borrower, or of any tenant under any Lease or other occupant, or failure to comply with the provisions of any Policy which might otherwise result in a forfeiture of the insurance or any part thereof, shall in any way affect the validity or enforceability of the insurance insofar as Lender is concerned;

(ii)           the Policy shall not be materially changed (other than to increase the coverage provided thereby) or canceled without at least 30 days’ written notice to Lender and any other party named therein as an insured;

(iii)          each Policy shall provide that the issuers thereof shall give written notice to Lender if the Policy has not been renewed thirty (30) days prior to its expiration; and

(iv)          Lender shall not be liable for any Insurance Premiums thereon or subject to any assessments thereunder.

(f)              If at any time Lender is not in receipt of written evidence that all insurance required hereunder is in full force and effect, Lender shall have the right, without notice to Borrower to take such action as Lender deems necessary to protect its interest in the Property, including, without limitation, the obtaining of such insurance coverage as Lender in its sole discretion deems appropriate, and all expenses incurred by Lender in connection with such action or in obtaining such insurance and keeping it in effect shall be paid by Borrower to Lender upon demand and until paid shall be secured by this Security Instrument and shall bear interest in accordance with Section 9.3 hereof.

(g)             If the Property shall be damaged or destroyed, in whole or in part, by fire or other casualty, Borrower shall give prompt notice of such damage to Lender and shall promptly commence and diligently prosecute the completion of the repair and restoration of the Property as nearly as possible to the condition the Property was in immediately prior to such fire or other casualty, with such alterations as may be approved by Lender (the “Restoration”) and otherwise in accordance with Section 4.1 of this Security Instrument. Borrower shall pay all costs of such Restoration whether or not such costs are covered by insurance.

Section 3.4           PAYMENT OF TAXES AND ESCROW FUND.

(a)           Borrower shall: (i) pay, when due, all real estate taxes, water charges and sewer rents, and (ii) furnish to Lender, promptly after payment of the same, certificates, receipts or other evidence satisfactory to Lender of such payment.

(b)           Provided an Event of Default has occurred, which Event of Default was not (1) the direct result of any condemnation or eminent domain proceeding, or (2) a breach of a specific covenant hereunder due solely to a breach by a lessee under a Lease, Lender may require Borrower, upon ten (10) days notice to Borrower, to pay to Lender, on the first day of each calendar month: (i) one-twelfth of an amount which would be sufficient to pay the annual real estate taxes, water charges and sewer rents payable, or estimated by Lender to be payable, during the next ensuing twelve (12) months, and (ii) one-twelfth of an amount which would be sufficient to pay the fire and extended coverage premiums due for the renewal of the coverage afforded by the Policies upon the

8

expiration thereof (the amounts in (i) and (ii) above shall be called the “Escrow Fund”).

(c)           All sums deposited into the Escrow Fund shall be held by Lender without interest for the purposes of paying such real estate taxes, water charges, sewer rents or insurance premiums. The sums deposited with Lender for this purpose may be adjusted from time to time, either upward or downward, in the event that the estimated amount shall prove to be more or less than the actual amount required to be paid by the Borrower on the next ensuing due date. If at any time during the term of the Loan (or, if applicable, during the extended term of the Loan), advances are made by Lender, its successor or assigns, on behalf of Borrower, a service fee of two percent (2%) per month will be levied on any amount advanced until the advance is repaid.

(d)           The Escrow Fund and the payments of interest or principal or both, payable pursuant to the Note shall be added together and shall be paid as an aggregate sum by Borrower to Lender. Lender will apply the Escrow Fund to payments of real estate taxes, water charges, sewer rents and Insurance Premiums required to be made by Borrower pursuant to Sections 3.3 and 3.4 hereof. If the amount of the Escrow Fund shall exceed the amounts due for taxes and Insurance Premiums pursuant to Sections 3.3 and 3.4 hereof, Lender shall, in its discretion, return any excess to Borrower or credit such excess against future payments to be made to the Escrow Fund. In allocating such excess, Lender may deal with the person shown on the records of Lender to be the owner of the Property. If the Escrow Fund is not sufficient to pay the items set forth in (i) and (ii) above, Borrower shall promptly pay to Lender, upon demand, an amount which Lender shall estimate as sufficient to make up the deficiency. The Escrow Fund shall not constitute a trust fund and may be commingled with other monies held by Lender. No earnings or interest on the Escrow Fund shall be payable to Borrower.

(e)           Borrower agrees to notify Lender immediately of any changes to the amounts, schedules and instructions for payment of any real estate taxes, water charges, sewer rents and Insurance Premiums of which it has or obtains knowledge and authorizes Lender or its agent to obtain the bills for taxes directly from the appropriate taxing authority.

Section 3.5            [Intentionally omitted].

Section 3.6 CONDEMNATION. Borrower shall promptly give Lender notice of the actual or threatened commencement of any condemnation or eminent domain proceeding and shall deliver to Lender copies of any and all papers served in connection with such proceedings. Notwithstanding any taking by any public or quasi-public authority through eminent domain or otherwise (including, but not limited to, any transfer made in lieu of or in anticipation of the exercise of such taking), Borrower shall continue to pay the Debt at the time and in the manner provided for its payment in the Note, the Loan Agreement and in this Security Instrument and the Debt shall not be reduced until any award or payment therefor shall have been actually received and applied by Lender, after the deduction of expenses of collection, to the reduction or discharge of the Debt. Lender shall not be limited to the interest paid on the award by the condemning authority but shall be entitled to receive out of the award interest at the rate or rates provided herein or in the Note. Lender may apply any award or payment to the reduction or discharge of the Debt whether or not then due and payable. If the Property is sold, through foreclosure or otherwise, prior to the receipt by Lender of the award or payment, Lender shall have the right, whether or not a deficiency judgment on the Note shall have been sought, recovered or denied, to receive the award or payment, or a portion thereof sufficient to pay the Debt.

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Section 3.7           OCCUPANCY BY BORROWER; LEASES AND RENTS.

(a)           After the date hereof, Borrower shall not enter into any Lease for 25,000 or more square feet (hereinafter a “Major Lease”) or any modification, renewal or amendment of a Major Lease without Lender’s prior written approval of the terms and conditions thereof. Notwithstanding the foregoing, during any period when Borrower fails to maintain the required net operating income as set forth in Section 9(a) of the Loan Agreement, Borrower shall not enter into any Lease or any modification, renewal or amendment of any Lease without Lender’s prior written approval of the terms and conditions thereof. Borrower shall furnish Lender with executed copies of all Leases and all modifications, renewals or amendments thereto within thirty (30) days following execution of such Lease or such modification, renewal or amendment. In addition, all renewals of Leases and all proposed Leases shall provide for rental rates and terms comparable to existing local market rates and terms and shall be arms-length transactions with bona fide, independent third party tenants. All Leases shall provide that they are subordinate to this Security Instrument and that the lessee agrees to attorn to Lender. Borrower (i) shall observe and perform all the obligations imposed upon the lessor under the Leases and shall not do or permit to be done anything to impair the value of any of the Leases as security for the Debt; (ii) shall promptly send copies to Lender of all notices of default which Borrower shall send or receive thereunder; (iii) shall not collect any of the Rents more than one (1) month in advance; and (iv) shall not execute any other assignment of the lessor’s interest in any of the Leases or the Rents.

(b)           Provided an Event of Default has occurred, Borrower shall promptly deposit with Lender any and all monies representing security deposits under the Leases (the “Security Deposits”), whether or not Borrower actually received such monies. Borrower shall also provide Lender with the names of all tenants, their social security numbers or tax identification numbers and the amount of security being held for each tenant. Subject to the terms of this Subsection, Lender shall hold the Security Deposits in accordance with the terms of the respective Lease, and shall only release the Security Deposits in order to return a tenant’s Security Deposit to such tenant if such tenant is entitled to the return of the Security Deposit under the terms of the Lease and is not otherwise in default under the Lease. To the extent required by Applicable Laws (as defined in Section 3.10), Lender shall hold the Security Deposits in an interest bearing account selected by Lender in its sole discretion. In the event Lender is not permitted by Applicable Law to hold the Security Deposits, Borrower shall deposit the Security Deposits into a segregated interest bearing account with a federally insured institution as approved by Lender.

Section 3.8 MAINTENANCE OF PROPERTY. Borrower shall cause the Property to be maintained in a good and safe condition and repair. The Improvements and the Personal Property shall not be removed, demolished or materially altered (except for normal replacement of the Personal Property) without the prior written consent of Lender. Borrower shall promptly repair, replace or rebuild any part of the Property which may be destroyed by any casualty, or become damaged, worn or dilapidated or which may be affected by any proceeding of the character referred to in Section 3.6 hereof and shall complete and pay for any structure at any time in the process of construction or repair on the Land. Borrower shall not initiate, join in, acquiesce in, or consent to any change in any private restrictive covenant, zoning law or other public or private restriction, limiting or defining the uses which may be made of the Property or any part thereof. If under applicable zoning provisions the use of all or any portion of the Property is or shall become a nonconforming use, Borrower will not cause or pen-nit the nonconforming use to be discontinued or

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abandoned without the express written consent of Lender.

Section 3.9 WASTE. Borrower shall not commit or suffer any waste of the Property or make any change in the use of the Property which will in any way materially increase the risk of fire or other hazard arising out of the operation of the Property, or take any action that might invalidate or give cause for cancellation of any Policy, or do or permit to be done thereon anything that may in any way impair the value of the Property or the security of this Security Instrument. Borrower will not, without the prior written consent of Lender, permit any drilling or exploration for or extraction, removal, or production of any minerals from the surface or the subsurface of the Land, regardless of the depth thereof or the method of mining or extraction thereof.

Section 3.10 COMPLIANCE WITH LAWS. Borrower shall promptly comply with all existing and future federal, state and local laws, orders, ordinances, governmental rules and regulations or court orders affecting or which may be interpreted to affect the Property, or the use thereof (“Applicable Laws”). Borrower shall from time to time, upon Lender’s request, provide Lender with evidence satisfactory to Lender that the Property complies with all Applicable Laws or is exempt from compliance with Applicable Laws. Borrower shall give prompt notice to Lender of the receipt by Borrower of any notice related to a violation of any Applicable Laws and of the commencement of any proceedings or investigations which relate to compliance with Applicable Laws.

Section 3.11 BOOKS AND RECORDS.

(a)           Borrower and any Guarantors (as defined in Subsection 9.1(f)), if any, and Indemnitor(s) (as defined in Subsection 9.1(q)), if any, shall keep adequate books and records of account in accordance with generally accepted accounting principles (“GAAP”), or in accordance with other methods acceptable to Lender in its sole discretion, consistently applied. Lender shall have the right from time to time upon reasonable prior notice during normal business hours to examine such books, records and accounts at the office of Borrower and to make copies or extracts thereof as Lender shall desire.

(b)           Borrower will furnish Lender, all in accordance with generally accepted accounting principles, consistently applied (“GAAP”) during the term of the Loan: (i) within fifteen (15) days after Borrower files its Form 10-K with the Securities and Exchange Commission, or any successor agency or commission thereto, audited consolidated financial statements of Borrower, including, but not limited to, balance sheets, income statements and cash flow statements for Borrower’s respective fiscal year (or calendar year, if applicable), audited by McGladrey & Pullen, LLP, Borrower’s independent certified public accountant (“McGladrey”), which such financial statements and information shall indicate no material adverse change from such statements and information provided to Lender in connection with the application of the Loan. Notwithstanding the foregoing, upon Lender’s written request, Borrower shall retain other independent certified public accountants acceptable to Lender, in its reasonable discretion, to prepare such financial statements if Lender determines, in its reasonable discretion, that McGladrey is no longer acceptable to Lender; (ii) promptly following Lender’s request: (a) a “rent roll,” so-called, stating with respect to each Lease the name of the tenant, the rent paid by such tenant, the date to which such rent is paid, the date on which such tenant’s leasehold interest terminates and the security deposit required under the respective Lease from each such tenant (the “Rent Roll”), and (b) a written confirmation from Borrower as to the status of any Lease or any extension thereof, and the Rent Roll, confirmation and information

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certified to by an officer of Borrower as being true, complete and accurate, which the Rent Roll, confirmation and information shall indicate that there has been no material adverse change from the Rent Roll, confirmation, if any, or information provided to Lender in connection with the application of the Loan; and (iii) within ninety (90) days of the end of each fiscal year of Borrower, annual financial information statements for the Property, including, but not limited to, income and expense statements, a statement of operations, and a cash flow statement and such statements and information certified to by an officer of Borrower as being true, complete and accurate, which such statements and information shall indicate that there has been no material adverse change from the statements and information provided to Lender in connection with the application of the Loan; and (iv) within a reasonable period of time and from time to time, such other financial data or information with respect to the Borrower, the Property or any Guarantor, if any, as may be reasonably requested by Lender from time to time.

