GRIFFIN LAND & NURSERIES INC (Form: 10-K, Received: 02/28/2003 15:05:12)

Each of the undersigned Guarantors acknowledges and accepts the foregoing and ratifies and confirms its obligations under its respective Guaranty:

IMPERIAL NURSERIES, INC.

/s/ ANTHONY GALICI
Its Senior Vice President

RIVER BEND ASSOCIATES, INC.

/s/ ANTHONY GALICI
Its Vice President

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

ý	ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended November 30, 2002
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 0-29288

GRIFFIN LAND & NURSERIES, INC.
(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)		06-0868496 (I.R.S. Employer Identification No.)
One Rockefeller Plaza New York, New York (Address of principal executive offices)		10020 (Zip Code)
(212) 218-7910 (Registrant's Telephone Number, Including Area Code)
SECURITIES REGISTERED PURSUANT TO SECTION 12 (B) OF THE ACT: None
SECURITIES REGISTERED PURSUANT TO SECTION 12 (G) OF THE ACT:

Title of Each Class		Name of Each Exchange on Which Registered
Common Stock $0.01 par value		Nasdaq National Market

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 ý No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Yes o No ý

Indicate by check mark whether the Registrant is an accelerated filer (as defined under Rule 12b-2 of the Securities Exchange Act of 1934) Yes o No ý

The aggregate market value of the Common Stock held by non-affiliates of the Registrant, was approximately $26,873,000 based on the closing sales price on the Nasdaq National Market on February 26, 2003. Shares of Common Stock held by each executive officer, director, and persons or entities known to the Registrant to be affiliates of the foregoing have been excluded in that such persons may be deemed to be affiliates. This assumption regarding affiliate status is not necessarily a conclusive determination for other purposes.

As of February 26, 2003, 4,864,916 shares of common stock were outstanding.

PART 1

ITEM 1. BUSINESS

Griffin Land & Nurseries, Inc. ("Griffin") and its subsidiaries comprise principally a landscape nursery and a real estate business. Griffin is engaged in two principal lines of business: (1) the landscape nursery products business, comprised of the growing of containerized landscape nursery products for sale principally to retail garden center operators, landscape nursery mass merchandisers and wholesale sales and service centers, whose main customers are landscape contractors; and (2) the real estate business, comprised of (x) the ownership, construction, leasing and management of commercial and industrial properties and (y) the development of residential subdivisions on real estate owned by Griffin in Connecticut and Massachusetts. On January 26, 2001, a portion of the landscape nursery products business which had related to the operation of wholesale sales and service centers (the "SSCs") was sold to Shemin Nurseries, Inc. ("Shemin"). Griffin holds an approximately 14% interest in the equity of Shemin Acquisition Corp. ("Acquisition"), the parent company of Shemin, acquired as part of the sale. The investment in Acquisition is accounted for under the cost method of accounting for investments. Griffin also owns an approximately 35% interest (32% fully diluted) in Centaur Communications, Ltd. ("Centaur"), a United Kingdom magazine and information services publisher which is accounted for under the equity method of accounting, and has a lesser interest in Linguaphone Group plc ("Linguaphone"), a designer and distributor of language teaching materials based in the United Kingdom, which is accounted for under the cost method of accounting for investments.

Landscape Nursery Business

The landscape nursery operations of Griffin are operated by its wholly-owned subsidiary, Imperial Nurseries, Inc. ("Imperial"). Imperial is a grower and, to a small extent, broker of wholesale landscape nursery stock. The landscape nursery industry is extremely fragmented. Imperial believes that its sales volume places it among the twenty largest landscape nursery growers in the country. On January 26, 2001, Imperial completed the sale of its SSCs, which provided most of Imperial's operating profit in prior years. As a result of the sale, the central overhead of Imperial, which could be reduced only in part, is now borne entirely by the growing operation.

Imperial's container growing operations are located on land owned by Griffin in Connecticut (approximately 455 acres currently used) and land owned by Imperial in northern Florida (approximately 450 acres currently used). The Florida growing operation is currently completing its planned expansion on adjacent lands owned by Imperial. Upon completion of current plans, the Florida farm will use approximately 490 acres. At that time, substantially all of the useable contiguous lands suitable for the container growing operations in Connecticut and a large portion of such lands in northern Florida will be in use. The Florida farm has also improved and expanded its shipping docks and customer service facilities and is improving its irrigation and water recycling operations. Imperial's inventories consist of container-grown plants on these two farms. The largest products of Imperial are evergreens, flowering shrubs and hollies in Florida and rhododendron, evergreens and flowering shrubs in Connecticut. Other major product categories in Florida include juniper, trees, perennials and crape myrtle. During 2000, a decision was made to reduce materially the number of azalea and juniper to be grown in Florida and to increase the number of larger plants of several varieties in Florida including leyland cypress, some varieties of deciduous shrubs, crape myrtle and trees. In Connecticut, alberta spruce, perennials and trees are other major products. Container-grown product is held principally from one to five years prior to its sale by Imperial. Over the past four years, Imperial substantially increased its production and sales of perennials which have a much shorter growing cycle than most of the rest of Imperial's products. Because many perennials were grown for sale by the SSCs, after the sale of the SSCs, the number of perennials being grown has been reduced starting in 2002. Commencing in 2003, Imperial will be selling some smaller perennials and a number of other products as one of several licensed growers under the "Novalis" trade name, and also in association with P. Allen Smith, an author and garden show host.

Imperial is reviewing a variety of approaches to increase the return on assets for its growing operations, including changes in the relative quantities of some products currently grown and proposed to be grown and also possible changes in the potting and growing cycle for some of its containerized production. Some of these programs are also directed at developing faster growing products and improved soil mixes. A substantial portion of the products which are part of the expanded Florida production will be of larger sizes requiring an extended growing cycle. The major investment in nursery growing assets in the current cycle of planned investment in Florida was substantially completed during 2002. Imperial is currently planning to expand its field grown liner program in Connecticut on land owned by Griffin and is also considering some other products and product sizes for both sales in its existing markets and expanding the market area served by the Florida farm. Any such changes, if successful, taking into account the growing cycles of the related plants, will take a substantial period to be reflected in results of operations to any material extent. Imperial's growing operation incurred charges for inventory losses above normal levels of approximately $1.8 million in 2002 and $0.6 million in 2001. These charges were due principally to crop failures and poor results from the propagation of new plants in Florida.

The growing operations serve a market comprised principally of retail garden center operators, landscape nursery mass merchandisers and wholesale sales and service centers. Shemin, the purchaser of Imperial's SSCs, has a contract to purchase some Imperial grown product during 2003. Imperial's major markets are in the Northeast, Mid-Atlantic, the northern portion of the Southeast and the Midwest. Imperial may seek to expand its distribution in parts of the Southeast. Nursery sales are extremely seasonal, peaking in Spring, and are strongly affected by commercial and residential building activity and are materially affected by weather conditions, particularly in the Spring planting season. Drought conditions in the Mid-Atlantic and Northeast areas adversely affected sales of Imperial in the 2002 season as did excessive rain and cold in the Midwest. Prices and competition in 2003 are expected to be affected by product grown by Imperial and others which was not sold, when expected, last year. Competition may also reflect the weakened financial condition of at least one major grower and by the weakened financial conditions of some customers of Imperial.

Imperial's sales are made to a large variety of customers. In fiscal 2002, sales to Shemin represented 10.1% of Imperial's total sales. Imperial's supply agreement with Shemin, entered into in conjunction with the sale of the SSCs to Shemin, expires on December 31, 2003. Imperial expects to continue to be a supplier to Shemin, although not necessarily at the same sales level, after the supply agreement terminates. There were no other customers in fiscal 2001 and fiscal 2000 that represented more than 10% of Imperial's annual sales in those years.

Imperial has increased its containerized growing capacity to meet the potential volume and quality needs of its customers and to capitalize on expected growth in the Mid-Atlantic and Midwest markets. Imperial also expects to seek to expand its sales in the Southeast. Shipping capacity in Florida has also been increased, but may require some additional peaking capacity. In coming years, Imperial expects that a higher portion of its shipping will be made on trucks outfitted with shelves, which will increase shipping expenses. Over the last two years, additional sales support has been provided to the farming operation, and in future years, additional sales support may be required to be provided to mass merchandisers.

During 2000, Imperial operated seven SSCs which sold a wide range of plant material, including a large portion purchased from growers other than Imperial, and horticultural tools and products to the trade. The largest portion of the sales of the SSCs were to professional landscapers. The SSCs, all of which were owned by Imperial, were located in Windsor, Connecticut; Aston and Pittsburgh, Pennsylvania; Columbus and Cincinnati, Ohio; White Marsh, Maryland; and Manassas, Virginia. During 2000, operating results of the SSCs improved from the prior year. The SSCs had become the principal contributor to the operating profit of Imperial. In January 2001, the SSCs were sold to Shemin for cash and stock in Shemin Acquisition Corporation. Griffin reported a pretax profit of approximately $9.5 million on this transaction. See Note 2 to the consolidated financial statements included in Item 8.

Real Estate Business

Griffin's real estate division, Griffin Land, is directly engaged in the real estate development business on portions of its land in Connecticut. Griffin Land develops portions of its properties for industrial, commercial and residential use. Griffin Land may also endeavor to sell some of its non-core land without obtaining development approvals. Additionally, in future years, Griffin Land may seek to acquire and develop on land not presently owned. The headquarters for this operation is in Bloomfield, Connecticut.

For several years, the real estate market in the Hartford area, particularly that in the northwest quadrant where the majority of Griffin's acreage is located, was depressed by a number of factors, including the decline of employment in the manufacturing and financial services industries. In 2000, there was some recovery in this market, including some recovery in the office portion of this market, which had been particularly weak. During 2001, in the area of Griffin's properties, there was not a significant change in the vacancy rates of office space, but Griffin Land and a joint venture, in which Griffin Land owned a 30% interest, succeeded in leasing 42,000 square feet of office space (a portion with occupancy and rent commencing in 2002) and Griffin Land delivered to tenants approximately 235,000 square feet (net of vacated space) of industrial and flex space. In 2002, an increase in the amount of industrial space leased was partially offset by a reduction in the net amount of office and flex space leased by Griffin Land. There can be no assurance as to the condition of the real estate market in this region in the near future. Current projections, made by analysts, show little growth for this market during 2003, particularly in office space, where lease terms are generally five years or fewer. Despite the employment decline in the manufacturing and financial services industries, the unemployment rate in the area is quite low. Griffin Land's development of its land is also affected by land planning issues, particularly in the town of Simsbury, Connecticut.

Commercial and Industrial Developments

New England Tradeport

A significant amount of Griffin Land's current commercial and industrial development efforts are focused on a 600 acre tract owned by Griffin Land near Bradley International Airport and Interstate 91 known as the New England Tradeport. To date, approximately 395,000 square feet of warehouse and light manufacturing space has been completed, of which approximately 380,000 (96%) is occupied, and a bottling and distribution plant has been built by the Pepsi Bottling Group ("Pepsi") on land sold to Pepsi by Griffin Land. Leases covering approximately 31.0% of the currently leased space in New England Tradeport expire prior to December 31, 2004. Griffin Land has begun site work for a new approximately 115,000 square foot warehouse which it expects to complete in 2003. The only currently vacant spaces are 10,000 and 5,000 square feet, respectively, in one older industrial building owned by Griffin Land.

Griffin Land has a state traffic control certificate for the development of 1.3 million square feet in the New England Tradeport. Griffin Land intends to continue to direct its primary efforts in the industrial properties portion of its real estate business toward construction and leasing of light industrial and warehouse facilities at the New England Tradeport. Future development in the New England Tradeport may require investment in off-site infrastructure on behalf of Windsor, Connecticut and improvement of some state or town roads. At present, $13.9 million is invested in buildings at New England Tradeport and $2.7 million is invested in the undeveloped land there. All of Griffin Land's existing buildings at New England Tradeport are currently mortgaged for an aggregate of approximately $15.6 million.

Griffin Center and Griffin Center South

Griffin's other substantial development is the combination of Griffin Center in Windsor, Connecticut and Griffin Center South in Bloomfield, Connecticut. Together these master planned

developments comprise approximately 600 acres, approximately 63% of which have been developed with approximately 2,165,000 square feet of office and industrial space.

Griffin Center currently includes ten corporate office buildings built by Griffin Land. Griffin Land currently owns two office buildings which have an aggregate of 161,000 square feet in the Griffin Center office complex. Through fiscal 2002, those buildings were owned by a joint venture in which Griffin Land held a 30% interest. Griffin Land purchased the remaining 70% interest in December 2002 for approximately $8.8 million. Occupancy in those buildings is approximately 152,000 square feet (94%). During 2001, Griffin Land completed the shell of a light manufacturing building of 165,000 square feet in Griffin Center for JDS Uniphase Corporation ("JDS") which is leased to JDS under a fifteen-year lease. Under the agreement, JDS paid for its interior improvements, which were material to the total cost of the building. At present, JDS has vacated the building which they are seeking to sublease. In 2002, Griffin Land built the shell of a 50,000 square foot single story office building in Griffin Center which is currently ready for tenant work but is unleased. Griffin's aggregate investment in Griffin Center, after acquiring the 70% interest in the two office buildings, is $24.9 million. Including the two office buildings recently acquired, leases covering approximately 18% of the currently leased space in Griffin Center expire prior to December 31, 2004. Mortgages on Griffin Land's buildings in Griffin Center, including a new mortgage on the two offices buildings recently acquired, total $15.9 million

In Griffin Center South, a 130-acre tract with sixteen buildings of flex and research and development space, Griffin Land has retained for lease 9 buildings. During 2001, Griffin Land accepted the surrender of a 57,500 square foot lease, for a termination fee, from JDS. Approximately 55% of that building has been released with occupancy starting in early 2003. Griffin Land also accepted back from JDS, in 2002, 10,000 square feet in another building which is currently for lease. JDS made a payment for termination of its lease in which it had made material improvements. A third lease of 11,400 square feet was surrendered by another tenant. That space is currently not leased. The Griffin Center South buildings have an aggregate of approximately 220,000 square feet of flex and research and development space and 18,000 square feet of storage space. Leases covering approximately 17% of the currently leased space expire prior to December 31, 2004. Undeveloped land remaining in Griffin Center South is sufficient for an additional approximately 200,000 square feet of space. The aggregate investment in Griffin Center South is $10.6 million.

Other Office and Industrial Subdivisions

Three additional Griffin Land parcels appropriate for office or industrial uses are currently marketed for development, including 100 acres in the South Windsor Technology Center, 28 acres in the Day Hill Technology Center in Windsor and a 16 acre parcel in Windsor for smaller build-to-suit industrial buildings.

Residential Developments

Simsbury

In November 1999, Griffin Land filed plans for the creation of a residential community of 640 homes on a 363-acre site in Simsbury. After the conclusion of the original hearings in this matter, Griffin Land reduced the number of proposed homes to 371. One quarter of these homes would be deed restricted affordable housing under Connecticut statutes. The public hearings focused on the density of the proposed development, as well as sewer, wetlands and soil contamination issues arising from prior use of the land for farming, as a result of which certain pesticides remain in the upper portion of the soil. The local commissions rejected the plan which is now before the Connecticut courts in a number of separate but related actions. See "Regulation: Environmental Matters". Griffin Land believes that its development plan for this site includes an appropriate method (which has received support from the Connecticut Department of Environmental Protection) of remediating the soils. The outcome of the pending litigation cannot be predicted. In December 2002, the trial court for two cases

related to this development held for Griffin. Simsbury is seeking to appeal those decisions. Those decisions would require compliance with conservation and septic decisions which would affect the development. The current book value of the land, including design and development costs to date, for this proposed development is $3.2 million. Griffin Land owns another 500 acres in Simsbury, portions of which are zoned residential and other portions of which are zoned industrial. The industrial land is probably more suited to commercial use. Griffin Land may seek to develop or sell such lands if approvals can be obtained.

Windsor

In 1988, a subsidiary of Griffin began infrastructure work at Walden Woods, a 153 acre site in Windsor, Connecticut, which was originally planned to contain more than 435 residential units. Through the end of fiscal 2002, 155 homes have been built. In 2000, Griffin entered into an agreement with a developer for the sale of the balance of the development rights at Walden Woods. Completion of this transaction, which is subject to site plan and other approvals by the town, would provide a significant cash flow to Griffin. Griffin's aggregate investment in Walden Woods is $2.7 million.

Suffield

Griffin is currently seeking to prepare 95 acres of contiguous land in Suffield for residential subdivision, which has received some preliminary favorable consideration.

Other

In addition, approximately 500 acres in Connecticut are leased for tobacco growing to General Cigar Co., Inc., at annual rentals approximating the land's annual carrying cost. The lease for these properties, which extends through February 2007, may be terminated as to 100 acres annually, on one year's prior notice.

Griffin is evaluating its other properties for residential development over a period of years. Griffin anticipates that obtaining subdivision approvals in many of the towns where it holds land appropriate for residential subdivision will be an extended process.

Investments

Centaur Communications, Ltd.

Griffin owns approximately 35% (32% fully diluted) of the outstanding common stock of Centaur, a privately-held publisher of business magazines in the United Kingdom and a compiler and supplier of computerized financial information through a subsidiary, Perfect Information, Ltd. As a result of a repurchase of common stock by Centaur and an additional investment by Griffin in 1998, Griffin's interest in Centaur was increased to its present level. The agreements relating to that transaction contemplate an offering of Centaur stock or sale of Centaur in the next year subject to a number of factors, including market conditions. Results of Centaur were significantly affected by the sale, at a substantial gain, of its Lawtel division in August 2002 and were adversely affected by the write down of goodwill of its engineering division. The British market for business advertising is currently not strong.

Linguaphone Group plc

Griffin received, in 1997 from Centaur, a 25% interest in Linguaphone. In early 1999, a recapitalization of Linguaphone resulted in Griffin's interest being reduced to approximately 14% (11% fully diluted). Further transactions by Linguaphone have reduced Griffin's ownership interest to approximately 8%. Accordingly, Griffin now accounts for Linguaphone under the cost method of accounting for investments. Griffin's 2001 statement of operations includes a charge of approximately $2.2 million to write down its investment in Linguaphone to less than $100,000 due to Linguaphone's financial results. Griffin invested $145,000 in Linguaphone in fiscal 2002.

Shemin Acquisition Corporation

In connection with Imperial's sale of the SSCs, Imperial holds approximately 14% of the outstanding common stock of Shemin Acquisition Corporation, a privately held company that is the parent company of Shemin Nurseries, Inc. Imperial accounts for its investment in Acquisition under the cost method of accounting for investments.

Financial Information Regarding Industry Segments

See Note 3 to the consolidated financial statements of Griffin included elsewhere herein for certain financial information regarding the landscape nursery business and the real estate business.

Employees

As of November 30, 2002, Griffin employed 220 persons on a full-time basis, including 16 in its real estate division and 200 in its landscape nursery business. At present, none of Griffin's employees are represented by a union. Griffin believes that its relations with its employees are satisfactory.

Competition

The landscape nursery business is competitive, and Imperial competes against a number of other companies, including national, regional and local landscape nursery businesses. Some of Imperial's competitors in the landscape nursery industry are larger than Imperial. Growers of landscape nursery products compete on the bases of price, product and service quality and product availability.

Numerous real estate developers operate in the portion of Connecticut and Massachusetts in which Griffin's holdings are concentrated. Some of such businesses may have greater financial resources than Griffin. Griffin's real estate business competes on the bases of location, price, availability of space, convenience and amenities.

Regulation: Environmental Matters

Under various federal, state and local laws, ordinances and regulations, an owner or operator of real estate may be required to investigate and clean up hazardous or toxic substances or petroleum product releases at such property and may be held liable to a governmental entity or to third parties for property damage and for investigation and clean-up costs incurred by such parties in connection with contamination. The cost of investigation, remediation or removal of such substances may be substantial, and the presence of such substances, or the failure to remediate properly such substances, may adversely affect the owner's ability to sell or rent such property or to borrow using such property as collateral. In connection with the ownership (direct or indirect), operation, management and development of real estate properties, Griffin may be considered an owner or operator of such properties or as having arranged for the disposal or treatment of hazardous or toxic substances and, therefore, potentially liable for removal or remediation costs, a well as certain other related costs, including governmental fines and injuries to persons and property. In Simsbury, Connecticut, the value of Griffin's land is affected by the presence of chlordane on a portion of the land which is intended for residential use. Although Griffin believes its proposed method of reducing chlordane contamination to levels below those that would impede residential development of such properties is appropriate and feasible, the acceptance of the method by any town commission has not yet been obtained. In the event that Griffin is unable adequately to remediate this property, its ability to develop such property for its intended purposes would be materially affected.

Griffin periodically reviews its properties for the purpose of evaluating such properties' compliance with applicable state and federal environmental laws. Griffin does not anticipate experiencing, in the immediate future, material expense in complying with such laws other than in connection with development operations which may require additional clean up expenses.

ITEM 2. PROPERTIES

Land Holdings

Griffin is a major landholder in the State of Connecticut, owning approximately 4,100 acres, and also owns approximately 450 acres of land in Massachusetts. In addition, Griffin owns approximately 1,100 acres in northern Florida, most of the useable portion of which is used for Imperial's growing operations or is contiguous to such operations.

The book value of undeveloped land holdings, including land improvements, owned by Griffin, principally in the Hartford, Connecticut area, is approximately $16 million. Griffin believes the fair market value of such land is substantially in excess of its book value, including land improvements.

A listing of the locations of Griffin's real estate held for development or sale, a portion of which, principally in Bloomfield, East Granby and Windsor, has been developed, and nursery real estate, is as follows:

Real Estate Held For Development or Sale

Location of Property		Land Area (Acres)
Connecticut
	Bloomfield	370
	East Granby	104
	East Windsor	115
	Granby	118
	Simsbury	865
	South Windsor	103
	Suffield	372
	Windsor	1,198
Massachusetts
	Southwick	442
Florida
	Leon County	6
	Hillsborough County	1

Nursery Real Estate

Location of Property		Land Area (Acres)
Florida
	Quincy	1,066
Connecticut
	East Granby	470
	Granby	305
	Windsor	33
	Simsbury	10

Griffin also leases approximately 2,100 square feet in New York City for its executive offices.

ITEM 3. LEGAL PROCEEDINGS

As discussed in Item 1, certain parts of Griffin's property in Simsbury, Connecticut, are affected by the presence of chlordane. Although the various federal, state and local agencies may have an interest in the matter, there are no proceedings known by Griffin to be contemplated by any of these agencies

in connection with possible chlordane exceedences on such land. Various aspects of Griffin's plans for its proposed residential development in Simsbury are currently being litigated. See discussion of residential development included in the Liquidity and Capital Resources section of Item 7.

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 legal counsel, the ultimate liability, if any, with respect to these matters will not be material to Griffin's financial position, results of operations or cash flows.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER MATTERS

Market Information

The following are the high and low prices of common shares of Griffin Land & Nurseries, Inc. as traded on the Nasdaq National Market:

	1st Quarter				2nd Quarter				3rd Quarter				4th Quarter
	High		Low		High		Low		High		Low		High		Low
2002	$	16.35	$	12.56	$	16.73	$	13.77	$	17.79	$	13.15	$	17.00	$	13.40
2001	$	14.75	$	11.13	$	18.85	$	12.94	$	18.08	$	15.00	$	15.51	$	11.00

On February 26, 2003, the number of record holders of common stock of Griffin was approximately 507, which does not include beneficial owners whose shares are held of record in the names of brokers or nominees. The closing market price as quoted on the Nasdaq National Market on such date was $10.95 per share. See Item 12 "Security Ownership of Certain Beneficial Owners and Management" for information on our equity compensation plan.

Dividend Policy

Griffin's current policy is to retain any earnings to finance the operation and expansion of its businesses.

ITEM 6. SELECTED FINANCIAL DATA

The following table sets forth selected statement of operations data for fiscal years 1998 through 2002 and balance sheet data as of the end of each fiscal year.

	2002			2001			2000		1999		1998
	(dollars in thousands, except per share data)
Statement of Operations Data:
Net sales & other revenue	$	33,961		$	32,013		$	74,374	$	64,998	$	53,133
Operating (loss) profit		(2,288	)		(3,182	)		3,812		3,130		74
Gain on sale of Sales & Service Centers		—			9,469			—		—		—
(Loss) income before equity investments (a)(b)		(717	)		1,490			1,670		1,623		86
Net income (loss)		2,925			1,137			2,262		2,176		(65	)
Basic net income (loss) per share		0.60			0.23			0.47		0.45		(0.01	)
Diluted net income (loss) per share		0.53			0.22			0.45		0.42		(0.03	)
Balance Sheet Data:
Total assets		132,956			124,175			127,284		112,885		104,730
Working capital		34,291			31,095			29,193		36,337		33,304
Long-term debt		26,007			15,940			9,008		8,860		2,666
Stockholders' equity		99,470			96,916			95,718		93,270		91,000

(a): Loss before equity investment for fiscal 2002 includes an income tax benefit of $1.5 million for the reversal of an accrual for income taxes as a result of the favorable settlement of tax examinations of prior years. See Note 4 to the consolidated financial statements included in Item 8.
(b): Income before equity investment in fiscal 2001 includes a pretax charge of $2.2 million to write-down the value of Griffin's investment in Linguaphone Group plc.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

The consolidated financial statements of Griffin include the accounts of Griffin's subsidiary in the landscape nursery business, Imperial Nurseries, Inc. ("Imperial"), and Griffin's Connecticut and Massachusetts based real estate business ("Griffin Land"). Griffin also has an equity investment in Centaur Communications, Ltd. ("Centaur"), a magazine publishing business based in the United Kingdom. On January 26, 2001, Imperial completed the sale of its wholesale sales and service centers (the "SSCs") to Shemin Nurseries, Inc. A substantial amount of the operating profit of Imperial in fiscal 2000 was attributable to the SSCs. Imperial remains in the landscape nursery business with its container growing operations in Connecticut and northern Florida. Griffin's statement of operations in fiscal 2000 and through the date of sale of the SSCs in fiscal 2001 includes the results of operations of the SSCs. In 2001, Imperial completed an expansion of its Connecticut growing operation and is currently nearing completion of the expansion of its growing operation in northern Florida.

The notes to Griffin's consolidated financial statements included in Item 8 contain a summary of the significant accounting policies and methods used in the preparation of Griffin's consolidated financial statements. However, in the opinion of management, Griffin does not have any individual accounting policy that is critical to the preparation of its consolidated financial statements. This is due principally to the definitive nature of the accounting requirements for the landscape nursery and real estate businesses in which Griffin is engaged. Also, in many cases, Griffin must use an accounting policy or method because it is the only policy or method permitted under accounting principles generally accepted in the United States of America. The following is a review of the more significant accounting policies and methods used by Griffin:

Revenue Recognition—Griffin recognizes revenues for its landscape nursery business upon shipment of products to customers when title and risk of loss pass to the customers. In Griffin's real estate business, rental revenue is recorded in accordance with Statement of Financial Accounting Standard ("SFAS") No. 13, "Accounting for Leases", which requires that rental revenue be recognized on a straight-line basis over the term of the lease. Real estate sales are recorded in accordance with SFAS No. 66, "Accounting for Sales of Real Estate" which establishes standards for recognition of profit on real estate sales. These standards require that profit on a transaction not be recognized until the amount is determinable, collectability of the sales price is reasonably assured and the earnings process is complete.

Depreciation and Amortization—Griffin depreciates its property and equipment and its real estate held for lease using straight-line methods. Griffin amortizes goodwill related to its investment in Centaur on a straight-line method over forty years. Beginning in fiscal 2003, Griffin, as required, will adopt SFAS No. 142. Accordingly, Griffin will no longer amortize the goodwill related to its investment in Centaur, but that goodwill, and any other, will be tested at least annually for impairment (see Note 1 to the consolidated financial statements in Item 8).

Inventories—Griffin's inventories of its landscape nursery business are stated at the lower of cost or market. Cost is determined using the average cost method. Although nursery stock includes certain inventories that will not be sold within one year, it is industry practice to include such inventories in current assets.

Impairment of Long-Lived Assets—Griffin evaluates the carrying value of its long-lived assets in relation to their operating performance and future undiscounted cash flows.

Results of Operations

Fiscal 2002 Compared to Fiscal 2001

Griffin's consolidated net sales and other revenue were $34.0 million in fiscal 2002 as compared to $32.0 million in fiscal 2001. The increase of $2.0 million reflects an increase in net sales and other revenue of $1.6 million at Imperial and an increase in net sales and other revenue of $0.4 million at Griffin Land. Net sales and other revenue at Griffin Land increased from $8.4 million in fiscal 2001 to $8.8 million in fiscal 2002. The increase of $0.4 million in net sales and other revenue at Griffin Land reflects an increase of $0.6 million of revenue from its leasing operations partially offset by a decrease of $0.2 million on revenue from property sales. The higher net sales and other revenue from Griffin Land's leasing operations was due to (a) an increase of $0.6 million in rental revenue from two buildings that were built and partially leased in fiscal 2001 and leased for the entire year in fiscal 2002; (b) a net increase of $0.5 million in rental revenue from leasing space that was previously vacant, net of previously leased space that was vacated in the current year; and (c) an increase of $0.2 million in rental revenue from the 57,000 square foot building in the New England Tradeport that was completed in fiscal 2002 and leased for a portion of the year; which was partially offset by a decrease of $0.7 million in other revenue in fiscal 2002 as compared to fiscal 2001 due to $0.5 million received in

fiscal 2001 in connection with an agreement to terminate early a lease and $0.2 million from construction management fees received in fiscal 2001.

Net sales and other revenue at Imperial increased from $23.6 million in fiscal 2001 to $25.2 million in fiscal 2002. The increase in net sales and other revenue at Imperial of $1.6 million reflects an increase in net sales of Imperial's container grown plants of $3.5 million in fiscal 2002 partially offset by the inclusion in fiscal 2001 of $1.9 million of net sales from the SSCs prior to their sale in January 2001. The increase in net sales of container grown plants reflects an increase in sales of larger sized plants, which have a higher per unit sales price, which more than offset a 2% decline in unit sales volume in fiscal 2002 as compared to fiscal 2001. The increase in sales of larger sized plants reflects changes in Imperial's product mix made over the past several years. Management believes that fiscal 2002 net sales were hampered by unfavorable weather conditions in Imperial's markets during the Spring, its peak selling season. Drought conditions in the Mid-Atlantic area and excessive rain and cold in the Midwest negatively affected sales in those areas.

Griffin incurred an operating loss of $2.3 million in fiscal 2002 as compared to an operating loss of $3.2 million in fiscal 2001. Griffin's operating loss in fiscal 2001 included an operating loss of $0.8 million from Imperial's SSCs prior to their sale in January 2001. Excluding the operating loss from the SSCs in fiscal 2001, Griffin's overall operating results were substantially unchanged in fiscal 2002 as compared to fiscal 2001.

Operating profit at Griffin Land increased from $1.0 million in fiscal 2001 to $1.1 million in fiscal 2002. The increase of $0.1 million in operating profit at Griffin Land reflects an increase of $0.3 million in profit from property sales and a decrease of $0.1 million in general and administrative expenses offset by an increase of $0.3 million in depreciation expense. Profit, before depreciation, from Griffin Land's commercial properties was $5.1 million in fiscal 2002 and fiscal 2001. However, fiscal 2001 results included a $0.5 million benefit from a lease termination. Excluding the early lease termination payment received in fiscal 2001, profit, before depreciation, from Griffin Land's commercial properties increased by $0.5 million in fiscal 2002 as compared to fiscal 2001. This reflects an increase in the amount of space leased in fiscal 2002 as compared to fiscal 2001. At November 30, 2002, Griffin Land had 1,013,000 square feet of office, flex and industrial space available for lease (including 50,000 square feet in the office building shell that was recently completed and is now ready for tenant work and the 160,000 square feet of office space in the two buildings owned by the joint venture in which Griffin held a 30% interest as of November 30, 2002), of which 885,000 square feet (87%) was occupied. At December 1, 2001 Griffin had 906,000 square feet of office and industrial space available for lease with 826,000 square feet (91%) occupied at that time. The increase in the amount of square feet available reflects the completion in fiscal 2002 of a 57,000 square foot facility in the New England Tradeport that is fully leased and the completion of the shell of a 50,000 square foot office building that is not yet leased.

Profit from property sales at Griffin Land increased by $0.3 million in fiscal 2002 as compared to fiscal 2001 despite the decrease in property sales revenue in fiscal 2002 as compared to fiscal 2001. The increased profitability reflects the substantially lower cost basis of the land sold in fiscal 2002 compared to the cost basis of the land sold in the prior year. The increase in depreciation expense in fiscal 2002 as compared to fiscal 2001 reflects a full year of depreciation expense in fiscal 2002, as compared to a partial year of depreciation expense in fiscal 2001, on tenant improvements on two buildings totaling 205,000 square feet placed in service during fiscal 2001 and the start of depreciation on the 57,000 square foot building that was completed in fiscal 2002.

General and administrative expenses at Griffin Land decreased from $2.2 million in fiscal 2001 to $2.1 million in fiscal 2002. The lower general and administrative expenses reflects a decrease of $0.1 million in donations expense in fiscal 2002 as compared to fiscal 2001 and a decrease of $0.1 million in employee recruitment expenses partially offset by higher insurance expenses.

Imperial incurred an operating loss of $1.9 million in both fiscal 2002 and fiscal 2001 (excluding the loss from the SSC operations of $0.8 million before they were sold in January 2001). The increase in gross profit generated from the higher net sales in fiscal 2002 was substantially offset by higher charges for unsaleable inventory, which were $1.8 million in fiscal 2002 as compared to $0.6 million in fiscal 2001. The charges for unsaleable inventory in the current year were caused principally by failures in certain crops, poor results from the propagation of new plants in Florida and failure to sell certain parts of the inventory which then became unsaleable. As a result of these issues, management has made changes in certain horticultural practices and changes of certain personnel. Imperial's gross margin on sales, excluding the charges for unsaleable inventory, was 17% in fiscal 2002 as compared to 15% in fiscal 2001. The higher gross margin on sales was principally due to changes in Imperial's product mix. Imperial's operating expenses in fiscal 2002 were $4.4 million, or 17.5% of net sales, as compared to $4.6 million, or 21.2% of net sales, in fiscal 2001, excluding the effect of the SSCs in fiscal 2001. The lower operating expenses in fiscal 2002 reflect principally lower central overhead expenses at Imperial due to headcount reductions as a result of the sale of the SSCs in fiscal 2001.

Griffin's interest expense increased from $0.9 million in fiscal 2001 to $1.6 million in fiscal 2002. The higher interest reflects increased borrowings outstanding in fiscal 2002 as compared to fiscal 2001. Borrowings in the current year were used to support the working capital needs at Griffin's businesses, and investment in Griffin Land's real estate operation and capital expenditures at Imperial. Griffin's financing requirements in fiscal 2001 were met using the proceeds from the sale of the SSCs that remained after paying down the balance then outstanding of Griffin's revolving credit agreement. Griffin's average amount of debt outstanding in fiscal 2002 was $23.2 million as compared to $15.0 million in fiscal 2001. In addition, in fiscal 2002 Griffin had capitalized interest of $0.1 million as compared to capitalized interest of $0.4 million in fiscal 2001. The lower amount of capitalized interest in fiscal 2002 reflects the lower amount of construction activity in fiscal 2002 as compared to fiscal 2001.

Griffin's effective rate of the income tax benefit in fiscal 2002 is 82% as compared to an effective income tax rate of 55% in fiscal 2001. The high effective benefit rate in fiscal 2002 reflects the tax benefit on its pretax loss and the reversal of a liability of $1.5 million for income taxes as a result of a favorable outcome of tax examinations for earlier years. The tax examinations were made on tax returns filed by Culbro Corporation ("Culbro"), Griffin's parent company prior to the distribution (the "Distribution") of Griffin common stock to Culbro's shareholders in 1997. Under a Tax Sharing Agreement, the liability for income taxes was assumed by Griffin from Culbro at the time of the Distribution. The high effective tax rate in fiscal 2001 reflects a basis difference in the writedown of an investment.

Griffin's equity income from Centaur was $3.6 million in fiscal 2002 as compared to an equity loss of $0.4 million in fiscal 2001. The higher equity income in fiscal 2002 reflects the gain at Centaur from the sale of its Lawtel operation, of which Griffin's allocable share was $8.4 million. There was no cash received by Griffin from the sale because Centaur used the proceeds to pay down its debt. Partially offsetting the gain on the sale of Lawtel was a goodwill impairment charge at Centaur, of which Griffin's allocable share was $5.0 million. Griffin's equity income from Centaur in fiscal 2002 also benefited from the reversal by Centaur of a valuation allowance on certain of its deferred tax assets, of which Griffin's allocable share was $0.7 million. The equity loss in fiscal 2001 included a charge, of which Griffin's allocable share was $0.9 million, for expenses related to a proposed stock offering or sale that did not take place. Excluding the effect of these items, Griffin's equity results from Centaur were lower in fiscal 2002 as compared to fiscal 2001, reflecting a weakened economy in the United Kingdom which has resulted in lower revenue and lower operating results at Centaur.