Section 3.12 PAYMENT FOR LABOR AND MATERIALS. Borrower will promptly pay when due all bills and costs for labor, materials, and specifically fabricated materials incurred in connection with the Property and never permit to exist beyond the due date thereof in respect of the Property or any part thereof any lien or security interest, even though inferior to the liens and the security interests hereof, and in any event never permit to be created or exist in respect of the Property or any part thereof any other or additional lien or security interest other than the liens or security interests hereof, except for the Permitted Exceptions (as defined below).

Section 3.13 PERFORMANCE OF OTHER AGREEMENTS. Borrower shall observe and perform each and every term to be observed or performed by Borrower pursuant to the terms of any agreement or recorded instrument affecting or pertaining to the Property, or given by Borrower to Lender for the purpose of further securing an Obligation and any amendments, modifications or changes thereto.

ARTICLE 4 - RESTORATION

Section 4.1            RESTORATION.

(a)             If the Net Proceeds (as defined below) shall be less than $75,000 and the costs of completing the Restoration shall be less than $75,000, the Net Proceeds will be disbursed by Lender to Borrower upon receipt, provided that all of the conditions set forth in Subsection 4.1(b)(i) are met and Borrower delivers to Lender a written undertaking to expeditiously commence and to satisfactorily complete with due diligence the Restoration in accordance with the terms of this Security Instrument.

(b)             If the Net Proceeds are equal to or greater than $75,000 or the costs of completing the Restoration is equal to or greater than $75,000, Lender shall make the net amount of all insurance proceeds received by Lender pursuant to Subsection 3.3(a) of this Security Instrument as a result of such damage or destruction, after deduction of its reasonable costs and expenses (including, but not limited to, reasonable counsel fees), if any, in collecting the same (the “Net Proceeds”) available for the Restoration in accordance with the provisions of this Subsection 4.1(b).

(i)              The Net Proceeds shall be made available to Borrower for the Restoration provided that each of the following conditions are met:

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(A)          no Event of Default shall have occurred and be continuing under the Note, the Loan Agreement, this Security Instrument or any of the Other Security Documents;

(B)           [intentionally omitted];

(C)           Borrower or the tenant subsidiary, if any, will continue to utilize the Property following Restoration and covenants and agrees with Lender to do so (upon the same terms and conditions as existed prior to the fire or other casualty) prior to receipt of the Net Proceeds;

(D)          Borrower shall commence the Restoration as soon as reasonably practicable (but in no event later than thirty (30) days after such damage or destruction occurs) and shall diligently pursue the same to satisfactory completion;

(E)          Lender shall be satisfied that any operating deficits, which will be incurred with respect to the Property as a result of the occurrence of any such fire or other casualty will be covered out of (1) the Net Proceeds, or (2) by other funds of Borrower;

(F)          Lender shall be satisfied that the Restoration will be completed on or before the earliest to occur of (1) three (3) months prior to the Maturity Date (as defined in the Loan Agreement) or the Extended Maturity Date (as defined in the Loan Agreement), as the case may be, (2) nine (9) months after the occurrence of such fire or other casualty or (3), such time as may be required under applicable zoning law, ordinance, rule or regulation in order to repair and restore the Property to the condition it was in immediately prior to such fire or other casualty;

(G)         Borrower shall execute and deliver to Lender a completion guaranty in form and substance satisfactory to Lender and its counsel pursuant to the provisions of which Borrower shall guaranty to Lender the lien-free completion by Borrower of the Restoration in accordance with the provisions of this Subsection 4.1(b);

(H)         the Property and the use thereof after the Restoration will be in compliance with and permitted under all applicable zoning laws, ordinances, rules and regulations; and

(I)           the Restoration shall be done and completed by Borrower in an expeditious and diligent fashion and in compliance with all applicable governmental laws, rules and regulations (including, without limitation, all applicable Environmental Laws (as defined below).

(ii)                The Net Proceeds shall be held by Lender and, until disbursed in accordance with the provisions of this Subsection 4.1(b), shall constitute additional security for the Obligations. The Net Proceeds shall be disbursed by Lender to, or as directed by, Borrower from time to time during the course of the Restoration, upon receipt of evidence satisfactory to Lender that (A) all materials installed and work and labor performed (except to the extent that they are to be paid for out of the requested disbursement) in connection with the Restoration have been paid for in full, and (B) there exist no notices of pendency, stop orders, mechanic’s or materialman’s liens or notices of intention to file same, or any other liens or encumbrances of any nature whatsoever on the Property arising out of the Restoration which have not either been fully bonded to the satisfaction of Lender and discharged of record or in the alternative fully insured to the satisfaction of Lender by the title company insuring the lien of this Security Instrument.

(iii)          All plans and specifications required in connection with the Restoration shall be subject to prior review and acceptance in all respects by Lender and by an independent consulting engineer

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selected by Lender (the “Casualty Consultant”), whose fees are to be paid out of Net Proceeds.

(iv)          In no event shall Lender be obligated to make disbursements of the Net Proceeds in excess of an amount equal to the costs actually incurred from time to time for work in place as part of the Restoration, as certified by the Casualty Consultant, minus an amount equal to 10% of the costs actually incurred for work in place as part of the Restoration.

(v)           Lender shall not be obligated to make disbursements of the Net Proceeds more frequently than once every calendar month.

(vi)          If at any time the Net Proceeds or the undisbursed balance thereof shall not, in the opinion of Lender, be sufficient to pay in full the balance of the costs which are estimated by the Casualty Consultant to be incurred in connection with the completion of the Restoration, Borrower shall deposit the deficiency (the “Net Proceeds Deficiency”) with Lender before any further disbursement of the Net Proceeds shall be made. The Net Proceeds Deficiency deposited with Lender shall be held by Lender and shall be disbursed for costs actually incurred in connection with the Restoration on the same conditions applicable to the disbursement of the Net Proceeds, and until so disbursed pursuant to this Subsection 4.1(b) shall constitute additional security for the Obligations.

(vii)         The excess, if any, of the Net Proceeds and the remaining balance, if any, of the Net Proceeds Deficiency deposited with Lender after the Casualty Consultant certifies to Lender that the Restoration has been completed in accordance with the provisions of this Subsection 4.1(b), and the receipt by Lender of evidence satisfactory to Lender that all costs incurred in connection with the Restoration have been paid in full, shall be remitted by Lender to Borrower, provided no Event of Default shall have occurred and shall be continuing under the Note, the Loan Agreement, this Security Instrument or any of the Other Security Documents.

(c)             All Net Proceeds not required hereunder to be made available for the Restoration may be retained and applied by Lender toward the payment of the Debt whether or not then due and payable in such order, priority and proportions as Lender in its discretion shall deem proper. If Lender shall receive and retain Net Proceeds, the lien of this Security Instrument shall be reduced only by the amount thereof received and retained by Lender and actually applied by Lender in reduction of the Debt.

ARTICLE 5 - REPRESENTATIONS AND WARRANTIES

Borrower represents and warrants to Lender that:

Section 5.1 WARRANTY OF TITLE. Borrower has good title to the Property and has the right to mortgage, grant, bargain, sell, pledge, assign, warrant, transfer and convey the same and that Borrower possesses an unencumbered fee simple absolute estate in the Land and the Improvements and that it owns the Property free and clear of all liens, encumbrances and charges whatsoever except for those exceptions shown in the title insurance policy insuring the lien of this Security Instrument (the “Permitted Exceptions”). Borrower shall forever warrant, defend and preserve the title and the validity and priority of the lien of this Security Instrument and shall forever warrant and defend the same to Lender against the claims of all persons whomsoever.

Section 5.2 AUTHORITY.  Borrower (and the undersigned representative of

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Borrower, if any) has full power, authority and legal right to execute this Security Instrument, and to mortgage, grant, bargain, sell, pledge, assign, warrant, transfer and convey the Property pursuant to the terms hereof and to keep and observe all of the terms of this Security Instrument on Borrower’s part to be performed. Borrower (a) is duly organized, validly existing and in good standing under the laws of its state of organization or incorporation; (b) is duly qualified to transact business and is in good standing in the State where the Property is located; and (c) has all necessary approvals, governmental and otherwise, and full power and authority to own the Property and carry on its business as now conducted and proposed to be conducted. Borrower now has and shall continue to have the full right, power and authority to operate and lease the Property, to encumber the Property as provided herein and to perform all of the other obligations to be performed by Borrower under the Note, the Loan Agreement, this Security Instrument and the Other Security Documents.

Section 5.3            STATUS OF PROPERTY.

(a)            No portion of the Improvements is located in an area identified by the Secretary of Housing and Urban Development or any successor thereto as an area having special flood hazards pursuant to the Flood Insurance Acts or, if any portion of the Improvements is located within such area, Borrower has obtained and will maintain the insurance prescribed in Section 3.3 hereof.

(b)           Borrower has obtained all necessary certificates, licenses and other approvals, governmental and otherwise, necessary for the operation of the Property and the conduct of its business and all required zoning, building code, land use, environmental and other similar permits or approvals, all of which are in full force and effect as of the date hereof and not subject to revocation, suspension, forfeiture or modification.

(c)           The Property and the present and contemplated use and occupancy thereof are or shall be in full compliance with all applicable zoning ordinances, building codes, land use and environmental laws and other similar laws.

(d)          The Property is served by all utilities required for the current or contemplated use thereof. All utility service is provided by public utilities and the Property has accepted or is equipped to accept such utility service.

(e)             All public roads and streets necessary for service of and access to the Property for the current or contemplated use thereof have been completed, are serviceable and all-weather and are physically and legally open for use by the public.

(f)              The Property is served by public water and sewer systems.

(g)             The Property is free from damage caused by fire or other casualty.

(h)             Borrower has paid in full for, and is the owner of, all furnishings, fixtures and equipment (other than tenants’ property) used in connection with the operation of the Property, free and clear of any and all security interests, liens or encumbrances, except the lien and security interest created hereby.

(i)              All liquid and solid waste disposal, septic and sewer systems located on the Property are in a good and safe condition and repair and in compliance with all Applicable

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Laws.

Section 5.4 NOFOREIGN PERSON. Borrower is not a “foreign person” within the meaning of Section 1445(f)(3) of the Internal Revenue Code of 1986, as amended and the related Treasury Department regulations, including temporary regulations.

Section 5.5 SEPARATE TAX LOT. The Property is assessed for real estate tax purposes as one or more wholly independent tax lot or lots, separate from any adjoining land or improvements not constituting a part of such lot or lots, and no other land or improvements is assessed and taxed together with the Property or any portion thereof.

Section 5.6 LEASES. (a) Borrower is the sole owner of the entire lessor’s interest in the Leases; (b) the Leases are valid and enforceable and in full force and effect; (c) all of the Leases are arms-length agreements with bona fide, independent third parties; (d) no party under any Lease is in default; (e) all Rents due have been paid in full, except as set forth in the Rent Roll; (f) the terms of all alterations, modifications and amendments to the Leases are reflected in the certified occupancy statement delivered to and approved by Lender; (g) none of the Rents reserved in the Leases have been assigned or otherwise pledged or hypothecated; (h) none of the Rents have been collected for more than one (1) month in advance; (i) the premises demised under the Leases have been completed and the tenants under the Leases have accepted the same and have taken possession of the same on a rent-paying basis; (j) there exist no offsets or defenses to the payment of any portion of the Rents; (k) no Lease contains an option to purchase, right of first refusal to purchase, or any other similar provision; (l) no person or entity has any possessory interest in, or right to occupy, the Property except under and pursuant to a Lease; (m) each Lease is subordinate to this Security Instrument, either pursuant to its terms or a recorded subordination agreement; and (n) no Lease has the benefit of a non-disturbance agreement, except those entered into on or about the date hereof with Lender in connection with the Loan.

Section 5.7             FINANCIAL CONDITION.

(a) (i) Borrower is solvent, and no bankruptcy, reorganization, insolvency or similar proceeding under any state or federal law with respect to Borrower has been initiated, and (ii) Borrower has received reasonably equivalent value for the granting of this Security Instrument.

(b) No petition in bankruptcy has ever been filed by or against Borrower, any Guarantor, any Indemnitor or any related entity, or any principal, general partner or member thereof, in the last seven (7) years, and neither Borrower, any Guarantor, any Indemnitor nor any related entity, or any principal, general partner or member thereof, in the last seven (7) years has ever made any assignment for the benefit of creditors or taken advantage of any insolvency act or any act for the benefit of debtors.