Fiscal 2001 Compared to Fiscal 2000

Griffin's net sales and other revenue were $32.0 million in fiscal 2001 as compared to $74.4 million in fiscal 2000. Net sales and other revenue at Imperial were $23.6 million in fiscal 2001 as compared to $68.6 million in fiscal 2000. The lower net sales at Imperial reflects the effect of the sale of the SSCs in January 2001. Net sales of the SSCs were $48.3 million in fiscal 2000 as compared to $1.9 million in fiscal 2001 through the date the SSCs were sold. Excluding the effect of the sale of the SSCs, net sales at Imperial increased by $1.4 million. The increase in net sales at Imperial principally reflects additional product available for sale as a result of the recent expansion of Imperial's Connecticut and northern Florida growing operations.

Net sales and other revenue at Griffin Land increased from $5.8 million in fiscal 2000 to $8.4 million in fiscal 2001. This increase of $2.6 million reflects an increase of $2.3 million from higher rental revenue in fiscal 2001 as a result of leases on buildings completed and occupied in fiscal 2001 and new leases on space that was vacant in fiscal 2000 but occupied for most of fiscal 2001. Additionally, revenue in fiscal 2001 included $0.5 million from the agreement to terminate early a lease on one of its buildings. The increase in rental revenue and the revenue from the early termination at Griffin Land substantially offset lower revenue from land sales in fiscal 2001 as compared to fiscal 2000. Revenue from land sales decreased from $1.2 million in fiscal 2000 to $0.8 million in fiscal 2001.

Griffin incurred an operating loss of $3.2 million in fiscal 2001 as compared to an operating profit of $3.8 million in fiscal 2000. Imperial incurred an operating loss of $2.7 million in fiscal 2001 as compared to an operating profit of $5.3 million in fiscal 2000. The lower operating results at Imperial reflects the effect of the sale of the SSCs in January 2001. Due to the seasonality of the landscape nursery business, the SSCs incurred an operating loss, before Imperial's central overhead expenses, of $0.8 million from the beginning of the 2001 fiscal year through their sale in January 2001. The SSCs generated an operating profit, before Imperial's central overhead expenses, of $6.6 million in fiscal 2000. Imperial's growing operations, including all of Imperial's central overhead expenses, incurred an operating loss of $1.9 million in fiscal 2001 as compared to an operating loss of $1.3 million in fiscal 2000. The effect of higher net sales of container grown plants by Imperial's growing operations was more than offset by higher cost of sales in fiscal 2001, which included a charge for unsaleable inventory of $0.6 million, due principally to horticultural issues, recorded in the 2001 third quarter. Imperial's operating expenses, excluding those expenses directly related to the SSCs, were $4.6 million in fiscal 2001 as compared to $5.4 million in fiscal 2000. As a percentage of net sales, operating expenses were 21.2% in fiscal 2001 as compared to 26.7% in fiscal 2000, excluding operating expenses directly related to the SSCs. The lower operating expenses in fiscal 2001 principally reflects lower central overhead expenses at Imperial due principally to staff reductions as a result of the sale of the SSCs and lower incentive compensation expense in fiscal 2001 as compared to fiscal 2000.

Operating profit at Griffin Land increased to $1.0 million in fiscal 2001 as compared to $0.2 million in fiscal 2000. The increased operating profit at Griffin Land principally reflects higher profit from commercial properties as a result of the increase in rental revenue in fiscal 2001. Profit before depreciation from Griffin Land's commercial properties, excluding the benefit of the lease termination, was $4.6 million in fiscal 2001 as compared to $2.9 million in fiscal 2000. The increase in profit, before depreciation, from commercial properties was partially offset by lower profit from property sales, higher operating expenses and higher depreciation expense. Profit from property sales declined from $0.5 million in fiscal 2000 to $0.1 million in fiscal 2001 due to the lower property sales revenue and the inclusion of properties with a lower cost basis in fiscal 2000 sales. The higher depreciation expense reflected depreciation on new buildings placed into service in fiscal 2001.

Griffin's results in fiscal 2001 reflect a write-down of $2.2 million on its investment in Linguaphone Group plc ("Linguaphone"). The write-down reflects the decrease in the value of Linguaphone based on a recent stock offering. Approximately 80% of the carrying value of Griffin's investment in

Linguaphone resulted from a distribution in 1997 of the common stock of Linguaphone by its former parent company, Centaur. The remaining carrying value of Griffin's investment in Linguaphone, approximately $0.2 million, reflects a recent cash investment by Griffin.

Griffin's interest expense declined from $1.1 million in fiscal 2000 to $0.9 million in fiscal 2001. Griffin's interest income increased by $0.1 million in fiscal 2001 as compared to fiscal 2000. The lower interest expense and higher interest income reflect repayment of the entire amount outstanding under Griffin's Credit Agreement from the cash proceeds received from the sale of the SSCs in January 2001. The remaining cash received from the sale of the SSCs, after repayment of the amount then outstanding under Griffin's revolving credit agreement was used to finance operations. Additionally, higher interest payments on mortgages, reflecting interest on a new mortgage entered into in March 2001, was more than offset by a higher amount of interest capitalized on new construction projects during fiscal 2001 as compared to fiscal 2000.

Griffin's effective tax rate in fiscal 2001 is 55% as compared to 39% in fiscal 2000. The higher effective tax rate in 2001 reflects the effect of the tax basis of Griffin's investment in Linguaphone being lower than its book basis, therefore the write-down did not generate the expected tax benefit had the tax basis of that asset been comparable to its book basis.

Griffin had an equity loss from Centaur in fiscal 2001 of $0.4 million as compared to equity income of $0.6 million in fiscal 2000. Although Centaur's operations were generally more profitable in fiscal 2001, Centaur incurred expenses, of which Griffin's allocable share was $0.9 million, related to a proposed stock offering or sale that did not take place.

Liquidity and Capital Resources

Net cash used in operating activities was $2.2 million in fiscal 2002 as compared to $6.0 million of net cash used in operating activities in fiscal 2001. The decrease of $3.8 million of net cash used in operating activities was due to several factors, including receiving an income tax refund of $0.2 million in fiscal 2002 as compared to income tax payments of $2.3 million in fiscal 2001. The fiscal 2001 income tax payments principally relate to the gain on sale of the SSCs in that year. Additionally, fiscal 2002 operating results at Griffin Land, before depreciation, increased by $0.4 million, and although Imperial's fiscal 2002 results from its container growing operations were substantially unchanged from fiscal 2001, fiscal 2001 included an operating loss of $0.8 million from Imperial's SSCs before they were sold. These items were partially offset by the effect of higher interest expense and overall unfavorable working capital changes.

In fiscal 2002, cash used in investing activities was $7.0 million as compared to cash of $5.4 million provided by investing activities in fiscal 2001, which included net proceeds of $18.4 million from the sale of Imperial's SSCs in 2001. Additions to Griffin Land's real estate assets were $3.4 million in fiscal 2002 as compared to $10.2 million in fiscal 2001. The higher amount of additions to real estate assets in fiscal 2001 reflects construction of a 165,000 square foot building in Griffin Center in Windsor, Connecticut, and a 40,000 square foot building in Griffin Center South in Bloomfield, Connecticut, in that year. Both of these buildings were completed in fiscal 2001 and are now leased. In addition, the shell of a 57,000 square foot building, built on speculation was started in fiscal 2001. In fiscal 2002, cash used for additions to Griffin Land's real estate assets included building the shell of a 50,000 square foot office building in Griffin Center and the completion of the shell and build out of the interior of its new 57,000 square foot building in the New England Tradeport in Windsor, Connecticut. The tenant work for that building, started as a result of entering into a lease for the entirety of that building, was completed in the 2002 third quarter. The shell of the new 50,000 square foot office building was completed in the 2002 fourth quarter and is ready for tenant work, although none of this building has been leased yet. Fiscal 2002 investing activities also include a $1 million payment for a

deposit on Griffin Land's acquisition of a 70% interest in a joint venture that owns two office buildings. The acquisition was completed in December 2002 (see below).

Capital expenditures of $2.5 million in fiscal 2002 and $2.9 million in fiscal 2001 were principally for the expansion of Imperial's farming operation in northern Florida. Over the past three years, Imperial has expanded and updated its facilities in Connecticut and northern Florida. Total costs of these projects is approximately $7.5 million, with only $0.3 million of work left to complete as of the end of fiscal 2002. The expansion is expected to be completed in fiscal 2003.

In fiscal 2002, cash provided by financing activities was $9.3 million as compared to cash of $0.5 million used in financing activities in fiscal 2001. Cash provided by financing activities in fiscal 2002 principally reflects borrowings made under Griffin's $19.4 million revolving credit agreement, as amended (the "2002 Credit Agreement"), with Fleet National Bank ("Fleet") which was completed on February 8, 2002 and a new mortgage entered into on September 17, 2002. The 2002 Credit Agreement has a three year term and is collateralized by certain of Griffin Land's real estate assets. The initial borrowing under the 2002 Credit Agreement was used to repay the amount then outstanding under Griffin's bridge loan, to repay a mortgage on one of Griffin's commercial buildings and for certain expenses related to the 2002 Credit Agreement. Subsequent borrowings were used to finance Griffin's seasonal working capital requirements, particularly those at Imperial. There was $4.2 million outstanding on the 2002 Credit Agreement at November 30, 2002.

On September 17, 2002, a subsidiary of Griffin completed a $7.7 million nonrecourse mortgage of two commercial buildings. The mortgage loan has an interest rate of 7% and a fifteen year term, with payments based on a twenty-five year amortization period. Proceeds of the mortgage were used to reduce amounts outstanding under the 2002 Credit Agreement. One of the properties included in this mortgage was previously included in the collateral for the 2002 Credit Agreement. As a result of removing that property from the collateral of the 2002 Credit Agreement, the commitment under the 2002 Credit Agreement was reduced to $14.1 million. Griffin is currently negotiating with Fleet to increase the amount available under the 2002 Credit Agreement to $21.0 million. The proposed increase in the commitment would be collateralized by certain of Griffin's real estate assets.

Subsequent to the end of fiscal 2002, Griffin completed the acquisition, for $8.8 million, of a 70% interest in a joint venture that owns two office buildings of approximately 80,000 square feet each in Griffin Center. Griffin previously held the other 30% interest in these buildings. This acquisition was temporarily financed under the 2002 Credit Agreement. Shortly after the acquisition, Griffin completed a $9.7 million nonrecourse mortgage. The mortgage loan has an interest rate of 6.08% and a ten year term with payments based on a twenty-five year amortization period. Proceeds of the mortgage were used to reduce amounts outstanding under the 2002 Credit Agreement.

In fiscal 2003, Griffin Land is planning to continue to invest in its real estate assets, including plans to build, on speculation, the shell of an approximately 115,000 square foot facility in the New England Tradeport, which is expected to require approximately $4.0 million. Additional amounts will be required to complete the interior of this new building and the interior of the 50,000 square foot office building in Griffin Center that was completed at the end of fiscal 2002. The buildout of the interiors of these buildings will be started when leases are obtained. Improvements to be made in fiscal 2003 to the infrastructure at Griffin Center and the New England Tradeport are expected to be approximately $0.7 million.

Griffin Land will also continue to seek approval for its proposed residential developments. Early in fiscal 2002, a court ruling upheld the denial, by Simsbury's Inland Wetlands Commission, of Griffin's Land's application for a wetlands activity permit in connection with its proposed residential development. Griffin Land is appealing that decision. On December 27, 2002, the Superior Court ruled that Simsbury's Planning and Zoning Commissions improperly denied Griffin's residential applications and ordered the commissions to reverse their decisions and approve Griffin Land's proposed zone

change and proposed site plan. The town is requesting permission from the Appellate Court to appeal these decisions. Griffin Land also has an agreement for the sale of the remaining development rights at its Walden Woods residential development in Windsor, Connecticut. The completion of that sale is subject to the purchaser receiving approval from the town's commissions for their development plans and, based on such plans, proceeds from that sale are expected to be approximately $3.0 million. Approvals from the town's commission on wetlands were obtained in fiscal 2002, but a suit was filed challenging that approval. Completion of this transaction is not expected to take place in fiscal 2003. Griffin Land has also applied for approvals for a 55 lot residential subdivision in Suffield, Connecticut. Sales from this project are not expected in fiscal 2003. Griffin Land intends to proceed with its other residential development plans on other of its lands that are also appropriate for that use.

Griffin's capital spending at Imperial in fiscal 2003 is expected to be less than $1.0 million, substantially lower than it has been the past two years because the expansion of Imperial's northern Florida growing operation is substantially completed.

Griffin's payments (including principal and interest) under contractual obligations as of November 30, 2002 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	$	38.0	$	2.1	$	4.1	$	4.1	$	27.7
2002 Credit Agreement (a)	$	4.2	$	—	$	4.2	$	—	$	—
Capital Lease Obligations	$	0.5	$	0.2	$	0.3	$	—	$	—
Operating Lease Obligations	$	1.0	$	0.2	$	0.4	$	0.3	$	0.1
Purchase Obligations (b)	$	1.1	$	1.1	$	—	$	—	$	—
Other	$	0.8	$	—	$	—	$	—	$	0.8

(a): Reflects the amount outstanding for the 2002 Credit Agreement as of November 30, 2002. Due to the variable interest rate on this debt, interest for future periods is not included above.
(b): Includes commitments made as of November 30, 2002 for the purchase of services and materials for the planned construction in fiscal 2003 of an approximately 115,000 square foot building. Subsequent to November 30, 2002, additional purchase commitments aggregating $3.2 million for services and materials for construction were incurred.

Management believes that in the near term, based on the current level of operations and anticipated growth, borrowings available under the 2002 Credit Agreement, as amended, and cash generated from operations will be sufficient to finance Griffin's working capital requirements, expected capital expenditures of the landscape nursery business and development of its real estate assets. Over the intermediate and long term, additional mortgage placements, construction financing or additional bank credit facilities are expected to be required to fund capital projects.

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 the expansion and improved return on assets of Imperial's operations, construction and leasing of additional facilities in the real estate business, completion of the sale of the development rights of Walden Woods, approval of other proposed residential subdivisions and obtaining an increase in the commitment of the 2002 Credit Agreement. 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 7A. 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 and related principal payment requirements are described in Note 5 to the consolidated financial statements in Item 8. 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. Griffin had $4.2 million of variable rate debt outstanding at November 30, 2002.

Griffin is exposed to market risks from fluctuations in interest rates and the effects of those fluctuations on market values of Griffin's cash equivalent short-term investments. These investments generally consist of overnight investments that are not significantly exposed to interest rate risk, except to the extent that changes in interest rates will ultimately affect the amount of interest income earned and cash flow from these investments.

Griffin does not currently have any derivative financial instruments in place to manage interest costs, but that does not mean that Griffin will not use them as a means to manage interest rate risk in the future.

Griffin does not use foreign currency exchange forward contracts or commodity contracts and does not have foreign currency exposure in operations. Griffin does have equity investments in privately-owned companies based in the United Kingdom. Changes in foreign currency exchange rates could affect the results of an equity investment in Griffin's financial statements. The companies have historically reinvested their earnings for future growth. The ultimate liquidation of those investments and conversion of proceeds into United States currency is subject to future foreign currency exchange rates.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

GRIFFIN LAND & NURSERIES, INC

Consolidated Statement of Operations

(dollars in thousands, except per share data)

	For the Fiscal Years Ended,
	Nov. 30, 2002			Dec. 1, 2001			Dec. 2, 2000
Net sales and other revenue	$	33,961		$	32,013		$	74,374
Cost of goods sold		28,196			24,948			52,175
Selling, general and administrative expenses		8,053			10,247			18,387

Operating (loss) profit		(2,288	)		(3,182	)		3,812
Gain on sale of Sales and Service Centers		—			9,469			—
Write-down of investment		—			(2,225	)		—
Interest expense		(1,619	)		(933	)		(1,141	)
Interest income		26			149			43

(Loss) income before income tax (benefit) provision		(3,881	)		3,278			2,714
Income tax (benefit) provision		(3,164	)		1,788			1,044

(Loss) income before equity investment		(717	)		1,490			1,670
Income (loss) from Centaur Communications, Ltd.		3,642			(353	)		592

Net income	$	2,925		$	1,137		$	2,262

Basic net income per common share	$	0.60		$	0.23		$	0.47

Diluted net income per common share	$	0.53		$	0.22		$	0.45

See Notes to Consolidated Financial Statements.

GRIFFIN LAND & NURSERIES, INC.

Consolidated Balance Sheet

(dollars in thousands, except per share data)

	Nov. 30, 2002			Dec. 1, 2001
ASSETS
Current Assets
Cash	$	24		$	23
Accounts receivable, less allowance of $129 and $132		1,999			2,437
Inventories		31,164			30,449
Deferred income taxes		2,110			1,788
Other current assets		3,473			2,667

Total current assets		38,770			37,364
Real estate held for sale or lease, net		50,546			49,242
Investment in Centaur Communications, Ltd.		20,279			17,012
Property and equipment, net		12,514			11,418
Other assets		10,847			9,139

Total assets	$	132,956		$	124,175

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued liabilities	$	3,939		$	5,761
Long-term debt due within one year		540			508

Total current liabilities		4,479			6,269
Long-term debt		26,007			15,940
Deferred income taxes		1,906			1,457
Other noncurrent liabilities		1,094			3,593

Total liabilities		33,486			27,259

Commitments and Contingencies (Note 12)
Common stock, par value $0.01 per share, 10,000,000 shares authorized, 4,864,916 shares issued and outstanding		49			49
Additional paid-in capital		93,588			93,584
Retained earnings		5,961			3,036
Accumulated other comprehensive (loss) income		(128	)		247

Total stockholders' equity		99,470			96,916

Total liabilities and stockholders' equity	$	132,956		$	124,175

See Notes to Consolidated Financial Statements.

GRIFFIN LAND & NURSERIES, INC.

Consolidated Statement of Stockholders' Equity

(dollars in thousands)

	Shares of Common Stock	Common Stock		Additional Paid-in Captial		Retained Earnings (Deficit)			Accumulated Other Comprehensive Income (Loss)			Total
Balance at November 27, 1999	4,862,704	$	49	$	93,584	$	(363	)	$	—		$	93,270
Other comprehensive income	—		—		—		—			186			186
Net income	—		—		—		2,262			—			2,262

Balance at December 2, 2000	4,862,704		49		93,584		1,899			186			95,718
Other comprehensive income	—		—		—		—			61			61
Net income	—		—		—		1,137			—			1,137

Balance at December 1, 2001	4,862,704		49		93,584		3,036			247			96,916
Exercise of employee stock options	2,212		—		4		—			—			4
Other comprehensive loss	—		—		—		—			(375	)		(375	)
Net income	—		—		—		2,925			—			2,925

Balance at November 30, 2002	4,864,916	$	49	$	93,588	$	5,961		$	(128	)	$	99,470

See Notes to Consolidated Financial Statements.

GRIFFIN LAND & NURSERIES, INC.

Consolidated Statement of Cash Flows

(dollars in thousands)

		For the Fiscal Years Ended,
		Nov. 30, 2002			Dec. 1, 2001			Dec. 2, 2000
Operating activities:
Net income		$	2,925		$	1,137		$	2,262
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
	Depreciation and amortization		3,226			2,919			2,533
	(Income) loss from equity investment		(3,642	)		353			(592	)
	Reversal of tax liability		(1,508	)		—			—
	Deferred income taxes		(373	)		(93	)		927
	Gain on sale of Sales and Service Centers		—			(9,469	)		—
	Write-down of investment		—			2,225			—
Changes in assets and liabilities which (decreased) increased cash:
	Accounts receivable		438			2,328			30
	Inventories		(715	)		(3,033	)		(2,673	)
	Other current assets		(1,048	)		27			(1,008	)
	Accounts payable and accrued liabilities		(1,822	)		(1,861	)		2,929
	Other, net		302			(529	)		667

Net cash (used in) provided by operations			(2,217	)		(5,996	)		5,075

Investing activities:
Additions to real estate held for sale or lease			(3,420	)		(10,238	)		(9,108	)
Additions to property and equipment			(2,478	)		(2,899	)		(3,715	)
Deposit for purchase of joint venture interest			(1,000	)		—			—
Proceeds from sale of Sales and Service Centers			—			18,390			—
Other, net			(145	)		111			—

Net cash (used in) provided by investing activities			(7,043	)		5,364			(12,823	)

Financing activities:
Increase in debt			10,925			12,075			7,300
Payments of debt			(893	)		(12,457	)		(429	)
Debt issuance costs			(771	)		(89	)		—

Net cash provided by (used in) financing activities			9,261			(471	)		6,871

Net increase (decrease) in cash and cash equivalents			1			(1,103	)		(877	)
Cash and cash equivalents at beginning of year			23			1,126			2,003

Cash and cash equivalents at end of year		$	24		$	23		$	1,126

See Notes to Consolidated Financial Statements.

GRIFFIN LAND & NURSERIES, INC.

Notes to Consolidated Financial Statements

(dollars in thousands, except per share data)

1. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying 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, Imperial Nurseries, Inc. ("Imperial"). All intercompany transactions have been eliminated.

Griffin accounts for its investments in Centaur Communications, Ltd. ("Centaur") and real estate joint ventures under the equity method. Centaur reports on a June 30 fiscal year in accordance with generally accepted accounting principles in the United Kingdom. Griffin reports its share of equity in Centaur's earnings based upon Griffin's fiscal year. Griffin converts Centaur's financial statements to accounting principles generally accepted in the United States of America and translates balance sheet information at the exchange rate as of the balance sheet date and uses the average exchange rates over the period to translate the statement of operations. Substantially all of Griffin's investment in Centaur represents the excess of the cost of Griffin's investment over the book value of its equity in Centaur (representing publishing rights and goodwill) and is being amortized on a straight-line basis over 30-40 years, which commenced in 1985. Effective in fiscal 2003, Griffin will no longer amortize goodwill related to its investment in Centaur (see below).

Business Segments

Griffin is engaged in the landscape nursery and real estate businesses. Imperial, Griffin's subsidiary in the landscape nursery segment, is engaged in growing plants in containers which are sold principally to mass merchandisers, garden centers and wholesalers. On January 26, 2001, Imperial completed the sale of its wholesale sales and service centers (see Note 2). Imperial remains in the landscape nursery business with its growing operations in Connecticut and northern Florida.

Griffin's real estate segment, Griffin Land, builds, leases and manages commercial and industrial properties and develops residential subdivisions on its land in Connecticut and Massachusetts.

Fiscal Year

Griffin's fiscal year ends on the Saturday nearest November 30. Fiscal 2002 ended November 30, 2002 and contained 52 weeks. Fiscal 2001 ended December 1, 2001 and contained 52 weeks. Fiscal 2000 ended December 2, 2000 and contained 53 weeks. The effect of an additional week in fiscal 2000 as compared to fiscal 2002 and fiscal 2001 was not material to Griffin's results of operations or cash flows.

Inventories

Griffin's inventories are stated at the lower of cost or market using the average cost method. Nursery stock includes certain inventories which will not be sold or used within one year. It is industry practice to include such inventories in current assets.

Stock-Based Compensation

Griffin accounts for stock options using the intrinsic value based method prescribed by Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," and has adopted the

disclosure provisions of SFAS No. 123 which require disclosing the pro forma effect on earnings and earnings per share of the fair value method of accounting for stock-based compensation.

Property and Equipment

Property and equipment are carried at cost. Depreciation is determined on a straight-line basis over the estimated useful asset lives for financial reporting purposes and principally on accelerated methods for tax purposes.

Real Estate Held for Sale or Lease

Real estate held for sale or lease is carried at cost. Interest is capitalized during the construction period of major facilities. The capitalized interest is recorded as part of the asset to which it relates and is amortized over the asset's useful life. Depreciation is determined on a straight-line basis over the estimated useful asset lives for financial reporting purposes and principally on accelerated methods for tax purposes. Repair and maintenance costs are expensed as incurred.

Impairment of Investments in Long-Lived Assets

Griffin periodically reviews long-lived assets to determine if there are indicators of impairment. When indicators of impairment are present, Griffin evaluates the carrying value of the assets in relation to the operating performance and future undiscounted cash flows of the underlying assets. Griffin adjusts the net book value of the underlying assets if the sum of the expected future cash flows is less than book value.

Revenue and Gain Recognition

In the landscape nursery business, sales and the related cost of sales are recognized upon shipment of products. Sales returns are not material. In 2000, the Financial Accounting Standards Board's ("FASB") Emerging Issues Task Force ("EITF") issued EITF 00-10, "Accounting for Shipping and Handling Fees and Costs" which Griffin adopted at the beginning of fiscal 2001. EITF 00-10 stated that all amounts billed to customers for shipping and handling should be included in net sales and the costs of shipping and handling should be included in cost of sales.

In the real estate business, revenue includes rental revenue from Griffin Land's commercial and industrial properties and proceeds from the sales of real estate. Rental revenue is accounted for in accordance with Statement of Financial Accounting Standards ("SFAS") No. 13, "Accounting for Leases." Gains on real estate sales are recognized in accordance with SFAS No. 66, "Accounting for Sales of Real Estate," based on the specific terms of the sale.

Recent Accounting Pronouncements

In June 2001, the FASB issued SFAS No. 142 "Goodwill and Other Intangible Assets." Under the provisions of SFAS No. 142, goodwill will no longer be amortized, but will be subject to a periodic test for impairment based upon fair values. Griffin does not anticipate a charge for impairment upon adoption of SFAS No. 142. Griffin's results from its equity investment in Centaur for fiscal 2002, fiscal

2001, and fiscal 2000 would have increased approximately $0.5 million annually due to the elimination of goodwill amortization. SFAS No. 142 will be effective for Griffin in fiscal 2003.

In June 2001, the FASB issued SFAS No. 143 "Accounting for Asset Retirement Obligations." This pronouncement addresses accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. SFAS No. 143 will be effective for Griffin in fiscal 2003. At this time, management believes that this new standard will not have an impact on Griffin's financial statements.

In August 2001, the FASB issued SFAS No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets." This pronouncement retains the requirements of SFAS No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of" to recognize an impairment loss only if the carrying amount of a long-lived asset is not recoverable from its undiscounted cash flow and measures an impairment loss as the difference between the carrying amount and fair value of the asset. This pronouncement also addresses the accounting for long-lived assets to be disposed of other than by sale and long-lived assets to be disposed of by sale. SFAS No. 144 will be effective for Griffin in fiscal 2003. At this time, management believes that this new standard will not have an impact on Griffin's financial statements.

In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections." SFAS No. 145 requires gains and losses from certain debt extinguishment as part of a risk management strategy not to be reported as extraordinary items. SFAS No. 145 will be effective for Griffin in fiscal 2003. At this time, management believes that this new standard will not have an impact on Griffin's financial statements.

In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities." This new pronouncement addresses financial accounting and reporting for costs associated with exit or disposal activities and requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. SFAS No. 146 will be effective for Griffin in fiscal 2003. At this time, management believes that this new standard will not have an impact on Griffin's financial statements.

In December, 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based Compensation-Transition and Disclosure-an amendment of FASB Statement No. 123". This Statement amends SFAS No. 123, "Accounting for Stock-Based Compensation", to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation, and requires enhanced disclosure of information on stock-based compensation in annual and interim financial statements. SFAS No. 148 will be effective for Griffin in fiscal 2003. At this time, management does not expect to change its method of accounting for stock-based compensation, but has included the required enhanced disclosure in Note 7.

Environmental Matters

Environmental expenditures are expensed or capitalized as appropriate, depending upon their future economic benefit. Expenditures that relate to an existing condition caused by past operations, and do not have future economic benefit, are expensed. Expenditures that create future benefit or contribute to future revenue generation are capitalized. Liabilities related to future remediation costs

are recorded when environmental assessments and/or cleanups are probable, and the costs can be reasonably estimated. There were no liabilities related to environmental assessments as of November 30, 2002 and December 1, 2001.

Fair Value of Financial Instruments

The amounts included in the financial statements for accounts receivable, accounts payable and accrued liabilities reflect their fair values because of the short-term maturity of these instruments. The fair values of Griffin's other financial instruments are discussed in Note 5.

Earnings Per Share

Basic net income per common share is calculated by dividing net income by the average number of common shares outstanding during the year. The calculation of diluted net income per common share includes adjusting net income to include the effect of stock options outstanding at Griffin's equity investee, Centaur, and adjusting outstanding shares, assuming conversion of all potentially dilutive Griffin stock options.

Reclassifications

Certain prior year balances have been reclassified to conform with the current year presentation.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and revenue and expenses during the period reported. Actual results could differ from those estimates. The more significant estimates include, among others, the impairment charge for Linguaphone recorded in fiscal 2001, the allowance for doubtful accounts, the inventory reserves, deferred taxes, net realizeable value of real estate held for sale or lease and the assumptions used in determining the accrual for postretirement benefits.

2. Sale of Sales and Service Centers

On January 26, 2001, Imperial completed the sale of all of the assets of its seven wholesale sales and service centers (the "SSCs") to Shemin Nurseries, Inc. ("Shemin"). Shemin also assumed certain liabilities related to the SSCs. The SSCs sold a wide variety of plant material and horticultural tools and products to the landscape trade. A portion of the products sold by the SSCs were grown by Imperial's farming operations. Imperial's only continuing involvement in Shemin is an approximately 13.8% ownership interest in Shemin's parent company (see below) and a three year supply agreement pursuant to which Shemin is obligated to purchase Imperial grown product for the SSCs. The supply agreement will terminate on December 31, 2003. The net book value of the assets sold and liabilities assumed by Shemin was $13.5 million. Prior to the sale of the SSCs in fiscal 2001, the net sales of the SSCs were $1.9 million and the SSCs incurred an operating loss, before Imperial's central overhead expenses, of $0.8 million through the date of the sale. For fiscal 2000, net sales of the SSCs were

$48.3 million and the operating profit of the SSCs, before Imperial's central overhead expenses, was $6.6 million. Imperial continues in the landscape nursery business with its container growing operations in Connecticut and northern Florida.

The consideration received by Imperial on the sale of the SSCs included cash of $18.4 million after expenses. Cash of $11.2 million from the sale was used to repay all of the amount then outstanding under Griffin's Credit Agreement. The remaining cash was used for general corporate purposes. In addition to the cash payment, Griffin received 20,570 shares of common stock (representing approximately 13.8% of the outstanding common stock) of Shemin Acquisition Corporation ("Acquisition"), the parent company of Shemin. The common stock of Acquisition is valued at $6.1 million and is included in other assets on the accompanying balance sheet. As a result of Griffin retaining a common equity ownership interest in Acquisition, $1.5 million of the gain from the sale of the SSCs has been deferred, and is offset against the investment in Acquisition on Griffin's balance sheet. Imperial accounts for its investment in Acquisition under the cost method of accounting for investments.

The sale of the SSCs reflected the disposition of the following assets and liabilities by Imperial:

Accounts receivable	$	1,407
Inventories		4,453
Other current assets		1,037
Fixed assets, net		7,393
Other assets		161

		14,451
Accounts payable and accrued liabilities		(719	)
Capital leases		(271	)

Net assets disposed	$	13,461

The following unaudited Pro Forma Condensed Consolidated Statement of Operations for the fiscal years ended December 1, 2001 and December 2, 2000 include pro forma adjustments to reflect the sale of the SSCs as if it had taken place at the beginning of the respective fiscal periods. Such adjustments include the elimination of sales, cost of sales and direct operating expenses of the SSCs, the elimination of salaries and benefits of employees terminated as a result of the sale of the SSCs, the inclusion of sales from Imperial's growing operations to the SSCs acquired by Shemin, the effect of the net cash proceeds on Griffin's interest expense and interest income, and adjustment to Griffin's income tax provision.

In the opinion of management, all adjustments necessary to fairly present this pro forma information have been made. The pro forma information does not purport to be indicative of the results that would have been reported had this transaction actually occurred on the dates specified, nor is it indicative of Griffin's future results.

Pro Forma Condensed Consolidated Statement of Operations (Unaudited)

	For the Fiscal Years Ended
	Dec. 1, 2001			Dec. 2, 2000
Net sales and other revenue	$	30,130		$	28,841
Cost of goods sold		23,517			21,566
Selling, general and administrative expenses		8,931			9,052

Operating loss		(2,318	)		(1,777	)
Gain on sale of Sales and Service Centers		9,469			9,469
Write-down of investment		(2,225	)		—
Nonoperating expenses, net		(624	)		(175	)

Income before income tax provision		4,302			7,517
Income tax provision		2,198			2,950

Income before equity investment		2,104			4,567
(Loss) income from equity investment		(353	)		592

Net income	$	1,751		$	5,159

Basic net income per common share	$	0.36		$	1.06

Diluted net income per common share	$	0.35		$	1.04

3. Industry Segment Information

Griffin's reportable segments are defined by their products and services, and are comprised of the landscape nursery and real estate 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.

	For the Fiscal Years Ended,
	Nov. 30, 2002			Dec. 1, 2001			Dec. 2, 2000
Net sales and other revenue
Landscape nursery product sales	$	25,212		$	23,610		$	68,563
Rental revenue and real estate sales		8,749			8,403			5,811

	$	33,961		$	32,013		$	74,374

Operating profit (loss)
Landscape nursery	$	(1,921	)	$	(2,741	)	$	5,303
Real estate		1,142			1,046			151

Industry segment totals		(779	)		(1,695	)		5,454
General corporate expense		(1,509	)		(1,487	)		(1,642	)
Gain on sale of Sales and Service Centers		—			9,469			—
Write-down of investment		—			(2,225	)		—
Interest expense, net		(1,593	)		(784	)		(1,098	)

(Loss) income before income tax (benefit) provision	$	(3,881	)	$	3,278		$	2,714

	Nov. 30, 2002		Dec. 1, 2001		Dec. 2, 2000
Identifiable assets
Landscape nursery	$	50,306	$	48,908	$	56,336
Real estate		58,431		55,746		46,814

Industry segment totals		108,737		104,654		103,150
General corporate (consists primarily of investments)		24,219		19,521		24,134

	$	132,956	$	124,175	$	127,284

	Capital Expenditures						Depreciation and Amortization
	For the Fiscal Years Ended,						For the Fiscal Years Ended,
	Nov. 30, 2002		Dec. 1, 2001		Dec. 2, 2000		Nov. 30, 2002		Dec. 1, 2001		Dec. 2, 2000
Landscape nursery	$	2,451	$	2,815	$	3,618	$	1,172	$	1,267	$	1,463
Real estate		3,447		10,322		9,205		1,911		1,613		1,056

Industry segment totals		5,898		13,137		12,823		3,083		2,880		2,519
General corporate		—		—		—		143		39		14

	$	5,898	$	13,137	$	12,823	$	3,226	$	2,919	$	2,533

See Note 2 regarding the sale of the SSCs and Note 9 for information on Griffin's equity investment in Centaur.

4. Income Taxes

Griffin's income tax (benefit)/provision and deferred tax assets and liabilities in the accompanying financial statements have been calculated in accordance with SFAS No. 109 "Accounting for Income Taxes." The income tax (benefit)/provisions for fiscal 2002, fiscal 2001 and fiscal 2000 are summarized as follows:

	For the Fiscal Years Ended,
	Nov. 30, 2002			Dec. 1, 2001			Dec. 2, 2000
Current federal	$	(2,837	)	$	1,525		$	8
Current state and local		46			356			110
Deferred		(373	)		(93	)		926

Total income tax (benefit) provision	$	(3,164	)	$	1,788		$	1,044

The reasons for the difference between the United States statutory income tax rate and the effective rates are shown in the following table:

	For the Fiscal Years Ended,
	Nov. 30, 2002			Dec. 1, 2001			Dec. 2, 2000
Tax provision at statutory rates	$	(1,320	)	$	1,115		$	923
State and local taxes		(141	)		427			187
Reversal of accrued tax liability		(1,508	)		—			—
Basis difference on investment		—			343			—
Other		(195	)		(97	)		(66	)

Total income tax (benefit) provision	$	(3,164	)	$	1,788		$	1,044

The reversal of an accrual for income tax liability reflects the favorable settlement of tax examinations of earlier years. The tax examinations were made on tax returns filed by Culbro Corporation ("Culbro"), Griffin's parent company prior to distribution (the "Distribution") of Griffin common stock to Culbro's stockholders in 1997. The accrual for income taxes was assumed by Griffin from Culbro at the time of the Distribution for unresolved tax examinations of earlier years. Under a Tax Sharing Agreement between Griffin and Culbro, Griffin remained liable after the Distribution for tax assessments related to certain items included on Culbro's consolidated income tax returns. The Tax Sharing Agreement provided, among other things, for the allocation between Culbro and Griffin of federal, state, local and foreign tax liabilities for all periods that Griffin was a wholly-owned subsidiary of Culbro. With respect to the consolidated tax returns filed by Culbro, the Tax Sharing Agreement provides that Griffin remained liable for any amounts that Culbro would have been required to pay with respect to any deficiencies assessed through the date of the Distribution, generally as if Griffin had filed separate tax returns.