ARTICLE 6 - FURTHER ASSURANCES

Section 6.1 RECORDING OF SECURITY INSTRUMENT, ETC. Borrower forthwith upon the execution and delivery of this Security Instrument and thereafter, from time to time, will cause this Security Instrument and any of the Other Security Documents creating a lien or security interest or

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evidencing the lien hereof upon the Property and each instrument of further assurance to be filed, registered or recorded in such manner and in such places as may be required by any present or future law in order to publish notice of and fully to protect and perfect the lien or security interest hereof upon, and the interest of Lender in, the Property. Borrower will pay all taxes, filing, registration or recording fees, and all expenses incident to the preparation, execution, acknowledgment or recording of the Note, the Loan Agreement, this Security Instrument, the Other Security Documents, any note or mortgage supplemental hereto, any security instrument with respect to the Property and any instrument of further assurance, and any modification or amendment of the foregoing documents, and all federal, state, county and municipal taxes, duties, imposts, assessments and charges arising out of or in connection with the execution and delivery of this Security Instrument, any mortgage supplemental hereto, any security instrument with respect to the Property or any instrument of further assurance, and any modification or amendment of the foregoing documents, except where prohibited by law so to do.

Section 6.2 FURTHER ACTS, ETC. Borrower will, at the cost of Borrower, and without expense to Lender, do, execute, acknowledge and deliver all and every such further acts, deeds, conveyances, mortgages, assignments, notices of assignments, transfers and assurances as Lender shall, from time to time, require, for the better assuring, conveying, assigning, transferring, and confirming unto Lender the Property and rights hereby mortgaged, granted, bargained, sold, conveyed, confirmed, pledged, assigned, warranted and transferred or intended now or hereafter so to be, or which Borrower may be or may hereafter become bound to convey or assign to Lender, or for carrying out the intention or facilitating the performance of the terms of this Security Instrument or for filing, registering or recording this Security Instrument, or for complying with all Applicable Laws. Borrower, on demand, will execute and deliver and hereby authorizes Lender to execute in the name of Borrower or without the signature of Borrower to the extent Lender may lawfully do so, one or more financing statements, chattel mortgages or other instruments, to evidence more effectively the security interest of Lender in the Property. Borrower grants to Lender an irrevocable power of attorney coupled with an interest for the purpose of exercising and perfecting any and all rights and remedies available to Lender at law and in equity, including, without limitation, such rights and remedies available to Lender pursuant to this Section 6.2

Section 6.3              CHANGES IN TAX, DEBT CREDIT AND DOCUMENTARY STAMP LAWS.

(a)           If any law is enacted or adopted or amended after the date of this Security Instrument which deducts the Debt from the value of the Property for the purpose of taxation or which imposes a tax, either directly or indirectly, on the Debt or Lender’s interest in the Property, Borrower will pay the tax, with interest and penalties thereon, if any. If Lender is advised by counsel chosen by it that the payment of tax by Borrower would be unlawful or taxable to Lender or unenforceable or provide the basis for a defense of usury, then Lender shall have the option by written notice of not less than ninety (90) days to declare the Debt immediately due and payable.

(b)           Borrower will not claim or demand or be entitled to any credit or credits on account of the Debt for any part of the Taxes or Other Charges assessed against the Property, or any part thereof, and no deduction shall otherwise be made or claimed from the assessed value of the Property, or any part thereof, for real estate tax purposes by reason of this Security Instrument or the Debt. If such claim, credit or deduction shall be required by law, Lender shall have the option, by written notice of not less than ninety (90) days, to declare the Debt immediately due and payable.

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(c)           If at any time the United States of America, any State thereof or any subdivision of any such State shall require revenue or other stamps to be affixed to the Note, the Loan Agreement, this Security Instrument, or any of the Other Security Documents or impose any other tax or charge on the same, Borrower will pay for the same, with interest and penalties thereon, if any.

Section 6.4            SNDA AND ESTOPPEL CERTIFICATES.

(a)             After request by Lender, Borrower, within ten (10) days, shall furnish Lender or any proposed assignee with a statement, duly acknowledged and certified by Borrower, setting forth (i) the amount of the original principal amount of the Note, (ii) the unpaid principal amount of the Note, (iii) the rate of interest of the Note, (iv) the terms of payment and maturity date of the Note, (v) the date installments of interest or principal were last paid, (vi) that, except as provided in such statement, there are no defaults or events which with the passage of time or the giving of notice or both, would constitute an event of default under the Note, the Loan Agreement or this Security Instrument, (vii) that the Note, the Loan Agreement and this Security Instrument are valid, legal and binding obligations and have not been modified or if modified, giving particulars of such modification, (viii) whether any offsets or defenses exist against the obligations secured hereby and, if any are alleged to exist, a detailed description thereof, (ix) that all Leases are in full force and effect and have not been modified (or if modified, setting forth all modifications), (x) the date to which the Rents thereunder have been paid pursuant to the Leases, (xi) whether or not, to the best knowledge of Borrower, any of the lessees under the Leases are in default under the Leases, and, if any of the lessees are in default, setting forth the specific nature of all such defaults, (xii) the amount of security deposits held by Borrower under each Lease and that such amounts are consistent with the amounts required under each Lease, and (xiii) as to any other matters reasonably requested by Lender and reasonably related to the Leases, the obligations secured hereby, the Property or this Security Instrument.

(b)           Borrower shall deliver to Lender, promptly upon request, duly executed estoppel certificates from any one or more lessees as required by Lender attesting to such facts regarding the Lease as Lender may require, including, but not limited to, attestations that each Lease covered thereby is in full force and effect with no defaults thereunder on the part of any party, that none of the Rents have been paid more than one month in advance, and that the lessee claims no defense or offset against the full and timely performance of its obligations under the Lease.

(c)           Upon any transfer or proposed transfer contemplated by Section 17.1 hereof, at Lender’s written request, Borrower, any Guarantors and any Indemnitor(s) shall provide an estoppel certificate to the Investor (as defined in Section 17.1) or any prospective Investor in such form, substance and detail as Lender, such Investor or prospective Investor may require.

Section 6.5 SPLITTING OF SECURITY INSTRUMENT. This Security Instrument and the Note shall, at any time until the same shall be fully paid and satisfied, at the sole election of Lender, be split or divided into two or more notes and two or more security instruments, each of which shall cover all or a portion of the Property to be more particularly described therein. To that end, Borrower, upon written request of Lender, shall execute,

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acknowledge and deliver, or cause to be executed, acknowledged and delivered by the then owner of the Property, to Lender or its designee or designees substitute notes and security instruments in such principal amounts, aggregating not more than the then unpaid principal amount of this Security Instrument, and containing terms, provisions and clauses similar to those contained herein and in the Note, and such other documents and instruments as may be required by Lender.

Section 6.6 REPLACEMENT DOCUMENTS. Upon receipt of an affidavit of an officer of Lender as to the loss, theft, destruction or mutilation of the Note, the Loan Agreement or any Other Security Document which is not of public record, and, in the case of any such mutilation, upon surrender and cancellation of such Note, Loan Agreement or Other Security Document, Borrower will issue, in lieu thereof, a replacement Note, Loan Agreement or Other Security Document, dated the date of such lost, stolen, destroyed or mutilated Note, Loan Agreement or Other Security Document in the same principal amount thereof and otherwise of like tenor.

ARTICLE 7 - DUE ON SALE/ENCUMBRANCE

Section 7.1 LENDER RELIANCE. Borrower acknowledges that Lender has examined and relied on the experience of Borrower and its directors, members, general partners, principals and (if Borrower is a trust) beneficial owners in owning and operating properties such as the Property in agreeing to make the loan secured hereby, has relied on the covenant of Borrower contained in Section 3.7(a) hereof, and will continue to rely on Borrower’s ownership and occupancy of the Property as a means of maintaining the value of the Property as security for repayment of the Debt and the performance of the Other Obligations. Borrower acknowledges that Lender has a valid interest in maintaining the value of the Property so as to ensure that, should Borrower default in the repayment of the Debt or the performance of the Other Obligations, Lender can recover the Debt by a sale of the Property.

Section 7.2 NO SALE/ENCUMBRANCE AND SUBORDINATE FINANCING. Borrower agrees that Borrower shall not, without the prior written consent of Lender, (i) sell, convey, mortgage, grant, bargain, encumber, pledge, assign, or otherwise transfer the Property or any part thereof or permit the Property or any part thereof to be sold, conveyed, mortgaged, granted, bargained, encumbered, pledged, assigned, or otherwise transferred and (ii) permit any subordinate financing or any other form of lien or encumbrance placed on the Property which is not removed or bonded within sixty (60) days after such filing.

Section 7.3             SALE/ENCUMBRANCE DEFINED. A sale, conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment, or transfer within the meaning of this Article 7 shall be deemed to include, but not limited to, (a) an installment sales agreement wherein Borrower agrees to sell the Property or any part thereof for a price to be paid in installments; (b) an agreement by Borrower leasing all or a substantial part of the Property for other than actual occupancy by a space tenant thereunder or a sale, assignment or other transfer of, or the grant of a security interest in, Borrower’s right, title and interest in and to any Leases or any Rents; (c) if Borrower, any Guarantor,

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any Indemnitor, or any general or limited partner or member of Borrower, any Guarantor or any Indemnitor is a corporation, the voluntary or involuntary sale, conveyance, transfer or pledge of such corporation’s stock (or the stock of any corporation directly or indirectly controlling such corporation by operation of law or otherwise) or the creation or issuance of new stock by which an aggregate of more than 35% of such corporation’s stock shall be vested in a party or parties who are not now stockholders; (d) if Borrower, any Guarantor or any Indemnitor or any general or limited partner or member of Borrower, any Guarantor or any Indemnitor is a limited or general partnership or joint venture, the change, removal or resignation of a general partner or managing partner or the transfer or pledge of the partnership interest of any general partner or managing partner or any profits or proceeds relating to such partnership interest or the voluntary or involuntary sale, conveyance, transfer or pledge of limited partnership interests (or the limited partnership interests of any limited partnership directly or indirectly controlling such limited partnership by operation of law or otherwise) or the creation or issuance of new limited partnership interests, by which an aggregate of more than 10% of such limited partnership interests are held by parties who are not currently limited partners; and (e) if Borrower, any Guarantor, any Indemnitor or any general or limited partner or member of Borrower, any Guarantor or any Indemnitor is a limited liability company, the change, removal or resignation of a managing member or the transfer of the membership interest of any managing member or any profits or proceeds relating to such membership interest or the voluntary or involuntary sale, conveyance, transfer or pledge of membership interests (or the membership interests of any limited liability company directly or indirectly controlling such limited liability company by operation of law or otherwise) or the creation or issuance of new membership interests, by which an aggregate of more than 10% of such membership interests are held by parties who are not currently members.

Section 7.4 LENDER’S RIGHTS. Lender reserves the right to condition the consent required hereunder upon a modification of the terms hereof and on assumption of the Note, the Loan Agreement, this Security Instrument and the Other Security Documents as so modified by the proposed transferee, payment of a transfer fee of not less than one percent (1%) of the principal balance of the Note, a $500.00 processing fee, and all of Lender’s expenses incurred in connection with such transfer (including, but not limited to reasonable attorneys’ fees and expenses), the approval by a Rating Agency of the proposed transferee, the proposed transferee’s continued compliance with the covenants set forth in this Security Instrument, or such other conditions as Lender shall determine in its sole discretion to be in the interest of Lender. All of Lender’s expenses incurred and the $500.00 processing fee shall be payable by Borrower whether or not Lender consents to the transfer. Lender shall not be required to demonstrate any actual impairment of its security or any increased risk of default hereunder in order to declare the Debt immediately due and payable upon Borrower’s sale, conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment, or transfer of the Property without Lender’s consent. This provision shall apply to every sale, conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment, or transfer of the Property regardless of whether voluntary or not, or whether or not Lender has consented to any previous sale, conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment, or transfer of the Property.

ARTICLE 8 - PREPAYMENT

Section 8.1 PREPAYMENT BEFORE EVENT OF DEFAULT. The Debt may be prepaid only in strict accordance with the express terms and conditions of the Note including the payment of any prepayment premium or consideration.

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Section 8.2 PREPAYMENT AFTER EVENT OF DEFAULT. If a Default Prepayment (as defined below) occurs, Borrower shall pay to Lender the entire Debt, including, without limitation, the sums referred to in Article 5 of the Note, if any, as if such payment were a voluntary prepayment referred to in such Article 5. For purposes of this Section 8.2, the term “Default Prepayment” shall mean a prepayment of the principal amount of the Note made after the occurrence of any Event of Default or an acceleration of the Maturity Date under any circumstances, including, without limitation, a prepayment occurring in connection with reinstatement of this Security Instrument provided by statute under foreclosure proceedings or exercise of a power of sale, any statutory right of redemption exercised by Borrower or any other party having a statutory right to redeem or prevent foreclosure, any sale in foreclosure or under exercise of a power of sale or otherwise.