The significant components of Griffin's deferred tax asset and liability are as follows:

	Nov. 30, 2002		Dec. 1, 2001
Inventory	$	1,474	$	1,212
NOL carryforward		256		99
Other		380		477

Deferred tax asset	$	2,110	$	1,788

	Nov. 30, 2002			Dec. 1, 2001
Depreciation	$	2,173		$	2,076
Deferred gain on sale of SSCs		(551	)		(551	)
Write-down of investment		(413	)		(413	)
Other		697			345

Deferred tax liability	$	1,906		$	1,457

5. Long-Term Debt

Long-term debt includes:

	Nov. 30, 2002		Dec. 1, 2001
Mortgages	$	21,811	$	14,779
Credit Agreement		4,250		—
Bridge Loan		—		1,000
Capital leases		486		669

Total		26,547		16,448
Less: due within one year		540		508

Total long-term debt	$	26,007	$	15,940

On February 8, 2002, Griffin entered into a $19.4 million revolving credit agreement, as amended (the "2002 Credit Agreement") with Fleet National Bank ("Fleet"). The amount available for borrowing under the 2002 Credit Agreement was reduced to $14.1 million as described below. The initial borrowings under the 2002 Credit Agreement were used to repay the amount then outstanding ($4.5 million) under Griffin's bridge loan, to repay a mortgage of $0.4 million on one of Griffin's commercial buildings and for certain expenses related to the 2002 Credit Agreement. The 2002 Credit Agreement is being used to finance working capital requirements at Griffin's landscape nursery and real estate businesses and for investment in Griffin's real estate assets. Borrowings under the 2002 Credit Agreement may be, at Griffin's option, on an overnight basis or for periods of one, two, three or six months. Overnight borrowings bear interest at Fleet's prime rate plus a margin of 0.5% per annum. Borrowings of one month and longer bear interest at the London Interbank Offered Rate ("LIBOR") plus a margin of 2.5% per annum. The amount outstanding at November 30, 2002 under the 2002 Credit Agreement had a weighted average interest rate of 3.97%. The margins can be reduced if Griffin achieves certain debt service coverage ratios (as defined). There are no compensating balance requirements, and Griffin pays a commitment fee of 0.25% per annum on unused borrowing capacity.

The 2002 Credit Agreement is collateralized by certain of Griffin's real estate assets and includes financial covenants with respect to Griffin's fixed charge coverage (as defined), net worth and leverage. As of August 31, 2002 and November 30, 2002, Griffin was in default under the fixed charge coverage ratio of the 2002 Credit Agreement. The 2002 Credit Agreement was amended to adjust the fixed charge coverage ratio, and after giving effect to the amendments, Griffin is no longer in default.

On September 17, 2002, Griffin completed a $7.7 million nonrecourse mortgage of two commercial properties. Proceeds of the mortgage were used to reduce the amount outstanding under the 2002 Credit Agreement. The mortgage has an interest rate of 7.0% and a term of fifteen years, with payments based on a twenty-five year amortization period. One of the properties included in this mortgage was previously included as collateral under the 2002 Credit Agreement. As a result of removing that property from the collateral of the 2002 Credit Agreement, the commitment under the 2002 Credit Agreement was reduced to $14.1 million.

At November 30, 2002, Griffin had three nonrecourse mortgages outstanding. These mortgages had balances of $7,983, $6,172 and $7,656, with fixed interest rates of 8.54%, 8.125% and 7.0%, respectively. The annual principal payment requirements under the terms of the mortgages for the years 2003 through 2007 are $340, $365, $397, $430 and $464, respectively. The book value of buildings under the mortgages was $21.2 million at November 30, 2002.

At November 30, 2002 and December 1, 2001, the fair value of Griffin's mortgages was $23.9 million and $15.8 million, respectively. Fair value is based on the present value of future cash flows discounted at estimated borrowing rates for comparable risks, maturities and collateral. Management believes that because of their variable interest rates, the amount included on Griffin's balance sheet for the 2002 Credit Agreement at November 30, 2002 and the amount included on Griffin's balance sheet for the Bridge Loan at December 1, 2001 reflect their fair values.

On December 17, 2002, Griffin completed a $9.75 million nonrecourse mortgage of two commercial properties. Proceeds of the mortgage were used to finance Griffin's $8.8 million acquisition, completed on December 6, 2002, of a 70% interest in those buildings. Griffin previously held a 30% interest in those buildings. The mortgage has a 6.08% rate and a term of ten years, with payments based on a twenty-five year amortization period.

Future minimum lease payments under capital leases for transportation equipment and the present value of such payments as of November 30, 2002 were:

2003	$	241
2004		175
2005		92
2006		23
2007		2

Total minimum lease payments		533
Less: amounts representing interest		47

Present value of minimum lease payments (a)	$	486

(a): Includes current portion of $200 at November 30, 2002.

At November 30, 2002 and December 1, 2001, machinery and equipment included capital leases amounting to $305 and $411, respectively, which is net of accumulated amortization of $398 and $883, respectively, at November 30, 2002 and December 1, 2001. Amortization expense relating to capital leases in fiscal 2002, fiscal 2001, and fiscal 2000 was $174, $204, and $295, respectively.

6. Retirement Benefits

Savings Plan

Griffin maintains the Griffin Land & Nurseries, Inc. 401(k) Savings Plan (the "Griffin Savings Plan") for its employees, a defined contribution plan whereby Griffin matches 60% of each employee's contribution, up to a maximum of 5% of base salary. Griffin's contributions to the Griffin Savings Plan in fiscal 2002, fiscal 2001 and fiscal 2000 were $152, $156 and $251, respectively.

Deferred Compensation Plan

In fiscal 1999, Griffin adopted a non-qualified deferred compensation plan (the "Deferred Compensation Plan") for certain employees who, due to Internal Revenue Service guidelines, cannot take full advantage of the Griffin Savings Plan. Contributions to the Deferred Compensation Plan started in fiscal 2000. At November 30, 2002 and December 1, 2001, Griffin's liability under the Deferred Compensation Plan was $243 and $189, respectively. The expense for Griffin's matching contributions to the Deferred Compensation Plan in fiscal 2002, fiscal 2001 and fiscal 2000 was $20, $27 and $19, respectively. The Deferred Compensation Plan is unfunded, with benefits to be paid from Griffin's general assets.

Postretirement Benefits

Griffin maintains a postretirement benefits program which provides principally health and life insurance benefits to certain of its employees. The liability for postretirement benefits is included in other noncurrent liabilities on the consolidated balance sheet. Because Griffin's obligation for retiree medical benefits is fixed under the terms of Griffin's postretirement benefits program, any increase in the medical cost trend would have no effect on the accumulated postretirement benefit obligation, service cost or interest cost. The components of Griffin's postretirement benefits expense is as follows:

	For the Fiscal Years Ended,
	Nov. 30, 2002		Dec. 1, 2001		Dec. 2, 2000
Service cost	$	25	$	24	$	21
Interest		37		32		29

Total expense	$	62	$	56	$	50

Griffin's liability for postretirement benefits, as determined by the Plan's actuaries, is shown below. None of these liabilities were funded as of November 30, 2002 and December 1, 2001.

	Nov. 30, 2002			Dec. 1, 2001
Retirees	$	71		$	36
Fully eligible active participants		303			277
Other active participants		276			241
Unrecognized net loss from experience differences and assumption changes		(117	)		(77	)

Liability for postretirement benefits	$	533		$	477

Discount rates of 6.75% and 7.0% were used to compute the accumulated postretirement benefit obligations at November 30, 2002 and December 1, 2001, respectively.

7. Stockholders' Equity

Per Share Results

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

	For the Fiscal Years Ended,
	Nov. 30, 2002			Dec. 1, 2001			Dec. 2, 2000
Net income as reported for computation of basic per share results	$	2,925		$	1,137		$	2,262
Adjustment to net income for assumed exercise of options of equity investee (Centaur)		(283	)		(23	)		(41	)

Adjusted net income for computation of diluted per share results	$	2,642		$	1,114		$	2,221

Weighted average shares outstanding for computation of basic per share results		4,864,000			4,863,000			4,863,000
Incremental shares from assumed exercise of Griffin stock options		107,000			114,000			67,000

Adjusted weighted average shares for computation of diluted per share results		4,971,000			4,977,000			4,930,000

Griffin Stock Option Plan

The Griffin Land & Nurseries, Inc. 1997 Stock Option Plan (the "Griffin Stock Option Plan"), adopted in 1997 and subsequently amended, makes available a total of 1,250,000 options to purchase shares of Griffin common stock. Options granted under the Griffin Stock Option Plan may be either incentive stock options or non-qualified stock options issued at market value on the date approved by the Board of Directors of Griffin. None of the options outstanding at November 30, 2002 may be exercised as stock appreciation rights.

The Griffin Stock Option Plan is administered by the Compensation Committee of the Board of Directors of Griffin. A summary of the activity under the Griffin Stock Option Plan is as follows:

	Number of Shares		Weighted Avg. Exercise Price
Outstanding at November 27, 1999	601,707		$	12.16
Granted in 2000	27,000			11.34
Cancelled in 2000	(900	)		13.25

Outstanding at December 2, 2000	627,807			12.12
Granted in 2001	55,300			14.29
Cancelled in 2001	(53,800	)		13.97

Outstanding at December 1, 2001	629,307			12.18
Exercised in 2002	(2,212	)		1.79
Granted in 2002	32,983			15.26
Cancelled in 2002	(4,000	)		13.09

Outstanding at November 30, 2002	656,078		$	12.37

Number of option holders at November 30, 2002	28

Range of Exercise Prices	Outstanding at Nov. 30, 2002	Weighted Avg. Exercise Price		Weighted Avg. Remaining Contractual Life (in years)
Under $3.00	32,223	$	1.75	1.5
$3.00-$11.00	100,172		7.52	3.2
Over $11.00	523,683		13.95	6.0

	656,078

Of the options issued in fiscal 2002, 25,000 vest in equal installments on the third, fourth and fifth anniversaries from the date of grant and 7,983 vest on the second anniversary from the date of grant. Of the options issued in fiscal 2001, 40,300 vest in equal installments on the third, fourth and fifth anniversaries from the date of grant and 15,000 vest on the second anniversary from the date of grant. Of the options issued in fiscal 2000, 20,000 options vest in equal installments on the third, fourth and fifth anniversaires from the date of grant, 4,000 options vested during fiscal 2002 and 3,000 were vested on the date of grant. At November 30, 2002, 412,730 options outstanding under the Griffin Stock Option Plan were exerciseable with a weighted average price of $11.64 per share.

Stock-Based Compensation

Griffin accounts for stock options under Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," and has adopted the disclosure provisions of SFAS No. 123 which require disclosing the pro forma effect on earnings and earnings per share of the fair value method of accounting for stock-based compensation. Griffin's results would have been the following pro forma amounts under the method prescribed by SFAS No. 123.

	Nov. 30, 2002			Dec. 1, 2001			Dec. 2, 2000
Net income, as reported	$	2,925		$	1,137		$	2,262
Total stock based employee compensation expense determined under fair value based method for all awards, net of tax effects		(332	)		(357	)		(388	)

Net income, pro forma (under SFAS No. 123)	$	2,593		$	780		$	1,874

Adjusted net income for computation of diluted per share results, pro forma (SFAS No. 123)	$	2,310		$	757		$	1,833

Basic net income per common share, as reported	$	0.60		$	0.23		$	0.47
Basic net income per common share, pro forma (under SFAS No. 123)	$	0.53		$	0.16		$	0.39
Diluted net income per common share, as reported	$	0.53		$	0.22		$	0.45
Diluted net income per common share, pro forma (under SFAS No. 123)	$	0.46		$	0.15		$	0.37

The weighted average fair value of each option granted during fiscal 2002, fiscal 2001 and fiscal 2000, were $7.15, $4.82 and $5.20, respectively, estimated as of the date of grant using the Black-Scholes option-pricing model. The following weighted average assumptions were used in the model to calculate the fair value of each option; expected volatility of approximately 46% in fiscal 2002, and 35% in fiscal 2001 and fiscal 2000; risk free interest rates in fiscal 2002, fiscal 2001 and fiscal 2000 of 4.77%, 5.00% and 5.15%, respectively; expected option term of 5 years and no dividend yield for all options issued.

8. Operating Leases

Future minimum rental payments for the next five years under noncancelable leases as of November 30, 2002 were:

2003	$	158
2004		175
2005		169
2006		167
2007		166
Later years		131

Total minimum lease payments	$	966

Total rental expense for all operating leases in fiscal 2002, fiscal 2001 and fiscal 2000 was $157, $182 and $408, respectively.

As lessor, Griffin Land's real estate activities include the leasing of industrial and office space in Connecticut. Future minimum rentals to be received under noncancelable leases as of November 30, 2002 were:

2003	$	7,121
2004		6,497
2005		5,971
2006		4,672
2007		3,722
Later years		14,269

	$	42,252

Total rental revenue from all leases in fiscal 2002, fiscal 2001 and fiscal 2000 was $6,557, $5,402 and $3,629, respectively. On December 6, 2002, Griffin acquired the 70% interest that it did not already own in a joint venture that owns two office buildings. Minimum rental revenue under noncancellable leases to be received from these two buildings for the years 2003 through 2007, which is not included in the above table, are $2,423, $2,188, $1,499, $1,135 and $305, respectively.

9. Investments

Investment in Centaur

Griffin holds 5.4 million shares of the 15.4 million shares of Centaur common stock outstanding, or approximately 35%. Griffin's equity results from Centaur for each of the three fiscal years ended November 30, 2002, reflect Centaur's results for the twelve month periods ended November 30, 2002, November 30, 2001, and November 30, 2000, respectively. Griffin's equity income (loss) from Centaur for each of the three fiscal years ended November 30, 2002 includes $578 for amortization of the excess of the cost of Griffin's investment over the book value of its equity in Centaur (representing publishing rights and goodwill). Griffin's retained earnings at November 30, 2002 includes undistributed earnings from Centaur of $5.2 million. The following table reflects Centaur's results for the twelve month periods ended November 30, 2002, November 30, 2001 and November 30, 2000.

		Twelve Months Ended,
		Nov. 30, 2002			Nov. 30, 2001			Nov. 30, 2000
Net sales		$	95,298		$	94,921		$	107,002
Costs and expenses			106,050			89,353			95,231

Operating (loss) profit			(10,752	)		5,568			11,771
Nonoperating expenses			2,113			1,945			2,389

Pretax (loss) income			(12,865	)		3,623			9,382
Income tax (benefit) provision			(1,084	)		2,282			3,297

(Loss) income from continuing operations			(11,781	)		1,341			6,085
Discontinued operation:
	Income (loss) from discontinued operation, net of tax		45			(411	)		(2,969	)
	Gain on sale of discontinued operation, net of tax		23,736			—			—

Net income		$	12,000		$	930		$	3,116

In August, 2002 Centaur completed the sale of its Lawtel operation that provided on-line legal information. Griffin did not receive any cash from the sale as Centaur used the proceeds to pay down debt. Griffin's allocable portion of the gain was $8.4 million, and is included in Griffin's equity income from Centaur in the fiscal year ended November 30, 2002. Lawtel is accounted for as a discontinued operation in Centaur's operating results in each of the periods presented above.

Also included in Griffin's equity results from Centaur in the fiscal year ended November 30, 2002 was a charge for goodwill impairment at Centaur of which Griffin's allocable share of this charge was $5.0 million. Centaur's income tax benefit from continuing operations in the fiscal year ended November 30, 2002 includes the effect of a reduction of a valuation allowance on certain deferred tax assets related to prior years operating losses of a subsidiary of Centaur. Griffin's allocable share of this item was $0.7 million. The income tax (benefit) provision of Centaur reflects the nondeductability of certain expenses under tax laws in the United Kingdom.

The following table reflects Centaur's balance sheet as of November 30, 2002 and November 30, 2001.

	Nov. 30, 2002		Nov. 30, 2001
Current assets	$	19,895	$	23,701
Intangible assets		5,955		19,157
Other noncurrent assets		11,380		11,691

Total assets	$	37,230	$	54,549

Current liabilities	$	23,893	$	31,594
Debt		—		20,803
Noncurrent liabilities		2,710		3,135

Total liabilities		26,603		55,532
Stockholders' equity (deficit)		10,627		(983	)

Total liabilities and stockholders' equity (deficit)	$	37,230	$	54,549

Real Estate Joint Venture

Included in other assets at November 30, 2002 and December 1, 2001 is $3,103 and $3,099, respectively, for Griffin's 30% interest in a real estate joint venture that owns two commercial properties in Connecticut. Results of this investment are included in operating profit. On December 6, 2002, Griffin acquired the remaining 70% interest in these buildings for $8.8 million (see Note 5). Upon completion of that transaction, the joint venture was liquidated.

10. Supplemental Financial Statement Information

Related Party Transactions

Prior to the Distribution on July 3, 1997, Griffin, as lessor, and General Cigar Co., Inc. ("General Cigar"), as lessee, entered into a lease for certain agricultural land in Connecticut and Massachusetts (the "Agricultural Lease"). At the time the Agricultural Lease was consummated, both Griffin and General Cigar were wholly-owned subsidiaries of Culbro. The Agricultural Lease is for approximately 500 acres of arable land held by Griffin for possible development in the long term, but which is being used by General Cigar for growing Connecticut Shade wrapper tobacco. General Cigar's use of the land is limited to the cultivation of cigar wrapper tobacco. The Agricultural Lease has an initial term of ten years and provides for the extension of the lease for additional periods thereafter. In addition, at Griffin's option, the Agricultural Lease may be terminated with respect to 100 acres of such land annually upon one year's prior notice. The rent payable by General Cigar under the Agricultural Lease is approximately equal to the aggregate amount of all taxes and other assessments payable by Griffin attributable to the land leased. In fiscal 2002, fiscal 2001, and fiscal 2000 General Cigar made rental payments of $147, $144, and $148, respectively, to Griffin with respect to the Agricultural Lease.

10. Supplemental Financial Statement Information (Continued)

Also prior to the Distribution in 1997, Griffin entered into a Services Agreement (the "Services Agreement") with Culbro, and its successor, General Cigar Holdings, Inc. ("GC Holdings"). The Services Agreement was terminated with respect to all services provided by GC Holdings after one year, except for certain transportation services, with respect to which the Services Agreement was amended and extended through March 2002, at which time it was not renewed. In fiscal 2002, fiscal 2001 and fiscal 2000, Griffin paid $55, $109 and $141, respectively, to GC Holdings under the Services Agreement. As of November 30, 2002 there were no amounts due GC Holdings from Griffin with respect to the Services Agreement. As of December 1, 2001, $110 was due to GC Holdings from Griffin with respect to the Services Agreement.

In 1997 subsequent to the Distribution, Griffin, as lessor, and General Cigar, as lessee, entered into a lease for approximately 40,000 square feet of office space in the Griffin Center South development in Bloomfield, Connecticut (the "Commercial Lease"). The Commercial Lease has an initial term of ten years and provides for the extension of the lease for additional annual periods thereafter. Under the Commercial Lease, General Cigar made rental payments to Griffin in fiscal 2002, fiscal 2001 and fiscal 2000 of $655, $571 and $511, respectively. Management believes the rent payable by General Cigar to Griffin under the Commercial Lease approximates market rates.

Comprehensive Income

The statement of stockholders' equity for the years ended November 30, 2002, December 1, 2001 and December 2, 2000 includes other comprehensive (loss) income of ($375), $61 and $186, respectively, relating to the effect of translation adjustments on Griffin's equity investment in Centaur.

Inventories

Inventories consist of:

	Nov. 30, 2002		Dec. 1, 2001
Nursery stock	$	29,960	$	29,514
Materials and supplies		1,204		935

	$	31,164	$	30,449

Although all inventories are classified as a current asset based upon industry practice (see Note 1), approximately $13.8 million of the inventory at November 30, 2002 is not currently expected to be sold within twelve months of the balance sheet date.

Property and Equipment

Property and equipment consist of:

	Estimated Useful Lives	Nov. 30, 2002			Dec. 1, 2001
Land and improvements		$	5,075		$	4,175
Buildings	10 to 40 years		2,964			2,960
Machinery and equipment	3 to 20 years		14,789			15,093

			22,828			22,228
Accumulated depreciation			(10,314	)		(10,810	)

		$	12,514		$	11,418

Total depreciation expense related to property and equipment in fiscal 2002, fiscal 2001 and fiscal 2000 was $1,076, $1,367 and $1,526, respectively.

Real Estate Held for Sale or Lease

Real estate held for sale or lease consists of:

		November 30, 2002
	Estimated Useful Lives	Held for Sale		Held for Lease			Total
Land		$	1,330	$	3,097		$	4,427
Land improvements	15 years		—		3,978			3,978
Buildings	40 years		—		40,482			40,482
Development costs			6,374		7,540			13,914

			7,704		55,097			62,801
Accumulated depreciation			—		(12,255	)		(12,255	)

		$	7,704	$	42,842		$	50,546

		December 1, 2001
	Estimated Useful Lives	Held for Sale		Held for Lease			Total
Land		$	1,342	$	3,097		$	4,439
Land improvements	15 years		—		3,948			3,948
Buildings	40 years		—		40,613			40,613
Development costs			5,991		4,744			10,735

			7,333		52,402			59,735
Accumulated depreciation			—		(10,493	)		(10,493	)

		$	7,333	$	41,909		$	49,242

Griffin capitalized interest in fiscal 2002, fiscal 2001 and fiscal 2000 of $61, $377 and $91, respectively. Total depreciation expense related to real estate held for sale or lease in fiscal 2002, fiscal 2001 and fiscal 2000 was $1,762, $1,494 and $937, respectively.

Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consist of:

	Nov. 30, 2002		Dec. 1, 2001
Trade payables	$	1,495	$	2,165
Accrued salaries, wages and other compensation		410		376
Accrued construction costs		336		650
Retainage		248		659
Other accrued liabilities		1,450		1,911

	$	3,939	$	5,761

Supplemental Cash Flow Information

Griffin incurred capital lease obligations in fiscal 2002, fiscal 2001 and fiscal 2000 of $67, $412 and $576, respectively.

In fiscal 2002, Griffin received an income tax refund, net of income tax payments, of $225. In fiscal 2001 and fiscal 2000, Griffin made income tax payments of $2,272 and $141, respectively. Interest payments, net of capitalized interest, were $1,614, $988 and $1,086 in fiscal 2002, fiscal 2001 and fiscal 2000, respectively.

11. Quarterly Results of Operations (Unaudited)

Summarized quarterly financial data are presented below:

2002 Quarters	1st			2nd		3rd		4th(a)		Total
Net sales and other revenue	$	2,599		$	19,903	$	5,973	$	5,486	$	33,961
Gross profit		743			4,082		254		686		5,765
Net income (loss)		(1,465	)		1,629		1,499		1,262		2,925
Basic net income (loss) per common share		(0.30	)		0.33		0.31		0.26		0.60
Diluted net income (loss) per common share		(0.30	)		0.32		0.26		0.25		0.53

2001 Quarters	1st		2nd		3rd			4th(a)			Total
Net sales and other revenue	$	3,947	$	16,808	$	6,453		$	4,805		$	32,013
Gross profit		1,021		3,503		1,558			983			7,065
Net income (loss)		4,069		719		(1,289	)		(2,362	)		1,137
Basic net income (loss) per common share		0.84		0.15		(0.27	)		(0.49	)		0.23
Diluted net income (loss) per common share		0.82		0.14		(0.27	)		(0.49	)		0.22

(a): The 2002 fourth quarter reflects an income tax benefit of $1.5 million for the reversal of an accrual for income taxes as a result of the favorable settlement of tax examinations of prior years.
(b): The 2001 fourth quarter includes an impairment charge of $2.2 million to write-down Griffin's investment in Linguaphone.

12. Commitments and Contingencies

As of November 30, 2002, Griffin had committed purchase obligations, including materials and services related to construction of a new 115,000 square foot facility by Griffin Land, of $1.1 million. Subsequent to November 30, 2002, Griffin entered into purchase obligations for an additional $3.2 million, principally related to the construction of the new building.

Report of Independent Accountants

To the Stockholders and Directors of
Griffin Land & Nurseries, Inc.

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, stockholders' equity and of cash flows present fairly, in all material respects, the financial position of Griffin Land & Nurseries, Inc. and its subsidiaries at November 30, 2002 and December 1, 2001 and the results of their operations and cash flows for the fiscal years ended November 30, 2002, December 1, 2001 and December 2, 2000, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the management of Griffin Land & Nurseries, Inc.; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these consolidated financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

/s/ PRICEWATERHOUSECOOPERS LLP
February 24, 2003
Hartford, Connecticut

Consent of Independent Accountants

We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 333-30639) of Griffin Land & Nurseries, Inc. of our report dated February 24, 2003, which appears above in this Form 10-K of Griffin Land & Nurseries, Inc. for the fiscal year ended November 30, 2002. We also consent to the incorporation by reference in such Registration Statement on Form S-8 of our report on the financial statement schedules, which appears in Exhibit 23.2 on this Form 10-K of Griffin Land & Nurseries, Inc. for the fiscal year ended November 30, 2002.

/s/ PRICEWATERHOUSECOOPERS LLP
February 24, 2003
Hartford, Connecticut

ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE CORPORATION

The following table sets forth the information called for in this Item 10:

Name	Age	Position
Edgar M. Cullman	85	Chairman of the Board and Director
Frederick M. Danziger	62	President, Chief Executive Officer and Director
Anthony J. Galici	45	Vice President, Chief Financial Officer and Secretary
John L. Ernst	62	Director
Winston J. Churchill, Jr.	62	Director
Thomas C. Israel	58	Director
David F. Stein	62	Director
Gregory M. Schaan	45	President and Chief Executive Officer of Imperial Nurseries, Inc.

Edgar M. Cullman has been the Chairman of the Board of Griffin since April 1997. He has been Chairman of the Board of General Cigar Holdings, Inc., since December 1996. From 1962 to 1996 he served as Chief Executive Officer of Culbro Corporation. Mr. Cullman served as a director of Culbro Corporation from 1961 until 1997 and was Chairman of Culbro Corporation from 1975 until 1997. He also is a director of Centaur Communications, Ltd., and Bloomingdale Properties, Inc. Edgar M. Cullman is the uncle of John L. Ernst and the father-in-law of Frederick M. Danziger.

Frederick M. Danziger has been a director and the President and Chief Executive Officer of Griffin since April 1997, and was a director of Culbro Corporation from 1975 until 1997. He was previously involved in the real estate operations of Griffin in the early 1980s. Mr. Danziger was Of Counsel to the law firm of Latham & Watkins from 1995 until 1997. From 1974 until 1995, Mr. Danziger was a Member of the law firm of Mudge Rose Guthrie Alexander & Ferdon. Mr. Danziger also is a director of Monro Muffler/Brake, Inc., Bloomingdale Properties, Inc. and Centaur Communications, Ltd.

Anthony J. Galici has been the Vice President, Chief Financial Officer and Secretary of Griffin since April 1997. Mr. Galici was Vice President and Assistant Controller of Culbro Corporation from 1995 until 1997. Prior to 1995, he was Assistant Controller of Culbro Corporation.

John L. Ernst has been a director of Griffin since April 1997. Mr. Ernst also was a director of Culbro Corporation from 1983 until 1997 and a director of General Cigar Holdings, Inc. from December 1996 through May 2000. He is the Chairman of the Board and President of Bloomingdale Properties, Inc., an investment and real estate company. Mr. Ernst also is a director of the Doral Financial Corporation.

Winston J. Churchill, Jr. has been a director of Griffin since April 1997. Mr. Churchill, Jr. is also a director of Amkor Technology, Inc., USDATA Corporation and Innovative Solutions and Support, Inc. He is a managing general partner of SCP Private Equity Partners, L.P., a private equity fund, and is Chairman of Churchill Investment Partners, Inc. and CIP Capital, Inc.

Thomas C. Israel has been a director of Griffin since July 2000. Mr. Israel is also a director of Asbury Automotive Group, Inc. Mr. Israel was a director of Culbro Corporation from 1989 until 1997 and a director of General Cigar Holdings, Inc. from December 1996 through May 2000. Mr. Israel is Chairman of A.C. Israel Enterprises, Inc., an investment company.

David F. Stein has been a director of Griffin since November 1997. Mr. Stein is Vice Chairman of J&W Seligman & Co., Inc., an asset management firm. He has been Vice Chairman since 1996. Mr. Stein was a Managing Director of J&W Seligman & Co., Inc., from 1990 until 1996.

Gregory M. Schaan has been the President and Chief Executive Officer of Imperial Nurseries, Inc. ("Imperial") since October 1999. From 1997 until 1999 he was Senior Vice President of Sales and Marketing of Imperial. From 1992 until 1997 he was Vice President of Sales and Marketing of Imperial.

ITEM 11. EXECUTIVE COMPENSATION

The following table sets forth the annual and long-term compensation for Mr. Danziger, Griffin's President and Chief Executive Officer, and Mr. Galici, Griffin's Vice President, Chief Financial Officer and Secretary (the "Named Executive Officers"), as well as the total compensation paid by Griffin during fiscal 2002, fiscal 2001 and fiscal 2000 to the Named Executive Officers. There are no other executive officers of Griffin.

Summary Compensation Table

									Long Term Compensation Awards
		Annual Compensation							Number of Securities Underlying Stock Options Granted
Name and Principal Position		Annual Compensation					Other Annual Compensation(1)
Name and Principal Position		Year	Salary		Bonus		Other Annual Compensation(1)
Frederick M. Danziger		2002	$	413,858	$	—	$	12,727	—
	President and Chief Executive Officer	2001		398,086		261,000		12,312	—
		2000		386,538		111,000		12,138	—
Anthony J. Galici		2002	$	194,615	$	—	$	14,559	—
	Vice President, Chief Financial Officer	2001		188,846		123,000		14,199	7,500
	and Secretary	2000		180,577		48,000		5,923	10,000

(1): Amounts shown under Other Annual Compensation include matching contributions made by Griffin under its 401(k) Savings Plan and its Deferred Compensation Plan, and other miscellaneous cash benefits, but do not include funding for or receipt of retirement plan benefits. No executive officer who would otherwise have been includable in such table resigned or terminated employment during fiscal 2002, fiscal 2001 or fiscal 2000.

There were no awards of restricted stock or payouts pursuant to long term incentive plans made to any Named Executive Officer in fiscal 2002. There were no stock options granted to a Named Executive Officer in fiscal 2002.

Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option Values

				Number of Securities Underlying Options Held at Fiscal Year End		Value of Unexercised In-the-Money Options at Fiscal Year End(1)
Name	Shares Acquired on Exercise	Value Realized
Name	Shares Acquired on Exercise	Value Realized		Exercisable	Unexercisable	Exercisable		Unexercisable
Frederick M. Danziger	—	$	—	200,000	100,000	$	31,500	$	63,000
Anthony J. Galici	2,212		27,110	25,429	27,500		66,188		39,510

(1): The amounts presented in this column have been calculated based upon the difference between the fair market value of $13.88 per share (the average of the high and low prices of Griffin's Common Stock on November 29, 2002) and the exercise price of each stock option.

There were no stock options exercised by the Named Executive Officers in 2001 and 2000.

Compensation of Directors

Members of the Board of Directors who are not employees of Griffin receive $15,000 per year and $750 for each Board and Committee meeting attended. Effective January 1, 2003, Chairmen of the Committees receive $5,000 per year. The 1997 Stock Option Plan, as amended, provides that non-employee Directors who are not members of the Cullman & Ernst Group receive annually options exercisable for shares of Common Stock at an exercise price that is the market price at the time of grant. Under the 1997 Stock Option Plan, as amended, the number of shares granted to non-employee Directors is equal to $40,000 divided by the fair market value per share of Griffin common stock at the time of grant. In 2002 Griffin granted Mr. Churchill, Jr., Mr. Stein and Mr. Israel each options exercisable for 2,661 shares of Common Stock, and expects to grant additional options to Messrs. Churchill, Jr., Israel and Stein in 2003 consistent with the 1997 Stock Option Plan, as amended.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), requires Griffin's officers and directors, and persons who own more than ten percent of its Common Stock, to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Such persons are required by regulation to furnish Griffin with copies of all Section 16(a) forms they file. Based upon its involvement in the preparation of certain of such forms and a review of copies of other such forms received by it, Griffin believes that with respect to fiscal 2002, all such Section 16(a) filing requirements were satisfied. The stock option ownership of the officers is disclosed in the stock option table set forth above and the description of stock option grants to directors is disclosed under the heading "Compensation of Directors."

Compensation Committee Interlocks and Insider Participation

Messrs. Cullman, Danziger, and Ernst are members of the Board of Directors of Bloomingdale Properties, of which Mr. Ernst is Chairman and President and other members of the Cullman & Ernst Group are associated. Mr. Danziger also serves as trustee of the retirement plan for Bloomingdale Properties.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table lists the number of shares and options to purchase shares of Common Stock of Griffin beneficially owned or held by (i) each person known by Griffin to beneficially own more than 5% of the outstanding shares of Common Stock, (ii) the nominees for election as directors (who are all current directors), (iii) the Named Executive Officers (as defined in Item 11) and (iv) all directors and officers of Griffin, collectively. Unless otherwise indicated, information is provided as of November 30, 2002.

Name and Address(1)	Shares Beneficially Owned(2)	Percent of Total
Edgar M. Cullman (3)	977,342	18.5
Edgar M. Cullman, Jr. (3)	946,038	17.9
Louise B. Cullman (3)	846,775	16.0
Susan R. Cullman (3)	758,607	14.4
Frederick M. Danziger (3)	476,320	9.0
Lucy C. Danziger (3)	1,043,992	19.8
John L. Ernst (3)	421,250	8.0
Winston J. Churchill, Jr.	49,000	*
Thomas C. Israel	15,000	*
David F. Stein	44,000	*
Anthony J. Galici	37,246	*
B. Bros. Realty Limited Partnership (4)	233,792	4.4
Gabelli Funds, Inc. et al (5)	1,503,200	28.5
All directors and officers collectively, consisting of 7 persons (6)	2,020,158	38.3

*: Less than 1%
(1): Unless otherwise indicated, the address of each person named in the table is 641 Lexington Avenue, New York, New York 10022.
(2): This information reflects the definition of beneficial ownership adopted by the Securities and Exchange Commission (the "Commission"). Beneficial ownership reflects sole investment and voting power, except as reflected in footnote 3. Where more than one person shares investment and voting power in the same shares, such shares may be shown more than once. Such shares are reflected only once, however, in the total for all directors and officers. Includes options exercisable within 60 days pursuant to the 1997 Stock Option Plan. Excluded are shares held by charitable foundations and trusts of which members of the Cullman and Ernst families, including persons referred to in this footnote 2, are officers and directors. As of November 30, 2002, a group (the "Cullman and Ernst Group") consisting of Messrs. Cullman, direct members of their families and trusts for their benefit; Mr. Ernst, his sister and direct members of their families and trusts for their benefit; a partnership in which members of the Cullman and Ernst families hold substantial direct and indirect interests; and charitable foundations and trusts of which members of the Cullman and Ernst families are directors or trustees, owned an aggregate of approximately 2,327,295 shares of Common Stock (approximately 47.8% of the outstanding shares of Common Stock). Among others, Mr. Cullman, Mr. Cullman, Jr., Mr. Ernst and Mr. Danziger (who is a member of the Cullman & Ernst Group) hold investment and voting power or shared investment and voting power over such shares. Certain of such shares are pledged as security for loans payable under standard pledge arrangements. A form filed with the Commission on behalf of the Cullman & Ernst Group states that there is no formal agreement governing the group's holding and voting of such shares but that there is an informal understanding that the persons and entities included in the group will hold and vote together with shares owned by each of them in each case

subject to any applicable fiduciary responsibilities. Louise B. Cullman is the wife of Edgar M. Cullman; Edgar M. Cullman, Jr., is the son of Edgar M. Cullman and Louise B. Cullman; Susan R. Cullman and Lucy C. Danziger are the daughters of Edgar M. Cullman and Louise B. Cullman; and Lucy C. Danziger is the wife of Frederick M. Danziger.

(3): Included within the shares shown as beneficially owned by Edgar M. Cullman are 866,204 shares in which he holds shared investment and/or voting power; included within the shares shown as beneficially owned by John L. Ernst are 411,321 shares in which he holds shared investment and/or voting power; and included within the shares shown as beneficially owned by Frederick M. Danziger are 209,778 shares in which he holds shared investment and/or voting power. Included within the shares shown as beneficially owned by Edgar M. Cullman, Jr., are 716,918 shares in which he holds shared investment and/or voting power; included with the shares owned by Louise B. Cullman are 743,365 shares in which she holds shared investment and/or voting power; included within the shares shown as beneficially owned by Susan R. Cullman are 670,842 shares in which she holds shared investment and/or voting power; and included within the shares shown as beneficially owned by Lucy C. Danziger are 962,150 shares in which she holds shared investment and/or voting power. Excluded in each case are shares held by charitable foundations and trusts in which such persons or their families or trusts for their benefit are officers and directors. Messrs. Cullman, Danziger and Ernst disclaim beneficial interest in all shares over which there is shared investment and/or voting power and in all excluded shares.
(4): The address of B. Bros. Realty Limited Partnership ("B. Bros.") is 641 Lexington Avenue, New York, New York 10022. Lucy C. Danziger and John L. Ernst are the general partners of B. Bros.
(5): The address of such person is Gabelli Funds, Inc., One Corporate Center, Rye, New York 10580. A form filed with the Securities and Exchange Commission in July 1997 by Gabelli Funds, Inc. et al, as subsequently amended, indicates that the securities have been acquired by Gabelli Group Capital Partners, Inc., and certain of its direct and indirect subsidiaries on behalf of their investment advisory clients. Griffin has been informed that no individual client of Gabelli Group Capital Partners, Inc. et al, has ownership of more than 5% of Griffin's outstanding Common Stock.
(6): Excluding shares held by certain charitable foundations, the officers and/or directors of which include certain officers and directors of Griffin.

The table below provides information on Griffin's equity compensation plan as of November 30, 2002:

Plan Category		Number of securities to be issued upon exercise of outstanding options (a)		Weighted average exercise price of outstanding options (b)			Number of securities remaining available for future issuance under the equity compensation plan (excluding securities reflected in column (a)) (c)
Equity compensation plan approved by security holders		656,078		$	12.37		288,115

Note: There are no equity compensation plans that were not approved by security holders.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

For the information of stockholders, attention is called to the following transactions between Griffin and other parties in which the persons mentioned below might have had a direct or indirect interest.

Messrs. Cullman, Danziger and Ernst are members of the Board of Directors of Bloomingdale Properties, Inc. ("Bloomingdale Properties") of which Mr. Ernst is Chairman and President and other members of the Cullman & Ernst Group are associated. Real estate management and advisory services have been provided to Griffin by John Fletcher, an employee of Bloomingdale Properties, for which Mr. Fletcher receives compensation at a rate of approximately $50,000 per year.

Edgar M. Cullman, the Chairman of Griffin, is also the Chairman of General Cigar Holdings, Inc. ("GC Holdings"), the successor to Culbro. In addition, certain members of the Cullman & Ernst Group who may be deemed to beneficially own more than five percent of Griffin's Common Stock (see Item 12) also may be deemed to beneficially own more than five percent of the Common Stock of GC Holdings. Prior to the distribution of the common stock of Griffin to Culbro stockholders in 1997 (the "Distribution"), Griffin, as lessor, and General Cigar Co., Inc. ("General Cigar"), a wholly-owned subsidiary of GC Holdings, as lessee, entered into a lease for certain agricultural land in Connecticut and Massachusetts (the "Agricultural Lease"). The Agricultural Lease is for approximately 500 acres of arable land held by Griffin for possible development in the long term, but which is being used by General Cigar for growing Connecticut Shade wrapper tobacco. General Cigar's use of the land is limited to the cultivation of cigar wrapper tobacco. The Agricultural Lease has an initial term of ten years and provides for the extension of the lease for additional periods thereafter. In addition, at Griffin's option, the Agricultural Lease may be terminated with respect to 100 acres of such land annually upon one year's prior notice. In fiscal 2002, fiscal 2001 and fiscal 2000, General Cigar made rental payments of $147,000, $144,000 and $148,000, respectively, to Griffin with respect to the Agricultural Lease.

Also in 1997, Griffin entered into a Services Agreement (the "Services Agreement") with Culbro. Pursuant to the Services Agreement, Culbro, and its successor GC Holdings, provided Griffin, for a period of one year after the Distribution, with certain administrative services, including internal audit, tax preparation, legal and transportation services. The Services Agreement was terminated with respect to all services provided by GC Holdings as of July 1998, except for certain transportation services, with respect to which the Services Agreement was amended and extended through March 2002, at which time it was not renewed. In fiscal 2002, fiscal 2001 and fiscal 2000, Griffin paid $55,000, $109,000 and $141,000, respectively, to GC Holdings under the Services Agreement.

In late 1997, Griffin, as lessor, and General Cigar, as lessee, entered into a lease for approximately 40,000 square feet of office space in the Griffin Center South office complex in Bloomfield, Connecticut (the "Commercial Lease"). The Commercial Lease has an initital term of ten years and provides for the extension of the lease for additional annual periods thereafter. In fiscal 2002, fiscal 2001 and fiscal 2000 General Cigar made rental payments to Griffin of $655,000, $571,000 and $511,000, respectively, under the Commercial Lease. Management believes the rent payable by General Cigar to Griffin under the Commercial Lease is at market rates.

ITEM 14. 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

recognized 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 was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Also, Griffin has investments in certain unconsolidated entities. As Griffin does not control or manage these entities, its disclosure controls and procedures with respect to such entities are necessarily substantially more limited than those it maintains with respect to its consolidated subsidiaries.

Within 90 days prior to the date of this report, Griffin carried out an evaluation, under the supervision and with the participation of Griffin's management, including its Chief Executive Officer and its Chief Financial Officer, of the effectiveness of the design and operation of Griffin's disclosure controls and procedures. Based on the foregoing, Griffin's Chief Executive Officer and Chief Financial Officer concluded that Griffin's disclosure controls and procedures were effective.

There have been no significant changes in Griffin's internal controls or in other factors that could significantly affect the internal controls subsequent to the date Griffin completed its evaluation.

PART IV

ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS

(a)(1) Financial Statements-see also Item 8

(2) Financial Statement Schedules and Financial Statements of Equity Investee

The following financial statements of Griffin's equity investee and additional financial data should be read in conjunction with the financial statements in such 2002 Annual Report to Shareholders. Schedules not included with this additional financial data have been omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.

SCHEDULES

II—Valuation and Qualifying Accounts and Reserves		S-1
III—Real Estate and Accumulated Depreciation		S-2/S-3

FINANCIAL STATEMENTS

Centaur Communications, Ltd. financial statements for the year ended June 30, 2002

F-1

(b): On October 3, 2002 Griffin filed a Form 8-K dated October 3, 2002 to report its agreement to acquire the 70% interest owned by USAA Real Estate Company in two office buildings in Griffin Center, Windsor, Connecticut.
(c): Exhibits

Exhibit No.		Description
2.1		Form of Distribution Agreement among Culbro Corporation, Griffin Land & Nurseries, Inc. and General Cigar Holdings, Inc. (incorporated by reference to the Registration Statement on Form S-1 of General Cigar Holdings, Inc., filed December 24,1996, as amended)
2.2		Asset Purchase Agreement among Shemin Nurseries, Inc., Shemin Acquisition Corporation and Imperial Nurseries, Inc. dated January 5, 2001 (incorporated by reference to the Form 8-K of Griffin Land & Nurseries, Inc. dated January 26, 2001 filed February 12, 2001)
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)
10.1		Form of Tax Sharing Agreement among Culbro Corporation, Griffin Land & Nurseries, Inc. and General Cigar Holdings, Inc. (incorporated by reference to the Registration Statement on Form S-1 of General Cigar Holdings, Inc., filed December 24, 1996, as amended)
10.2		Form of Benefits and Employment Matters Allocation Agreement among Culbro Corporation, Griffin Land & Nurseries, Inc. and General Cigar Holdings, Inc. (incorporated by reference to the Registration Statement on Form S-1 of General Cigar Holdings, Inc., filed December 24, 1996, as amended)
10.3		Form of Services Agreement among Culbro Corporation, Griffin Land & Nurseries, Inc. and General Cigar Holdings, Inc. (incorporated by reference to the Registration Statement on Form S-1 of General Cigar Holdings, Inc., filed December 24, 1996, as amended)

10.4		Form of Agricultural Lease between Griffin Land & Nurseries, Inc. and General Cigar Holdings, Inc. (incorporated by reference to the Registration Statement on Form S-1 of General Cigar Holdings, Inc., filed December 24, 1996, as amended)
10.5		Employment Agreement between Culbro Corporation and Jay M. Green, dated as of April 8, 1994, and as amended on January 11, 1997 (incorporated by reference to the Registration Statement on Form S-1 of General Cigar Holdings, Inc., filed December 24, 1996, as amended)
10.6		Form of 1997 Stock Option Plan of Griffin Land & Nurseries, Inc. (incorporated by reference to the Form 10 of Griffin Land & Nurseries, Inc., filed April 8, 1997, as amended)
10.7		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)
10.8		1996 Stock Plan of Culbro Corporation dated as of March 15, 1996 (incorporated by reference to the definitive proxy statement of Culbro Corporation, dated March 15, 1996, for its Annual Meeting of Shareholders held on April 11, 1996)
10.9		1992 Stock Plan of Culbro Corporation, dated December 10, 1993 (incorporated by reference to the definitive proxy statement of Culbro Corporation, dated March 31, 1993, for its Annual Meeting of Shareholders held on April 8, 1993)
10.10		Stock Option Plan for Non-employee Directors of Culbro Corporation, dated December 10, 1993 (incorporated by reference to the definitive proxy statement of Culbro Corporation, dated March 3, 1993, for its Annual Meeting of Shareholders held on April 8, 1993)
10.11		1991 Employees Incentive Stock Option Plan of Culbro Corporation, dated as of January 31, 1991 and as amended on February 12, 1995 (incorporated by reference to the definitive proxy statement of Culbro Corporation, dated April 9, 1991, for its Annual Meeting of Shareholders held on May 9, 1991)
10.12		Annual Incentive Compensation Plan of Culbro Corporation, dated as of December 7, 1995 (incorporated by reference to the Registration Statement on Form S-1 of General Cigar Holdings, Inc., filed December 24, 1996, as amended)
10.13		Annual Incentive Compensation Plan of General Cigar Co., Inc., dated as of December 7, 1995 (incorporated by reference to the Registration Statement on Form S-1 of General Cigar Holdings, Inc., filed December 24, 1996, as amended)
10.14		Long-Term Performance Plan of Culbro Corporation for the three-year period 1995-1997 (incorporated by reference to the Registration Statement on Form S-1 of General Cigar Holdings, Inc., filed December 24, 1996, as amended)
10.15		Deferred Incentive Compensation Plan of Culbro Corporation, dated as of December 13, 1982 and as amended on February 12, 1985 (incorporated by reference to the Registration Statement on Form S-1 of General Cigar Holdings, Inc., filed December 24, 1996, as amended)
10.16		Revolving Credit Agreement and Guaranty dated May 6, 1998 (incorporated by reference to Form 10-Q dated May 30, 1998 filed July 10, 1998)
10.17		Loan Agreement dated June 24, 1999 (incorporated by reference to Form 10-Q dated August 28, 1999 filed October 8, 1999)
10.18		Revolving Credit Agreement dated August 3, 1999 (incorporated by reference to Form 10-Q dated August 28, 1999 filed October 8, 1999)

10.19		Credit Agreement dated as of February 8, 2002 by and between Griffin Land & Nurseries, Inc. and Fleet National Bank (incorporated by reference to Form 10-K dated December 1, 2001 filed March 1, 2002)
10.20		Amendment Agreement dated as of August 31, 2002 by and between Griffin Land & Nurseries, Inc. and Fleet National Bank amending certain Credit Agreement dated as of February 8, 2002 (incorporated by reference to Form 10-Q dated August 31, 2002 filed October 11, 2002)
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)
10.22		Letter of Agreement between Griffin Land & Nurseries, Inc. and USAA Real Estate Company (incorporated by reference to Form 10-Q dated August 31, 2002 filed October 11, 2002)
10.23		Agreement of Purchase and Sale of Partnership Interest between Griffin Land & Nurseries, Inc. and USAA Real Estate Company dated December 5, 2002
10.24		Mortgage Deed and Security Agreement dated December 17, 2002 between Griffin Center Development IV, LLC and Webster Bank
10.25		Second Amendment Agreement dated as of January 31, 2003 by and between Griffin Land & Nurseries, Inc. and Fleet National Bank amending certain Credit Agreement dated as of February 8, 2002
21		Subsidiaries of Griffin Land & Nurseries, Inc. (incorporated by reference to the Form 10 of Griffin Land & Nurseries, Inc., filed April 8, 1997, as amended)
23.1		Consent of PricewaterhouseCoopers LLP (included with the report accompanying Item 8 of this Form 10-K)
23.2		Report of Independent Accountants on Financial Statement Schedules

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Corporation has duly caused this annual report to be signed on its behalf by the undersigned, thereunto duly authorized as of February 28, 2003.

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

Pursuant to the requirements of the Securities Exchange Act of 1934, this annual report has been signed by the following persons on behalf of the Corporation and in the capacities indicated as of February 28, 2003.

Name		Title

/s/ WINSTON J. CHURCHILL, JR. Winston J. Churchill, Jr.		Director
/s/ EDGAR M. CULLMAN Edgar M. Cullman		Chairman of the Board and Director
/s/ FREDERICK M. DANZIGER Frederick M. Danziger		Director, President and Chief Executive Officer
/s/ JOHN L. ERNST John L. Ernst		Director
/s/ ANTHONY J. GALICI Anthony J. Galici		Vice President, Chief Financial Officer and Secretary
/s/ THOMAS C. ISRAEL Thomas C. Israel		Director
/s/ DAVID F. STEIN David F. Stein		Director

FORM OF CERTIFICATION

I, Frederick M. Danziger, certify that:

1.

I have reviewed this annual report on Form 10-K of Griffin Land & Nurseries, Inc.

2.

Based on my knowledge, this annual 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 annual report;

3.

Based on my knowledge, the financial statements, and other financial information included in this annual 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 annual 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-14 and 15d-14) for the registrant and have:

a): Designed such disclosure controls and procedures 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 annual report is being prepared;
b): Evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and
c): Presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, 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 in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
b): Any fraud, whether or not material, that involves the management or other employees who have a significant role in the registrant's internal controls; and

6.: The registrant's other certifying officer and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

			Date: February 28, 2003
			/s/ FREDERICK M. DANZIGER Frederick M. Danziger President and Chief Executive Officer

FORM OF CERTIFICATION

I, Anthony J. Galici, certify that:

1.

I have reviewed this annual report on Form 10-K of Griffin Land & Nurseries, Inc.

2.

3.

4.

a): Designed such disclosure controls and procedures 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 annual report is being prepared;
b): Evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and
c): Presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.

a): All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
b): Any fraud, whether or not material, that involves the management or other employees who have a significant role in the registrant's internal controls; and

6.: The registrant's other certifying officer and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

			Date: February 28, 2003
			/s/ ANTHONY J. GALICI Anthony J. Galici Vice President, Chief Financial Officer and Secretary

Schedule II—Valuation and Qualifying Accounts and Reserves
(dollars in thousands)

Description	Balance at Beginning of Year		Charged to Cost and Expenses	Charged to Other Accounts	Deductions From Reserves		Balance at End of Year
For fiscal year ended November 30, 2002
Reserves:
Uncollectible accounts—trade	$	132	32	18	53(3	)	$	129

Inventories	$	130	1,840	100	1,452(2	)	$	618

For fiscal year ended December 1, 2001
Reserves:					196(1	)
Uncollectible accounts—trade	$	580	48	4	304(3	)	$	132

Inventories	$	135	60	—	65(2	)	$	130

For fiscal year ended December 2, 2000
Reserves:
Uncollectible accounts—trade	$	564	72	14	70(3	)	$	580

Inventories	$	601	227	—	693(2	)	$	135

Notes:

(1): Reflects amount related to the disposition of the Sales and Service Centers by Imperial Nurseries, Inc. on January 26, 2001.
(2): Inventories disposed.
(3): Accounts receivable written off.

S-1

Schedule III—Real Estate
and Accumulated Depreciation
(dollars in thousands)

										Gross Amount at November 30, 2002
				Initial Cost
				Initial Cost				Cost Capitalized Subsequent to Acquisition Improvements
Description		Encumbrances		Land		Bldg. & Improve.		Cost Capitalized Subsequent to Acquisition Improvements		Land		Land Improve.		Bldg.		Devel. Cost		Total		Accum. Dep.			Date of Construction	Date of Acquisition	Depr. Life
Real Estate Held for Sale
Undeveloped Land		$	—	$	1,061	$	—	$	—	$	1,061	$	—	$	—	$	—	$	1,061	$	—
Residential Development Simsbury, CT			—		203		—		2,998		203		—		—		2,998		3,201		—
Residential Development Windsor, CT			—		66		—		2,641		66		—		—		2,641		2,707		—
Other			—		—		—		735		—		—		—		735		735		—

Subtotal			—		1,330		—		6,374		1,330		—		—		6,374		7,704		—

Real Estate Held for Lease
Undeveloped Land			—		2,185		—		—		2,185		—		—		—		2,185		—
New England Tradeport Windsor/E. Granby, CT.
	Undeveloped portion		—		439		—		2,278		439		—		—		2,278		2,717		—
	Industrial Buildings		7,983		29		—		3,930		29		399		3,510		21		3,959		(2,469	)	1978		40 yrs.
	Industrial Building		—		13		1,722		396		13		319		1,799		—		2,131		(943	)		1989	40 yrs.
	Industrial Building		—		9		—		3,928		9		313		3,615		—		3,937		(469	)	1998		40 yrs.
	Industrial Building		7,656		10		—		5,569		10		325		5,244		—		5,579		(934	)	1999		40 yrs.
	Industrial Building		—		10		—		3,028		10		4		3,024		—		3,038		(80	)	2001		40 yrs.
	Construction in Progress		—		—		—		156		—		—		—		156		156		—
Griffin Center Windsor, CT.
	Undeveloped portion		—		179		—		2,169		179		—		—		2,169		2,348		—
	Industrial Building		6,172		22		—		7,791		22		—		7,791		—		7,813		(353	)	2001		40 yrs.
	Restaurant		—		—		—		1,410		—		207		1,203		—		1,410		(801	)	1983		40 yrs.
	Construction in Progress		—		—		—		2,678		—		—		—		2,678		2,678		—		2002
Griffin Center South Bloomfield, CT.
	Undeveloped portion		—		142		—		218		142		—		—		218		360		—
	Office Building		—		47		—		2,960		47		341		2,613		6		3,007		(1,806	)	1977		40 yrs.
	Office Building		—		3		—		1,929		3		248		1,673		8		1,932		(866	)	1985		40 yrs.
	Office Building		—		1		—		1,797		1		364		1,431		2		1,798		(669	)	1988		40 yrs.
	Office Building		—		1		—		1,522		1		177		1,343		2		1,523		(616	)	1989		40 yrs.
	Office Building		—		—		—		670		—		82		588		—		670		(279	)	1988		40 yrs.
	Office Buildings		—		5		—		3,445		5		127		3,318		—		3,450		(1,055	)	1991		40 yrs.
	Office Building		—		2		—		3,334		2		4		3,330		—		3,336		(146	)	2001		40 yrs.
Other			—		—		—		1,070		—		1,068		—		2		1,070		(769	)

Subtotal			21,811		3,097		1,722		50,278		3,097		3,978		40,482		7,540		55,097		(12,255	)

		$	21,811	$	4,427	$	1,722	$	56,652	$	4,427	$	3,978	$	40,482	$	13,914	$	62,801	$	(12,255	)

S-2

Schedule III—Real Estate
and Accumulated Depreciation (Continued)
November 30, 2002
(dollars in thousands)

Fiscal year ended November 30, 2002

		Cost			Reserve
Balance at beginning of year		$	59,735		$	(10,493	)
Changes during the year:
	Improvements		3,220			—
	Additions to reserve charged to costs and expense		—			(1,762	)
	Cost of sales		(154	)		—

Balance at end of year		$	62,801		$	(12,255	)

Fiscal year ended December 1, 2001

		Cost			Reserve
Balance at beginning of year		$	50,439		$	(9,218	)
Changes during the year:
	Improvements		10,238			—
	Additions to reserve charged to costs and expense		—			(1,494	)
	Cost of sales		(942	)		219

Balance at end of year		$	59,735		$	(10,493	)

Fiscal year ended December 2, 2000

		Cost			Reserve
Balance at beginning of year		$	42,047		$	(8,281	)
Changes during the year:
	Improvements		9,108			—
	Additions to reserve charged to costs and expense		—			(937	)
	Cost of sales		(716	)		—

Balance at end of year		$	50,439		$	(9,218	)

S-3

Centaur Communications
Limited

(Registered number 1595235)

Annual report
for the year ended 30 June 2002

F-1

INDEPENDENT ACCOUNTANTS

To the Board of Directors and shareholders of Centaur Communications Limited

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, of changes in financial position (cash flows) and of changes in capital stock, reserves not available for distribution and unappropriated earnings (shareholders' equity) present fairly, in all material respects, the financial position of Centaur Communications Limited and its subsidiaries at 30 June 2002 and 2001, and the results of their operations and their cash flows for each of the years ended 30 June 2002 and 2001, in conformity with accounting principles generally accepted in the United Kingdom. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above.

Accounting principles generally accepted in the United Kingdom vary in certain significant respects from accounting principles generally accepted in the United States. The application of the latter would have affected the determination of consolidated net income expressed in sterling for each of the years ended 30 June 2002 and 2001 and the determination of consolidated stockholders' equity and consolidated financial position also expressed in sterling at 30 June 2002 and 2001 to the extent summarised in note 35 to the consolidated financial statements.

/s/ PricewaterhouseCoopers

PricewaterhouseCoopers
Chartered Accountants and Registered Auditors
London

15 November 2002
Except for the information presented in note 35 for which the date is 30 January 2003

F-2

Centaur Communications Limited

Consolidated profit and loss account for the year ended 30 June 2002

	Note	Continuing operations 2002		Discontinued operations 2002		Total 2002		2001 (restated)
		£'000		£'000		£'000		£'000
Turnover	1	63,327		5,374		68,701		76,520
Cost of sales		(36,276	)	(3,869	)	(40,145	)	(42,641	)

Gross profit		27,051		1,505		28,556		33,879
Distribution costs		(4,180	)	(139	)	(4,319	)	(4,589	)
Administrative expenses		(29,341	)	(1,722	)	(31,063	)	(23,006	)

Adjusted EBITDA	1	5,808		(160	)	5,648		11,842
Depreciation of tangible fixed assets		(2,332	)	(191	)	(2,523	)	(2,255	)
Amortisation of goodwill		(880	)	(5	)	(885	)	(875	)
Exceptional administrative costs	4	(9,066	)	—		(9,066	)	(2,428	)

Operating (loss) / profit		(6,470	)	(356	)	(6,826	)	6,284

Loss on disposal of business						—		(105	)
Interest receivable and similar income	6					46		67
Interest payable and similar charges	7					(1,449	)	(1,592	)

(Loss) / profit on ordinary activities before taxation	3					(8,229	)	4,654
Tax on (loss) / profit on ordinary activities	8					(358	)	(2,430	)

(Loss) / profit on ordinary activities after taxation						(8,587	)	2,224
Equity minority interests						(41	)	(101	)

(Loss) / profit for the financial year						(8,628	)	2,123
Dividends	9					—		(191	)

Retained (loss) / profit for the financial year	23					(8,628	)	1,932

Adjusted EBITDA is calculated as operating (loss) / profit excluding depreciation, amortisation and exceptional administrative expenses as detailed in note 4.

The accounting policies on pages 12 and 13 and notes on pages 14 to 34 form a integral part of these financial statements.

F-3

Centaur Communications Limited

Consolidated balance sheet at 30 June 2002

		2002			2001 (restated)
	Note	£'000	£'000		£'000	£'000
Fixed assets
Intangible fixed assets	10	2,352			12,060
Tangible fixed assets	11	8,262			7,750
Investments	12	459			423

			11,073			20,233
Current assets
Stocks	13	550			601
Debtors	14	14,512			16,946
Cash at bank and in hand		3,300			1,578

			18,362			19,125
Creditors: amounts falling due within one year	15		(23,234	)		(23,691	)

Net current liabilities			(4,872	)		(4,566	)

Total assets less current liabilities			6,201			15,667
Creditors: amounts falling due after more than one year	16		(13,787	)		(15,125	)
Provisions for liabilities and charges	18		(445	)		—

			(8,031	)		542

Capital and reserves
Called up share capital	20		1,539			1,532
Share premium account	21		13,436			13,378
Capital redemption reserve	22		483			483
Profit and loss account	23		(23,536	)		(14,908	)

Equity shareholders' (deficit) / funds			(8,078	)		485
Equity minority interests	28		47			57

			(8,031	)		542

The financial statements were approved by the Board of Directors on 15 November 2002,except for the information presented in note 35 which was approved on 30 January 2003, and were signed on its behalf by:

/s/ GTD Wilmot

GTD Wilmot
Director

The accounting policies on pages 12 and 13 and notes on pages 14 to 34 form an integral part of these financial statements.

F-4

Centaur Communications Limited

Company balance sheet at 30 June 2002

		2002			2001 (restated)
	Note	£'000	£'000		£'000	£'000
Fixed assets
Intangible assets	10	136			474
Tangible assets	11	42			53
Investments	12	4,726			4,741

			4,904			5,268
Current assets
Debtors	14	43,125			52,252
Cash at bank and in hand		741			1,007

			43,866			53,259
Creditors: amounts falling due within one year	15		(10,123	)		(18,501	)

Net current assets			33,743			34,758

Total assets less current liabilities			38,647			40,026
Creditors: amounts falling due after more than one year	16		(13,787	)		(15,125	)
Provisions for liabilities and charges	18		(1,252	)		(1,254	)

			23,608			23,647

Capital and reserves
Called up share capital	20		1,539			1,532
Share premium account	21		13,436			13,378
Capital redemption reserve	22		483			483
Profit and loss account	23		8,150			8,254

Equity shareholders' funds			23,608			23,647

/s/ GTD Wilmot

GTD Wilmot
Director

The accounting policies on pages 12 and 13 and notes on pages 14 to 34 form an integral part of these financial statements.

F-5

Centaur Communications Limited

Consolidated cash flow statement for the year ended 30 June 2002

	Note	2002		2001 (restated)
		£'000		£'000
Net cash inflow from operating activities	29	8,182		13,991

Returns on investments and servicing of finance
Interest received		46		67
Interest paid		(1,487	)	(1,549	)
Dividends paid to minority interests		(51	)	(120	)

Net cash (outflow) from returns on investments and servicing of finance		(1,492	)	(1,602	)
Taxation		(561	)	(1,811	)

Capital expenditure and financial investment
Purchase of tangible fixed assets		(3,071	)	(3,332	)
Sale of tangible fixed assets		59		52
Acquisition of trade investments		(36	)	(74	)

Net cash (outflow) for capital expenditure and financial investment		(3,048	)	(3,354	)
Acquisitions and disposals
Purchase of additional investment in subsidiary undertaking	33	—		(491	)
Disposal of unincorporated business	32	—		137

Net cash outflow for acquisitions and disposals		—		(354	)
Equity dividends paid to shareholders		(191	)	—
Net cash inflow before financing		2,890		6,870
Financing
Issue of ordinary share capital	*20,21*	65		—
Repayment of bank and other borrowings		(1,250	)	(6,450	)

Net cash (outflow) from financing		(1,185	)	(6,450	)

Increase in cash	*30,31*	1,705		420

The accounting policies on pages 12 and 13 and notes on pages 14 to 34 form an integral part of these financial statements.

F-6

Centaur Communications Limited

Statement of Group total recognised gains and losses

	2002		2001 (restated)
	£'000		£'000
(Loss) / profit for the financial year	(8,628	)	2,123

Total recognised (losses)/gains relating to the financial year	(8,628	)	2,123

Prior year adjustment (note 8—FRS 19 "Deferred Taxation")	1,250

Total losses recognised since last financial statements	(7,378	)

Reconciliation of movements in Group shareholders' funds

	2002		2001 (restated)
	£'000		£'000
(Loss) / profit for the financial year	(8,628	)	2,123
Dividends	—		(191	)
New share capital issued	65		—

Net (decrease) / increase in shareholders' funds	(8,563	)	1,932
Opening shareholders' (deficit) / funds (originally £(2,762,000) at 1 July 2000 and £(765,000) at 1 July 2001 before adding prior year adjustment of £1,315,000 and £1,250,000 respectively).	485		(1,447	)

Closing shareholders' funds	(8,078	)	485

The accounting policies on pages 12 and 13 and notes on pages 14 to 34 form an integral part of these financial statements

F-7

Centaur Communications Limited

Principal accounting policies

a) Basis of preparation

The financial statements have been prepared under the historical cost convention in accordance with applicable accounting standards in the United Kingdom.

b) Basis of consolidation

The financial statements incorporate that of the Company, its subsidiary undertakings and have been consolidated using the acquisition method of accounting. Profits or losses on intra-Group transactions are eliminated in full. The results of subsidiaries or unincorporated businesses acquired or disposed of are included from the date of acquisition or up to the date of disposal.

c) Turnover

Turnover represents sales of advertising space, subscriptions and individual publications and revenue from exhibitions and conferences, exclusive of value added tax.

Sales of advertising space are recognised in the period in which publication occurs. Sales of publications are recognised in the period in which the sale is made. Revenue received in advance for exhibitions and conferences is deferred and recognised in the period in which the event takes place.

Revenue from subscriptions to publications and on-line services is deferred and recognised in the profit and loss account on a straight-line basis over the subscription period.

d) Investments

Investments are recorded at cost less provision for impairment in value.

e) Goodwill

Goodwill purchased or arising on consolidation has been capitalised and is amortised over its estimated useful economic life of 20 years, which is the period over which the directors estimate that the values of the underlying businesses acquired are expected to exceed the value of the underlying assets.

f) Tangible fixed assets

Tangible fixed assets are stated at cost less accumulated depreciation. Depreciation of tangible assets is provided on a straight-line basis over the following estimated useful lives of the assets:

Leasehold improvements	—	20 years or the length of the lease if shorter
Fixtures and fittings	—	10 years
Computer equipment	—	3-5 years (except costs of developing computer databases—10 years)
Motor vehicles	—	4 years

g) Impairment of fixed assets and goodwill

The need for any fixed asset or goodwill impairment write down is assessed by comparison of the carrying value of the asset against the higher of net realisable value or value in use. The value in use is determined from estimated discounted future cash flows. Discount rates used are based on the circumstances of the individual businesses.

F-8

h) Deferred tax

Deferred tax is recognised in respect of all timing difference that have originated but not reversed at the balance sheet date, where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the balance sheet date.

A net deferred tax asset is regarded as recoverable and therefore recognised only when, on the basis of all available evidence, it can be regarded as more likely than not that there will be suitable taxable profits against which to recover carried forward tax losses and from which the future reversal of underlying timing difference can be deducted.

Deferred tax is measured at the average tax rates that are expected to apply in the periods in which the timing difference are expected to reverse, based on tax rates and laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax is measured on a non-discounted basis.

On adoption of Financial Reporting Standard (FRS)19 "Deferred Taxation," the Group has changed its accounting policy in respect of deferred taxation, and restated prior year results accordingly (note 8).

i) Stocks

Stocks are stated at the lower of cost and net realisable value. For raw materials cost is the purchase price. Work in progress comprises costs incurred relating to publications, exhibitions and conferences prior to the publication date or the date of the event. For goods for resale cost is the purchase price, or, in the case of publications, the direct cost of production.

j) Operating leases

Rentals payable under operating leases are charged to the profit and loss account on a straight-line basis over the term of the lease.

k) Pensions

Pension costs charged to the profit and loss account represent the amount of contributions payable to the Company's defined contribution scheme in respect of the accounting period.

l) Remuneration element of share options

In accordance with Urgent Issues Task Force (UITF) Abstract 17 "Employee share schemes," the fair value of share options at the date of grant, less any consideration to be received from the employee, is charged to the profit and loss account over the performance period to which the grant relates. An equal amount is credited directly to reserves in the same period.

m) Foreign currencies

Transactions denominated in foreign currency are translated at exchange rates prevailing at the transaction date. Assets and liabilities are translated at exchange rates prevailing at the year end date. Any gains or losses arising on exchange are reflected in the profit and loss account.

F-9

Centaur Communications Limited

Notes to the financial statements

1 Segmental reporting

The Group is involved in the single activity of the creation and dissemination of business and professional information. There is therefore no segmental reporting required. However, set out below are analyses of turnover and adjusted EBITDA of the Group by the communities it serves, by source of revenue, by established activities and new products.

Analysis by community

	Turnover		Adjusted EBITDA
	2002 £'000	2001 £'000	2002 £'000		2001 £'000
Marketing, creative and new media	23,935	30,460	3,723		8,821
Legal and financial	26,546	27,418	2,756		4,530
Engineering and construction	11,526	10,467	(1,291	)	(1,417	)
Other	6,694	8,175	460		(92	)

	68,701	76,520	5,648		11,842

Analysis by source of revenue

	Turnover		Adjusted EBITDA
	2002 £'000	2001 £'000	2002 £'000		2001 £'000
Printed products	41,595	55,179	4,085		12,400
Electronic products	11,878	9,801	(697	)	(2,448	)
Exhibitions and conferences	13,510	10,511	1,768		1,287
Other	1,718	1,029	492		603

	68,701	76,520	5,648		11,842

Analysis by established activities, new products and discontinued products

	Turnover		Adjusted EBITDA
	2002 £'000	2001 £'000	2002 £'000		2001 £'000
Established products	59,275	61,484	10,144		17,426
New products	4,052	10,076	(4,336	)	(5,104	)
Discontinued products	5,374	4,960	(160	)	(480	)

	68,701	76,520	5,648		11,842

A product is regarded as new until the earlier of 3 years from date of launch or acquisition and the end of a 3-month consecutive period of positive adjusted EBITDA for that product. Substantially all net assets are located and all turnover and adjusted EBITDA are generated in the United Kingdom.

F-10

2 Prior period operating profit

The analysis between continuing and discontinued activities of the prior period is:

	Note	Continuing operations 2001 (restated)		Discontinued operations 2001 (restated)		Total 2001 (restated)
						£'000
Turnover	1	71,560		4,960		76,520
Cost of sales		(39,050	)	(3,591	)	(42,641	)

Gross profit		32,510		1,369		33,879
Distribution costs		(4,525	)	(64	)	(4,589	)
Administrative expenses		(21,032	)	(1,974	)	(23,006	)

Adjusted EBITDA	1	12,322		(480	)	11,842
Depreciation of tangible fixed assets		(2,069	)	(186	)	(2,255	)
Amortisation of goodwill		(872	)	(3	)	(875	)
Exceptional administrative costs	4	(2,428	)	—		(2,428	)

Operating Profit/(loss)		6,953		(669	)	6,284

The discontinued activities for the current year and the prior year contain the results of Lawtel, the on-line legal reporting business and that of the fortnightly magazine, Leisure and Hospitality Business.

3 (Loss) / profit on ordinary activities before taxation

(Loss) / profit on ordinary activities before taxation is stated after charging:

		2002		2001 (restated)
		£'000		£'000
Staff costs (note 5)		28,773		27,343
Exceptional administrative costs (note 4)		9,066		2,428
Leasehold property rentals		2,767		2,187
Other operating leases		198		210
Depreciation of tangible fixed assets		2,523		2,255
Amortisation of goodwill		885		875
(Profit) / loss on disposal of fixed assets		(23	)	3
Loss on disposal of trade investment		—		10
Auditors' remuneration:
	—audit services	73		92
	—non-audit services (2001; of this £702,000 is included in the exceptional administrative costs below)	13		707

F-11

4 Exceptional administrative expenses

Exceptional administrative expenses relate to continuing operations and comprise:

	2002	2001 (restated)
	£'000	£'000
Goodwill impairment	8,823	—
Provision for onerous property contracts	243	—
Professional fees incurred in respect of the long term financing review	—	1,663
Amounts payable under executive incentive schemes	—	765

	9,066	2,428

FRS 10 "goodwill and intangible assets," requires an impairment review to be undertaken if the carrying value is considered not to be recoverable in full. A review of the goodwill portfolio has resulted in an impairment provision of £8,823,507.

Within the onerous property contracts provision, the Group has provided against future liabilities for all long-term idle properties.