ARTICLE 9 - DEFAULT

Section 9.1             EVENTS OF DEFAULT. The occurrence of any one or more of the following events shall constitute an “Event of Default”:

(a)             if any portion of the Debt is not paid when due and continues for a period of ten (10) days after notice thereof by Lender, provided, however, Lender shall not be obligated to provide more than two (2) such notices in any continuous twelve (12) month period during the term of the Loan with respect to any failure by Borrower to make any payment of interest or principal due under the Note;

(b)             if the entire Debt is not paid on or before the Maturity Date or the Extended Maturity Date, as the case may be;

(c)             if any of the Taxes or Other Charges is not paid when the same is due and payable and continues for a period of ten (10) days after notice thereof by Lender, except to the extent sums sufficient to pay such Taxes and Other Charges have been deposited with Lender in accordance with the terms of this Security Instrument;

(d)             if the Policies are not kept in full force and effect, or if the Policies are not delivered to Lender upon request;

(e)             if Borrower violates or does not comply with any of the provisions of Section 3.7 or Article 11 within thirty (15) days after notice from Lender or if Borrower violates or does not comply with any of the provisions of Article 7;

(f)            if any representation or warranty of Borrower, any Indemnitor or any person guaranteeing payment of the Debt or any portion thereof or performance by Borrower of any of the terms of this Security Instrument (a “Guarantor”), or any director, member, general partner, principal or beneficial owner of any of the foregoing, made herein or in the Environmental Indemnity (as defined below) or any guaranty, or in any certificate, report, financial statement or other instrument or document furnished to Lender shall have been false or misleading in any material respect when made;

(g)             if (i) Borrower or any Guarantor or Indemnitor shall commence any case,

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proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization, conservatorship or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets, or Borrower or any managing member or general partner of Borrower, or any Guarantor or Indemnitor shall make a general assignment for the benefit of its creditors; or (ii) there shall be commenced against Borrower or any managing member or general partner of Borrower, or any Guarantor or Indemnitor any case, proceeding or other action of a nature referred to in clause (i) above which (A) results in the entry of an order for relief or any such adjudication or appointment or (B) remains undismissed, undischarged or unbonded for a period of sixty (60) days; or (iii) Borrower or any director, managing member or general partner of Borrower, or any Guarantor or Indemnitor shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i) or (ii) above; or (iv) Borrower or any managing member or general partner of Borrower, or any Guarantor or Indemnitor shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due;

(h)             if (i) a writ of execution or attachment or any similar process shall be issued or levied against all or any part of, or interest in the Property, any of the Borrower’s other properties or assets (collectively, the “Other Borrower Assets”) or any Guarantor’s or any Indemnitor’s properties or assets, or any judgment involving monetary damages shall be entered against Borrower which shall become a lien on all or any part of, or interest in the Property or any Other Borrower Assets, or entered against any Guarantor or any Indemnitor which shall become a lien on all or any part of, or interest in such Guarantor’s or Indemnitor’s properties or assets, and an appeal shall not be taken and actively prosecuted with respect to such judgment within thirty (30) days of its entry, or such execution, attachment or similar process shall not be released, bonded, satisfied, vacated or stayed within sixty (60) days after its entry or levy, and with respect to the Other Borrower Assets only, said writ of execution, attachment levy or judgment shall involve monetary damages aggregating more than $50,000,00; or (ii) Borrower or any director, managing member or general partner of Borrower, or any Guarantor or Indemnitor shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i) above;

(i)              if Borrower or any other person or entity shall be in default under the Note, the Loan Agreement or the other Loan Documents or under any other mortgage, instrument, deed of trust, deed to secure debt or other security agreement covering any part of the Property whether it be superior or junior in lien to this Security Instrument, or otherwise executed and delivered in connection with the Note, the Loan Agreement, or the other Loan Documents or the loan evidenced and secured thereby;

(j)              if Borrower shall be in default under the Bloomfield Mortgage (as hereinafter defined) and any and all documents executed in connection with the Bloomfield

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Mortgage;

(k)             if the Property becomes subject to any mechanic’s, materialman’s or other lien other than a lien for local real estate taxes and assessments not then due and payable and the lien shall remain undischarged of record (by payment, bonding or otherwise) for a period of sixty (60) days or if the same is not fully insured to the satisfaction of Lender by the title company insuring the lien of this Security Instrument;

(l)              if any federal tax lien is filed against Borrower, any Guarantor, any Indemnitor or the Property and same is not discharged of record within thirty (30) days after same is filed;

(m)            if any condemnation or eminent domain proceeding has been finally concluded and adjudicated which renders the use or occupancy of the Property economically unfeasible;

(n)             if Borrower shall fail to reimburse Lender on demand, with interest calculated at the Default Rate, for all Insurance Premiums or Taxes, together with interest and penalties imposed thereon, paid by Lender pursuant to this Security Instrument;

(o)             if Borrower shall fail to deliver to Lender, within ten (10) days after request by Lender, the estoppel certificates required pursuant to the terms of Subsections 6.4(a) and (c);

(p)             if Borrower shall fail to deliver to Lender, within ten (10) days after request by Lender, the statements referred to in Section 3.11 in accordance with the terms thereof;

(q)             if any default occurs under that certain environmental indemnity agreement dated the date hereof given by Borrower and the Guarantor (at times hereinafter and hereinbefore collectively referred to as “Indemnitor”) to Lender (the “Environmental Indemnity”) and such default continues after the expiration of applicable notice and grace periods, if any;

(r)              [intentionally omitted];

(s)             if the Borrower shall have entered into any secondary financing, guaranteed any other loan, other than trade payables in the ordinary course of its business which are paid within thirty (30) days of when due, or shall have consented to the placing of any lien, mortgage or other encumbrance upon the Property without the prior written consent of Lender. Notwithstanding the foregoing, the Borrower may take on additional indebtedness or guarantees unrelated to the Property without the prior written consent of Lender provided Borrower is not in default under the Note, the Loan Agreement, this Mortgage, the Bloomfield Mortgage or the other Loan Documents at the time of the initial closing of such indebtedness. If Borrower is in default under the Note, the Loan Agreement, this Mortgage, the Bloomfield Mortgage or the other Loan Documents, Lender’s prior written consent shall be required, which consent can be withheld for any reason or no reason;

(t)              the dissolution or the sale, assignment, hypothecation, gift or other transfer of all

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or substantially all of the assets of Borrower;

(u)             any failure of Borrower to adhere to any governmental rules or regulations after notice from Lender or any applicable governmental authority and beyond the same cure periods as provide in Subsection 9.1(x) hereof;

(v)             if Borrower shall be in a declared default in the payment of any indebtedness for borrowed money, including without limitation, any other indebtedness owed to Lender, or shall be in a declared default in the performance of any term, covenant, condition or agreement of any such indebtedness if the effect of such default would be that the holder of such indebtedness elects to accelerate the maturity thereof, provided, however, that any declared default with respect to non-recourse mortgage obligations of Borrower which is held by any other party or parties other than Lender shall not constitute an Event of Default hereunder;

(w)            the sale, transfer, encumbrance, conveyance or assignment of the Property, directly or indirectly, except as permitted under Section 16 of the Loan Agreement; or

(x)             if for more than ten (10) days after notice from Lender, Borrower shall continue to be in default under any other term, covenant or condition of the Note, the Loan Agreement, this Security Instrument or the Other Security Documents in the case of any default which can be cured by the payment of a sum of money or for thirty (30) days after notice from Lender in the case of any other default, provided that if such default cannot be cured within such thirty (30) day period and Borrower shall have commenced to cure such default within such thirty (30) day period and thereafter diligently and expeditiously proceeds to cure the same, such thirty (30) day period shall be extended for so long as it shall require Borrower in the exercise of due diligence to cure such default, it being agreed, however, that no such extension shall be for a period in excess of ninety (90) days.

Section 9.2 LATE PAYMENT CHARGE. If any monthly installment of principal and interest is not paid on or prior to the tenth (10th) day after the date on which it is due, Borrower shall pay to Lender upon demand an amount equal to the lesser of five percent (5%) of such unpaid portion of the outstanding monthly installment of principal and interest then due or the maximum amount permitted by applicable law, to defray the expense incurred by Lender in handling and processing such delinquent payment and to compensate Lender for the loss of the use of such delinquent payment, and such amount shall be secured by this Security Instrument and the Other Security Documents.

Section 9.3 DEFAULT INTEREST RATE. Upon the occurrence of an Event of Default and its continuing beyond any applicable notice, grace or cure periods, Lender shall be entitled to receive and Borrower shall pay interest on the entire unpaid principal balance of the Note at a rate that is the lesser of twenty-one percent (21%) per annum or the maximum rate permitted by applicable law (the “Default Rate”). The Default Rate shall be computed from the occurrence of the Event of Default until the earlier of (i) the date prior to the day upon which the Event of Default is cured or (ii) the date upon which the Debt is paid in full. Interest calculated at the Default Rate shall be added to the Debt, and shall be deemed secured by this Mortgage.

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ARTICLE 10 - RIGHTS AND REMEDIES

Section 10.1 REMEDIES. Upon the occurrence of any Event of Default, Borrower agrees that Lender may take such action, without notice or demand, as it deems advisable to protect and enforce its rights against Borrower and in and to the Property, including, but not limited to, the following actions, each of which may be pursued concurrently or otherwise, at such time and in such order as Lender may determine, in its sole discretion, without impairing or otherwise affecting the other rights and remedies of Lender:

(a)             declare the entire unpaid Debt to be immediately due and payable;

(b)             institute proceedings, judicial or otherwise, for the complete foreclosure of this Security Instrument under any applicable provision of law in which case the Property or any interest therein may be sold for cash or upon credit in one or more parcels or in several interests or portions and in any order or manner. It is expressly acknowledged and agreed that the Default Rate shall be in effect at all times after an Event of Default shall have occurred and be continuing until the full principal amount of the Debt shall have been finally and indefeasibly paid in full, and that such Default Rate shall continue in effect after the entry of any money judgment or decree or other judgment or decree which may be entered in any action or proceeding under this Security Instrument, the Loan Agreement or the Note (including any deficiency proceeding) notwithstanding any provision of law or rule providing for post-judgment interest at a lower rate, unless interest at the higher rate provided for herein shall be expressly prohibited by specific provision of any applicable statute, rule or regulation of the State of Connecticut. It is further expressly agreed and acknowledged by Borrower that the Default Rate shall apply to any such judgment or decree until the final and indefeasible payment in full of all amounts due under such judgment or decree is received by Lender. As such, the Default Rate shall survive the entry of any such judgment or decree and any merger, or claim of merger, of the Note, the Loan Agreement or this Mortgage into any such judgment or decree.

(c)             with or without entry, to the extent permitted and pursuant to the procedures provided by applicable law, institute proceedings for the partial foreclosure of this Security Instrument for the portion of the Debt then due and payable, subject to the continuing lien and security interest of this Security Instrument for the balance of the Debt not then due, unimpaired and without loss of priority;

(d)             sell for cash or upon credit the Property or any part thereof and all estate, claim, demand, right, title and interest of Borrower therein and rights of redemption thereof, pursuant to power of sale or otherwise, at one or more sales, as an entity or in parcels, at such time and place, upon such terms and after such notice thereof as may be required or permitted by law;

(e)           institute an action, suit or proceeding in equity for the specific performance of any covenant, condition or agreement contained herein, in the Note, the Loan Agreement or in the Other Security Documents;

(f)            recover judgment on the Note either before, during or after any proceedings for the enforcement of this Security Instrument or the Other Security Documents;

(g)           apply for the appointment of a receiver, trustee, liquidator or conservator of the Property, without notice and without regard for the adequacy of the security for the Debt and

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without regard for the solvency of Borrower, any Guarantor, Indemnitor or of any person, firm or other entity liable for the payment of the Debt;

(h)           subject to any applicable law, the license granted to Borrower under Section 1.2 shall automatically be revoked and Lender may enter into or upon the Property, either personally or by its agents, nominees or attorneys and dispossess Borrower and its agents and servants therefrom, without liability for trespass, damages or otherwise and exclude Borrower and its agents or servants wholly therefrom, and take possession of all books, records and accounts relating thereto and Borrower agrees to surrender possession of the Property and of such books, records and accounts to Lender upon demand, and thereupon Lender may (i) use, operate, manage, control, insure, maintain, repair, restore and otherwise deal with all and every part of the Property and conduct the business thereat; (ii) complete any construction on the Property in such manner and form as Lender deems advisable; (iii) make alterations, additions, renewals, replacements and improvements to or on the Property; (iv) exercise all rights and powers of Borrower with respect to the Property, whether in the name of Borrower or otherwise, including, without limitation, the right to make, cancel, enforce or modify Leases, obtain and evict tenants, and demand, sue for, collect and receive all Rents of the Property and every part thereof, (v) require Borrower to pay monthly in advance to Lender, or any receiver appointed to collect the Rents, the fair and reasonable rental value for the use and occupation of such part of the Property as may be occupied by Borrower; (vi) require Borrower to vacate and surrender possession of the Property to Lender or to such receiver and, in default thereof, Borrower may be evicted by summary proceedings or otherwise; and (vii) apply the receipts from the Property to the payment of the Debt, in such order, priority and proportions as Lender shall deem appropriate in its sole discretion after deducting therefrom all expenses (including reasonable attorneys’ fees) incurred in connection with the aforesaid operations and all amounts necessary to pay the Taxes, Other Charges, Insurance Premiums and other expenses in connection with the Property, as well as just and reasonable compensation for the services of Lender, its counsel, agents and employees;