5 Employees and directors

Staff costs

	2002	2001 (restated)
	£'000	£'000
Wages and salaries	25,801	24,516
Social security costs	2,540	2,472
Other pension costs	432	355

	28,773	27,343

The average monthly number of persons employed during the year, including executive directors, was 778 (2001: 803).

Directors' emoluments

	2002	2001 (restated)
	£'000	£'000
Aggregate emoluments	775	609
Pension contributions to money purchase schemes	74	70

	849	679

During the year 2 directors (2001: 2 directors) participated in money purchase pension schemes.

Options have been granted, in prior years, to certain directors to subscribe for ordinary shares of 10p each in Centaur Communications Limited. Full details are given in the directors' report.

F-12

Highest paid director

	2002	2001 (restated)
	£'000	£'000
Aggregate emoluments	451	327
Pension contributions to money purchase scheme	50	47

	501	374

6 Interest receivable and similar income

	2002	2001 (restated)
	£'000	£'000
Interest on bank deposits	46	67

7 Interest payable and similar charges

	2002	2001 (restated)
	£'000	£'000
Interest on bank loans and overdrafts	1,229	1,549
Amortisation of borrowings issue costs (note 17)	220	43

	1,449	1,592

8 Tax on (loss) / profit on ordinary activities

		2002		2001 (restated)
		£'000		£'000
UK corporation tax at 30% (2001: 30%):
	—current year	371		2,231

	—over provision in previous periods	(208	)	—

		163		2,231

Deferred taxation		195		199

		358		2,430

F-13

The Group has adopted FRS 19 "Deferred tax," and has restated prior year figures accordingly. Adoption has resulted in the recognition of deferred tax assets in respect of losses and other timing difference incurred in prior years, and corresponding restatement of the prior year results. The effect of the FRS 19 restatement is as follows:

	2002	2001 as previously reported	FRS19 restatement	2001 (restated)
	£'000	£'000	£'000	£'000
Tax on (loss) / profit on ordinary activities
UK corporation tax	163	2,231	—	2,231
Deferred tax	195	134	65	199

	358	2,365	65	2,430

Balance sheet
Deferred tax asset (notes 14 and 19)	297	—	492	492

	2002		2001 (restated)
	£'000		£'000
(Loss) / profit on ordinary activities before tax	(8,229	)	4,654
(Loss) / profit on ordinary activities multiplied by standard rate of corporation tax in the UK 2002: 30% (2001:30%)	(2,469	)	1,396
Effects of:
Expenses not deductible for tax purposes	3,174		832
Capital allowances for the period in excess of depreciation	(77	)	(10	)
Utilisation of tax losses	(135	)	3
Adjustments to tax charge in respect of previous periods	(208	)	—
Adjustment in respect of provisions	(122	)	10

Current tax charge for the period	163		2,231

9 Dividends

	2002	2001 (restated)
	£'000	£'000
Dividend—final	—	191

F-14

10 Intangible fixed assets

	Goodwill
	Group £'000	Company £'000
Cost
At 1 July 2001 and 30 June 2002	16,685	1,130

Amortisation
At 1 July 2001	4,625	656

Impairment	8,823	298
Charge for the year	885	40

At 30 June 2002	14,333	994

Net book amount
At 30 June 2002	2,352	136

At 30 June 2001	12,060	474

11 Tangible fixed assets

	Leasehold Improvements	Fixtures and Fittings		Computer Equipment		Motor Vehicles		Total
	£'000	£'000		£'000		£'000		£'000
Group
Cost
At 1 July 2001	920	2,500		12,290		672		16,382

Additions	153	101		2,792		25		3,071
Disposals	—	(9	)	(3	)	(230	)	(242	)

At 30 June 2002	1,073	2,592		15,079		467		19,211

Depreciation
At 1 July 2001	279	1,161		6,809		383		8,632

Charge for the year	86	214		2,113		110		2,523
Disposals	—	(6	)	(3	)	(197	)	(206	)

At 30 June 2002	365	1,369		8,919		296		10,949

Net book amount
At 30 June 2002	708	1,223		6,160		171		8,262

At 30 June 2001	641	1,339		5,481		289		7,750

F-15

Company
Cost
At 1 July 2001 and
at 30 June 2002	193	314	12	18	537

Depreciation
At 1 July 2001	142	312	12	18	484
Charge for the year	10	1	—	—	11

At 30 June 2002	152	313	12	18	495

Net book amount
At 30 June 2002	41	1	—	—	42

At 30 June 2001	51	2	—	—	53

12 Investments

	Investments in subsidiary undertakings		Unlisted trade investments		Total
	£'000		£'000		£'000
Group
Cost and net book amount
At 1 July 2001	—		423		423
Additions	—		51		51
Disposals	—		(15	)	(15	)

At 30 June 2002	—		459		459

Company
Cost
At 1 July 2001	7,777		199		7,976
Disposals	—		(15	)	(15	)

At 30 June 2002	7,777		184		7,961

Provisions
At 30 July 2001 and at 30 June 2002	(3,235	)	—		(3,235	)

Net book amount
At 30 June 2002	4,542		184		4,726

At 30 June 2001	4,542		199		4,741

F-16

Centaur Communications Limited holds IPE International Publishers Limited as an investment within its accounts. IPE International Publishers limited is a company incorporated in England and Wales (company registration number 03233596).

Centaur Communications Limited holds 34% of the ordinary share capital of IPE International Publishers Limited. For the year ended 30 June 2001, IPE International Publishers Limited filed accounts at Companies House showing a loss for the year of £20,967 and the aggregate amount of capital and reserves of £282,758.

In the opinion of the directors, Centaur Communications Limited does not exert a significant influence on the operations or decisions of IPE International Publishers Limited.

In the opinion of the Directors, the value of the Group's investments is not less than their carrying amount.

Principal subsidiary undertakings at 30 June 2002

	Holding of ordinary shares
Name	Group %	Company %	Principal activity
Lawtel Limited (formerly Chiron Communications Limited)	100	100	Magazine publishing
Hali Publications Limited	100	69.6	Magazine publishing
Ascent Publishing Limited	100	100	Magazine publishing
IFA Events Limited	80	80	Exhibitions
Your Business Magazine Limited	100	100	Holding company
Perfect Information Limited	99.78	98.93	Financial information services
Consultancy Europe Associates Limited	100	100	Legal information services
Mind Advertising Limited	50	50	Information services

In addition to the holdings above, the Company holds 100% of the issued preference share capital of Hali Publications Limited.

All the above subsidiary undertakings are incorporated in England and Wales. A full list of subsidiary undertakings will be included with the Company's next annual return.

F-17

13 Stocks

	2002		2001 (restated)
	Group £'000	Company £'000	Group £'000	Company £'000
Raw materials	35	—	60	—
Work in progress	503	—	533	—
Goods for resale	12	—	8	—

	550	—	601	—

14 Debtors

	2002		2001 (restated)
	Group £'000	Company £'000	Group £'000	Company £'000
Trade debtors	12,456	—	15,094	—
Amounts owed by Group undertakings	—	43,108	—	52,202
Other debtors	270	17	264	50
Deferred tax asset (note 19)	297	—	492
Prepayments and accrued income	1.489	—	1,096	—

	14,512	43,125	16,946	52,252

15 Creditors: amounts falling due within one year

	2002		2001 (restated)
	Group £'000	Company £'000	Group £'000	Company £'000
Bank and other borrowings	2,039	2,000	1,972	1,950
Amounts owed to Group undertakings	—	7,446	—	15,919
Trade creditors	2,640	—	2,270	—
Corporation tax	365	22	763	172
Social security and other taxes	2,362	18	1,997	25
Other creditors	428	102	336	191
Accruals and deferred income	15,400	535	16,353	244

	23,234	10,123	23,691	18,501

16 Creditors: amounts falling due after more than one year

	2002		2001 (restated)
	Group £'000	Company £'000	Group £'000	Company £'000
Bank and other borrowings	13,787	13,787	15,125	15,125

F-18

17 Bank and other borrowings

			2001 (restated)
Group and Company	2002		2001 (restated)
Group and Company	£'000		£'000
Revolving credit facility	—		8,500
Term loan	16,000		8,750
Issue costs of term loan	(258	)	(300	)

	15,742		16,950
Amortisation of issue costs	45		125

	15,787		17,075

The principal amounts of these borrowings are repayable as follows:
Within 1 year:
Term loan	2,000		1,950

Between 1 and 2 years:
Revolving credit facility	—		1,700
Term loan	4,000		2,600

Between 2 and 5 years:
Revolving credit facility	—		6,800
Term loan	10,000		4,200

The Term Loan was granted on 14 December 2001 and is guaranteed by the Company's subsidiaries, Lawtel Limited (formerly Chiron Communications Limited), Ascent Publishing Limited, Hali Publications Limited, Chiron Communications Limited (formerly Oguz Press Limited) and Your Business Magazine Limited. It is repayable in quarterly instalments commencing 14 March 2003 and ending 14 March 2007. The interest rate is calculated by reference to a formula and approximated to 5.04% per annum.

The Revolving Credit Facility was granted on 14 December 2001 and is guaranteed by the Company's subsidiaries, Lawtel Limited (formerly Chiron Communications Limited), Ascent Publishing Limited, Hali Publications Limited, Chiron Communications Limited (formerly Oguz Press Limited) and Your Business Magazine Limited. The maximum facility allowed is £4,000,000 for a period ending on 14 December 2002 and is extendable by a further year. The interest rate is calculated by reference to a formula and approximated to 5.04% per annum.

Both the above cross guarantees are secured by fixed and floating charges over the Group's assets.

On 1 November 2001 the Company entered into an interest rate swap arrangement, under which the variable rate applying to a principal amount of £10,000,000 of the Term Loan is swapped to a fixed rate of 5.88% until 1 November 2004.

Subsequent to the financial year end the Term Loan amounting to £16 million was redeemed in full but is available to be redrawn if necessary to finance future investment.

F-19

18 Provisions for liabilities and charges

	Onerous Property Contracts	Restructuring Provisions	Total
	£'000	£'000	£'000
Group
At 1 July 2001	—	—	—
Charge for the year	243	202	445

At 30 June 2002	243	202	445

	Deffered tax (note 19)		Onerous Property Contracts	Restructuring Provisions	Total
	£'000		£'000	£'000	£'000
Company
At 1 July 2001	1,254		—	—	1,254
Credit for the year	(2	)	—	—	(2	)

At 30 June 2002	1,252		—	—	1,252

19 Deferred Tax

Deferred tax asset

The deferred tax asset in the Group comprises the following amounts:

	2002		2001 (restated)
	Group £'000		Group £'000
Accelerated capital allowances	(3	)	(65	)
Tax losses carried forward	922		1,066
Other timing differences	(622	)	(509	)

	297		492

	Deferred tax
	£'000
Group
At 1 July 2001 (restated)	492
Charge for the year	(195	)

At 30 June 2002	297

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Deferred tax liability

The deferred tax liability in the Company comprises:

	2002	2001 (restated)
	Company £'000	Company £'000
Accelerated capital allowances	7	13
Other timing differences	1,245	1,241

	1,252	1,254

Unrecognised deferred tax assets comprise the following amounts:

	2002		2001 (restated)
	Group £'000	Company £'000	Group £'000	Company £'000
Tax losses carried forward	16	—	15	—
Other timing differences	1,657	1,657	1,980	1,980

	1,673	1,657	1,995	1,980

20 Called up share capital

Authorised

	2002	2001 (restated)
	£'000	£'000
50,000,000 Ordinary shares of 10p each	5,000	5,000

Allotted, called up and fully paid

	2002		2001 (restated)
	Group £'000	Company £'000	Group £'000	Company £'000
Ordinary shares of 10p each
As at 1 July 2001 (15,324,757 shares)	1,532	1,532	1,531	1,531
Allotted under share option scheme (65,000 shares)	7	7	1	1

As at 30 June 2002 (15,389,757 shares)	1,539	1,539	1,532	1,532

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The company has in issue class A, B, C and D ordinary shares which all rank pari passu in all respects.

During the year employees of the Group exercised their options over ordinary shares in the Company at a price of £1.00 per share as follows:

		Number of shares
Date of exercise
August 2001		15,000
September 2001		50,000

		65,000

At 30 June 2002 options had been granted and agreed to be granted to certain directors and employees to subscribe for a total of 1,761,496 ordinary shares of 10p each at varying times and varying prices up to August 2006. The directors' options are disclosed in the directors' report.

21 Share premium account

	2002		2001 (restated)
	Group £'000	Company £'000	Group £'000	Company £'000
As at 1 July 2001	13,378	13,378	13,378	13,378
Premium on shares issued during the year under share option scheme	58	58	—	—

As at 30 June 2002	13,436	13,436	13,378	13,378

22 Capital redemption reserve

	2002		2001 (restated)
	Group £'000	Company £'000	Group £'000	Company £'000
At 1 July and 30 June 2002	483	483	483	483

23 Profit and loss account

	Group		Company
	£'000		£'000
At 1 July 2001—as previously reported	(16,158	)	8,254
Prior year adjustment (note 7- FRS 19 "Deferred Tax")	1,250		—

At 1 July 2001—as restated	(14,908	)	8,254
Retained (loss)/profit for the financial year	(8,628	)	(104	)

At 30 June 2002	(23,536	)	8,150

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At 30 June 2002, £98,000 of goodwill remained eliminated directly against the profit and loss account reserve. This will be charged to the profit and loss account in the period in which disposal of the related business is made.

Of the Company's profit and loss account at 30 June 2002, £918,000 is regarded as being available for distribution. In addition, a further £2,078,000 may become available for distribution if dividends are declared and paid up to the Company by subsidiaries.

The Company has taken advantage of the exemption available under section 230 of the Companies Act 1985 and has not presented its own profit and loss account in these financial statements. Of the Group loss for the financial year, £(104,783) (2001: profit £200,264) is dealt with in the financial statements of the Company.

24 Capital commitments

The Group and Company had no capital commitments at 30 June 2002 or 30 June 2001.

25 Operating lease commitments

The operating lease rentals payable within one year of the balance sheet date are as follows:

		Land and buildings		Equipment
		2002 £'000	2001 £'000	2002 £'000	2001 £'000
On leases expiring:
	— within 1 year	38	22	7	—
	— between 2 and 5 years	194	38	192	211
	— after 5 years	2,495	2,671	—	—

		2,727	2,731	199	211

26 Pension schemes

The Group contributes to individual and collective money purchase pension schemes in respect of directors and employees once they have completed the requisite period of service. The charge for the year in respect of these pension schemes is shown in note 5.

27 Contingent liabilities

The Company, together with its subsidiary undertakings, has granted a cross guarantee in favour of its bankers in respect of the bank borrowings of the Group. The guarantee is secured by fixed and floating charges over the Group's assets.

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28 Equity Minority interests

	£'000
At 1 July 2001	57
Dividend paid	(51	)
Share of net income for the year	41

At 30 June 2002	47

29 Net cash inflow from operating activities

Reconciliation of operating (loss) / profit to net cash inflow from operating activities:

	2002		2001 (restated)
	£'000		£'000
Operating (loss) / profit	(6,826	)	6,284
Depreciation of tangible fixed assets	2,523		2,255
Amortisation of goodwill	885		875
Exceptional item—impairment of goodwill	8,823		—
(Profit) / loss on disposal of fixed assets	(23	)	3
Loss on disposal of trade investment	—		10
Decrease / (increase) in stocks	51		(138	)
Decrease in debtors	2,239		3,982
(Decrease) / increase in creditors	65		720
Increase in provisions	445		—

Net cash inflow from operating activities	8,182		13,991

30 Analysis of movement in net debt

	At 1 July 2001		Cash flow		Other non-cash changes		At 30 June 2002
	£'000		£'000		£'000		£'000
Cash at bank and in hand	1,556		1,705		—		3,261

Debt due within 1 year (before issue costs)	(1,950	)	1,950		(2,000	)	(2,000	)
Debt due after 1 year (before issue costs)	(15,300	)	(700	)	2,000		(14,000	)

	(17,250	)	1,250		—		(16,000	)

	(15,694	)	2,955		—		(12,739	)

F-24

31 Reconciliation of net cash flows to movements in net debt

	2002		2001 (restated)
	£'000		£'000
Increase in cash in the year	1,705		420
Cash outflow from changes in debt	1,250		6,450

Change in net debt resulting from cash flows	2,955		6,870

Movement in net debt in the year	2,955		6,870
Net debt at 1 July (before issue costs)	(15,694	)	(22,564	)

Net debt at 30 June (before issue costs)	(12,739	)	(15,694	)

32 Disposal of business

In year ended 30 June 2002, the Group did not make a material disposal of a business. (2001:On 5 October 2000, the Group disposed of the business of EXE for a cash consideration of £137,000, giving rise to a loss of £105,000.)

33 Acquisitions

During the year ended June 2002 the Group did not make any acquisitions. During the year ended 30 June 2001 made the following acquisitions:

	Mind Advertising Limited(a)		IFA Events Limited(b)		IFA Events Limited(c)		Total
	£'000		£'000		£'000		£'000
Tangible fixed assets	3		28		26		57
Stocks	—		60		54		114
Debtors	9		293		452		754
Cash at bank and in hand	4		103		283		390
Creditors: amounts falling due within one year	(15	)	(344	)	(583	)	(942	)

	1		140		232		373
Minority interests	(1	)	(126	)	(188	)	(315	)

Group share of net assets acquired	—		14		44		58
Goodwill	50		137		246		433

Consideration	50		151		290		491

Satisfied by:
Cash	50		151		290		491

The following information relates to prior period comparatives:

a): Mind Advertising Limited

On 27 July 2000, the Group acquired 50% of the assets and liabilities of Mind Advertising Limited for a consideration of £50,000. This purchase was accounted for by the acquisition method of accounting. The book values of the assets and liabilities acquired, which are shown in the table above, approximated to their fair values.

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b): IFA Events Limited

On 18 October 2000, the Group acquired a further 10% of the issued share capital of IFA Events Limited for a consideration of £151,000. This purchase was accounted for by the acquisition method of accounting. The book values of the assets and liabilities acquired, which are shown in the table above, approximated to their fair values.

c): IFA Events Limited

On 3 May 2001, the Group acquired a further 19% of the issued share capital of IFA Events Limited for a consideration of £290,000. This purchase was accounted for by the acquisition method of accounting. The book values of the assets and liabilities acquired, which are shown in the table above, approximated to their fair values.

34 Post balance sheet events

a): Subsequent to the financial year end, the Group disposed of its subsidiary companies Lawtel Limited and Consultancy Europe Associates Limited, the on-line legal reporting business, to Thomson Legal & Regulatory Limited for a consideration of £17.1 million resulting in a profit on disposal of £15.4m. Of this consideration a total of £1.45 million is deferred over three years. The results of this on-line legal reporting business are shown as discontinued activities.
b): Subsequent to the financial year end the Term Loan amounting to £16 million was redeemed in full.
c): Subsequent to the year end, the Group sold the business of Leisure and Hospitality Business to William Reed Publishing Limited for a consideration of £1.

35 Reconciliation to generally accepted accounting principles in the United States ("US GAAP")

The accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United Kingdom ("UK GAAP"), which differs in certain significant respects from US GAAP. Such differences include methods for measuring the amounts shown in the financial statements, as well as additional disclosures required by US GAAP.

F-26

The effect on the consolidated net income and shareholders' equity of applying the significant differences between UK GAAP and US GAAP is summarised in the reconciliation statements over the page:

(a) Reconciliation of net income

	2002		2001
	£'000		£'000
Net income (loss) in accordance with UK GAAP	(8,628	)	1,932
Dividend proposed (1)	(191	)	191
Amortisation of goodwill (2)	(501	)	299
Disposal of unincorporated business (3)	—		(48	)
Remuneration Effect of options exercised (4)	35		—
Release of valuation allowance against deferred tax asset (6)	1,250		—
Valuation allowance deferred tax asset	—		65

Net income (loss)in accordance with US GAAP	(8,035	)	2,439

(b) Reconciliation of shareholders' equity

		2002		Restated 2001
		£'000		£'000
Equity shareholders' funds in accordance with UK GAAP		(8,078	)	(765	)
Prior period adjustment—Deferred Tax(6)		—		1,250

		(8,078	)	485
Dividend proposed(1)		—		191
Deferred taxes(6)		—		(1,250	)
Amortisation of goodwill(2)		1,023		1,572
Disposal of business(3)		—		(48	)
Reinstatement of goodwill written off(5)		98		98
Remuneration element of equity share options(4)		(1,464	)	(1,499	)

		(8,421	)	(451	)

	(c) Changes in US GAAP shareholders' equity
Shareholders' equity at the beginning of the year		(451	)	(2,890	)
Net income (loss)		(8,035	)	2,439
Issue of share capital		65		—

		(8,421	)	(451	)

(1): A dividend of £191,000 was proposed for the period ended 30 June 2001. Under UK GAAP dividends are reported on an accruals basis and therefore was included in arriving at the net income for the year ended 30 June 2001. Under US GAAP dividends are not reported until the board declare the dividend to the shareholders and therefore the dividend will be a reconciling

F-27

item until paid. The dividend was declared in the quarter ending 31 December 2001 and is therefore charged as an expense under US GAAP in the year ended 30 June 2002.

(2): Under UK GAAP goodwill is being amortised over a maximum period of 20 years, following the adoption of FRS 10. In accordance with US GAAP goodwill is amortised over an estimated economic life of 30 years. In the current year, goodwill relating to the Engineering portfolio and Leisure and Hospitality Business was impaired and written down.
(3): During the year ended 30 June 2001, the Group disposed of an unincorporated business, EXE and the related goodwill. The profit on disposal under US GAAP was lower by £48,000, this being the difference in accumulated amortisation on the EXE goodwill asset.
(4): Under UK GAAP, the remuneration element of stock options is charged against net income in the period between the options being granted and the date of vesting, with an equal amount credited directly to shareholders' equity. Under US GAAP an available alternative method is to charge net income and credit a liability account, with the balance on the liability account being subsequently transferred to shareholders' equity as the options are exercised or lapse.

The Group has adopted this available alternative method and accordingly a GAAP difference arises in shareholders' equity.

(5): Under UK GAAP, the group has previously written off goodwill of £98,000 directly to shareholders' equity. Under US GAAP, the goodwill is reinstated and is being amortised over 30 years.
(6): Under UK GAAP, FRS 19 requires full provision to be made for deferred tax assets and liabilities arising from timing differences between the recognition of gains and losses in the financial statements and their recognition in a tax computation. Deferred tax assets are recognised to the extent that they are regarded as recoverable. Recoverability is regarded as more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted.

Under US GAAP deferred taxes are provided for on a full liability basis. Under the full liability method, deferred tax assets and liabilities are recognised between the financial and tax bases of assets, liabilities and for tax loss carry forwards at the statutory rate of each reporting date. A valuation allowance is established when it is more likely than not that some portion or all of the deferred tax assets will not be realised.

A subsidiary undertaking of Centaur Communications Limited, Perfect Information Limited, incurred tax losses up to June 2001 of £2,872,000, which under UK tax law are carried forward indefinitely to be offset against taxable profits arising from the same trade. The Company adopted FRS 19 during 2002 and restated prior financial statements. The historical conversion to U.S.GAAP recognised a deferred tax asset and provided a full valuation allowance at 30 June 2001.

Perfect Information has made taxable profits in the current financial year and Centaur Communications Limited consider it more likely than not that Perfect Information will produce suitable taxable profits from which the future reversal of the underlying timing difference can be deducted. This has resulted in a deferred tax asset being created under FRS 19 and accordingly under US GAAP, the valuation allowance set against the related deferred tax asset has been released.

F-28

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PART 1
Real Estate Held For Development or Sale
Nursery Real Estate
PART II
Market Information
Dividend Policy
GRIFFIN LAND & NURSERIES, INC Consolidated Statement of Operations (dollars in thousands, except per share data)
GRIFFIN LAND & NURSERIES, INC. Consolidated Balance Sheet (dollars in thousands, except per share data)
GRIFFIN LAND & NURSERIES, INC. Consolidated Statement of Stockholders' Equity (dollars in thousands)
GRIFFIN LAND & NURSERIES, INC. Consolidated Statement of Cash Flows (dollars in thousands)
GRIFFIN LAND & NURSERIES, INC. Notes to Consolidated Financial Statements (dollars in thousands, except per share data)
Report of Independent Accountants
Consent of Independent Accountants
PART III
Summary Compensation Table
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option Values
Compensation of Directors
Section 16(a) Beneficial Ownership Reporting Compliance
Compensation Committee Interlocks and Insider Participation
PART IV
SIGNATURES
FORM OF CERTIFICATION
FORM OF CERTIFICATION
Schedule II—Valuation and Qualifying Accounts and Reserves (dollars in thousands)
Fiscal year ended November 30, 2002
Fiscal year ended December 1, 2001
Fiscal year ended December 2, 2000
INDEPENDENT ACCOUNTANTS
Centaur Communications Limited Consolidated profit and loss account for the year ended 30 June 2002
Centaur Communications Limited Consolidated balance sheet at 30 June 2002
Centaur Communications Limited Company balance sheet at 30 June 2002
Centaur Communications Limited Consolidated cash flow statement for the year ended 30 June 2002
Centaur Communications Limited Statement of Group total recognised gains and losses
Centaur Communications Limited Notes to the financial statements

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Exhibit 10.23

AGREEMENT OF PURCHASE AND SALE OF PARTNERSHIP INTEREST

This AGREEMENT OF PURCHASE AND SALE OF PARTNERSHIP INTEREST (this "Agreement") is made and entered into as of this 5th day of December, 2002 by and between USAA REAL ESTATE COMPANY , a Texas corporation having an office at 9830 Colonnade Boulevard, Suite 600, San Antonio, Texas 78230 (hereinafter referred to as the " Seller ") and GRIFFIN LAND & NURSERIES, INC. , a Delaware corporation having an office at 204 West Newberry Road, Bloomfield, Connecticut 06002 (hereinafter referred to as the " Purchaser ").

R E C I T A L S:

WHEREAS, the Seller and Purchaser are the sole Partners in USGC Joint Venture (the "Joint Venture"), a Connecticut general partnership, pursuant to the terms of that certain USGC Joint Venture Agreement (the "Joint Venture Agreement") dated as of June 13, 1984 by and between Seller and Purchaser; and

WHEREAS, Seller owns and holds an undivided 70% interest in the Joint Venture ("Seller's Partnership Interest"), and Purchaser owns and holds an undivided 30% interest in the Joint Venture ("Purchaser's Partnership Interest"); and

WHEREAS, the Joint Venture owns certain improved real property commonly known as 5 & 7 Waterside Crossing, located in Windsor, Connecticut, along with certain related personal and intangible property (collectively, the "Property"); and

WHEREAS, the Seller has agreed to sell and assign, and Purchaser has agreed to purchase and take an assignment of, Seller's Partnership Interest; and

WHEREAS, Seller and Purchaser have agreed to such sale and assignment on the terms and conditions contained herein.

NOW, THEREFORE, in consideration of the foregoing, of the covenants, promises and undertakings set forth herein, and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller and Purchaser agree as follows:

Section 1. Sale and Assignment of Seller's Percentage. For the consideration specified in Section 2, the Seller hereby agrees to sell, transfer, convey, and assign to the Purchaser all of Seller's Partnership Interest and all of Seller's rights under the Joint Venture Agreement, including, without limitation, (i) all rights of the Seller to receive Profits, Losses and other property or assets due and to become due to the Seller under or pursuant to the Joint Venture Agreement, and (ii) all rights of the Seller to receive proceeds or benefit of any indemnity, warranty, or other payments with respect to the Joint Venture (and all of the foregoing, together with Seller's Partnership Interest, are hereinafter collectively referred to as "Seller's Percentage"). The Purchaser hereby agrees to purchase and take an assignment of Seller's Percentage.

Section 2. Purchase Price. The purchase price for Seller's Percentage (the "Purchase Price") is EIGHT MILLION SIX HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS ($8,650,000.00).

Section 3. Payment. Payment of the Purchase Price is to be made in cash as follows:

(a): Prior to the date hereof Purchaser has made an earnest money deposit of ONE MILLION AND NO/100 DOLLARS ($1,000,000.00) (the "Deposit"). The Deposit has been placed with and is being held in escrow by Commonwealth Land Title Insurance Company (the "Title Company"), located at 111 Founders Plaza, Suite 1702, East Hartford, Connecticut 06108, Attention: George Browne, Esq., in an interest bearing account at Fleet National Bank. Any interest earned by the Deposit shall be considered as part of the Deposit. Except as otherwise expressly provided in this Agreement, the Deposit shall be applied to the Purchase Price at Closing.

(c): At Closing, Purchaser shall pay to (or cause to be paid to) Seller EIGHT MILLION SIX HUNDRED FIFTY THOUSAND AND NO/DOLLARS ($8,650,000.00), inclusive of the Deposit and subject to adjustment for the prorations as provided herein.

Section 4. Closing. Payment of the Purchase Price and the closing hereunder (the "Closing") will take place at the offices of the Title Company or at such other place as may be agreed upon in writing by Seller and Purchaser. Both parties hereby agree that the Closing shall take place no later than December 6, 2002. Purchaser may, at its option and upon at least five (5) business days prior written notice to Seller, elect to accelerate the Closing date (and the actual Closing date hereunder is hereinafter referred to as the "Closing Date"). Although specifically not a condition to Purchaser's obligations hereunder, Seller acknowledges that Purchaser may wish to finance its acquisition of Seller's Percentage by mortgaging the Property. Seller agrees, without additional cost to Seller and without deferring the Closing Date, to cooperate with Purchaser in all reasonable ways in order to effectuate such financing, including, without limitation, closing in escrow with the Title Company in order to permit the simultaneous conveyance and mortgaging of the Property.

Section 5. Seller's Continuing Rights and Obligations. From and after the Closing Date, Seller shall cease to be a partner in the Joint Venture, and shall cease to be entitled to or liable for any rights, proceeds, interests, powers, warranties, obligations and/or liabilities in the Joint Venture, under the Joint Venture Agreement and/or relating to the Property with respect to any period from and after the Closing Date. With respect to all entitlements and liabilities of the Joint Venture arising prior to the Closing Date, except as set forth in Section 11 hereof Seller shall remain entitled to (and liable for) 70% of all such rights and obligations, and Purchaser shall be entitled to (and liable for) 30% of all such rights and obligations. Consistent with the foregoing, Purchaser hereby agrees to indemnify Seller against and hold Seller harmless from any and all cost, liability, loss, damage or expense, including, without limitation, reasonable attorneys' fees, arising out of the Joint Venture Agreement and/or the Property and attributable to any event or circumstance first occurring or arising from and after the Closing Date. Further consistent with the foregoing, Purchaser (with respect to 30%) and Seller (with respect to 70%) hereby each agree to indemnify the other against and hold the other harmless from any and all cost, liability, loss, damage or expense, including, without limitation, reasonable attorneys' fees, arising out of the Joint Venture Agreement and/or the Property and attributable to any event or circumstance occurring or arising prior to the Closing Date.

Section 6. Dissolution or Continuation of Joint Venture. After the Closing Date, Purchaser shall hold Seller's Percentage plus Purchaser's Partnership Interest in the Joint Venture, for a combined 100% of the ownership interests in the Joint Venture, resulting in dissolution of the Joint Venture pursuant to Section 8.1 of the Joint Venture Agreement. Notwithstanding said Section 8.1, as an alternative to dissolution it is agreed that Purchaser may at its option assign this Agreement to a subsidiary entity in accordance with Section 17(d) hereof, in which event Purchaser may elect to continue the Joint Venture after the Closing Date.

Section 7. Inspections and Approvals. The parties acknowledge that this Agreement contains no provision for an inspection or a due diligence period. Seller and Purchaser agree that Purchaser, in acquiring Seller's Percentage hereunder, is accepting the Property in an "as-is" condition.

Section 8. Prior to Closing. Until Closing, the Joint Venture shall:

(a) Insurance. Maintain all existing insurance on the Property, including, without limitation, insurance against fire and other hazards covered by extended coverage endorsement and comprehensive public liability insurance against claims for bodily injury, death and property damage occurring in, on or about the Property.

(b) Operation. Operate and maintain the Property in a businesslike manner and in accordance with the Joint Venture's past practices with respect to the Property, and make any and

all repairs and replacements reasonably required to deliver the Property to Purchaser at Closing in its present condition, normal wear and tear excepted, provided that in the event of any loss or damage to the Property as described in Section 11 , Section 11 shall be controlling.

(c) Compliance with Agreements. Comply with the terms, covenants, conditions and obligations contained in all the leases, contracts and any other material document or agreement affecting the Property and to monitor compliance thereunder, consistent with past practices.

(d) New Contracts. Not enter any new third-party contracts or leases unless Purchaser consents thereto in writing.

(e) Other Agreements. Not enter into, modify, amend or terminate any existing lease, contract or other agreement with respect to the Property which would encumber or be binding upon the Property or the Joint Venture from and after the Closing Date, without in each instance obtaining the prior written consent of Purchaser.

(f) Take no action to change the status of title to the Property.

Section 9. Representations and Warranties.

(a) By Seller. To induce Purchaser to enter in this Agreement, Seller represents and warrants to Purchaser as follows:

(i): The Seller has (and will, through the Closing Date) duly, truly and fully performed and observed the material undertakings, agreements, warranties, obligations and conditions on the part of the Seller that are contained in the Joint Venture Agreement, and the Seller is not in any respect in material default under or as to any of such undertakings, agreements, warranties, obligations and conditions. The Seller's execution, delivery and performance of this Agreement has been authorized by all necessary action on the Seller's part and does not require any consent, authorization or approval of any governmental entity or other third party.
(ii): This Agreement is the valid and binding obligation of the Seller, enforceable in accordance with its terms;
(iii): The Seller is the sole owner of Seller's Percentage, and the Seller has good title to the Seller's Percentage, free and clear of any liens, claims, encumbrances, security interests, options or other claims of any nature;
(iv): The Seller will cause the Joint Venture to comply with the provisions of Section 8 hereof; and
(v): To Seller's knowledge, no investigation, action or proceeding is pending and, to Seller's knowledge, no action or proceeding is threatened and no investigation looking toward such an action or proceeding has begun which (A) questions the validity of this Agreement or any action to be taken pursuant hereto, (B) will result in any material adverse change in the business operation, affairs or condition of the Joint Venture, or (C) results in or subjects the Joint Venture to a material liability. As used in this Section 9 and elsewhere in this Agreement, the phrase "to Seller's knowledge" or phrases of similar import mean and are limited to the actual current knowledge of Seller, without any independent investigation or inquiry having been made, and not to any constructive knowledge of Seller.

(b) By Purchaser. To induce Seller to enter in this Agreement, Purchaser represents and warrants to Seller as follows:

(i): The Purchaser has (and will, through the Closing Date) duly, truly and fully performed and observed the material undertakings, agreements, warranties, obligations and conditions on the part of the Purchaser that are contained in the Joint Venture Agreement, and the Purchaser is not in any respect in material default under or as to any of such undertakings, agreements,

warranties, obligations and conditions. The Purchaser's execution, delivery and performance of this Agreement has been authorized by all necessary action on the Purchaser's part and does not require any consent, authorization or approval of any governmental entity or other third party.

(ii): This Agreement is the valid and binding obligation of the Purchaser, enforceable in accordance with its terms;
(iii): The Purchaser will cause the Joint Venture to comply with the provisions of Section 8 hereof; and
(iv): To Purchaser's knowledge, no investigation, action or proceeding is pending and, to Purchaser's knowledge, no action or proceeding is threatened and no investigation looking toward such an action or proceeding has begun which (A) questions the validity of this Agreement or any action to be taken pursuant hereto, (B) will result in any material adverse change in the business operation, affairs or condition of the Joint Venture, or (C) results in or subjects the Joint Venture to a material liability. As used in this Section 9 and elsewhere in this Agreement, the phrase "to Purchaser's knowledge" or phrases of similar import mean and are limited to the actual current knowledge of Purchaser, without any independent investigation or inquiry having been made, and not to any constructive knowledge of Purchaser.

(c) By Both Parties. Both parties acknowledge that there are no brokerage firms involved in this transaction other than CB Richard Ellis (CBRE). Seller alone, and not the Joint Venture, shall be responsible for the payment of the commission to CBRE in accordance with separate agreement between CBRE and Seller, and Seller shall indemnify Purchaser against any claim for a commission by CBRE arising as a result of this Agreement. Each party (the "indemnifying party") shall indemnify the other for the claim of any other broker or other party claiming a fee or commission arising out of this Agreement as a result of the acts of the indemnifying party.

(d) Survival of Representations and Warranties. Reference is made to Seller's representations and warranties as set forth in Subsections 9(a)(ii) and (iii), and to Purchaser's representation and warranty as set forth in Subsection 9(b)(ii) (collectively, the "Continuing Reps"). Other than the Continuing Reps, which shall not be limited in duration, each of the other representations and warranties of Seller and Purchaser contained in this Agreement will survive for a period of eighteen (18) months after the Closing. Other than the Continuing Reps, any claim that Seller or Purchaser may have at any time against the other for a breach of any other representation or warranty contained in this Agreement, whether known or unknown, which is not specifically asserted by written notice from Seller or Purchaser to the other before the expiration of such eighteen (18) month period will not be valid or effective, and the offending party will have no liability with respect thereto.

Section 10. Costs and Prorations.

A. Real Estate. At Closing, all real estate taxes, rents, utilities, and all other items of income and expense normally adjusted in real estate transactions and applicable to the Property shall be adjusted between Purchaser and the Joint Venture as of the Closing Date, with the intent that Purchaser shall bear all expenses and receive all income with respect to the Property accruing from and after the Closing Date, and the Joint Venture shall bear all expenses and receive all income with respect to the Property accruing through midnight at the end of the day preceding the Closing Date. However, delinquent rents will not be prorated at Closing. Rents are delinquent if they were due prior to the Closing Date but payment thereof has not been made on or before the Closing Date. Purchaser shall use commercially reasonable efforts during the three (3) month period immediately following the Closing Date to collect and promptly remit to Seller rents or other amounts due Seller for the period prior to the Closing Date. All rents collected after the Closing Date shall be applied first to rents due

for the month in which the Closing occurs, second to rents for periods after the month in which the Closing Date occurs (provided that rents which are received prior to the due date, unless specified by the tenant as advance payments, shall be applied to unpaid periods prior to the Closing Date), and third to rents for periods prior to the month in which the Closing Date occurs. Purchaser's obligations with respect to the collection and remittance of rents to Seller shall survive Closing.

B. Joint Venture. Upon completing the Property prorations set forth in Section 10(A) above, Seller and Purchaser shall further apportion the income and expenses applicable to the Joint Venture 70% to Seller and 30% to Purchaser. All other items of income and expense applicable to the Joint Venture up to the Closing Date shall likewise be allocated 70% to Seller and 30% to Purchaser. In addition, all costs and expenses incurred by either Seller or Purchaser in negotiating and closing the transaction contemplated by this Agreement (including without limitation attorneys' fees) shall be allocated 70% to Seller and 30% to Purchaser. Notwithstanding the foregoing, controlling interest transfer taxes payable under Connecticut law upon the transfer of Seller's Percentage in excess of $96,015.00 shall be 100% Seller's responsibility. In addition, at Closing, provided that the Joint Venture or Seller is not otherwise charged for the cost of a title insurance policy at Closing, Purchaser shall be entitled to a credit of $7,741.00 (70% of the cost, net of any commission, of an owner's title insurance policy in the amount of $12,360,000.00). Except as otherwise expressly provided herein, the purpose and intent of the prorations and apportionments set forth in this Section 10 and elsewhere in this Agreement are that the Joint Venture shall bear all expenses of ownership and operation of the Property and shall receive all income therefrom accruing through midnight at the end of the day preceding the Closing Date, with Seller bearing 70% of all of such expenses and receiving 70% of all of such income, and Purchaser bearing 30% of all of such expenses and receiving 30% of all of such income.

C. Net Adjustment. Upon completing the adjustments set forth above, the net credit (or debit) which would otherwise be payable to (or payable from) Purchaser shall be reflected as a credit (or debit) against the Purchaser Price, as the case may be. In this connection, it is understood that, although final adjustment will be made between Purchaser and Seller wherever possible, certain items of income and/or expense may not be available for adjustment and/or may only be estimated at Closing. In all such instances, final adjustment shall be made as soon as possible and in any event within one hundred twenty (120) days following the Closing, and Seller and Purchaser agree to cooperate with each other, reasonably and in good faith, as shall be necessary to finalize any post-closing adjustment.

Section 11. Damage, Destruction or Condemnation. If, prior to Closing, all or any portion of the Property is rendered untenantable or is destroyed or damaged, or is taken under power of eminent domain, Purchaser shall close this transaction on the date and at the Purchase Price agreed upon in Section 2 without any diminution whatsoever, and Seller shall assign to Purchaser 100% of the proceeds of any insurance policies payable to Seller on account of, in connection with or as a result of such damage or destruction, and/or 100% of any condemnation award.

Section 12. Closing Conditions.

(a) Purchaser's Closing Conditions. The obligation of Purchaser to acquire Seller's Percentage from Seller shall be subject to the satisfaction of the following conditions precedent on and as of the Closing Date:

(i) Seller shall have delivered to Purchaser Seller's Closing Documents (as hereinafter defined).

(ii) All representations and warranties of Seller herein shall continue to be true, correct and complete in all material respects on and as of the Closing Date, and Seller shall have performed all covenants and obligations required to be performed by Seller hereunder on or before the Closing Date.

(b) Seller's Closing Conditions. The obligation of Seller to convey the Seller's Percentage to Purchaser shall be subject to the satisfaction of the following conditions precedent on and as of the Closing Date:

(i) Purchaser shall have delivered to the Title Company the Purchase Price payable hereunder.

(ii) Purchaser shall have delivered to Seller Purchaser's Closing Documents (as hereinafter defined).

(iii) All representations and warranties of Purchaser herein shall be true, correct and complete in all material respects on and as of the Closing Date and Purchaser shall have performed all covenants and obligations required to be performed by Purchaser on or before the Closing Date.

Section 13. Closing and Escrow.

(a)

Escrow instructions. Upon execution of this Agreement, the parties shall deliver an executed counterpart of this Agreement to the Title Company to serve as the instructions to the Title Company as the escrow holder for consummation of the transaction contemplated herein. Seller and Purchaser agree to execute such additional and supplementary escrow instructions as may be appropriate to enable the Title Company to comply with the terms of this Agreement; provided, however, that in the event of any conflict between the provisions of this Agreement and any supplementary escrow instructions, the terms of the Agreement shall prevail.

(b)

Seller's Deliveries. Seller shall deliver either at Closing the following original documents (collectively, "Seller's Closing Documents"), each executed and, if required, acknowledged:

(i): An Assignment of Partnership Interest (the "Assignment") in the form attached hereto as Exhibit A ;
(ii): Documentation to establish the reasonable satisfaction of Purchaser and the Title Company the due authorization of the sale of Seller's Percentage by Seller and the delivery of the Assignment;
(iii): On behalf of the Joint Venture, a parties in possession affidavit, a mechanic's lien affidavit, and such other documents, certificates, and other instruments as the Title Company may reasonably require and as are customary in like transactions in the State of Connecticut.

(c): Purchaser's Deliveries. At the Closing, Purchaser shall (i) pay Seller the Purchase Price; (ii) execute any applicable agreements required under this Agreement (collectively, the "Purchaser's Closing Documents"); (iii) provide documentation to establish to the reasonable satisfaction of Seller and the Title Company the due authorization of the purchase of Seller's Percentage by Purchaser and the delivery of the Assignment; and (iv) on behalf of the Joint Venture, execute a parties in possession affidavit, a mechanic's lien affidavit, and such other documents, certificates, and other instruments as the Title Company may reasonably require and as are customary in like transactions in the State of Connecticut.

Section 14. Default; (Failure of Condition).

(a) Purchaser Default . IF PURCHASER SHALL BECOME IN BREACH OF OR DEFAULT UNDER THIS AGREEMENT BEYOND THE EXPIRATION OF THE APPLICABLE CURE PERIOD, IF ANY, OR THE CLOSING DATE AND THE CLOSING DOES NOT OCCUR AS A RESULT THEREOF (OTHER THAN BY REASON OF A BREACH OR DEFAULT BY SELLER UNDER THIS AGREEMENT BEYOND THE EXPIRATION OF THE APPLICABLE CURE PERIOD, IF ANY, OR THE CLOSING DATE, THE DEPOSIT SHALL BE RETAINED BY SELLER AS LIQUIDATED

DAMAGES, AND BOTH PARTIES SHALL BE RELIEVED OF AND RELEASED FROM ANY FURTHER LIABILITY HEREUNDER. SELLER AND PURCHASER AGREE THAT THE DEPOSIT IS A FAIR AND REASONABLE AMOUNT TO BE RETAINED BY SELLER AS AGREED AND LIQUIDATED DAMAGES IN LIGHT OF SELLER'S REMOVAL OF THE PROPERTY FROM THE MARKET AND THE COSTS INCURRED BY SELLER AND SHALL NOT CONSTITUTE A PENALTY OR A FORFEITURE.

Purchaser's Initials

Seller's Initials

(b) Seller Default. If Seller shall refuse or fail to convey Seller's Percentage as herein provided for any reason other than (i) a default by Purchaser beyond the expiration of the applicable cure period, if any, or the Closing Date, or (ii) any other provision of this Agreement which permits Seller to terminate this Agreement or otherwise relieves Seller of the obligation to convey Seller's Percentage, Purchaser may, as its sole remedy, either (x) terminate this Agreement and receive a refund of the Deposit or (y) pursue a suit for specific performance; provided, however , if Purchaser is unsuccessful in its suit for specific performance but Seller is adjudicated in default of its obligations hereunder, it shall nevertheless be entitled to the remedies provided in clause (ii)(x) above.

Section 15. Amendment, Modification and Waiver. No amendment, supplement, modification, waiver or termination of this Agreement or any provisions hereof shall be binding unless executed in writing by all parties hereto. No waiver of any of the provisions of this Agreement shall constitute a waiver of any other provision (whether or not similar), nor shall such waiver constitute a continuing waiver unless otherwise expressly provided.

Section 16. Notices. Any notice required or permitted to be given hereunder shall be deemed to be given when hand delivered, transmitted by facsimile (with electronic confirmation of receipt) or one (1) business day after pickup by Emery Air Freight, Airborne, Federal Express, or similar overnight express service, in either case addressed to the parties at their respective addresses referenced below:

If to Seller:		USAA Real Estate Company 9830 Colonnade Boulevard, Suite 600 San Antonio, Texas 78230 Attention: Elizabeth Hamilton/Susan Swank Telephone: (210) 498-2994 Fax: (210) 691-3324
with copies to:		USAA Real Estate Company 9830 Colonnade Boulevard, Suite 600 San Antonio, Texas 78230 Attention: Susan Wallace Telephone: (210) 498-3222 Fax: (210) 691-3259
If to Purchaser:		Griffin Land & Nurseries, Inc. 204 West Newberry Road Bloomfield, CT 06002 Attention: Thomas M. Lescalleet Telephone: (860) 286-7600 Fax: (860) 286-7653
with copies to:		Murtha Cullina LLP CityPlace I, 185 Asylum Street Hartford, Connecticut 06103-3469 Attention: Thomas M. Daniells Telephone: (860) 240-6078 Fax: (860) 240-6150

or in each case to such other address as either party may from time to time designate by giving notice in writing to the other party. Telephone numbers are for informational purposes only. Effective notice will be deemed given only as provided above.

Section 17. Miscellaneous.

(a) Entire Agreement. This Agreement, together with the Exhibits attached hereto, all of which are incorporated by reference, is the entire agreement between the parties with respect to the subject matter hereof, and no alteration, modification or interpretation hereof shall be binding unless in writing and signed by both parties.

(b) Severability. If any provision of this Agreement or application to any party or circumstances shall be determined by any court of competent jurisdiction to be invalid and unenforceable to any extent, the remainder of this Agreement or the application of such provision to such person or circumstances, other than those as to which it is so determined invalid or unenforceable, shall not be affected thereby, and each provision hereof shall be valid and shall be enforced to the fullest extent permitted by law.

(c) Applicable Law. This Agreement shall be construed and enforced in accordance with the laws of the State of Connecticut.

(d) Assignability. Neither party may assign this Agreement without first obtaining the other party's written consent, except that Purchaser may assign this Agreement to any entity wholly owned, directly or indirectly, by Purchaser. Any assignment in contravention of this provision shall be void. No assignment shall release Purchaser herein named from any obligation or liability under this Agreement. Any assignee shall be deemed to have made any and all representations and warranties made by Purchaser hereunder, as if the assignee were the original signatory hereto.

(e) Successors Bound; Survival. This Agreement shall be binding upon and inure to the benefit of Purchaser and Seller and their respective successors and permitted assigns. The provisions of this Agreement shall survive the Closing.

(f) Waivers, Etc. Any waiver of any term or condition of this Agreement, or of the breach of any covenant, representation or warranty contained herein, in any one instance, shall not operate as or be deemed to be or construed as a further or continuing waiver of any other breach of such term, condition, covenant, representation or warranty or any other term, condition, covenant, representation or warranty, nor shall any failure at any time or times to enforce or require performance of any provision hereof operate as a waiver of or affect in any manner such party's right at a later time to enforce or require performance of such provision or any other provision hereof. This Agreement may not be amended, nor shall any waiver, change, modification, consent or discharge be effected, except by an instrument in writing executed by or on behalf of the party against whom enforcement of any amendment, waiver, change, modification, consent or discharge is sought.

(g) Captions. The captions in this Agreement are inserted only as a matter of convenience and for reference and in no way define, limit or describe the scope of this Agreement or the scope or content of any of its provisions.

(h) Attorneys' Fees. In the event of any litigation arising out of this Agreement, the prevailing party shall be entitled to reasonable attorneys' fees and costs.

(i) Time of Essence. Time is of the essence in this Agreement.

(j) Counterparts. This Agreement may be executed and delivered in any number of counterparts, each of which so executed and delivered shall be deemed to be an original and all of which shall constitute one and the same instrument.

(k) Recordation. Purchaser and Seller agree not to record this Agreement or any memorandum hereof.

(l) Proper Execution. The submission by Seller to Purchaser of this Agreement in unsigned form shall be deemed to be a submission solely for Purchaser's consideration and not for acceptance and execution. Such submission shall have no binding force and effect, shall not constitute an option, and shall not confer any rights upon Purchaser or impose any obligations upon Seller irrespective of any reliance thereon, change of position or partial performance. The submission by Seller of this Agreement for execution by Purchaser and the actual execution and delivery thereof by Purchaser to Seller shall similarly have no binding force and effect on Seller unless and until Seller shall have executed this Agreement and the Deposit shall have been received by the Title Company and a counterpart of this Agreement shall have been delivered to Purchaser.

IN WITNESS WHEREOF, the parties hereto have caused this Assignment to be duly executed as of the day and year first above written.

Signed, Sealed and Delivered in the Presence of:	SELLER: USAA REAL ESTATE COMPANY
/s/ ELIZABETH HAMILTON Name: Elizabeth Hamilton	By:	/s/ SUSAN WALLACE Name: Susan Wallace Title: Vice President
/s/ TONI M. FISHER Name: Toni M. Fisher		Hereunto Duly Authorized
	PURCHASER: GRIFFIN LAND & NURSERIES, INC.
/s/ THOMAS M. DANIELLS Name: Thomas M. Daniells	By:	/s/ THOMAS M. LESCALLEET Name: Thomas M. Lescalleet Title: Senior Vice President
/s/ EILEEN M. MCCARTHY Name: Eileen M. McCarthy		Hereunto Duly Authorized

An original, fully executed copy of this Agreement has been received by the Title Company's agent this 6th day of December, 2002, and by execution hereof the Title Company's agent hereby covenants and agrees to be bound by the terms of this Agreement. Receipt of the $1,000,000.00 Deposit is also confirmed.

		COMMONWEALTH LAND TITLE COMPANY
		By:	/s/ PATRICIA A. REJMAN Name: Patricia A. Rejman Title: Vice President

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Exhibit 10.23

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Exhibit 10.24

OPEN-END MORTGAGE DEED
AND SECURITY AGREEMENT

THIS OPEN-END MORTGAGE DEED AND SECURITY AGREEMENT made as of the 17th day of December, 2002 (this "Mortgage"), by GRIFFIN CENTER DEVELOPMENT IV, LLC, a Connecticut limited liability company having an address at 204 West Newberry Road, Bloomfield, Connecticut 06002 ("Mortgagor"), in favor of WEBSTER BANK , a federal savings bank chartered under the laws of the United States of America having its principal place of business at 145 Bank Street, Waterbury, Connecticut 06702 ("Mortgagee").

W I T N E S S E T H:

FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of which are hereby acknowledged, Mortgagor does hereby give, grant, bargain, sell, assign and confirm unto Mortgagee, its successors and assigns, the following:

THE MORTGAGED PROPERTY

(A) The land described in Schedule A attached hereto, incorporated herein and made a part hereof (the "Land"), and located in the Town of Windsor, Connecticut, and all trees, shrubbery, crops and other plantings now or hereafter grown on the Land;

(B) TOGETHER WITH (1) all buildings, structures and improvements of every nature whatsoever now or hereafter situated on the Land (collectively, the "Buildings"), (2) all right, title and interest of Mortgagor, of whatever character (whether as owner, chattel lessee or otherwise, whether vested or contingent and whether now owned or hereafter acquired), in and to all building materials, supplies and other property now or hereafter stored at or delivered to the Land or any other location for installation in any of the Buildings, and all fixtures, fittings, machinery, appliances, equipment, apparatus, furnishings and personal property of every nature whatsoever now or hereafter located in or on, or attached to, and used or intended to be used in connection with the Land or any of the Buildings, or in connection with the operation thereof or any construction or other work now or hereafter conducted thereon (all of the property described in this clause (2) being hereinafter collectively referred to as the "Equipment") (the Buildings and the Equipment being hereinafter collectively referred to as the "Improvements"), and (3) all right, title and interest of Mortgagor, of whatever character (whether as owner, chattel lessee or otherwise, whether vested or contingent and whether now owned or hereafter acquired), any and all plans, specifications, drawings, books, records and similar items relating to the Land or the Improvements, the operation thereof, any rights thereto or any interest therein;

(C) TOGETHER WITH all proceeds, products, extensions, additions, improvements, renewals, substitutions, replacements, accessions, and accretions of and to all or any part of the property described in paragraphs (A) and (B) hereof or any other property encumbered by this Mortgage;

(D) TOGETHER WITH all right, title and interest of Mortgagor, of whatever character (whether vested or contingent and whether now owned or hereafter acquired), in and to (1) all streets, roads and public places (whether open or proposed) adjoining or otherwise providing access to the Land, (2) the land lying in the bed of such streets, roads and public places, and (3) all other sidewalks, alleys, ways, passages, vaults, water courses, strips and gores of land adjoining or used or intended to be used in connection with all or any part of the property described in paragraphs (A), (B) and (C) hereof;

(E) TOGETHER WITH all right, title and interest of Mortgagor, of whatever character (whether vested or contingent and whether now owned or hereafter acquired), in and to all easements, rights-of-way and rights of use or passage (whether public or private), estates, interests, benefits, powers, rights (including, without limitation, any and all lateral support, drainage, slope, sewer, water, air, mineral, oil, gas and subsurface rights), privileges, claims, franchises, licenses, profits, rents,

royalties, tenements, hereditaments, reversions, remainders and appurtenances of every nature whatsoever in any way now or hereafter belonging, relating or appertaining to all or any part of the property described in paragraphs (A), (B), (C) and (D) hereof;

(F) TOGETHER WITH all right, title and interest of Mortgagor, of whatever character (whether vested or contingent and whether now owned or hereafter acquired), in and to (1) any and all judgments, settlements, claims, awards, insurance proceeds and other proceeds and compensation, and interest thereon (collectively, "Compensation"), now or hereafter made or payable in connection with any casualty or other damage to all or any part of the property described in paragraphs (A), (B), (C), (D) and (E) hereof, or in connection with any condemnation proceedings affecting any such property or any taking under power of eminent domain (or any conveyance in lieu of or under threat of any such taking) of any such property or any rights thereto or any interest therein, including, without limitation, any and all Compensation for change of grade of streets or any other injury to or decrease in the value of such property, (2) any and all proceeds of any sales, assignments or other dispositions of any such property or any rights thereto or any interest therein, (3) any and all proceeds of any other conversion (whether voluntary or involuntary) of any such property into cash or any liquidated claim, (4) any and all refunds of insurance premiums, taxes, assessments, water charges, sewer rents or other impositions in respect of any such property, and (5) all accounts, accounts receivable, option rights, contract rights, general intangibles, permits, licenses, approvals, bonuses, actions and rights in action arising from or relating to any such property (including, without limitation, all rights to insurance proceeds and unearned insurance premiums and all rights of Mortgagor in and to all contracts relating to management, maintenance and security of any such property);

(G) TOGETHER WITH all right, title and interest of Mortgagor, of whatever character (whether vested or contingent and whether now owned or hereafter acquired), in and to all rents, royalties, issues, profits, revenues, income, proceeds, products and other benefits of and from all or any part of the property described in paragraphs (A), (B), (C), (D) and (E) hereof or any business conducted thereon byMortgagor, whether now or hereafter payable or accruing (including, without limitation, any and all monetary sums paid or payable from time to time by any and all tenants, licensees, invitees, guests, customers, occupants or other users of any such property or business), and all right of Mortgagor to collect and receive the same; provided , however , that permission is hereby given to Mortgagor, so long as no Event of Default (as hereinafter defined) shall have occurred and be continuing, to collect and use such rents, royalties, issues, profits, revenues, income and other benefits as they become due and payable, but not in advance thereof, which permission shall terminate immediately upon the occurrence of, and during the continuance of, any Event of Default;

(H) TOGETHER WITH (1) all right, title and interest of Mortgagor (whether as seller, purchaser or otherwise) in and to any and all agreements for purchase and sale or any other transfer of all or any part of the property described in paragraphs (A), (B), (C), (D) and (E) hereof, together with any and all down payments, earnest money deposits and other sums paid or payable or deposited in connection therewith, and (2) all right, title and interest of Mortgagor (whether as lessor, lessee or otherwise) in and to any and all leases, subleases, use, occupancy or similar agreements (collectively, "leases") now or hereafter affecting all or any part of the property described in paragraphs (A), (B), (C), (D) and (E) hereof, together with any and all guaranties thereof and security therefor (including, without limitation, any and all right, title and interest of Mortgagor in and to property of any tenant or other person under any such lease or under any other arrangement entered into in connection with any such lease, and any and all cash, security deposits, advance rentals and deposits or payments of a similar nature under any such lease or other arrangement) and together with all money payable thereunder or in connection therewith (including, without limitation, any and all cancellation or termination payments), subject, however, to the conditional permission given to Mortgagor to collect and use the rents, income and other benefits arising under any such lease as provided above;

(I) TOGETHER WITH all right, title and interest of Mortgagor, of whatever character (whether vested or contingent and whether now owned or hereafter acquired), in and to any and all further or greater estate, right, title, interest, claim and demand of Mortgagor, of whatever character (whether vested or contingent and whether now owned or hereafter acquired), in and to any of the property described in the foregoing paragraphs or any rights or interests appurtenant thereto;

(J) TOGETHER WITH all contracts and agreements, licenses, permits and approvals, and warranties and representations, relating to the use, operation, management, construction, repair or service of the Mortgaged Property; and

(K) TOGETHER WITH all funds held by Mortgagee as tax or insurance escrow payments; and

(L) TOGETHER WITH all Proceeds relating to all or any portion of the foregoing collateral described in (A) through (K) above, whether such Proceeds take the form of Accounts, Inventory, Instruments (including Promissory Notes), Documents, Chattel Paper, Investment Property, Certificated Securities, Uncertificated Securities, Security Entitlements, General Intangibles, Payment Intangibles, Software, Deposit Accounts, Letter of Credit Rights, Equipment, Farm Products or Fixtures, or otherwise, and all Supporting Obligations relating to any of the forgoing (as each of those capitalized terms is defined in the Connecticut Uniform Commercial Code ("UCC") all in connection with or with respect to the Premises or the Property (as defined below) or arising or constituting Proceeds thereof); and

(M) TOGETHER WITH all insurance proceeds relating to all or any portion of the foregoing collateral described in (A) through (L) above, all proceeds received from the sale, exchange, collection or other disposition of any of the foregoing collateral described in (A) through (L) above, and all awards, damages, proceeds and refunds from any state, local, federal or other taking of, and all municipal tax abatements relating to, all or any portion of the collateral described in clauses (A) through (L) above.

All of the property described in paragraphs (A), (B), (C), (D), (E), (F), (G), (H), (I), (J), (K), (L) and (M) above, and each item of property therein described, is herein collectively referred to as the "Mortgaged Property."

TO HAVE AND TO HOLD the Mortgaged Property unto Mortgagee, its successors and assigns forever, to its and their own proper use.

AND ALSO, Mortgagor, for itself and its successors and assigns, covenants with and warrants to Mortgagee, its successors and assigns, that, at and until the ensealing of these presents, Mortgagor is well seized of the Land, the Buildings and all other parts of the Mortgaged Property constituting real property as a good indefeasible estate in fee simple, that Mortgagor has good and absolute title to the Equipment and all other parts of the Mortgaged Property constituting personal property (except Equipment owned by any person, other than Mortgagor, leasing space in any of the Buildings and Equipment leased by any such tenant from any person other than Mortgagor, that Mortgagor has good right, full power and lawful authority, without the joinder or consent of any person, to give, grant, bargain, sell, assign and confirm the Mortgaged Property in manner and form as written above, and that the Mortgaged Property is free and clear of all claims, demands, liens, security interests, charges, encumbrances and exceptions to title whatsoever (except as set forth in Schedule B attached hereto, incorporated herein and made a part hereof);

AND FURTHERMORE, Mortgagor does by these presents bind itself and its successors and assigns forever to WARRANT AND DEFEND the Mortgaged Property to Mortgagee, its successors and assigns, against all claims, demands, liens, security interests, charges, encumbrances and exceptions to title (except as set forth in Schedule B).

THE CONDITION OF THIS DEED IS SUCH THAT:

WHEREAS, Mortgagor is indebted to Mortgagee in the principal sum of NINE MILLION SEVEN HUNDRED FIFTY THOUSAND AND NO/DOLLARS ($9,750,000), as evidenced by Mortgagor's Promissory Note of even date herewith in said principal amount, a copy of which is attached hereto as Exhibit A, the terms and provisions thereof being incorporated herein by reference and made a part of this Mortgage to the same extent as though set forth in full herein (such Promissory Note, as presently constituted and as it may hereafter be amended, extended, renewed or consolidated, together with any and all notes that may hereafter be given in substitution therefor, being hereinafter referred to as the "Note"), bearing interest and payable as set forth in the Note, said indebtedness maturing on January 1, 2013, all as more particularly set forth in the Note; and

WHEREAS, Mortgagor further covenants and agrees as follows:

ARTICLE ONE—COVENANTS OF MORTGAGOR

1.01 Performance of Obligations. Mortgagor shall cause to be performed, observed and complied with all provisions of this Mortgage, of the Note and of every other instrument now or hereafter evidencing or securing all or any part of the indebtedness evidenced by the Note or otherwise governing the responsibilities of Mortgagor in connection with such indebtedness or the Mortgaged Property, and Mortgagor shall promptly pay to Mortgagee when due all principal, interest and other sums required to be paid by Mortgagor under the Note, this Mortgage or any such other instrument (the principal amount of the Note outstanding from time to time, all accrued interest thereon and all other obligations and indebtedness described in this Mortgage being herein collectively referred to as the "Indebtedness"; the Note, this Mortgage and all such other instruments being herein collectively referred to as the "Loan Documents").

1.02 General Representations, Covenants and Warranties. Mortgagor warrants, represents and covenants that: (a) Mortgagor is a duly organized and validly existing limited liability company organized under the laws of the State of Connecticut and is duly qualified to do business in the State of Connecticut; (b) Mortgagor has duly obtained all licenses, permits, approvals and authorizations, and has duly completed all filings, required for the conduct of its business; (c) all due action has been taken to make and constitute the Loan Documents, and the Loan Documents do constitute, legal, valid and binding obligations enforceable in accordance with their respective terms, subject to the effect of bankruptcy and other laws affecting the rights of creditors generally; (d) there are no provisions in any indenture, contract, agreement or other document affecting Mortgagor, or to which Mortgagor is a party or by which Mortgagor or its properties are bound, which prohibit or limit the execution of any of the Loan Documents, or the performance and observance by Mortgagor of any of the covenants, agreements, conditions or other provisions of any of the Loan Documents, and such actions by Mortgagor will not violate any law, ordinance, rule, regulation, order, judgment, injunction or decree presently in effect or the adoption of which is known to Mortgagor to be presently under consideration; (e) Mortgagor is now able to meet its debts as they mature, the fair market value of its assets exceeds its liabilities and no bankruptcy or insolvency cases or proceedings are pending, or to the knowledge of Mortgagor contemplated, by or against Mortgagor; (f) all reports, statements and other data furnished to Mortgagee by Mortgagor or any members of Mortgagor are true, correct and complete in all material respects and do not omit to state any fact or circumstance necessary to make the statements contained therein not misleading; (g) there are no actions, suits or proceedings pending, or to the knowledge of Mortgagor threatened, against or affecting Mortgagor or the Mortgaged Property in any court or before any governmental authority, nor is Mortgagor in default with respect to any order of any court or governmental authority; (h) all costs incurred prior to the date hereof in connection with any construction of, in or on any Improvements or in connection with the purchase of any Equipment have been paid; (i) the Land has frontage on, and direct access for ingress and egress to, a publicly

dedicated street or highway; (j) electric, gas, septic, water and telephone facilities and any other necessary utilities presently are available in sufficient capacity to service the Mortgaged Property satisfactorily until the Indebtedness shall have been paid in full, and any easements necessary to the furnishing of such utility service to the Mortgaged Property have been obtained and duly recorded; and (k) Mortgagor has not received any notice of default, or any notice of the existence of any state of facts which, with notice or the passage of time, or both, would constitute a default, under any instrument evidencing or securing any indebtedness of Mortgagor.

1.03 Compliance with Laws.

(a) Mortgagor warrants and represents that, to the best of Mortgagor's knowledge, the Mortgaged Property and the use thereof presently comply with all applicable agreements and restrictive covenants and with all applicable laws, ordinances, rules, regulations, orders, judgments, injunctions and decrees (including, without limitation, all zoning and subdivision ordinances and building codes and all health and environmental laws and regulations), and all licenses, permits, approvals and authorizations required in connection therewith have been duly obtained and are in effect. Mortgagor shall cause the Mortgaged Property and the use thereof to comply with all such agreements, covenants, laws, ordinances, rules, regulations, orders, judgments, injunctions and decrees (whether now or hereafter in effect), and all licenses, permits, approvals and authorizations hereafter required in connection therewith shall be obtained. To the extent compliance relates to the use of the Mortgaged Property by any tenant, Mortgagor shall use all commercially reasonable efforts to cause such tenant to comply.

(b) Mortgagor warrants and represents that, to the best of its knowledge, and except as expressly disclosed in writing in any environmental reports relevant to the Mortgaged Property received by Mortgagee prior to the date hereof, (i) neither the Mortgaged Property nor any other property now or previously owned by Mortgagor is under investigation with respect to, or is or has been in violation of, any Environmental Law (as hereinafter defined), (ii) no proceedings have been commenced against, nor notice received by, Mortgagor concerning any alleged violation of any Environmental Law, (iii) neither the Mortgaged Property nor any such other property has been the subject of any threatened, proposed or actual cleanup or other protective or remedial action relating to any Hazardous Substances (as hereinafter defined), whether pursuant to any Environmental Law or otherwise, and (iv) there are no Hazardous Substances in, on, under or about the Mortgaged Property, no release, discharge, spillage, seepage or filtration of any Hazardous Substances is occurring or has occurred in, on, under, about or from the Mortgaged Property, and the Mortgaged Property is not being used and has not been used for any generation, treatment, storage, handling, transportation, use or disposal of any Hazardous Substances in, on, under, about or from the Mortgaged Property. Mortgagor shall not permit or suffer the generation, treatment, storage, handling, transportation, use, disposal, release, discharge, spillage, seepage or filtration of any Hazardous Substances, in, on, under, about or from all or any part of the Mortgaged Property. For purposes of this Mortgage, (A) the term "Environmental Law" shall mean and refer to any law, ordinance, rule, regulation, order, judgment, injunction or decree relating to pollution, Hazardous Substances or environmental protection (including, without limitation, the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act, Chapters 445 and 446k of the Connecticut General Statutes, all amendments and supplements to any of the foregoing and all regulations issued pursuant thereto), and (B) the term "Hazardous Substances" shall mean and refer to any and all pollutants, contaminants, toxic or hazardous wastes or any other substances that might pose a hazard to health or safety, the removal of which may be required or the manufacture, use, maintenance or handling of which is restricted, prohibited or penalized by any Environmental Law (including, without limitation, asbestos, urea formaldehyde foam insulation and polychlorinated biphenyls).

1.04 Discharge of Liens. If any mechanic's, laborer's, materialman's, statutory or other lien (other than any lien for taxes not yet due and payable) shall be filed or otherwise imposed upon or against all or any part of the Mortgaged Property which may under applicable law gain priority over the interests

of Mortgagee created by this Mortgage, then Mortgagor shall, within sixty (60) days after being given notice of the filing thereof or otherwise becoming aware of the imposition thereof, cause such lien to be vacated or discharged of record by payment, deposit, bond, final order of a court of competent jurisdiction or otherwise. If Mortgagee is named as a party in any litigation relating to any such lien, Mortgagor shall at its expense defend the rights of Mortgagee granted herein and, upon request by Mortgagee, Mortgagor shall pay to Mortgagee, or to any other person designated by Mortgagee, the amount of all reasonable costs, expenses and liabilities (including, without limitation, attorneys' fees) incurred by Mortgagee in connection therewith.

1.05 Taxes Affecting Mortgaged Property.

(a) Mortgagor shall pay or cause to be paid, on or before the last day when they may be paid without interest or penalty, all taxes, assessments, rates, dues, charges, fees, levies, fines, impositions, liabilities, obligations and encumbrances (including, without limitation, water and sewer rents and charges, charges for setting or repairing meters and charges for other utilities), general or special, ordinary or extraordinary, foreseen or unforeseen, of every kind whatsoever, now or hereafter imposed, levied or assessed upon or against all or any part of the Mortgaged Property, the use, occupancy or possession thereof, this Mortgage, the Indebtedness or the interest of Mortgagee in the Mortgaged Property, as well as all income taxes, assessments and other governmental charges levied and imposed upon or against Mortgagor or in respect of all or any part of the Mortgaged Property, and any and all interest, costs and penalties on or with respect to any of the foregoing (collectively, the "Impositions"); provided , however , that Mortgagor may in good faith, by appropriate proceedings diligently conducted (including, without limitation, payment of the asserted Imposition under protest if such payment must be made in order to contest such Imposition), contest the validity, applicability or amount of any asserted Imposition, and such contest shall not constitute a default under this paragraph if, on or before the due date of such asserted Imposition, Mortgagor shall establish an escrow acceptable to Mortgagee in an amount estimated by Mortgagee to be adequate to cover the payment of such Imposition and all interest, costs and penalties thereon (the "Tax Escrow"). If such escrow is insufficient to pay any amount adjudged by a court of competent jurisdiction to be due, and all interest, costs and penalties thereon, Mortgagor shall pay such deficiency no later than the date such judgment becomes final. Upon request by Mortgagee, Mortgagor shall exhibit to Mortgagee original receipts or other satisfactory proof of payment of the then most recently paid Impositions. Mortgagee may require the establishment of a Tax Escrow in the case of the occurrence and continuance of an Event of Default.

(b) Mortgagor shall not claim, demand or be entitled to receive any credit on account of the Indebtedness for any Impositions. No deduction shall be claimed from the taxable value of all or any part of the Mortgaged Property by reason of the Indebtedness, any of the Loan Documents or the interest of Mortgagee in the Mortgaged Property.

1.06 Taxes Affecting Mortgagee's Interest. Mortgagor shall pay when due any and all mortgage recording, intangible property and documentary stamp taxes, all similar taxes, and all filing, registration and recording fees, which are now or hereafter may become payable in connection with the Indebtedness, this Mortgage or any of the other Loan Documents. Mortgagor shall pay when due any and all transfer and conveyance taxes which are now or hereafter may become payable in connection with the Indebtedness, this Mortgage or any of the other Loan Documents, or in connection with any foreclosure of this Mortgage, any other transfer of title to the Mortgaged Property in extinguishment of all or any part of the Indebtedness or any other enforcement of Mortgagee's rights with respect thereto.