(i)            exercise any and all rights and remedies granted to a secured party upon default under the Uniform Commercial Code, including, without limiting the generality of the foregoing: (i) the right to take possession of the Personal Property or any part thereof, and to take such other measures as Lender may deem necessary for the care, protection and preservation of the Personal Property, and (ii) request Borrower at Borrower’s expense to assemble the Personal Property and make it available to Lender at a convenient place acceptable to Lender. Any notice of sale, disposition or other intended action by Lender with respect to the Personal Property sent to Borrower in accordance with the provisions hereof at least five (5) days prior to such action, shall constitute commercially reasonable notice to Borrower;

(j)            apply any sums then deposited in the Escrow Fund and any other sums held in escrow or otherwise by Lender in accordance with the terms of this Security Instrument or any Other Security Document to the payment of the following items in any order in its sole and absolute discretion:

(i)                Taxes and Other Charges;

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(ii)           Insurance Premiums;

(iii)          Interest on the unpaid principal balance of the Note;

(iv)             Amortization of the unpaid principal balance of the Note;

(v)              All other sums payable pursuant to the Note, the Loan Agreement, this Security Instrument and the Other Security Documents, including without limitation advances made by Lender pursuant to the terms of this Security Instrument;

(k)           surrender the Policies maintained pursuant to Article 3 hereof, collect the unearned Insurance Premiums and apply such sums as a credit on the Debt in such priority and proportion as Lender in its discretion shall deem proper, and in connection therewith, Borrower hereby appoints Lender as agent and attorney-in-fact (which is coupled with an interest and is therefore irrevocable) for Borrower to collect such Insurance Premiums;

(l)            pursue such other remedies as Lender may have under applicable law; or

(m)          apply the undisbursed balance of any Net Proceeds Deficiency deposit, together with interest thereon, to the payment of the Debt in such order, priority and proportions as Lender shall deem to be appropriate in its discretion.

In the event of a sale, by foreclosure, power of sale, or otherwise, of less than all of the Property, this Security Instrument shall continue as a lien and security interest on the remaining portion of the Property unimpaired and without loss of priority. Notwithstanding the provisions of this Section 10.1 to the contrary, if any Event of Default as described in clause (i) or (ii) of Subsection 9.1(g) shall occur, the entire unpaid Debt shall be automatically due and payable, without any further notice, demand or other action by Lender.

Section 10.2 APPLICATION OF PROCEEDS. The purchase money, proceeds and avails of any disposition of the Property, or any part thereof, or any other sums collected by Lender pursuant to the Note, the Loan Agreement, this Security Instrument or the Other Security Documents, may be applied by Lender to the payment of the Debt in such priority and proportions as Lender in its discretion shall deem proper.

Section 10.3 RIGHT TO CURE DEFAULTS. Upon the occurrence of any Event of Default or if Borrower fails to make any payment or to do any act as herein provided, Lender may, but without any obligation to do so and without notice to or demand on Borrower and without releasing Borrower from any obligation hereunder, make or do the same in such manner and to such extent as Lender may deem necessary to protect the security hereof. Lender is

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authorized to enter upon the Property for such purposes, or appear in, defend, or bring any action or proceeding to protect its interest in the Property or to foreclose this Security Instrument or collect the Debt, and the cost and expense thereof (including reasonable attorneys’ fees to the extent permitted by law), with interest as provided in this Section 10.3, shall constitute a portion of the Debt and shall be due and payable to Lender upon demand. All such costs and expenses incurred by Lender in remedying such Event of Default or such failed payment or act or in appearing in, defending, or bringing any such action or proceeding shall bear interest at the Default Rate, for the period after notice from Lender that such cost or expense was incurred to the date of payment to Lender. All such costs and expenses incurred by Lender together with interest thereon calculated at the Default Rate shall be deemed to constitute a portion of the Debt and be secured by this Security Instrument and the Other Security Documents and shall be immediately due and payable upon demand by Lender therefor.

Section 10.4 ACTIONS AND PROCEEDINGS. Lender has the right to appear in and defend any action or proceeding brought with respect to the Property and to bring any action or proceeding, in the name and on behalf of Borrower, which Lender, in its discretion, decides should be brought to protect its interest in the Property.

Section 10.5 RECOVERY OF SUMS REQUIRED TO BE PAID. Lender shall have the right from time to time to take action to recover any sum or sums which constitute a part of the Debt as the same become due, without regard to whether or not the balance of the Debt shall be due, and without prejudice to the right of Lender thereafter to bring an action of foreclosure, or any other action, for a default or defaults by Borrower existing at the time such earlier action was commenced.

Section 10.6 OTHER RIGHTS, ETC.

(a)           The failure of Lender to insist upon strict performance of any term hereof shall not be deemed to be a waiver of any term of this Security Instrument. Borrower shall not be relieved of Borrower’s obligations hereunder by reason of (i) the failure of Lender to comply with any request of Borrower, any Guarantor or any Indemnitor to take any action to foreclose this Security Instrument or otherwise enforce any of the provisions hereof or of the Note, the Loan Agreement or the Other Security Documents, (ii) the release, regardless of consideration, of the whole or any part of the Property, or of any person liable for the Debt or any portion thereof, or (iii) any agreement or stipulation by Lender extending the time of payment or otherwise modifying or supplementing the terms of the Note, the Loan Agreement, this Security Instrument or the Other Security Documents.

(b)           It is agreed that the risk of loss or damage to the Property is on Borrower, and Lender shall have no liability whatsoever for decline in value of the Property, for failure to maintain the Policies, or for failure to determine whether insurance in force is adequate as to the amount of risks insured. Possession by Lender shall not be deemed an election of judicial relief, if any such possession is requested or obtained, with respect to any Property or collateral not in Lender’s possession.

(c)           Lender may resort for the payment of the Debt to any other security held

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by Lender in such order and manner as Lender, in its discretion, may elect. Lender may take action to recover the Debt, or any portion thereof, or to enforce any covenant hereof without prejudice to the right of Lender thereafter to foreclose this Security Instrument. The rights of Lender under this Security Instrument shall be separate, distinct and cumulative and none shall be given effect to the exclusion of the others. No act of Lender shall be construed as an election to proceed under any one provision herein to the exclusion of any other provision. Lender shall not be limited exclusively to the rights and remedies herein stated but shall be entitled to every right and remedy now or hereafter afforded at law or in equity.

Section 10.7 RIGHT TO RELEASE ANY PORTION OF THE PROPERTY. Lender may release any portion of the Property for such consideration as Lender may require without, as to the remainder of the Property, in any way impairing or affecting the lien or priority of this Security Instrument, or improving the position of any subordinate lienholder with respect thereto, except to the extent that the obligations hereunder shall have been reduced by the actual monetary consideration, if any, received by Lender for such release, and may accept by assignment, pledge or otherwise any other property in place thereof as Lender may require without being accountable for so doing to any other lienholder. This Security Instrument shall continue as a lien and security interest in the remaining portion of the Property.

Section 10.8 VIOLATION OF LAWS. If the Property is not in compliance with Applicable Laws, Lender may impose additional requirements upon Borrower in connection herewith including, without limitation, monetary reserves or financial equivalents.

Section 10.9 RECOURSE AND CHOICE OF REMEDIES. Notwithstanding any other provision of this Security Instrument, Lender and other Indemnified Parties (as defined in Section 12.1 below) are entitled to enforce the obligations of Borrower, Guarantor and Indemnitor contained in Section 12.2 and in the Environmental Indemnity without first resorting to or exhausting any security or collateral and without first having recourse to the Note or any of the Property, through foreclosure or acceptance of a deed in lieu of foreclosure or otherwise, and in the event Lender commences a foreclosure action against the Property, Lender is entitled to pursue a deficiency judgment with respect to such obligations against Borrower, any Guarantor or Indemnitor. The liability of Borrower, Guarantor and Indemnitor is not limited to the original principal amount of the Note. Notwithstanding the foregoing, nothing herein shall inhibit or prevent Lender from foreclosing pursuant to this Security Instrument or exercising any other rights and remedies pursuant to the Note, the Loan Agreement, this Security Instrument and the Other Security Documents, whether simultaneously with foreclosure proceedings or in any other sequence. A separate action or actions may be brought and prosecuted against Borrower, whether or not action is brought against any other person or entity or whether or not any other person or entity is joined in the action or actions. In addition, Lender shall have the right but not the obligation to join and participate in, as a party if it so elects, any administrative or judicial proceedings or actions initiated in connection with any matter addressed in Article 11 or in the Environmental Indemnity.

Section 10.10 RIGHT OF ENTRY. Lender and its agents shall have the right to enter and inspect the Property at all reasonable times.

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ARTICLE 11 - ENVIRONMENTAL HAZARDS

Section 11.1 ENVIRONMENTAL REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants, that to the best of its knowledge and based upon information that Borrower knows or should reasonably have known (a) there are no Hazardous Substances (as defined below) or underground storage tanks in, on, or under the Property, except those that are both (i) in compliance with Environmental Laws (as defined below) and with permits issued pursuant thereto and (ii) fully disclosed to Lender in writing pursuant to the written reports resulting from the environmental assessments of the Property delivered to Lender (the “Environmental Report”); (b) there are no past, present or threatened Releases (as defined below) of Hazardous Substances in, on, under or from the Property except as described in the Environmental Report; (c) there is no threat of any Release of Hazardous Substances migrating to the Property except as described in the Environmental Report; (d) there is no past or present non-compliance with Environmental Laws, or with permits issued pursuant thereto, in connection with the Property except as described in the Environmental Report; (e) Borrower does not know of, and has not received, any written or oral notice or other communication from any person or entity (including, but not limited to, a governmental entity) relating to Hazardous Substances or Remediation (as defined below) thereof, of possible liability of any person or entity pursuant to any Environmental Law, other environmental conditions in connection with the Property, or any actual or potential administrative or judicial proceedings in connection with any of the foregoing; and (f) Borrower has truthfully and fully provided to Lender, in writing, any and all information relating to conditions in, on, under or from the Property that is known to Borrower and that is contained in Borrower’s files and records, including, but not limited to, any reports relating to Hazardous Substances in, on, under or from the Property or to the environmental condition of the Property. “Environmental Law” means any present and future federal, state and local laws, statutes, ordinances, rules, regulations and the like, as well as common law, relating to protection of human health or the environment, relating to Hazardous Substances, relating to liability for or costs of Remediation or prevention of Releases of Hazardous Substances or relating to liability for or costs of other actual or threatened danger to human health or the environment. “Environmental Law” includes, but is not limited to, the following statutes, as amended, any successor thereto, and any regulations promulgated pursuant thereto, and any state or local statutes, ordinances, rules, regulations and the like addressing similar issues: the Comprehensive Environmental Response, Compensation and Liability Act; the Emergency Planning and Community Right-to-Know Act; the Hazardous Substances Transportation Act; the Resource Conservation and Recovery Act (including, but not limited to, Subtitle I relating to underground storage tanks); the Solid Waste Disposal Act; the Clean Water Act; the Clean Air Act; the Toxic Substances Control Act; the Safe Drinking Water Act; the Occupational Safety and Health Act; the Federal Water Pollution Control Act; the Federal Insecticide, Fungicide and Rodenticide Act; the Endangered Species Act; the National Environmental Policy Act; and the River and Harbors Appropriation Act. “Environmental Law” also includes, but is not limited to, any present and future federal, state and local laws, statutes, ordinances, rules, regulations and the like, as well as common law; conditioning transfer of property upon a negative declaration or other approval of a governmental authority of the environmental condition of the property; requiring notification or disclosure of Releases of Hazardous Substances or other environmental condition of the Property to any governmental authority or other person or entity, whether or not in connection with transfer of title to or interest in property; imposing conditions or requirements in connection with permits or other authorization for lawful activity; relating to nuisance, trespass or other causes of action related to the Property; and relating to wrongful death, personal injury, or property or other damage in connection with any physical condition or use of the Property. “Hazardous Substances” include but are not limited to any and all substances (whether solid, liquid or gas) defined, listed, or otherwise classified as pollutants, hazardous wastes, hazardous substances, hazardous materials, extremely hazardous

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wastes, or words of similar meaning or regulatory effect under any present or future Environmental Laws or that may have a negative impact on human health or the environment, including, but not limited to, petroleum and petroleum products, asbestos and asbestos-containing materials, polychlorinated biphenyls, lead, radon, radioactive materials, flammables and explosives. “Release” of any Hazardous Substance includes but is not limited to any release, deposit, discharge, emission, leaking, spilling, seeping, migrating, injecting, pumping, pouring, emptying, escaping, dumping, disposing or other movement of Hazardous Substances. “Remediation” includes but is not limited to any response, remedial, removal, or corrective action, any activity to cleanup, detoxify, decontaminate, contain or otherwise remediate any Hazardous Substance, any actions to prevent, cure or mitigate any Release of any Hazardous Substance, any action to comply with any Environmental Laws or with any permits issued pursuant thereto, any inspection, investigation, study, monitoring, assessment, audit, sampling and testing, laboratory or other analysis, or evaluation relating to any Hazardous Substances or to anything referred to in Article 12.