1.07 Insurance.

(a) Mortgagor shall, at its sole expense, obtain for, deliver to, assign to and maintain for the benefit of Mortgagor and Mortgagee, for so long as this Mortgage shall remain in effect, insurance policies (including renewals thereof as herein provided) in such amounts as Mortgagee may reasonably

require, insuring the Mortgaged Property against all insurable hazards, casualties and contingencies (including, without limitation, loss of rentals or business interruption for not more than one (1) year, as Mortgagee may require, and shall pay promptly when due any and all premiums on such insurance policies. All such policies shall be issued by a company or companies reasonably acceptable to Mortgagee. All such policies shall be in form acceptable to Mortgagee, and shall contain such provisions and endorsements as Mortgagee may require. Without limiting the generality of the foregoing, each such policy shall contain a noncontributory standard mortgagee endorsement making all losses payable to Mortgagee, shall provide that no act or omission of Mortgagor shall invalidate such policy as against Mortgagee, and shall provide that such policy shall not be canceled, terminated or materially altered without at least thirty (30) days' prior written notice to Mortgagee. All such policies shall be delivered to and held by Mortgagee. At least fifteen (15) days prior to the expiration date of each such policy, a renewal thereof satisfactory to Mortgagee shall be delivered to Mortgagee. Within fifteen (15) days after the effective date of each such policy and each such renewal, Mortgagor shall deliver to Mortgagee a satisfactory receipt evidencing the payment of all premiums on such insurance policy or renewal, prepaid for a period of at least six (6) months. In the event of any foreclosure of this Mortgage or any other transfer of title to the Mortgaged Property in extinguishment of all or any part of the Indebtedness, all right, title and interest of Mortgagor in and to all such insurance policies then in force shall pass to the purchaser or Mortgagee. Mortgagee's acceptance or approval of any insurer shall not be construed as a representation or warranty of the solvency of such insurer, and Mortgagee's acceptance or approval of any insurance coverage shall not be construed as a representation or warranty of the sufficiency of such coverage.

(b) Mortgagor shall give immediate written notice to Mortgagee of any loss covered by any insurance policy on the Mortgaged Property, and Mortgagee may make proof of loss with respect thereto if not made promptly by Mortgagor. Mortgagee is hereby irrevocably authorized and appointed the agent and attorney-in-fact of Mortgagor, at Mortgagee's option but with notice to Mortgagor, to adjust or compromise any such loss and to collect and receive the proceeds from any such policy in respect of any such loss, which appointment shall be deemed to be coupled with an interest. Each insurance company issuing any such policy is hereby irrevocably authorized and directed to make payment for any such loss (whether or not Mortgagee exercises its option to adjust or compromise such loss) directly to Mortgagee alone and not to Mortgagor and Mortgagee jointly. Mortgagor shall immediately pay over to Mortgagee any such payments received directly from any insurance company. Mortgagee is hereby irrevocably authorized and appointed the agent and attorney-in-fact of Mortgagor to endorse Mortgagor's name on any instrument in payment of such proceeds, which appointment shall be deemed to be coupled with an interest. Such insurance proceeds received by Mortgagee shall not be commingled with the general funds of Mortgagee, and shall be deposited by Mortgagee in an interest bearing account. After deducting from such insurance proceeds any expenses incurred by Mortgagee in the adjustment or compromise of such loss or in the collection or handling of such funds (including, without limitation, attorneys' fees), Mortgagee may apply the net proceeds, in such manner as Mortgagee may determine, either toward restoring the Mortgaged Property or to the reduction of the Indebtedness, whether then matured or to mature in the future. Alternatively, at the option of Mortgagee, Mortgagee may pay over to Mortgagor all or any part of such net proceeds for the purpose of repairing the Improvements, building new Improvements in their place, or for any other purpose or object satisfactory to Mortgagee, without affecting the lien of this Mortgage as security for the full Indebtedness secured hereby before such payment to Mortgagor took place. Notwithstanding any such loss, Mortgagor shall continue to pay interest, at the applicable rate and at the times provided in the Note, on the entire outstanding principal amount of the Indebtedness. Although Mortgagee intends to use reasonable efforts to collect such proceeds in a timely fashion, Mortgagee shall not be responsible for any failure to collect any proceeds due under the terms of any policy, regardless of the cause of such failure.

(c) Mortgagor shall, at its sole expense, obtain for, deliver to and maintain for the benefit of Mortgagor and Mortgagee, for so long as this Mortgage shall remain in effect, liability insurance policies (including renewals thereof) relating to the Mortgaged Property, in such amounts, with such companies and in such form as Mortgagee may reasonably require and which are usual and customary for properties similar to the Mortgaged Property. Mortgagee may require such policies to contain an endorsement, in form reasonably satisfactory to Mortgagee, naming Mortgagee as an additional insured thereunder. Mortgagor shall pay promptly when due any and all premiums on such insurance policies and, promptly thereafter, shall deliver to Mortgagee satisfactory evidence of such payment.

(d) If the Mortgaged Property is located in an area designated by the Federal Emergency Management Agency or the Flood Disaster Protection Act of 1973 (P.L. 93-234) as being in a "special flood hazard area" or as having specific flood hazards, Mortgagor shall, at its sole expense, obtain for, deliver to and maintain for the benefit of Mortgagor and Mortgagee, for so long as this Mortgage shall remain in effect, flood insurance policies (including renewals thereof) which conform to the requirements of said Flood Disaster Protection Act of 1973 and the National Flood Insurance Act of 1968, with such companies and in such form as Mortgagee may require. Mortgagee may require such policies to contain an endorsement, in form satisfactory to Mortgagee, naming Mortgagee as an additional insured thereunder. Mortgagor shall pay promptly when due any and all premiums on such insurance policies and, promptly thereafter, shall deliver to Mortgagee satisfactory evidence of such payment.

(e) Mortgagor shall not carry any additional or separate insurance concurrent in form or contributing in the event of loss with any insurance required to be maintained hereunder, or in excess of the amounts required hereunder, unless such insurance shall comply with the provisions of this Section 1.07 (including, without limitation, the loss payable provisions herein set forth). Mortgagor immediately shall notify Mortgagee if any such additional, separate or excess insurance shall be carried and shall deliver to Mortgagee duplicate originals of all policies of such insurance (including all renewals thereof).

(f) Notwithstanding the foregoing, Mortgagee, after deducting its expenses as provided above, shall, if requested by Mortgagor, make the net proceeds received by Mortgagee available for restoring or repairing the Improvements, building new Improvements in their place, or for any other purpose or object requested by Mortgagor and satisfactory to Mortgagee, all in accordance with terms, conditions and procedures customarily followed by prudent institutional lenders in making construction loans in similar amounts and such other terms, conditions and procedures as Mortgagee may require to assure the proper application of such proceeds and the continuing performance by Mortgagor of its obligations hereunder, provided (i) no Event of Default shall then exist and no state of facts shall then exist which, with notice or the passage of time, or both, would constitute an Event of Default if not cured or corrected, (ii) Mortgagee shall be reasonably satisfied that such net proceeds, together with any additional funds made available for such purpose by Mortgagor and deposited with Mortgagee shall be sufficient to restore or repair the Improvements, build new Improvements, or for such other purpose, as the case may be, in accordance with plans and specifications approved by Mortgagee, free and clear of all liens except the lien of this Mortgage and any other liens expressly permitted hereunder, (iii) Mortgagee shall be satisfied that such restoration can be completed within any applicable time limitation imposed by law or agreement, and (iv) Mortgagee shall be satisfied that, after such application and restoration or rebuilding (taking into account the status of leasing of the Mortgaged Property and any restrictions imposed by law or agreement on such restoration or rebuilding or on the use of the Mortgaged Property after such restoration or rebuilding), the remaining Mortgaged Property shall constitute adequate security for the Indebtedness.

1.08 Condemnation.

(a) Mortgagee shall be entitled to all compensation, awards, damages, claims, rights of action, proceeds, payment and other relief (collectively, "compensation") of, or on account of, any damage or

taking of all or any part of the Mortgaged Property in connection with any condemnation proceedings or any exercise of the power of eminent domain (or any conveyance in lieu of or under threat of any such taking), including, without limitation, any such compensation for change of grade of streets or any other injury to or decrease in the value of the Mortgaged Property. All such compensation, and the right thereto, is hereby assigned to Mortgagee and included in the Mortgaged Property. Mortgagor shall promptly execute such further assignments of any such compensation as Mortgagee may require, and Mortgagor shall take all steps to assure that such compensation shall be paid to Mortgagee alone, and not to Mortgagor and Mortgagee jointly, and that such compensation at all times shall be free and clear of any liens, charges or encumbrances of any kind whatsoever. Mortgagee is hereby irrevocably authorized and appointed the agent and attorney-in-fact of Mortgagor to endorse Mortgagor's name on any instrument in payment of such compensation, which appointment shall be deemed to be coupled with an interest.

(b) Mortgagee is hereby irrevocably authorized and appointed the agent and attorney-in-fact of Mortgagor, at Mortgagee's option, to commence, appear in and prosecute in its own or Mortgagor's name any action or proceeding relating to any condemnation or exercise of the power of eminent domain, to settle or compromise any claim in connection therewith and to collect and receive such compensation and give proper receipts therefor, which appointment shall be deemed to be coupled with an interest. Mortgagor from time to time shall promptly deliver to Mortgagee any and all instruments and authorizations which Mortgagee may request to enable Mortgagee to take any such action. Such compensation received by Mortgagee shall not be, nor be deemed to be, trust funds and may be commingled with the general funds of Mortgagee. No interest shall be payable in respect of any such compensation. After deducting from such compensation any expenses incurred by Mortgagee in connection therewith (including, without limitation, attorneys' fees), Mortgagee may release such net compensation to Mortgagor without affecting the lien of this Mortgage as security for the full Indebtedness secured hereby before such payment to Mortgagor took place (which release may be made subject to such terms and conditions as Mortgagee may impose), or Mortgagee may apply such net compensation, in such manner as Mortgagee may determine, to the reduction of the Indebtedness, whether then matured or to mature in the future. Any balance of such net compensation remaining after such application to the Indebtedness shall be paid to Mortgagor. Notwithstanding any such condemnation, Mortgagor shall continue to pay interest, at the applicable rate and at the times provided in the Note, on the entire outstanding principal amount of the Indebtedness. Although Mortgagee intends to use reasonable efforts to collect such compensation, in a timely fashion, Mortgagee shall not be responsible for any failure to collect such compensation, regardless of the cause of such failure.

(c) Notwithstanding the foregoing, Mortgagee, after deducting its expenses as provided above, shall, if requested by Mortgagor, without unreasonable delay, make the net proceeds received by Mortgagee available for restoring or repairing the Improvements, building new Improvements in their place, or for any other purpose or object requested by Mortgagor and satisfactory to Mortgagee, all in accordance with terms, conditions and procedures customarily followed by prudent institutional lenders in making construction loans in similar amounts and such other terms, conditions and procedures as Mortgagee may require to assure the proper application of such proceeds and the continuing performance by Mortgagor of its obligations hereunder, provided (i) no Event of Default shall then exist and no state of facts shall then exist which, with notice or the passage of time, or both, would constitute an Event of Default if not cured or corrected, (ii) Mortgagee shall be satisfied that such net proceeds, together with any additional funds made available for such purpose by Mortgagor and deposited with Mortgagee shall be sufficient to restore or repair the Improvements, build new Improvements, or for such other purpose, as the case may be, in accordance with plans and specifications approved by Mortgagee, free and clear of all liens except the lien of this Mortgage and any other liens expressly permitted hereunder, (iii) Mortgagee shall be satisfied that such restoration can be completed within any applicable time limitation imposed by law or agreement, and

(iv) Mortgagee shall be satisfied that, after such application and restoration or rebuilding (taking into account the status of leasing of the Mortgaged Property and any restrictions imposed by law or agreement on such restoration or rebuilding or on the use of the Mortgaged Property after such restoration or rebuilding), the remaining Mortgaged Property shall constitute adequate security for the Indebtedness.

1.09 Care and Management of Mortgaged Property.

(a) Mortgagor shall preserve and maintain the Mortgaged Property in good, safe and tenantable condition and repair. Mortgagor shall not threaten, cause, permit or suffer (i) any abandonment, waste, impairment or deterioration of all or any part of the Mortgaged Property, (ii) the conduct of any nuisance in or on all or any part of the Mortgaged Property, or (iii) any action that will increase the risk of fire or other hazard to all or any part of the Mortgaged Property. Mortgagor shall pay when due all charges for utilities, whether public or private, serving or intended to serve all or any part of the Mortgaged Property.

(b) Upon notice to Mortgagee and without disturbing the tenant(s) of the Property Mortgagee may enter upon and inspect the Mortgaged Property at any reasonable time while this Mortgage is in effect.

(c) If all or any part of the Mortgaged Property shall be physically damaged or destroyed by fire or any other cause (including, without limitation, any condemnation), Mortgagor shall give immediate written notice thereof to Mortgagee and shall promptly commence and diligently pursue to completion the restoration or repair of the Mortgaged Property to the equivalent of its condition immediately prior to such damage or destruction (or, in the case of any condemnation, to such condition as shall be satisfactory to Mortgagee upon receipt by Mortgagor of insurance or condemnation proceeds from Mortgagee.

(d) No structural work required to be performed under this Section (other than routine maintenance and repairs or tenant improvements required under leases for the Mortgaged Property) shall be undertaken until plans and specifications therefor, prepared and signed by an architect or engineer satisfactory to Mortgagee and approved by all governmental authorities whose approval is required, have been submitted to and approved in writing by Mortgagee.

(e) No part of the Mortgaged Property shall be removed, demolished or materially altered, without the prior written consent of Mortgagee. Notwithstanding the foregoing, Mortgagor shall have the right, without the consent of Mortgagee, to remove and dispose of, free from the lien of this Mortgage, items of Equipment which shall have become worn out or obsolete; provided , however , that, either contemporaneously with or prior to such removal or disposition, any such item shall be replaced with another item or items of equal utility and of a value at least equal to that of the replaced item when first acquired, which item or items shall be owned by Mortgagor and shall be free from any security interest, ownership interest or other right or claim of any other person. By such removal and replacement, Mortgagor conclusively shall be deemed to have elected to subject said replacement item to the lien and security interest of this Mortgage.

1.10 Use of Mortgaged Property.

(a) The Mortgaged Property shall be used as multi-tenant office buildings located within a corporate office park known as Griffin Center, Windsor, Connecticut.

(b) Mortgagor shall not cause, permit or suffer all or any part of the Mortgaged Property to be used by the public without restriction or in such manner as might tend to impair Mortgagor's right, title and interest in and to all or any part of the Mortgaged Property or in such manner as might make possible any claim of adverse usage or adverse possession by the public or of implied dedication of all or any part of the Mortgaged Property.

(c) If, at any time, the then-existing use or occupancy of all or any part of the Mortgaged Property shall, pursuant to any law, ordinance or regulation, be permitted only so long as such use or occupancy shall continue, Mortgagor shall not cause, permit or suffer such use or occupancy to be discontinued without the prior written consent of Mortgagee.

1.11 Leases.

(a) Mortgagor warrants and represents that (i) the schedule of leases set forth in the Assignment of Leases and Rents executed by Mortgagor and delivered to Mortgagee in connection with the transaction of which this Mortgage is a part is true, correct and complete, (ii) all leases described in said schedule are presently in effect, and (iii) to the best of Mortgagor's knowledge, no default exists under any such lease (other than any default disclosed in said schedule). Upon request of Mortgagee, Mortgagor shall provide Mortgagee with a current list of all leases then affecting the Mortgaged Property. Mortgagor shall keep, perform and observe its obligations as landlord under all leases now or hereafter affecting all or any part of the Mortgaged Property, and Mortgagor shall use reasonable efforts to require each tenant under any such lease to keep, perform and observe its obligations as tenant under such lease. Upon request by Mortgagee, Mortgagor shall promptly furnish to Mortgagee original or certified copies of all such leases and all amendments thereto.

(b) Mortgagor shall not, without the prior written consent of Mortgagee, accelerate the payment of rent or accept payment of rent more than one (1) month in advance, grant any reduction, deferral or abatement of rent payable under any such lease, grant any rights of termination or cancellation in favor of the tenant under any such lease, shorten the term of any such lease, or change the terms or renewal or extension provision under any such lease.

(c) The assignment contained in paragraph (H) of the section of this Mortgage entitled "The Mortgaged Property" shall not be deemed to impose upon Mortgagee any of the obligations, duties or liabilities of Mortgagor under or in respect of any lease (including, without limitation, any liability under any covenant of quiet enjoyment in the event that any tenant shall have been barred and foreclosed by any foreclosure of this Mortgage, or by any other transfer of title to the Mortgaged Property in extinguishment of all or any part of the Indebtedness, of all right, title and interest in and to all or any part of the Mortgaged Property). Upon request by Mortgagee, Mortgagor from time to time shall specifically assign to Mortgagee as additional security for the Indebtedness, by a written instrument approved by Mortgagee, all right, title and interest of Mortgagor in and to any and all leases now or hereafter affecting all or any part of the Mortgaged Property, together with all security therefor and all money payable thereunder, subject to the conditional permission given to Mortgagor to collect and use the rents, income and other benefits arising under any such lease as provided above. Mortgagor also shall execute and deliver to Mortgagee any notice, financing statement or other document required by Mortgagee to perfect the foregoing assignment as to any such lease. The provisions of this Section 1.12 shall be subject to the provisions of said paragraph (H).

(d) Mortgagor shall not enter into any new lease for the Property without the prior approval of such lease by Mortgagee, provided, however, that Mortgagee notify Mortgagor of it approval or disapproval within ten (10) days of such proposed lease being submitted to Mortgagee.

1.13 Assignment of Rents.

(a) The assignment contained in paragraph (G) of the section of this Mortgage entitled "The Mortgaged Property" shall, to the extent permitted by law, constitute an absolute and present assignment of the rents, royalties, issues, profits, revenues, income and other benefits described in said paragraph, subject, however, to the conditional permission given to Mortgagor to collect and use the same as provided in said paragraph (it being understood and agreed that neither the existence nor exercise of such permission shall subordinate such assignment to any subsequent assignment by Mortgagor and that all such subsequent assignments shall be subject to the rights of Mortgagee under this Mortgage). Said assignment contained in paragraph (G) shall be fully operative without any further action by Mortgagor or Mortgagee, and Mortgagee is hereby irrevocably authorized and empowered, at

its option upon the occurrence and during the continuance of an Event of Default, to collect and receive any and all such rents, royalties, issues, profits, revenues, income and other benefits, whether or not Mortgagee shall have taken, or at any time shall take, possession of the Land, the Buildings or any other part of the Mortgaged Property. Mortgagee is hereby irrevocably authorized, upon and during the continuance of an Event of Default, to notify all tenants, licensees, invitees, guests, customers, occupants or other users of all or any part of the Mortgaged Property of Mortgagee's rights under this Section and said paragraph (G).

(b) Mortgagor hereby grants to Mortgagee the right, at Mortgagee's option upon the occurrence and during the continuance of an Event of Default, to take all actions with respect to any and all such rents, royalties, issues, profits, revenues, income and other benefits as are contemplated by Section 3.03 below. Mortgagee is hereby irrevocably authorized and appointed the agent and attorney-in-fact of Mortgagor, at Mortgagee's option upon the occurrence of and during the continuance of an Event of Default, to demand, collect, receive and enforce payment of any and all such rents, royalties, issues, profits, revenues, income and other benefits, to give receipts, releases and satisfactions therefor and to apply such collections in the manner provided in Section 3.03, which appointment shall be deemed to be coupled with an interest. Such assignment, grant and appointment shall continue in effect until the Indebtedness shall have been paid in full, the execution of this Mortgage constituting and evidencing the irrevocable consent of Mortgagor to the entry upon and taking possession of the Mortgaged Property by Mortgagee pursuant to such grant and appointment, whether or not foreclosure shall have been instituted. Neither the exercise by Mortgagee of any rights under this Section or said paragraph (G), nor the application of any such rents, royalties, issues, profits, revenues, income or other benefits to the Indebtedness, shall cure or waive any Event of Default or notice of any Event of Default or invalidate any act done pursuant to this Mortgage or any such notice, but shall be cumulative of all other rights and remedies.

1.14 Reserve for Tenant Improvements and Commission Expenses. Mortgagor shall maintain with Mortgagee (i) a reserve account to be used to fund tenant improvements and commission expenses associated with leases for the Property that are approved by Mortgagee (the "TI Reserve Account"), and (ii) a reserve account to be used to hold in escrow any lease termination payments received from tenants of the Property until such portion of the Property is re-leased in accordance with an Approved Lease (the "LTP Reserve Account"), both as more particularly defined in that certain Reserve Account Agreement entered into by Mortgagor and Mortgagee and dated of even date herewith (the "Reserve Account Agreement"). On or before January 1, 2003, and on the first day of each calendar month thereafter, Mortgagor shall deposit into the TI Reserve Account an amount equal to $16,666.67 (the "Monthly Deposit"), until such time as the balance of the Reserve Account reaches $500,000.00 (the "Aggregate Maximum Balance"), after which time Mortgagor shall be required to maintain the Aggregate Maximum Balance until the Loan is paid in full in accordance with the terms and conditions set forth below. Once the Aggregate Maximum Balance has been funded hereunder, if at any time thereafter during the term of the Loan the balance of the TI Reserve Account falls below the Aggregate Maximum Balance, Mortgagor shall be required to resume making Monthly Deposits until the TI Reserve Account balance is restored to the Aggregate Maximum Balance. Any lease termination payment received by or on behalf of Mortgagor shall be deposited into the LTP Reserve Account. No deposit into either the TI Reserve Account nor the LTP Reserve Account pursuant to this section shall be deemed or construed to be a payment on account of the Indebtedness. All funds deposited into the TI Reserve Account and the LTP Reserve Account from time to time, together with all interest earned on such funds as provided herein, are hereinafter referred to collectively as the "Reserve Account Funds". All Reserve Account Funds are hereby pledged to Mortgagee as additional collateral for the Loan and shall be released by Mortgagee upon Mortgagor's request in connection with tenant improvements and commission expenses associated with leases approved by Mortgagee, as defined below. Any Event of Default under the terms of the Reserve Account Agreement shall be considered

an Event of Default by Grantor under this Mortgage. Reserve Account Funds shall be released to Mortgagor solely in accordance with the terms of the Reserve Account Agreement.

1.15 Security Agreement.

(a) Mortgagor (as Debtor) hereby grants to Mortgagee (as Creditor and Secured Party) a security interest in all personal property and fixtures described in the section of this Mortgage entitled "The Mortgaged Property" and in any and all other personal property or fixtures now or hereafter constituting part of the Mortgaged Property. This Mortgage is a self-operative security agreement and fixture filing for the purpose of creating and perfecting a security interest in all such personal property and fixtures. In addition to all rights and remedies specified in this Mortgage, Mortgagee shall have all the rights and remedies of a secured party under the Uniform Commercial Code and other applicable law.

(b) It is hereby expressly declared and agreed that, to the extent permitted by law, all items of Equipment, all accessions, renewals, substitutions and replacements thereof and thereto and all other items included in the Mortgaged Property are, and at all times and for all purposes shall be deemed to be, part and parcel of the real property encumbered by this Mortgage and appropriated to the use of such real property, whether or not any such item is affixed or annexed to such real property and whether or not any such item is or shall be identified by serial number or otherwise referred to or reflected in any recital or list contained in this Mortgage or in any financing statement filed or recorded in connection herewith. Neither anything set forth in this Section nor the filing or recording of any such financing statement in the records for personal property security interests shall be construed as in any way derogating from or otherwise impairing the effectiveness of the aforesaid declaration. The mention in any such financing statement of any particular item included in the Mortgaged Property shall not be construed as in any way altering the rights of Mortgagee with respect thereto pursuant to this Mortgage or the priority of the lien of this Mortgage with respect thereto. Any and all such financing statements are intended to be for the protection of Mortgagee in the event that any court shall determine that the priority of the lien of this Mortgage with respect to any part of the Mortgaged Property requires the recording or filing of notice in the records for personal property security interests.

1.16 After-Acquired Property. To the extent permitted by law, the lien of this Mortgage shall automatically attach, without further act, to all right, title and interest of Mortgagor in and to any and all after acquired property of the character or type described in the section of this Mortgage entitled "The Mortgaged Property". Mortgagor shall promptly execute and deliver to Mortgagee such instruments as shall be requested by Mortgagee to confirm such lien. Mortgagor hereby irrevocably authorizes and appoints Mortgagee the agent and attorney-in-fact of Mortgagor to execute all such instruments on behalf of Mortgagor, which appointment shall be deemed to be coupled with an interest.

1.17 Further Assurances. Upon request by Mortgagee, Mortgagor from time to time shall make, execute and deliver, or cause to be made, executed and delivered, to Mortgagee, and where appropriate shall cause to be recorded or filed, and from time to time thereafter to be re-recorded and refiled at such times and in such offices and places as Mortgagee shall reasonably deem desirable, any and all such further mortgages, assignments, security agreements, financing statements, instruments of further assurance, certificates and such other documents as Mortgagee may consider necessary or reasonably desirable in order to effectuate, complete, perfect, continue or preserve the obligations of Mortgagor under the Loan Documents or the lien of this Mortgage upon all or any part of the Mortgaged Property. Upon failure by Mortgagor to do so, in addition to its other rights and remedies under this Mortgage, Mortgagee may make, execute, deliver, record, file, re-record or refile any and all such mortgages, assignments, security agreements, financing statements, instruments, certificates and documents for and in the name of Mortgagor, and Mortgagor hereby irrevocably authorizes and appoints Mortgagee the agent and attorney-in-fact of Mortgagor to do so, which appointment is deemed to be coupled with an interest.

1.18 Loan to Value Ratio. Mortgagor shall at all times maintain a loan to value ratio regarding the Mortgaged Property of not greater than eighty percent (80%), as determined by Mortgagee in its sole discretion.

1.19 Debt Service Coverage Ratio. Mortgagor shall at all times maintain a debt service coverage ratio of not less than 1.25, which debt service coverage shall be calculated by dividing the net operating income on an annual basis for the Mortgaged Property by the total debt service on an annual basis on the Mortgaged Property, as determined by Lender in its sole discretion

1.20 Financial Reporting Requirements.

(a) Mortgagor shall keep and maintain at all times complete and accurate books of accounts and records reflecting the results of the operation of the Mortgaged Property. Mortgagor shall furnish to Mortgagee within ninety (90) days after the end of each fiscal year of Mortgagor, (i) an annual statement of financial condition for Mortgagor, sworn to be true and correct and in a form acceptable to Mortgagee, excluding footnotes, (ii) an annual operating statement for the Mortgaged Property, in a form acceptable to Mortgagee, provided, however, that Mortgagor shall furnish to Mortgagee monthly operating statements for the Mortgaged Property upon the request of Mortgagee, and (iii) an annual rent roll for the Mortgaged Property, in a form acceptable to Mortgagee.

(b) Upon request by Mortgagee, Mortgagor from time to time shall furnish to Mortgagee such interim financial statements and other information as Mortgagee may require. Mortgagee shall have the right, at all reasonable times, to inspect and copy Mortgagor's books and records, and the books and records of any manager retained by or on behalf of Mortgagor, with respect to the Mortgaged Property. Mortgagor shall take all action necessary to make such books and records available for such inspection and copying.

1.21 Estoppel Certificates. Upon request by Mortgagee, Mortgagor from time to time shall deliver to Mortgagee a written statement, duly acknowledged, setting forth the then outstanding principal of and interest on the Indebtedness, and stating whether or not any offsets or defenses exist against the Indebtedness and, if any offsets or defenses are claimed, identifying same in detail.

1.22 Expenses and Indemnification.

(a) Mortgagor shall pay when due and payable, and upon request by Mortgagee shall reimburse Mortgagee for, all commercially reasonable appraisal fees, recording fees, taxes, brokerage fees and commissions, abstract and search fees, title insurance fees and premiums, escrow fees, attorneys' fees, court costs, fees of inspecting architect(s) and engineer(s) and all other reasonable costs and expenses which have been incurred, or which hereafter may be incurred, by Mortgagee in connection with: (i) preparation, execution and recording of this Mortgage and the other Loan Documents; (ii) after the occurrence of any Event of Default, preparation for enforcement of this Mortgage or any of the other Loan Documents, whether or not any suit or other action actually shall be commenced or undertaken; (iii) enforcement of this Mortgage or any of the other Loan Documents after the occurrence of an Event of Default; (iv) court or administrative proceedings of any kind to which Mortgagee may be a party, whether as plaintiff, defendant or otherwise, by reason of the Indebtedness or any of the Loan Documents; (v) defending and upholding the lien of this Mortgage or otherwise defending or asserting any rights and claims of Mortgagee under this Mortgage and the other Loan Documents; (vi) preparation for, and actions taken in connection with, Mortgagee's taking possession of all or any part of the Mortgaged Property; (vii) negotiations with Mortgagor or any or its members, employees, agents, contractors, attorneys or other representatives in connection with the existence or cure of any Event of Default; (viii) any transfer or proposed transfer of the Mortgaged Property in lieu of foreclosure; and (ix) the approval or disapproval by Mortgagee of any action taken or proposed to be taken and required to be approved by Mortgagee under the terms of any of the Loan Documents.

(b) Mortgagor shall indemnify and hold harmless Mortgagee from and against, and reimburse Mortgagee for, any and all claims, demands, liabilities, losses, damages, judgments, penalties, costs and

expenses (including, without limitation, reasonable attorneys' fees) which may be imposed upon, asserted against, or incurred or paid by Mortgagee by reason of, on account of or in connection with (i) any bodily injury, death or property damage occurring in or upon or in the vicinity of the Mortgaged Property through any cause whatsoever, (ii) any act performed or omitted to be performed by Mortgagor under any of the Loan Documents, or (iii) any transaction, suit, action or proceeding arising out of or in any way connected with the Mortgaged Property, any of the Loan Documents or the Indebtedness. Notwithstanding anything contained herein to the contrary, the foregoing indemnity and hold harmless shall not apply to any negligent or intentional acts or omissions of Mortgagee, its agents, employees, contractors or representatives.

1.23 Mortgagee's Performance of Defaults. If Mortgagor defaults in the payment of any Imposition or insurance premium, in its obligation to furnish insurance hereunder, or in the performance or observance of any other covenant, agreement, condition or provision of this Mortgage or any of the other Loan Documents and such default constitutes an Event of Default hereunder, Mortgagee, at its option after notice and after the expiration of any applicable notice and cure periods may pay, perform or observe the same. No such payment, performance or observance shall release Mortgagor from any obligations under any of the Loan Documents or constitute a waiver of any Event of Default or any rights or remedies of Mortgagee in connection therewith. Upon request by Mortgagee, Mortgagor shall pay to Mortgagee, or to any other person or persons that Mortgagee may designate, the amount of all such payments properly made by Mortgagee (whether such payments are regular or accelerated payments) and all reasonable costs, expenses and liabilities (including, without limitation, reasonable attorneys' fees) incurred by Mortgagee in connection therewith, together with interest thereon at the Default Rate from the date paid or incurred by Mortgagee until the date so paid to, or as directed by, Mortgagee. Mortgagee is hereby irrevocably authorized and empowered to enter upon, and to authorize others to enter upon, the Mortgaged Property for the purpose of performing or observing any such defaulted covenant, agreement, condition or other provision, without thereby becoming liable to Mortgagor or any person in possession holding under Mortgagor.

1.24 Security for Advances. All reasonable amounts properly advanced by Mortgagee pursuant to this Mortgage, all reasonable amounts otherwise advanced by Mortgagee to protect the security of this Mortgage and all reasonable costs, expenses and liabilities paid or incurred by Mortgagee and reimbursable or payable by Mortgagor pursuant to this Mortgage or any of the other Loan Documents, together with interest thereon as provided in this Mortgage or as otherwise provided by law, shall be deemed to be a part of the Indebtedness and shall be secured by this Mortgage to the extent permitted by law.

1.25 Required Notices.

(a) Mortgagor shall promptly notify Mortgagee in writing of the occurrence of any of the following:

(i) receipt by Mortgagor of any notice from any governmental authority or instrumentality concerning (A) compliance or lack of compliance of all or any part of the Mortgaged Property, or any business or other activity conducted thereon, with any law, ordinance, rule, regulation, order, judgment, injunction or decree or with the conditions or other requirements of any license, permit, approval or authorization (including, without limitation, notice of any violation or alleged violation of any Environmental Law, or of any threatened, proposed or actual cleanup or other protective or remedial action relating to any Hazardous Substances, whether pursuant to any Environmental Law or otherwise), or (B) the status of, or need for, any license, permit, approval or authorization;

(ii) receipt by Mortgagor of any notice concerning compliance or lack of compliance of all or any part of the Mortgaged Property, or any business or other activity conducted thereon, with any agreement or restrictive covenant;

(iii) receipt by Mortgagor of any notice from any tenant leasing all or any part of the Mortgaged Property or from the holder of any lien or security interest encumbering all or any part of the Mortgaged Property concerning any default or any other material matter in respect of such lease, lien or security interest;

(iv) receipt by Mortgagor of any notice of any contemplated, threatened or pending condemnation or eminent domain proceeding relating to all or any part of the Mortgaged Property;

(v) receipt by Mortgagor of any notice concerning (A) any contemplated, threatened or pending cancellation of any insurance coverage on all or any part of the Mortgaged Property, (B) any refusal by any insurance company to provide or continue insurance coverage on all or any part of the Mortgaged Property, or (C) any increase in the cost of premiums for any insurance coverage on all or any part of the Mortgaged Property due to the condition thereof or due to any business or activity conducted therein or thereon, other than normal, customary annual premium increases;

(vi) receipt by Mortgagor of any notice concerning commencement of any judicial or administrative proceedings by, against, or otherwise having a material effect on Mortgagor or the Mortgaged Property;

(vii) receipt by Mortgagor of any notice concerning commencement of any action for default under the terms of any loan by any creditor of Mortgagor;

(viii) any change in the name of Mortgagor or in the location of Mortgagor's principal place of business; or

(ix) any material change in the occupancy of the Buildings.

(b) Mortgagor also shall notify Mortgagee in writing upon receipt by Mortgagor of notice of any other occurrence requiring the giving of notice to Mortgagee pursuant to this Mortgage or any of the other Loan Documents. Each notice to Mortgagee pursuant to this Section 1.24 shall be accompanied by a true, correct and complete copy of any notice received by Mortgagor which is the subject of such notice to Mortgagee.

ARTICLE TWO—DEFAULTS

2.01 Event of Default. As used in this Mortgage, the term "Event of Default" shall mean and refer to any one or more of the following events (as used herein, the term Event of Default shall in each case mean after the expiration of any applicable notice and cure periods):

(a) Failure by Mortgagor, not cured within ten (10) days after written notice thereof to Mortgagor, to pay (i) any periodic installment of interest or principal, or both, after the due date thereof under the Note, (ii) the outstanding principal balance on the Note, together with interest accrued on such principal balance, at maturity of the Note, or (iii) any other sums to be paid by Mortgagor under this Mortgage or any of the other Loan Documents.

(b) Failure by Mortgagor to comply with its obligations under Section 1.04 ("Discharge of Liens") in accordance with the terms thereof which is not cured within sixty (60) days after written notice thereof to Mortgagor.

(c) Failure by Mortgagor to comply with its obligations under Section 1.07 ("Insurance") or Section 1.22 ("Required Notices") in accordance with the terms thereof which is not cured within thirty (30) days after written notice thereof to Mortgagor.

(d) Failure by Mortgagor to comply with any order or other notice of violation issued by any governmental authority or instrumentality claiming jurisdiction over the Mortgaged Property, within the time specified by such authority or instrumentality, or (if no such time is so specified)

within thirty (30) days after the issuance of such order or notice; provided , however , that (if no such time is so specified) such failure shall not constitute an Event of Default until the expiration of ninety (90) days after the issuance of such order or notice, in the case of any such violation that is not susceptible to being cured within the aforesaid thirty (30) day period, provided (i) Mortgagor shall have commenced such cure within such thirty (30) day period and thereafter shall diligently continue its efforts in that regard until such violation shall have been fully cured, (ii) no hazardous condition shall continue or be created as a result of such failure, (iii) no part of the Mortgaged Property, or the interest therein of Mortgagor, Mortgagee or any tenant, would (in the judgment of Mortgagee) be in danger of being forfeited or lost as a result of such failure, (iv) such failure shall not result in any governmental authority or instrumentality threatening to carry out any work to cure such violation or threatening to establish or foreclose any lien against all or any part of the Mortgaged Property or the interest therein of Mortgagor, Mortgagee or any tenant, and (v) neither Mortgagee nor any officer, employee, agent, contractor, attorney or other representative of Mortgagee would (in the judgment of Mortgagee) be in danger of being subjected to any criminal or civil liability or penalty, or any charge of any kind, as a result of such failure.

(e) Failure by Mortgagor to duly keep, perform or observe any other covenant, agreement, condition or provision in this Mortgage or any of the other Loan Documents; provided , however , that such failure shall not constitute an Event of Default unless it shall not be cured within thirty (30) days after written notice thereof shall have been given to Mortgagor. Notwithstanding the foregoing, so long as Mortgagor shall commence to cure such failure within said thirty (30) day period, and shall thereafter diligently pursue such cure to completion, such failure shall not constitute an Event of Default unless it shall not be cured within one hundred twenty (120) days after the notice thereof was given to Mortgagor.