Section 11.2 ENVIRONMENTAL COVENANTS. Borrower covenants and agrees that: (a) all uses and operations on or of the Property, whether by Borrower or any other person or entity, shall be in compliance with all Environmental Laws and permits issued pursuant thereto; (b) there shall be no Releases of Hazardous Substances in, on, under or from the Property; (c) there shall be no Hazardous Substances in, on, or under the Property, except those that are both (i) in compliance with all Environmental Laws and with permits issued pursuant thereto and (ii) fully disclosed to Lender in writing; (d) Borrower shall keep the Property free and clear of all liens and other encumbrances imposed pursuant to any Environmental Law, whether due to any act or omission of Borrower or any other person or entity (the “Environmental Liens”); (e) Borrower shall, at its sole cost and expense, fully and expeditiously cooperate in all activities pursuant to Section 11.3 below, including, but not limited to, providing all relevant information and making knowledgeable persons available for interviews; (f) Borrower shall, at its sole cost and expense, perform any environmental site assessment or other investigation of environmental conditions in connection with the Property, pursuant to any reasonable written request of Lender (including, but not limited to, sampling, testing and analysis of soil, water, air, building materials and other materials and substances whether solid, liquid or gas), and share with Lender the reports and other results thereof, and Lender and other Indemnified Parties shall be entitled to rely on such reports and other results thereof; (g) Borrower shall, at its sole cost and expense, comply with all reasonable written requests of Lender to (i) reasonably effectuate Remediation of any condition (including, but not limited to, a Release of a Hazardous Substance) in, on, under or from the Property; (ii) comply with any Environmental Law; (iii) comply with any directive from any governmental authority; and (iv) take any other reasonable action necessary or appropriate for protection of human health or the environment; (h) Borrower shall not do or allow any tenant or other user of the Property to do any act that materially increases the dangers to human health or the environment, poses an unreasonable risk of harm to any person or entity (whether on or off the Property), impairs or may impair the value of the Property, is contrary to any requirement of any insurer, constitutes a public or private nuisance, constitutes waste, or violates any covenant, condition, agreement or easement applicable to the Property; and (i) Borrower shall immediately notify Lender in writing of (A) any presence or Releases or threatened Releases of Hazardous Substances in, on, under, from or migrating towards the Property; (B) any noncompliance with any Environmental Laws related in any way to the Property; (C) any actual or potential Environmental Lien; (D) any required or proposed Remediation of environmental conditions relating to the Property; and (E) any written or oral notice or other communication which Borrower becomes aware from any source whatsoever (including, but not limited to, a governmental entity) relating in any way to Hazardous Substances or Remediation thereof, possible liability of any person or entity pursuant to any Environmental Law, other environmental conditions in connection with the

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Property, or any actual or potential administrative or judicial proceedings in connection with anything referred to in this Article. Any failure of Borrower to perform its obligations pursuant to this Section 11.2 shall constitute bad faith waste with respect to the Property.

Section 11.3 LENDER’S RIGHTS. Lender and any other person or entity designated by Lender, including, but not limited to, any receiver, any representative of a governmental entity, and any environmental consultant, shall have the right, but not the obligation, to enter upon the Property at all reasonable times to assess any and all aspects of the environmental condition of the Property and its use, including, but not limited to, conducting any environmental assessment or audit (the scope of which shall be determined in Lender’s sole and absolute discretion) and taking samples of soil, groundwater or other water, air, or building materials, and conducting other invasive testing. Borrower shall cooperate with and provide access to Lender and any such person or entity designated by Lender.

ARTICLE 12 — INDEMNIFICATION

Section 12.1 GENERAL INDEMNIFICATION. Borrower shall, at its sole cost and expense, protect, defend, indemnify, release and hold harmless the Indemnified Parties from and against any and all claims, suits, liabilities (including, without limitation, strict liabilities), actions, proceedings, obligations, debts, damages, losses, costs, expenses, fines, penalties, charges, fees, judgments, awards, amounts paid in settlement, punitive damages, foreseeable and unforeseeable consequential damages, of whatever kind or nature (including, but not limited to, attorneys’ fees and other costs of defense) (collectively, the “Losses”) imposed upon or incurred by or asserted against any Indemnified Parties and directly or indirectly arising out of or in any way relating to any one or more of the following: (a) ownership of this Security Instrument, the Property or any interest therein or receipt of any Rents, except in connection with any Losses to the extent caused by the gross negligence or willful misconduct of Lender; (b) any amendment to, or restructuring of, the Debt, and the Note, the Loan Agreement, this Security Instrument, or any Other Security Documents, except in connection with any Losses to the extent caused by the gross negligence or willful misconduct of Lender; (c) any and all lawful action that may be taken by Lender in connection with the enforcement of the provisions of this Security Instrument or the Note, the Loan Agreement or any of the Other Security Documents, whether or not suit is filed in connection with same, or in connection with Borrower, any Guarantor or Indemnitor or any member, partner, joint venturer or shareholder thereof becoming a party to a voluntary or involuntary federal or state bankruptcy, insolvency or similar proceeding; (d) any accident, injury to or death of persons or loss of or damage to property occurring in, on or about the Property or any part thereof or on the adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways; (e) any use, nonuse or condition in, on or about the Property or any part thereof or on the adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways; (f) any failure on the part of Borrower to perform or be in compliance with any of the terms of this Security Instrument; (g) performance of any labor or services or the furnishing of any materials or other property in respect of the Property or any part thereof, (h) the failure of any person to file timely with the Internal Revenue Service an accurate Form 1099-B, Statement for Recipients of Proceeds from Real Estate, Broker and Barter Exchange Transactions, which may be required in connection with this Security Instrument, or to supply a copy thereof in a timely fashion to the recipient of the proceeds of the transaction in connection with which this Security Instrument is made; (i) any failure of the Property to be in compliance with any Applicable Laws; (j) the enforcement by any Indemnified Party of the provisions of this Article 12; (k) any and all claims and demands whatsoever which may be asserted against Lender by reason of any alleged obligations or undertakings on its part to perform or discharge any of the terms, covenants, or agreements contained in any Lease; (1) the payment of any

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commission, charge or brokerage fee to anyone which may be payable in connection with the funding of the Loan evidenced by the Note, the Loan Agreement and secured by this Security Instrument; or (m) any misrepresentation made by Borrower in this Security Instrument or any Other Security Document. Any amounts payable to Lender by reason of the application of this Section 12,1 shall become immediately due and payable and shall bear interest at the Default Rate from the date loss or damage is sustained by Lender until paid. For purposes of this Article 12, the term “Indemnified Parties” means Lender, any person or entity who is or will have been involved in the servicing of the Loan, any person or entity in whose name the encumbrance created by this Security Instrument is or will have been recorded, persons and entities who may hold or acquire or will have held a full or partial interest in the Loan (including, but not limited to, Investors or prospective Investors in the Securities, as well as custodians, trustees and other fiduciaries who hold or have held a full or partial interest in the Loan for the benefit of third parties) as well as the respective directors, officers, shareholders, partners, members, employees, agents, servants, representatives, contractors, subcontractors, affiliates, subsidiaries, participants, successors and assigns of any and all of the foregoing (including, but not limited to, any other person or entity who holds or acquires or will have held a participation or other full or partial interest in the Loan or the Property, whether during the term of the Loan or as a part of or following a foreclosure of the Loan and including, but not limited to, any successors by merger, consolidation or acquisition of all or a substantial portion of Lender’s assets and business).

Section 12.2 MORTGAGE AND INTANGIBLE TAX. Borrower shall, at its sole cost and expense, protect, defend, indemnify, release and hold harmless the Indemnified Parties from and against any and all Losses imposed upon or incurred by or asserted against any Indemnified Parties and directly or indirectly arising out of or in any way relating to any tax on the making or recording of this Security Instrument, the Note, the Loan Agreement or any of the Other Security Documents.

Section 12.3 DUTY TO DEFEND, ATTORNEYS’ FEES AND OTHER FEES AND EXPENSES. Upon written request by any Indemnified Party, Borrower shall defend such Indemnified Party (if requested by any Indemnified Party, in the name of the Indemnified Party) by attorneys and other professionals approved by the Indemnified Parties. Notwithstanding the foregoing, any Indemnified Parties may, in their sole and absolute discretion, engage their own attorneys and other professionals to defend or assist them, and, at the option of Indemnified Parties, their attorneys shall control the resolution of any claim or proceeding. Upon demand, Borrower shall pay or, in the sole and absolute discretion of the Indemnified Parties, reimburse, the Indemnified Parties for the payment of reasonable fees and disbursements of attorneys, engineers, environmental consultants, laboratories and other professionals in connection therewith.

ARTICLE 13 - WAIVERS

Section 13.1 WAIVER OF COUNTERCLAIM. Borrower hereby waives the right to assert a counterclaim, other than a mandatory or compulsory counterclaim, in any action or proceeding brought against it by Lender arising out of or in any way connected with this Security Instrument, the Note, the Loan Agreement, any of the Other Security Documents, or the Obligations.

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Section 13.2 MARSHALLING AND OTHER MATTERS. Borrower hereby waives, to the extent permitted by law, the benefit of all appraisement, valuation, stay, extension, reinstatement and redemption laws now or hereafter in force and all rights of marshalling in the event of any sale hereunder of the Property or any part thereof or any interest therein. Further, Borrower hereby expressly waives any and all rights of redemption from sale under any order or decree of foreclosure of this Security Instrument on behalf of Borrower, and on behalf of each and every person acquiring any interest in or title to the Property subsequent to the date of this Security Instrument and on behalf of all persons to the extent permitted by Applicable Law.

Section 13.3 WAIVER OF NOTICE. Borrower shall not be entitled to any notices of any nature whatsoever from Lender except with respect to matters for which this Security Instrument specifically and expressly provides for the giving of notice by Lender to Borrower and except with respect to matters for which Lender is required by Applicable Law to give notice, and Borrower hereby expressly waives the right to receive any notice from Lender with respect to any matter for which this Security Instrument does not specifically and expressly provide for the giving of notice by Lender to Borrower.

Section 13.4 WAIVER OF STATUTE OF LIMITATIONS. Borrower hereby expressly waives and releases to the fullest extent permitted by law, the pleading of any statute of limitations as a defense to payment of the Debt or performance of its Other Obligations.

Section 13.5 SOLE DISCRETION OF LENDER. Wherever pursuant to this Security Instrument (a) Lender exercises any right given to it to approve or disapprove, (b) any arrangement or term is to be satisfactory to Lender, or (c) any other decision or determination is to be made by Lender, the decision of Lender to approve or disapprove, all decisions that arrangements or terms are satisfactory or not satisfactory and all other decisions and determinations made by Lender, shall be in the sole and absolute discretion of Lender and shall be final and conclusive, except as may be otherwise expressly and specifically provided herein.

Section 13.6 SURVIVAL. The indemnifications made pursuant to Subsections 12.2 and 12.3 and the representations and warranties, covenants, and other obligations arising under Article 11, shall continue indefinitely in full force and effect and shall survive and shall in no way be impaired by: any satisfaction or other termination of this Security Instrument, any assignment or other transfer of all or any portion of this Security Instrument or Lender’s interest in the Property (but, in such case, shall benefit both Indemnified Parties and any assignee or transferee), any exercise of Lender’s rights and remedies pursuant hereto including, but not limited to, foreclosure or acceptance of a deed in lieu of foreclosure, any exercise of any rights and remedies pursuant to the Note or any of the Other Security Documents, any transfer of all or any portion of the Property (whether by Borrower or by Lender following foreclosure or acceptance of a deed in lieu of foreclosure or at any other time), any amendment to this Security Instrument, the Note, the Loan Agreement or the Other Security Documents, and any act or omission that might otherwise be construed as a release or discharge of Borrower from the obligations pursuant hereto.

SECTION 13.7 WAIVER OF TRIAL BY JURY. BORROWER

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HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE LOAN EVIDENCED BY THE NOTE, THE APPLICATION FOR THE LOAN EVIDENCED BY THE NOTE, THE LOAN AGREEMENT, THIS SECURITY INSTRUMENT OR THE OTHER SECURITY DOCUMENTS OR ANY ACTS OR OMISSIONS OF LENDER, ITS OFFICERS, EMPLOYEES, DIRECTORS OR AGENTS IN CONNECTION THEREWITH.

ARTICLE 14 - NOTICES

Section 14.1 NOTICES. All notices shall be in writing and shall be deemed to have been properly given (i) upon delivery, if delivered in person, (ii) one (1) Business Day (as defined below) after having been deposited for overnight delivery with any reputable overnight courier service, or (iii) three (3) Business Days after having been deposited in any post office or mail depository regularly maintained by the U.S. Postal Service and sent by registered or certified mail, postage prepaid, return receipt requested, addressed as follows:

If to Borrower:	Griffin Land & Nurseries, Inc.
	One Rockefeller Plaza, Suite 2301
	New York, New York 10020
	Attention: Mr. Frederick M. Danziger
	President and Chief Executive Officer
With a copy to:	Imperial Nurseries, Inc,
	90 Salmon Brook Street
	Granby, Connecticut 06035
	Attention:	Mr. Anthony J. Galici
		Vice President and Chief Financial Officer
and	Murtha Cullina LLP
	CityPlace I, 185 Asylum Street
	Hartford, Connecticut 06103-3469
	Attention: Thomas M. Daniells, Esq.
If to Lender:	Doral Bank, FSB
	623 Fifth Avenue
	New York, New York 10022
	Attention: Mortgage Servicing Department

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with a copy to:	Granoff, Walker & Forlenza, P.C.
	747 Third Avenue, Suite 4C
	New York, New York 10017
	Attention: Lee A. Forlenza, Esq.,

or addressed as such party may from time to time designate by written notice to the other parties.

Either party by notice to the other may designate additional or different addresses for subsequent notices or communications.

For purposes of this Subsection, “Business Day” shall mean a day on which commercial banks are not authorized or required by law to close in New York, New York.

ARTICLE 15 - SERVICE OF PROCESS; JURISDICTION

Section 15.1 CONSENT TO SERVICE. Borrower will maintain a place of business or an agent for service of process in the State of Connecticut and give prompt notice to Lender of the address of such place of business and of the name and address of any new agent appointed by it, as appropriate. Borrower further agrees that the failure of its agent for service of process to give it notice of any service of process will not impair or affect the validity of such service or of any judgment based thereon. If, despite the foregoing, there is for any reason no agent for service of process of Borrower available to be served, and if it at that time has no place of business in the State of Connecticut, then Borrower irrevocably consents to service of process by registered or certified mail, postage prepaid, to it at its address given in or pursuant to the first paragraph hereof

Section 15.2 SUBMISSION TO JURISDICTION. With respect to any claim or action arising hereunder or under the Note, the Loan Agreement or the Other Security Documents, Borrower (a) irrevocably submits to the nonexclusive jurisdiction of the courts of the State of New York in New York County or in the State of Connecticut in the county in which the Land is situated, the United States District Court for the Southern District of New York or for the judicial district in which the Land is situated and appellate courts from any thereof, and (b) irrevocably waives any objection which it may have at any time to the laying of venue of any suit, action or proceeding arising out of or relating to this Security Instrument brought in any such court, irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.

ARTICLE 16 - APPLICABLE LAW

Section 16.1 CHOICE OF LAW.   THIS SECURITY INSTRUMENT SHALL BE DEEMED TO BE A CONTRACT ENTERED INTO PURSUANT TO THE LAWS OF THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED, CONSTRUED, APPLIED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, PROVIDED, HOWEVER, THAT WITH RESPECT TO THE CREATION, VALIDITY, ATTACHMENT, PERFECTION, PRIORITY AND ENFORCEMENT OF THE LIEN OF THIS SECURITY INSTRUMENT, AND THE DETERMINATION OF DEFICIENCY OF JUDGMENTS, THE LAWS OF THE STATE WHERE THE LAND IS SITUATED SHALL APPLY.

Section 16.2 USURY LAWS This Security Instrument and the Note are subject to

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the express condition that at no time shall Borrower be obligated or required to pay interest on the Debt at a rate which could subject the holder of the Note to either civil or criminal liability as a result of being in excess of the maximum interest rate which Borrower is permitted by applicable law to contract or agree to pay. If by the terms of this Security Instrument, the Loan Agreement or the Note, Borrower is at any time required or obligated to pay interest on the Debt at a rate in excess of such maximum rate, the rate of interest under this Security Instrument, the Loan Agreement and the Note shall be deemed to be immediately reduced to such maximum rate and the interest payable shall be computed at such maximum rate and all prior interest payments in excess of such maximum rate shall be applied and shall be deemed to have been payments in reduction of the principal balance of the Note. All sums paid or agreed to be paid to Lender for the use, forbearance, or detention of the Debt shall, to the extent permitted by applicable law, be amortized, prorated, allocated, and spread throughout the full stated term of the Note until payment in full so that the rate or amount of interest on account of the Debt does not exceed the maximum lawful rate of interest from time to time in effect and applicable to the Debt for so long as the Debt is outstanding.

Section 16.3 PROVISIONS SUBJECT TO APPLICABLE LAW. All rights, powers and remedies provided in this Security Instrument may be exercised only to the extent that the exercise thereof does not violate any applicable provisions of law and are intended to be limited to the extent necessary so that they will not render this Security Instrument invalid, unenforceable or not entitled to be recorded, registered or filed under the provisions of any Applicable Law. If any term of this Security Instrument or any application thereof shall be invalid or unenforceable, the remainder of this Security Instrument and any other application of the term shall not be affected thereby.

ARTICLE 17 - SECONDARY MARKET

Section 17.1 TRANSFER OF LOAN.  Lender may, at any time, sell, transfer or assign the Note, the Loan Agreement, this Security Instrument and the Other Security Documents, and any or all servicing rights with respect thereto, or grant participations therein (the “Participations”) or issue mortgage pass-through certificates or other securities evidencing a beneficial interest in a rated or unrated public offering or private placement (the “Securities”). Lender may forward to each purchaser, transferee, assignee, servicer, participant, or investor in such Participations or Securities (collectively, the “Investor”) or any Rating Agency rating such Securities and each prospective Investor, all documents and information which Lender now has or may hereafter acquire relating to the Debt and to Borrower, any Guarantor, any Indemnitor(s) and the Property, whether furnished by Borrower, any Guarantor, any Indemnitor(s) or otherwise, as Lender determines necessary or desirable. Borrower, any Guarantor and any Indemnitor agree to cooperate with Lender in connection with any transfer made or any Securities created pursuant to this Section, including, without limitation, the delivery of an estoppel certificate required in accordance with Subsection 6.4(c) hereof and such other documents as may be reasonably requested by Lender. Borrower shall also furnish and Borrower, any Guarantor and any Indemnitor consent to Lender furnishing to such Investors or such prospective Investors or such Rating Agency any and all information concerning the Property, the Leases, the financial condition of Borrower, any Guarantor and any Indemnitor as may be requested by Lender, any Investor, any prospective Investor or any Rating Agency in connection with any sale, transfer, Participations or Securities, provided the disclosure of such information does not violate any applicable federal securities law, rule or regulation.

ARTICLE 18 - COSTS

Section 18.1 PERFORMANCE AT BORROWER’S EXPENSE. Borrower acknowledges

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and confirms that Lender shall impose certain administrative processing or commitment fees in connection with (a) the extension, renewal, modification, amendment and termination of the Loan, (b) the release or substitution of collateral therefor, (c) obtaining certain consents, waivers and approvals with respect to the Property, or (d) the review of any Lease or proposed Lease or the preparation or review of any subordination, non-disturbance agreement (the occurrence of any of the above shall be called an “Event”). Borrower further acknowledges and confirms that it shall be responsible for the payment of all costs of reappraisal of the Property or any part thereof, whether required by law, regulation, Lender or any governmental or quasi-governmental authority. Borrower hereby acknowledges and agrees to pay, immediately, with or without demand, all such fees (as the same may be increased or decreased from time to time), and any additional fees of a similar type or nature which may be imposed by Lender from time to time, upon the occurrence of any Event or otherwise. Wherever it is provided for herein that Borrower pay any costs and expenses, such costs and expenses shall include, but not be limited to, all legal fees and disbursements of Lender, whether with respect to external or in-house counsel, whether or not suit is brought.

Section 18.2 ATTORNEYS’ FEES FOR ENFORCEMENT. (a) Borrower shall pay all legal fees incurred by Lender in connection with (i) the preparation of the Note, the Loan Agreement, this Security Instrument and the Other Security Documents and (ii) the items set forth in Section 18.1 above, and (b) Borrower shall pay to Lender on demand any and all expenses, including legal expenses and attorneys’ fees, incurred or paid by Lender in protecting its interest in the Property or Personal Property or in collecting any amount payable hereunder or under the Note or in enforcing its rights hereunder, including by way of foreclosure proceeding, with respect to the Property or Personal Property, whether or not any legal proceeding is commenced hereunder or thereunder and whether or not any default or Event of Default shall have occurred and is continuing, together with interest thereon at the Default Rate from the date paid or incurred by Lender until such expenses are paid by Borrower.

ARTICLE 19 - DEFINITIONS

Section 19.1 GENERAL DEFINITIONS. Unless the context clearly indicates a contrary intent or unless otherwise specifically provided herein, words used in this Security Instrument may be used interchangeably in singular or plural form and the word “Borrower” shall mean “each Borrower and any subsequent owner or owners of the Property or any part thereof or any interest therein,” the word “Lender” shall mean “Lender and any subsequent holder of the Note,” the word “Note” shall mean “the Note and any other evidence of indebtedness secured by this Security Instrument,” the word “person” shall include an individual, corporation, partnership, limited liability company, trust, unincorporated association, government, governmental authority, and any other entity, the word “Property” shall include any portion of the Property and any interest therein, and the phrases “attorneys’ fees” and “counsel fees” shall include any and all attorneys’, paralegal and law clerk fees and disbursements, including, but not limited to, fees and disbursements at the pre-trial, trial and appellate levels incurred or paid by Lender in protecting its interest in the Property, the Leases and the Rents and enforcing its rights hereunder, including, but not limited to, foreclosure proceeding.

ARTICLE 20 - MISCELLANEOUS PROVISIONS

Section 20.1 No ORAL CHANGE. This Security Instrument, and any provisions hereof, may not be modified, amended, waived, extended, changed, discharged or terminated orally or by any act or failure to act on the part of Borrower or Lender, but only by an agreement in writing signed by the party against whom enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought.

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Section 20.2 LIABILITY If Borrower consists of more than one person, the obligations and liabilities of each such person hereunder shall be joint and several. This Security Instrument shall be binding upon and inure to the benefit of Borrower and Lender and their respective successors and assigns forever.

Section 20.3 INAPPLICABLE PROVISIONS. If any term, covenant or condition of the Note, the Loan Agreement or this Security Instrument is held to be invalid, illegal or unenforceable in any respect, the Note, the Loan Agreement and this Security Instrument shall be construed without such provision.

Section 20.4 HEADINGS, ETC. The headings and captions of various Sections of this Security Instrument are for convenience of reference only and are not to be construed as defining or limiting, in any way, the scope or intent of the provisions hereof.

Section 20.5 DUPLICATE ORIGINALS, COUNTERPARTS. This Security Instrument may be executed in any number of duplicate originals and each duplicate original shall be deemed to be an original. This Security Instrument may be executed in several counterparts, each of which counterparts shall be deemed an original instrument and all of which together shall constitute a single Security Instrument. The failure of any party hereto to execute this Security Instrument, or any counterpart hereof, shall not relieve the other signatories from their obligations hereunder.

Section 20.6 NUMBER AND GENDER. Whenever the context may require, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural and vice versa.

Section 20.7 SUBROGATION. If any or all of the proceeds of the Note have been used to extinguish, extend or renew any indebtedness heretofore existing against the Property, then, to the extent of the funds so used, Lender shall be subrogated to all of the rights, claims, liens, titles, and interests existing against the Property heretofore held by, or in favor of, the holder of such indebtedness and such former rights, claims, liens, titles, and interests, if any, are not waived but rather are continued in full force and effect in favor of Lender and are merged with the lien and security interest created herein as cumulative security for the repayment of the Debt, the performance and discharge of Borrower’s obligations hereunder, under the Note, the Loan Agreement and the Other Security Documents and the performance and discharge of the Other Obligations.

Section 20.8 BLOOMFIELD MORTGAGE. The Debt is also secured by that certain open-end mortgage and security agreement (the “Bloomfield Mortgage”), dated as of the date hereof, in the principal amount of up to $12,500,000.00, executed by Borrower in favor of Lender, encumbering certain property located at 29-35 Griffin Road South, Bloomfield, Connecticut; 204, 206, 210, 310, 320, 330 and 340 West Newberry Road, Bloomfield, Connecticut and 55 Griffin Road South, Bloomfield, Connecticut, as more particularly described therein (the “Bloomfield Property”), and intended to be recorded in the Office of the Town Clerk of Bloomfield, Hartford County, State of Connecticut. Borrower covenants to comply with all of the terms, covenants and conditions of the Bloomfield Mortgage, and agrees that any default under the Bloomfield Mortgage shall be a default under this Security Instrument. If there

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shall be a default in any sums due under the Bloomfield Mortgage, or in the payment of real estate taxes, water rates, sewer rents, assessments or ground rents, or any other liens encumbering the Bloomfield Property, Lender shall have the right, but not the obligation, to pay the same and any amounts so paid shall bear interest as calculated in this Security Instrument and shall be secured by this Security Instrument.

Section 20.9 REVOLVING LINE OF CREDIT LOAN AGREEMENT. This Security Instrument is subject to all of the terms, covenants and conditions of a certain revolving line of credit loan agreement, dated as of the date hereof, between Borrower and Lender (the “Loan Agreement”), which Loan Agreement is by this reference incorporated herein. The proceeds of the revolving line of credit loan secured hereby and by the Bloomfield Mortgage are to be advanced or re-advanced by Lender to Borrower solely in accordance with the Loan Agreement. Borrower shall perform and comply with all of the terms, covenants and conditions of the Loan Agreement and agrees that any default under the Loan Agreement shall be a default under this Security Instrument. All advances or re-advances made and all indebtedness arising and accruing under the Loan Agreement from time to time shall be secured hereby and by the Bloomfield Mortgage. In the event of any conflict or ambiguity between the terms of this Mortgage and the Loan Agreement, the terms which shall enlarge the rights and remedies of Lender and the interest of Lender in the Property, afford Lender greater financial security in the Property and better assure payment of the Debt in full, shall control.

Section 20.10 RECITALS, The above recitals are incorporated herein and made a part hereof.

ARTICLE 21 - SPECIAL CONNECTICUT PROVISIONS

Section 21.1 MATURITY DATE AND EXTENDED MATURITY DATE. The Note is payable no later than May 1, 2013 or, if extended in accordance with the Loan Agreement, May 1, 2014.

Section 21.2 FUTURE ADVANCES. This is an “OPEN-END MORTGAGE” and the holder hereof shall have all the rights, powers and protection to which the holder of an OPEN-END MORTGAGE is entitled. Upon request of the Borrower and subject to the terms of the Loan Agreement, the Lender, in whole or in part, may make future advances to the Borrower. Such future advances, with interest thereon, made in accordance with the Loan Agreement and evidenced by the Note shall be secured by this Mortgage and by the Bloomfield Mortgage. At no time shall the principal amount of the indebtedness secured by this Mortgage exceed Twelve Million Five Hundred Thousand and 00/100 Dollars ($12,500,000.00), which is the full amount authorized and the original amount of the Note secured hereby. Under no circumstances shall Lender be obligated to make any future advances or re-advances which will result in an unpaid principal balance in excess of the above-stated maximum amount to be secured by this Mortgage and the Bloomfield Mortgage.

Section 21.2 NOTE AND LOAN AGREEMENT. The Note and Loan Agreement are on file in the offices of Lender and shall be made available for inspection upon request.

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ARTICLE 22 — PARTIAL RELEASE/SUBSTITUTE PROPERTY

Section 22.1 PARTIAL RELEASE AND SUBSTITUTE PROPERTY.  Subject to the strict compliance of the express terms and conditions contained in the Loan Agreement, Borrower shall be entitled to: (i) receive a partial release of certain Land from the lien of this Mortgage, and (ii) either simultaneously with or some time after any release, add certain other real property owned by Borrower and provide Lender with a first mortgage lien on such real property as additional collateral to secure the Loan.

ARTICLE 23 — ADDITIONAL SPECIAL PROVISIONS

Section 23.1 COMPLIANCE WITH ANTI-TERRORISM, EMBARGO, SANCTIONS AND ANTI-MONEY LAUNDERING LAWS.

(a)           Borrower shall comply with all Requirements of Law (as defined herein) relating to money laundering, anti-terrorism, trade embargos and economic sanctions, now or hereafter in effect. Upon the Lender’s written request from time to time during the term of the loan evidenced by the Note, Borrower shall certify in writing to the Lender that Borrower’s representations, warranties and obligations under this Section 23.1 remain true and correct and have not been breached. Borrower shall immediately notify the Lender in writing if any of such representations, warranties or covenants are no longer true or have been breached or if Borrower has a reasonable basis to believe that they may no longer be true or have been breached. In connection with such an event, Borrower shall comply with all Requirements of Law and directives of Governmental Authorities (as defined herein) and, at the Lender’s written request, provide to the Lender copies of all notices, reports and other communications exchanged with, or received from, Governmental Authorities relating to such an event. Borrower shall also reimburse the Lender any expense incurred by the Lender in evaluating the effect of such an event on the loan evidenced by the Note and the Lender’s interest in the collateral for the loan evidenced by the Note, in obtaining any necessary license from Governmental Authorities as may be necessary for the Lender to enforce its rights under this Mortgage, the Loan Agreement, the Note or the Other Security Documents, and in complying with all Requirements of Law applicable to the Lender as a result of the existence of such an event and for any penalties or fines imposed upon the Lender as a result hereof. In connection herewith, “Governmental Authority” means any nation or government, any state or other political subdivision thereof, and any person exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to such government. In connection herewith, “Requirements of Law” means (a) the organizational documents of an entity, and (b) any law, regulation, ordinance, code, decree, treaty, ruling or determination of an arbitrator, court or other Governmental Authority, or any Executive Order issued by the President of the United States, in each case applicable to or binding upon such person or to which such person, any of its property or the conduct of its business is subject including, without limitation, laws, ordinances and regulations pertaining to the zoning, occupancy and subdivision of real property.

(b)             Borrower, and to the best of Borrower’s knowledge, but without independent review or verification, (a) each person owning an interest of 20% or more in Borrower, (b) each Guarantor, (c) the property manager, and (d) each tenant at the Property: (i) is not currently identified on the OFAC List, and (ii) is not a person with whom a citizen of the United States is prohibited to engage in transactions by any trade embargo, economic sanction or other prohibition of United States law, regulation or Executive Order of the President of the United States. Borrower has implemented procedures, and will consistently apply those procedures throughout the term of the loan evidenced

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by the Note, to ensure the foregoing representations and warranties remain true and correct during the term of the Loan. “OFAC List” means the list of specially designated nationals and blocked persons subject to financial sanctions that is maintained by the U.S. Treasury Department, Office of Foreign Assets Control and any other similar list maintained by the U.S. Treasury Department, Office of Foreign Assets Control pursuant to any Requirements of Law, including, without limitation, trade embargo, economic sanctions or other prohibitions imposed by Executive Order of the President of the United States. The OFAC List currently is accessible through the internet website www.treas.gov/ofac/tllsdn.pdf.

IN WITNESS WHEREOF, THIS SECURITY INSTRUMENT has been executed by Borrower the day and year first above written.

WITNESSES:			GRIFFIN LAND & NURSERIES, INC.,
			a Delaware corporation
/s/ Thomas M. Daniells			By:	/s/ Anthony J. Galici
Thomas M. Daniells			Name:	Anthony J. Galici
			Title:	Vice President and Secretary
/s/ Denise M. Boucher
Denise M. Boucher
STATE OF CONNECTICUT	)
	)	ss:   Hartford	April 28, 2011
COUNTY OF HARTFORD	)

Personally appeared Anthony J. Galici, Vice President and Secretary of Griffin Land & Nurseries, Inc., a Delaware corporation, signer of the foregoing instrument and acknowledged the same to be his free act and deed and the free act of said corporation, before me.

/s/ Thomas M. Daniells

Commissioner of the Superior Court

Thomas M. Daniells

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EXHIBIT A

21-25 Griffin Road North, Windsor, Connecticut

THAT CERTAIN PIECE OR PARCEL OF LAND TOGETHER WITH ALL BUILDINGS AND IMPROVEMENTS LOCATED THEREON SITUATED ON THE NORTHERLY SIDE OF GRIFFIN ROAD NORTH IN THE TOWN OF WINDSOR, COUNTY OF HARTFORD, AND STATE OF CONNECTICUT, BEING SHOWN AND DESIGNATED AS “PARCEL 759, 142 SQ. FT., 17.427 ACRES” ON A CERTAIN MAP OR PLAN ENTITLED “BOUNDARY AND TOPOGRAPHIC SURVEY PREPARED FOR GRIFFIN LAND AND NURSERIES, INC. 25 GRIFFIN ROAD NORTH WINDSOR, CONNECTICUT SCALE: 1 IN. = 50 FT. DATE: JULY 24, 2001 ALFORD ASSOCIATES, INC., CIVIL ENGINEERS, WINDSOR, CONNECTICUT.”  SAID.  PIECE OR PARCEL OF LAND IS MORE PARTICULARLY DESCRIBED AS FOLLOWS:

BEGINNING AT A POINT IN THE NORTHERLY LINE OF GRIFFIN ROAD NORTH AT THE NORTHWESTERLY CORNER OF LAND NOW OR FORMERLY OF SOUTHERN NEW ENGLAND TELEPHONE COMPANY AND THE SOUTHWESTERLY CORNER OF THE HEREIN DESCRIBED PARCEL;

THENCE WESTERLY ALONG A CURVE TO THE LEFT 165.73 FEET TO A CONCRETE MONUMENT, SAID CURVE HAVING A RADIUS OF 400.00 FEET AND A DELTA ANGLE OF 23° 44’ 20”;

THENCE N 53° 04’ 37” W, 434.61 FEET TO A CONCRETE MONUMENT;

THENCE WESTERLY ALONG A CURVE TO THE LEFT 315.61 FEET TO A CONCRETE MONUMENT, SAID CURVE HAVING A RADIUS OF 1000.00 FEET AND A DELTA ANGLE OF 18° 05’ 00”;

THENCE N 71° 09’ 37” W, 300.00 FEET TO A POINT; THE FOUR PRECEDING COURSES BEING IN THE NORTHERLY LINE OF GRIFFIN ROAD NORTH;

THENCE N 13° 12’ 40” E, 557.65 FEET TO A POINT;

THENCE S 76° 49’ 37” E, 600.00 FEET TO A POINT; THE TWO PRECEDING COURSES BEING ALONG LAND NOW OR FORMERLY OF RIVER BEND ASSOCIATES, INC.;

THENCE S 50° 31’ 51” E, 397.12 FEET TO A POINT;

THENCE S 57° 57’ 50” E, 264.15 FEET TO A POINT; THE TWO PRECEDING COURSES BEING ALONG LAND NOW OR FORMERLY OF RONCARI INDUSTRIES, INC.;

THENCE S 30° 07’ 05” W, 5.00 FEET TO A POINT;

THENCE S 57° 52’ 50” E, 44.82 FEET TO A POINT; THE TWO PROCEDING COURSES BEING ALONG LAND NOW OR FORMERLY OF GRIFFIN LAND AND NURSERIES, INC.;

THENCE S 20° 11’ 06” W, 602.02 FEET TO A POINT;

THENCE S 53° 03’ 46” E, 18.62 FEET TO A POINT; THE TWO PROCEDING COURSES BEING ALONG LAND NOW OR FORMERLY OF D.M.A.C. LIMITED PARTNERSHIP;

THENCE S 60° 39’ 43” W, 76.79 FEET ALONG LAND NOW OR FORMERLY OF SOUTHERN NEW ENGLAND TELEPHONE COMPANY TO THE POINT OF BEGINNING.

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EX-31.1

Exhibit 31.1

I, Frederick M. Danziger, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Griffin Land & Nurseries, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 7, 2011	/s/ FREDERICK M. DANZIGER
	Frederick M. Danziger
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

I, Anthony J. Galici, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Griffin Land & Nurseries, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 7, 2011	/s/ ANTHONY J. GALICI
	Anthony J. Galici
	Vice President, Chief Financial Officer and Secretary

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 UNITED STATES CODE SECTION 1350

In connection with the Quarterly Report of Griffin Land & Nurseries, Inc. (the “Company”) on Form 10-Q for the quarter ended May 28, 2011 as filed with the Securities and Exchange Commission on the date hereof (the “Periodic Report”), I, Frederick M. Danziger, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.The Periodic Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

2.The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ FREDERICK M. DANZIGER

Frederick M. Danziger

President and Chief Executive Officer

July 7, 2011

EX-32.2

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO 18 UNITED STATES CODE SECTION 1350

In connection with the Quarterly Report of Griffin Land & Nurseries, Inc. (the “Company”) on Form 10-Q for the quarter ended May 28, 2011 as filed with the Securities and Exchange Commission on the date hereof (the “Periodic Report”), I, Anthony J. Galici, Vice President, Chief Financial Officer and Secretary of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.The Periodic Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

2.The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ ANTHONY J. GALICI

Anthony J. Galici

Vice President, Chief Financial Officer and Secretary

July 7, 2011