(f) If Mortgagor maintains or incurs other indebtedness or borrowed money, and any secondary or additional financing is secured by the Mortgaged Property, and Mortgagor failed to obtain prior written consent from Mortgagee.

(g) If any material inaccuracy shall exist in any of the financial statements, certificates or other information furnished or to be furnished by Mortgagor to Mortgagee pursuant to the provisions of this Mortgage, and such inaccuracy is not corrected to Mortgagee's satisfaction within thirty (30) days after written notice to Mortgagor.

(h) Breach of any material warranty or untruth of any material representation of Mortgagor contained in this Mortgage or any of the other Loan Documents, which breach is not corrected to Mortgagee's satisfaction within thirty (30) days after written notice to Mortgagor.

(i) If (i) a petition shall be filed against Mortgagor under any present or future law relating to bankruptcy, reorganization, arrangement, composition, readjustment, liquidation, dissolution or insolvency, and shall not be dismissed within ninety (90) days after such filing, (ii) Mortgagor (A) shall file a petition in voluntary bankruptcy or seeking relief under any provision of any such law, (B) shall make any general assignment for the benefit of creditors or admit in writing its inability, or fail, to pay its debts generally as they become due, or consent to the appointment of a receiver, master, custodian, liquidator or trustee of himself, or of all or any part of its property, (C) is or shall become "insolvent" (as hereinafter defined), or (D) is or shall be adjudicated a bankrupt or insolvent, (iii) any trustee, custodian, receiver, master or liquidator of Mortgagor shall be appointed by court order and such order shall remain in effect for more than ninety (90) days, or an order for relief shall be entered with respect to Mortgagor and not withdrawn within ninety (90) days, or (iv) any of the property of Mortgagor shall be sequestered by court order and such order shall remain in effect for more than thirty (30) days. For purposes of this paragraph, a person or entity shall be deemed to be insolvent if he or it is unable to pay its or its debts as they become due or if the fair market value of its assets does not exceed its aggregate liabilities.

(j) The entry by any court of last resort of a decision that an undertaking by Mortgagor pursuant to this Mortgage to pay taxes, assessments, levies, liabilities, obligations or encumbrances is legally inoperative or cannot be enforced, or in the event of the adoption of any law or procedure changing in any way the laws or procedures now in force for the taxation of mortgages or debts secured by mortgages so as to affect adversely the security of this Mortgage or to reduce the net income to Mortgagee in respect of the Indebtedness, unless (i) upon request by Mortgagee, Mortgagor promptly shall pay to Mortgagee or to the taxing authority (if so directed by Mortgagee), all taxes, charges and related costs for which Mortgagee may be liable as a result thereof, and (ii) such payment by Mortgagor shall (in Mortgagee's opinion) be permitted and shall not render the Note usurious.

(k) The occurrence of a default under any encumbrance now or hereafter affecting all or any part of the Mortgaged Property, and the continuation of such default beyond any applicable grace or cure period established in such encumbrance, or any other event permitting acceleration of the maturity of any indebtedness secured by any such encumbrance.

(l) Dissolution or termination of Mortgagor.

ARTICLE THREE—REMEDIES

3.01 Acceleration of Maturity. After the occurrence of any Event of Default, Mortgagee, at its option and without demand or notice, may declare the outstanding Indebtedness (or, at Mortgagee's option, any part thereof) to be due and payable immediately. Upon such declaration, the Indebtedness (or such part thereof) shall immediately become and be due and payable without demand or notice.

3.02 Mortgagee's Power of Enforcement. After the occurrence of any Event of Default, Mortgagee, at its option, may proceed by any appropriate action or proceeding to (a) enforce payment of the Indebtedness pursuant to the Loan Documents, (b) enforce performance of any term of this Mortgage or any of the other Loan Documents, (c) enforce any other rights of Mortgagee with respect to the Indebtedness or the Mortgaged Property, (d) foreclose this Mortgage and sell the Mortgaged Property, as an entirety or in separate lots or parcels, under the judgment or decree of any court of competent jurisdiction, (e) to the extent permitted by law, pursue the partial foreclosure of this Mortgage for any part of the Indebtedness then due and payable, subject to the continuing encumbrance of this Mortgage as security for the balance of the Indebtedness not then due, and (f) pursue any other right, power or remedy available to Mortgagee at law or in equity. Mortgagee may pursue any and all such actions or proceedings, at Mortgagee's option, either with or without entry or taking possession and whether or not the Indebtedness or any part thereof shall have been declared to be immediately due and payable or shall otherwise be due. Mortgagee may pursue any and all such actions or proceedings without prejudice to Mortgagee's right thereafter to foreclose this Mortgage or to bring any other action or proceeding to enforce Mortgagee's rights, powers and remedies with respect to the Indebtedness or the Mortgaged Property, whether or not the basis for any such subsequent action or proceeding shall be a default or Event of Default existing at the time such earlier action or proceeding was commenced.

3.03 Appointment of Receiver.

(a) After the occurrence of any Event of Default, Mortgagee, to the extent permitted by law, shall be entitled as a matter of right if it so elects to the appointment of a receiver to enter upon and take possession of the Mortgaged Property and to collect all rents, royalties, issues, profits, revenues, income and other benefits of and from the Mortgaged Property and apply the same as the court may direct or otherwise as may be permitted by law. Without limiting the generality of the foregoing or any other provision of this Mortgage, Mortgagor agrees that the failure of Mortgagor to pay any Impositions (except to the extent permitted in connection with any contest pursuant to Section 1.05 of this Mortgage) or to maintain any insurance required with respect to the Mortgaged Property or to pay any premiums payable with respect to any such insurance shall constitute waste, justifying the appointment

of a receiver. The receiver shall be entitled to hold, store, use, operate, manage and control the Mortgaged Property and conduct the business thereof as would Mortgagee pursuant to paragraph 3.03(c) above and shall have all rights and powers permitted under the laws of the State of Connecticut and such other rights and powers as the court making such appointment shall confer. The receiver shall be liable to account only for rents, royalties, issues, profits, revenues, income and other benefits actually received by such receiver. Notwithstanding the appointment of any receiver or other custodian, Mortgagee, as pledgee or depository, shall be entitled to the possession and control of any cash, deposits or instruments held by Mortgagee at the time of such appointment or payable or deliverable to Mortgagee from time to time under the terms of this Mortgage or any of the other Loan Documents.

(b) Upon request by Mortgagee, Mortgagor shall pay to Mortgagee, or to any other person that Mortgagee may designate, or to any such receiver, all reasonable costs, expenses and liabilities (including, without limitation, attorneys' fees, receivers' fees and the fees of any manager retained by such receiver) incurred by Mortgagee or by such receiver in connection with the appointment of such receiver and the exercise of the rights and powers of such receiver, except to the extent such costs, expenses and liabilities shall or could have been paid out of collections from the Mortgaged Property as provided in paragraph 3.03(c) above, together with interest thereon at the Default Rate from the date incurred by Mortgagee or by such receiver until the date so paid to, or as directed by, Mortgagee or to such receiver.

3.04 Leases. Any foreclosure of this Mortgage and any other transfer of title to the Mortgaged Property in extinguishment of all or any part of the Indebtedness may, at Mortgagee's option, be subject to the rights of any tenants of all or any part of the Mortgaged Property, and any failure to make any such tenants parties defendant to any foreclosure proceedings or to foreclose or otherwise terminate their rights will not be, nor be asserted by Mortgagor to be, a defense to any such foreclosure proceedings or to any proceedings seeking collection of all or any part of the Indebtedness, including, without limitation, any deficiency remaining unpaid after the completion of any such foreclosure, any sale in connection therewith or any other transfer in extinguishment of all or any part of the Indebtedness.

3.05 Suits To Protect Mortgaged Property. Mortgagee is hereby irrevocably authorized, at Mortgagee's option, to institute and maintain any and all suits and proceedings as Mortgagee may deem advisable (a) to prevent any impairment of the Mortgaged Property or the security of this Mortgage by any unlawful acts or omissions, (b) to prevent the occurrence or continuance of any violation of this Mortgage or any of the other Loan Documents, (c) to foreclose this Mortgage (after the occurrence of an Event of Default), (d) to preserve and protect its interest in the Mortgaged Property, and (e) to restrain the enforcement of or compliance with any legislation or other governmental enactment, rule or order that may be unconstitutional or otherwise invalid, if the enforcement of or compliance with such legislation, enactment, rule or order might impair the Mortgaged Property or the security of this Mortgage or be prejudicial to Mortgagee's interests.

3.06 Proofs of Claim. In the case of any receivership, insolvency, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial case or proceeding affecting Mortgagor, its creditors or its properties, Mortgagee, to the extent permitted by law, is hereby irrevocably authorized, at Mortgagee's option, to file such proofs of claim and other documents as may be necessary or advisable in order to have its claims allowed in such case or proceeding for the entire Indebtedness, at the date of the institution of such case or proceeding, and for any additional amounts which may become due and payable under any of the Loan Documents after such date.

3.07 Application of Moneys by Mortgagee. Any moneys collected or received by Mortgagee in connection with the enforcement of its rights or remedies following any Event of Default shall be applied, in such priority as Mortgagee may determine, to the payment of reasonable compensation, expenses and disbursements of the agents, contractors, attorneys and other representatives of Mortgagee, to the payment of all or any part of the Indebtedness or for any other purpose authorized by any of the Loan Documents or by law.

3.08 No Waiver.

(a) No delay or omission of Mortgagee to insist upon strict performance of any obligations of Mortgagor under or in connection with this Mortgage or any of the other Loan Documents or to exercise any right, power or remedy available after the occurrence of any Event of Default shall waive, exhaust or impair any such obligation or any such right, power or remedy, nor shall any such delay or omission be construed to waive any such Event of Default or to constitute acquiescence therein. Notwithstanding any such delay or omission, Mortgagee thereafter shall have the right, from time to time and as often as may be deemed expedient by Mortgagee, to insist upon and enforce strict performance of any and all obligations of Mortgagor under or in connection with this Mortgage or any of the other Loan Documents. Every right, power and remedy given to Mortgagee may be exercised from time to time and as often as may be deemed expedient by Mortgagee.

(b) No waiver of any Event of Default shall extend to or affect any subsequent Event of Default or any other Event of Default then existing, nor shall any such waiver impair any rights, powers or remedies consequent upon any Event of Default. After the occurrence of any Event of Default (whether or not the Indebtedness shall have been declared to be due and payable immediately), Mortgagee may accept payments of amounts owing in respect of the Indebtedness, and no such acceptance shall waive any such Event of Default or result in any Indebtedness which shall have been declared to be due and payable no longer being due and payable unless the payment made by Mortgagor fully cures the outstanding defaults.

3.09 Remedies Cumulative. Except as otherwise provided herein, no right, power or remedy conferred upon or reserved to Mortgagee or to any receiver by any of the Loan Documents, by law or by any court, is exclusive of any other right, power or remedy, but each and every such right, power and remedy shall be cumulative and concurrent and shall be in addition to any other right, power and remedy given under any of the Loan Documents or now or hereafter existing at law, in equity or by statute.

3.10 Purchase by Mortgagee. Upon any foreclosure sale, Mortgagee may bid for and purchase all or any part of the Mortgaged Property and, upon compliance with the terms of sale, may hold, retain, possess and dispose of such property in its own absolute right without further accountability. Upon any foreclosure sale, Mortgagee may, if permitted by law, and after allowing for costs and expenses of the sale, compensation and other charges, in paying the purchase price, apply any portion of or all of the Indebtedness in lieu of cash, to the amount which shall, upon distribution of the net proceeds of such sale, be payable thereon.

3.11 Discontinuance of Proceedings. If Mortgagee shall have proceeded to enforce any right or remedy under this Mortgage by foreclosure or otherwise after the occurrence of and during the continuance of an Event of Default as claimed by Mortgagee, and if such proceedings shall have resulted in a final determination adverse to Mortgagee concluding that no Event of Default had occurred or that Mortgagee had beached its obligation of good faith and fair dealing, then Mortgagee shall be responsible for all reasonable and necessary costs and expenses incurred by Mortgagor in connection with such proceeding. In any other case, if such proceedings by Mortgagor have been discontinued or abandoned, Mortgagor and Mortgagee shall be restored to their former positions and rights hereunder, and all rights, powers and remedies of Mortgagee shall continue as if no such proceedings had occurred or had been taken.

3.12 Additional Security and Guaranty. If Mortgagee at any time holds additional security for, or any guaranty of, all or any part of the Indebtedness, Mortgagee may foreclose such security or otherwise enforce Mortgagee's rights with respect to, or realize upon, such security or such guaranty (as the case may be), at Mortgagee's option, either before or concurrently with or after a foreclosure or other enforcement of this Mortgage, without being deemed to have made an election thereby or to have accepted the benefits of such guaranty, the security of this Mortgage or such additional security (or the proceeds of such security) in full settlement of the Indebtedness and Mortgagee's rights with respect thereto. Any judgment or decree with respect to the Note or with respect to any such guaranty or security, whether rendered in the State of Connecticut or elsewhere, shall not in any manner affect the security of this Mortgage, and any deficiency or other debt represented by said judgment or decree shall, to the extent permitted by law, be secured by this Mortgage to the same extent that the Indebtedness was secured hereby prior to the rendering of such judgment.

ARTICLE FOUR—TRANSFER OR FURTHER ENCUMBRANCE OF MORTGAGED PROPERTY

4.01 Option to Accelerate; Consent of Mortgagee. In the event of any sale, conveyance, transfer, pledge or further encumbrance, by operation of law or otherwise, of all or any part of the Mortgaged Property, of any interest therein, or in the event of any change in the ownership or composition of Mortgagor, or any further assignment of rents from the Mortgaged Property, or any transfer of any interests in Mortgagor, the Land or the Improvements, without the prior written consent of Mortgagee, then, at Mortgagee's option, Mortgagee may declare the Indebtedness to be due and payable immediately, and upon such declaration the Indebtedness shall immediately become and be due and payable without demand or notice. Mortgagee's consent shall be within its sole and absolute discretion, and Mortgagee specifically reserves the right to condition its consent upon (by way of illustration but not by way of limitation) its approval of the financial and/or management ability of the purchaser, transferee, lessee, pledgee or assignee, upon an agreement to escalate the interest rate of the Note to Mortgagee's then current interest rate for similarly situated properties, upon the assumption of the obligations and liabilities of the Note and this Mortgage by the purchaser, transferee, lessee, pledgee or assignee, upon the receipt of guarantees of the Indebtedness satisfactory to Mortgagee and/or additional collateral satisfactory to Mortgagee and upon payment to Mortgagee of an assumption fee. Mortgagor covenants and agrees that it shall not take any of the actions, or suffer any of the events, that would be a cause for acceleration of the Indebtedness pursuant to this Section, without the prior written consent of Mortgagee.

4.02 Subsequent Owner. Mortgagor agrees that, in the event ownership of all or any part of the Mortgaged Property becomes vested in a person other than Mortgagor, Mortgagee may, without notice to Mortgagor, deal in any way with such successor or successors in interest with reference to this Mortgage, the other Loan Documents and the Indebtedness, without in any way vitiating or discharging Mortgagor's liability with respect thereto. No sale, conveyance, transfer, pledge, encumbrance, assignment or lease referred to in Section 4.01, and no forbearance, extension or assumption by or to any person with respect to the Indebtedness or any of the Loan Documents, shall operate to release, discharge, modify, change or affect the liability of Mortgagor either in whole or in part, unless Mortgagee specifically agrees in writing to the contrary.

ARTICLE FIVE—MISCELLANEOUS

5.01 Binding Effect; Use of Certain Terms. Each reference in this Mortgage to any party hereto shall include the heirs, successors and assigns of such party. All covenants and agreements contained in this Mortgage, by or on behalf of Mortgagor or Mortgagee, shall run with the Land and shall bind and inure to the benefit of their respective heirs, successors and assigns, whether so expressed or not. If there is more than one Mortgagor at any time, all undertakings of Mortgagor under this Mortgage shall be deemed to be joint and several. Each reference in this Mortgage to any gender shall include any

other gender, and the use of the singular shall include the plural and vice versa, unless the context requires otherwise. As used in this Mortgage, the term "person" shall mean and refer to all individuals, sole proprietorships, partnerships, joint ventures, associations, trusts, estates, business trusts, corporations (non-profit or otherwise), financial institutions, governments (and agencies, instrumentalities and political subdivisions thereof), and all similar entities and organizations.

5.02 Assignments. Mortgagee shall have the right to assign or transfer its rights under this Mortgage without limitation. Any assignee or transferee shall be entitled to all the benefits afforded Mortgagee under this Mortgage. Mortgagor shall not, without the prior written consent of Mortgagee, which consent may be withheld in Mortgagee's sole discretion, assign or transfer its rights under this Mortgage or any of the Loan Documents.

5.03 Survival. All covenants, representations and warranties made herein shall survive the making of the Loan and the delivery of the Note and other Loan Documents. The representations and warranties, covenants, and other obligations arising under this Mortgage shall in no way be impaired by any satisfaction or other termination of this Mortgage, any assignment or other transfer of all or any portion of this Mortgage or Mortgagee's interest in the Property (but, in such case, shall benefit both Mortgagee and any assignee or transferee), any exercise of Mortgagee'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 Loan Documents, any transfer of all or any part of the Property, any amendment to this Mortgage, the Note or the other Loan Documents, and any act or omission that might otherwise be construed as a release or discharge of Mortgagor from the obligations pursuant hereto.

5.04 Giving of Notices.

(a) Any notice, report, demand, request or other instrument or communication authorized or required under this Mortgage to be given to Mortgagor or Mortgagee shall be deemed given if addressed to the party intended to receive the same, at the address of such party set forth below, (i) when delivered at such address by hand or by overnight delivery service, or (ii) three (3) days after the same is deposited in the United States mail as first class certified mail, return receipt requested, postage paid, whether or not the same is actually received by such party:


Mortgagor:		Griffin Center Development IV, LLC 204 West Newberry Road Bloomfield, CT 06002
Copy to:		Thomas M. Daniells, Esq. Murtha Cullina LLP CityPlace I 185 Asylum Street Hartford, CT 06103
Mortgagee:		Webster Bank CityPlace II 185 Asylum Street Hartford, Connecticut 06103 Attention: Michael P. Thurz
Copy to:		Marshall S. Ruben, Esq. Ruben, Johnson & Morgan, P.C. CityPlace II 185 Asylum Street Hartford, Connecticut 06103

(b) Either party may change the address to which any such notice, report, demand, request or other instrument or communication to such party is to be delivered or mailed, by giving written notice

of such change to the other party, but no such notice of change shall be effective unless and until received by such other party. No such notice, report, demand, request or other instrument or communication given to Mortgagor shall be invalidated or rendered ineffective due to any failure to give, or any delay in giving, a copy of such notice, report, demand, request or other instrument or communication to any party to whom such copy is to be given as provided above.

5.05 Headings. The headings of the articles, sections, paragraphs and subdivisions of this Mortgage are for convenience of reference only, are not to be considered a part of this Mortgage and shall not limit, expand or otherwise affect any of the terms of this Mortgage.

5.06 Provisions Subject to Applicable Laws; Invalid Provisions To Affect No Others. All rights, powers and remedies provided in this Mortgage may be exercised only to the extent that the exercise thereof does not violate any law and are intended to be limited to the extent necessary so that they will not render this Mortgage invalid or unenforceable. In the event that any of the covenants, agreements, conditions or other provisions contained in this Mortgage or in any of the other Loan Documents shall be deemed invalid, illegal or unenforceable in any respect, the validity of the remaining covenants, agreements, conditions and provisions contained in this Mortgage or in any of the other Loan Documents shall be in no way affected, prejudiced or disturbed thereby.

5.07 Changes. Neither this Mortgage nor any of the other Loan Documents may be changed, waived, discharged or terminated orally, or by any action or inaction, but only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought, and then only to the extent specifically provided in such instrument. Any agreement hereafter made by Mortgagor and Mortgagee relating to this Mortgage or any of the other Loan Documents shall to the extent permitted by applicable law be superior to the rights of the holder of any intervening lien or encumbrance. Neither the modification of this Mortgage or any of the other Loan Documents nor the release of any part of the Mortgaged Property from the lien of this Mortgage shall impair the priority of such lien.

5.08 Waiver of Conditions. All conditions to any agreement or obligation of Mortgagee under this Mortgage or any of the other Loan Documents (including, without limitation, any agreement or obligation to make insurance proceeds or other amounts available to Mortgagor) are solely for the benefit of Mortgagee. Any or all such conditions may be waived or relaxed at any time or times by Mortgagee. No such waiver or relaxation in any particular instance shall affect Mortgagee's discretion in dealing with any such condition in any other instance.

5.09 No Benefit to Third Parties. Each covenant, agreement, condition and other provision of this Mortgage and of the other Loan Documents is and at all times shall be deemed to be for the exclusive benefit of Mortgagor and Mortgagee and their respective heirs, successors and assigns. Nothing set forth in this Mortgage or in any of the other Loan Documents shall be deemed to be for the benefit of any other person (including, without limitation, the holder of any other lien or interest in all or any part of the Mortgaged Property).

5.10 Exercise of Discretion. Each and every decision, determination, estimate, request, consent or similar matter to be made or given by Mortgagee from time to time pursuant to or in connection with this Mortgage or any of the other Loan Documents shall be within Mortgagee's sole discretion, except to the extent expressly and specifically provided to the contrary in this Mortgage or any of the other Loan Documents.

5.11 Representatives of Mortgagee. All rights, powers and remedies of Mortgagee under this Mortgage or any of the other Loan Documents may be exercised by Mortgagee itself or by its duly authorized officers, employees, agents, contractors, attorneys or other representatives.

5.12 No Release. None of the obligations or liabilities of Mortgagor under this Mortgage or any of the other Loan Documents or in connection with the Indebtedness or the Mortgaged Property shall

be released, discharged, modified or otherwise affected (except to the extent expressly provided in this Mortgage, any of the other Loan Documents or any written agreement executed by Mortgagee) by reason of: (a) any damage to, destruction of or condemnation or other taking affecting all or any part of the Mortgaged Property; (b) any restriction or prevention of or interference with any use of all or any part of the Mortgaged Property; (c) any title defect, lien or other encumbrance on all or any part of the Mortgaged Property or any eviction from all or any part of the Mortgaged Property by paramount title or otherwise; (d) any bankruptcy, reorganization, arrangement, composition, readjustment, liquidation, dissolution, insolvency or similar case or proceeding relating to Mortgagor, or any action taken with respect to this Mortgage, any of the other Loan Documents, the Indebtedness or the Mortgaged Property by any trustee, receiver or court in connection with any such case or proceeding; (e) any claim which Mortgagor has or may have against Mortgagee; (f) any default or failure by Mortgagee to perform or comply with any of the terms of this Mortgage, any of the other Loan Documents or any other agreement with Mortgagor; (g) any consent by Mortgagee to the granting of any easement on all or any part of the Mortgaged Property or to the filing of any map, plat or replat of all or any part of the Mortgaged Property; (h) any failure by Mortgagee to comply with any request of Mortgagor to foreclose this Mortgage or otherwise enforce any of Mortgagee's rights, powers or remedies under this Mortgage or any of the other Loan Documents; (i) any release of all or any part of the Mortgaged Property or any other collateral for the Indebtedness from the lien of this Mortgage or from the effect of any of the other Loan Documents or any acceptance of other or additional security for all or any part of the Indebtedness; (j) any release of any person from any liability for or in connection with all or any part of the Indebtedness; (k) any waiver or other failure by Mortgagee to exercise any right, power or remedy under this Mortgage or any of the other Loan Documents; or (l) any other occurrence whatsoever, whether similar or dissimilar to any of the foregoing occurrences, whether or not Mortgagor shall have notice or knowledge of any of the foregoing occurrences. None of the foregoing occurrences shall preclude Mortgagee from exercising any right, power or remedy available after the occurrence of any then existing or subsequent Event of Default, nor shall the lien of this Mortgage be altered by any such occurrence (except to the extent expressly provided in any instrument executed by Mortgagee).

5.13 Governing Law. This Mortgage shall be construed, interpreted, enforced and governed by and in accordance with the laws of the State of Connecticut.

5.14 Prejudgment Remedies; Waiver of Jury Trial. MORTGAGOR ACKNOWLEDGES THAT THE TRANSACTION OF WHICH THIS MORTGAGE IS A PART IS A COMMERCIAL TRANSACTION, AND, TO THE EXTENT ALLOWED UNDER SECTIONS 52-278a THROUGH 52-278n, INCLUSIVE, OR BY OTHER APPLICABLE LAW, MORTGAGOR HEREBY WAIVES ITS RIGHT TO NOTICE AND HEARING WITH RESPECT TO ANY PREJUDGMENT REMEDY WHICH MORTGAGEE OR ITS SUCCESSORS OR ASSIGNS MAY DESIRE TO USE, AND TO ANY TRIAL BY JURY IN CONNECTION WITH THIS MORTGAGE OR THE INDEBTEDNESS HEREBY SECURED.

5.15 Limitations on Recourse.

(a) Subject to the qualifications set forth below, Mortgagee shall not enforce the liability and obligation of Mortgagor to perform and observe the obligations contained in the Note and this Mortgage by an action or proceeding wherein a money judgment shall be sought against Mortgagor, except that Mortgagee may bring a foreclosure action, an action for specific performance or any other appropriate action or proceeding to enable Mortgagee to enforce and realize upon the Note, this Mortgage, the other Loan Documents, and Mortgagor's interests in the Mortgaged Property and any other collateral given to Mortgagee pursuant to this Mortgage and the other Loan Documents; provided , however , that, except as specifically provided in this Section, any judgment in any such action or proceeding shall be enforceable against Mortgagor only to the extent of Mortgagor's interest in the Mortgaged Property and in any other collateral given to Mortgagee. Subject to the qualifications set

forth below, Mortgagee, by accepting this Note, the Mortgage and the other Loan Documents, agrees that, except with respect to the Environmental Indemnification Agreement and/or that certain Indemnification Agreement of even date herewith (the "Indemnification Agreement") by Griffin Land and Nurseries, Inc. (the "Indemnitor") in favor of Mortgagee, it shall not sue for, seek or demand any deficiency judgment against Mortgagor in any such action or proceeding, under, by reason of or in connection with this Note or the Mortgage. The provisions of this Section shall not, however (A) constitute a waiver, release or impairment of any obligation evidenced or secured by the Note, this Mortgage or the other Loan Documents; (B) impair the right of Mortgagee to name Mortgagor as a party defendant in any action or suit for foreclosure and sale under this Mortgage; (C) affect the validity or enforceability of any indemnity made in connection with the Note, this Mortgage, or the other Loan Documents; (D) impair the right of Mortgagee to obtain the appointment of a receiver; (E) impair the enforcement of any other Loan Document; (F) impair the right of Mortgagee to bring suit with respect to fraud or misrepresentation by Mortgagor or any other person or entity in connection with the Loan, this Note, the Mortgage, or the other Loan Documents or (G) affect the validity or enforceability of the Environmental Indemnification Agreement or limit the liability or recourse of Mortgagor or any other party thereunder; or (I) affect the validity or enforceability of the Indemnification Agreement or limit the liability or recourse of Mortgagor or any other party thereunder.

Nothing set forth in this Mortgage shall be deemed to be a waiver of any right which Mortgagee may have under Section 506(a), 506(b), 1111(b) or any other provisions of the U.S. Bankruptcy Code to file a claim for the full amount of the Indebtedness or to require that all collateral shall continue to secure all of the Indebtedness owing to Mortgagee in accordance with the Note and the other Loan Documents.

Notwithstanding any other provisions in the Note, this Mortgage or the other Loan Documents, Mortgagor shall be fully liable for and shall indemnify Mortgagee for any or all loss, cost, liability, judgment, claim, damage or expense sustained, suffered or incurred by Mortgagee (including, without limitation, Mortgagee's reasonable attorneys' fees) arising out of or attributable or relating to (collectively and inclusive of (A) through (H) hereof):

(A) fraud, misrepresentation or criminal acts by Mortgagor or any guarantor of the Loan or their respective members, officers, directors, principals, agents, employee or affiliates in connection with the Loan;

(B) gross negligence or willful misconduct of Mortgagor or any guarantor of the Loan or their respective members, officers, directors, principals, agents, employees or affiliates with respect to their obligations to Mortgagee or with respect to the operation of the Mortgaged Property, or the physical waste of the Mortgaged Property;

(C) breach of provisions in the Mortgage concerning the Environmental Laws, and/or Hazardous Substances (as such terms are defined in the Mortgage), and any indemnification of Mortgagor therein, in the Environmental Indemnification Agreement or in any other Loan Document with respect to such Environmental Laws and/or Hazardous Substances;

(D) removal or disposal of any portion of the Mortgaged Property after default under this Note, the Mortgage, the Environmental Indemnification Agreement, or any other Loan Document;

(E) misapplication or conversion by Mortgagor or any guarantor of (1) any insurance proceeds paid by reason of any loss, damage or destruction to the Mortgaged Property; (2) any awards or other amounts received in connection with the condemnation of all or a portion of the Mortgaged Property; or (3) rents, income, accounts receivable, issues, profits, proceeds, accounts or other amounts received by Mortgagor or any guarantor (in the case of clause (3), following an Event of Default under this Note, the Mortgage or any of the other Loan Documents);

(F) Mortgagor's failure to pay taxes, assessments, charges for labor or materials or other charges that result in liens on any portion of the Mortgaged Property, to the extent that such taxes, assessments, or charges are due following an Event of Default under this Mortgage the Note, or any of the other Loan Documents, and rental income was available to pay such taxes, assessments or charges on a timely basis;

(G) any security deposits, advance deposits or retained rents and profits collected with respect to the Mortgaged Property which are not delivered to Mortgagee upon a foreclosure of the Mortgaged Property or action in lieu thereof.

The agreement of Mortgagee not to pursue recourse liability as set forth above SHALL BE AND BECOME NULL AND VOID and shall be of no further force and effect if:

(A) Mortgagor files for relief or protection under any federal, state or other bankruptcy, insolvency, reorganization or other creditor-relief laws, or an involuntary filing or petition is made, under any of such laws, against Mortgagor by any of their respective creditors (other than Mortgagee) and such involuntary filing is not unconditionally dismissed or vacated within ninety (90) days; or

(B) any financial information concerning Mortgagor or any guarantor provided by Mortgagor or any guarantor (or their agents, employees or authorized representatives) is fraudulent in any material respect, contains any material fraudulent information or misrepresents in any material respect the financial condition of Mortgagor or any guarantor or Mortgagor fails to deliver such financial information.

Upon the occurrence of any of the foregoing events, Mortgagor shall have full recourse liability for all sums due under the Loan Documents, jointly and severally with any guarantors of repayment of such sums. Nothing in this Section shall be interpreted or construed to impair, limit the liability of or otherwise affect the terms, conditions, requirements and obligations of the Guarantor under the Guaranty Agreement or Mortgagor or any indemnitor under the Environmental Indemnification Agreement or the Indemnification Agreement.

5.16 Transfer of Indebtedness. Mortgagor acknowledges that Mortgagee may (i) sell or transfer interests in the Indebtedness and Loan Documents to one or more participants or special purpose entities, (ii) pledge Mortgagee's interests in the Indebtedness and the Loan Documents as security for one or more loans obtained by Mortgagee, or (iii) sell the Indebtedness evidenced by the Note and the Loan Documents to a party who may pool the Indebtedness with a number of other loans and to have the holder of such loans grant participation therein or issue one or more classes of Mortgage-Backed, Pass-Through Certificates or other securities evidencing a beneficial interest in a rated or unrated public offering or private placement (the "Securities"). The Securities may be rated by one or more national rating agencies. Mortgagor acknowledges and agrees that Mortgagee may, at any time, sell, transfer or assign the Note, this Mortgage and the other Loan Documents, and any or all servicing rights with respect thereto, or grant participation therein or issue Securities evidencing a beneficial interest in a rate or unrated public offering or private placement. In this regard, Mortgagor agrees to make available to Mortgagee all information concerning its business and operations which Mortgagee reasonably requests. Mortgagee may share such information with the investment banking firms, rating agencies, accounting firms, law firms and other third-party advisory firms involved with the Indebtedness or the Securities. Mortgagee may forward to each purchaser, transferee, assignee, Servicer, participant or investor in such securities or credit rating agency rating such Securities (collectively, the "Investor") and each prospective Investor, all documents and information which Mortgagee now has or may hereafter acquire relating to Mortgagor and the Property, whether furnished by Mortgagor or otherwise, as Mortgagee determines necessary or desirable consistent with full disclosure for purposes of marketing and underwriting the Indebtedness. Mortgagor shall furnish and hereby consents to Mortgagee furnishing to such Investors or such prospective Investors any and

all information concerning Mortgagor and the Property as may be requested by Mortgagee, any Investor or any prospective Investor in connection with any sale, transfer or participation interest . It is understood that the information provided by Mortgagor to Mortgagee may ultimately be incorporated into the offering documents for the Securities and thus such information may be disclosed to Investors and prospective Investors. Mortgagee and all of the aforesaid third-party advisors and professional firms shall be entitled to rely on the information supplied by, or on behalf of, Mortgagor. Upon any transfer or proposed transfer contemplated above and by the Loan Documents, at Mortgagee's request, Mortgagor shall provide an estoppel certificate to the Investor or any prospective Investor in such form, substance and detail as Mortgagee may reasonably require.

5.17. Open-End. Upon request of the then owner of record of the Mortgaged Property, Mortgagee may hereafter, at its option, at any time before full payment of the indebtedness, make further advancements to such owner in such amounts and at such rates of interest as Mortgagee shall determine, and every such further advance, with interest, shall be secured by this Mortgage and shall be evidenced by a note signed by Mortgagor or such owner who has assumed this Mortgage; provided , however , that the principal amount of the indebtedness secured by this Mortgage and remaining unpaid shall at no time exceed the principal sum stated above as secured or to be secured hereby, and provided , further, that the terms of repayment of such advancement shall not extend the time of repayment beyond the maturity of the original debt hereby secured.

5.18 FLOOD INSURANCE. If the Mortgaged Property is located in an area designated by the Federal Emergency Management Agency or the Flood Disaster Protection Act of 1973 (P.L. 93-234) as being in a "special flood hazard area" or as having specific flood hazards, Borrower shall, at its sole expense, obtain for, deliver to and maintain for the benefit of Mortgagor and Mortgagee, for so long as this instrument shall remain in effect, flood insurance policies (including renewals thereof) which conform to the requirements of said Flood Disaster Protection Act of 1973 and the National Flood Insurance Act of 1968, with such companies and in such form as Lender may require. Mortgagee may require such policies to contain an endorsement, in form satisfactory to Mortgagee, naming Mortgagee as an additional insured thereunder. Mortgagor shall pay promptly when due any and all premiums on such insurance policies and, promptly thereafter, shall deliver to Lender satisfactory evidence of such payment.

5.19 ENVIRONMENTAL/PHYSICAL INSPECTIONS. In the event Mortgagee, in its commercially reasonable discretion deems it necessary, Mortgagor acknowledges and agrees that Mortgagee has the right to require an environmental analysis or physical inspection of the Mortgaged Property at any time, at the Borrower's expense, upon prior written notice by the Mortgagee to the Mortgagor, during the term of the loan evidenced by the Note and secured by this Mortgage.

NOW THEREFORE , if Mortgagor shall pay or cause to be paid the Indebtedness and if Mortgagor shall keep, perform and observe all of the covenants, agreements, conditions and provisions of this Mortgage and the other Loan Documents, then this Mortgage shall be null and void and of no further force and effect and shall be released by Mortgagee after written request by Mortgagor, otherwise to remain in full force and effect.

IN WITNESS WHEREOF , Mortgagor has caused this Mortgage to be executed as of the day and year first above written.

Signed, Sealed and Delivered	GRIFFIN CENTER DEVELOPMENT IV, LLC By: Griffin Land & Nurseries Inc., its Sole Member
/s/ IRWIN HAUSMAN Print Name: Irwin Hausman	By:	/s/ ANTHONY GALICI Name: Anthony Galici Its: Vice President
/s/ SARA A. TAYLOR Print Name: Sara A. Taylor


STATE OF CONNECTICUT ) )		ss.:		December 17, 2002
COUNTY OF HARTFORD )

On this the 17th day of December, 2002, before me the undersigned officer, personally appeared Anthony Galici, Vice President of Griffin Land & Nurseries, Inc., sole Member of Griffin Center Development IV, LLC, a Connecticut limited liability company, signer and sealer of the foregoing instrument and acknowledged the same to be his/her free act and deed as such Vice President, and the free act and deed of said limited liability company, before me.

IN WITNESS WHEREOF, I hereunto set my hand.

By:

/s/ IRWIN HAUSMAN

Commissioner of the Superior Court
/Notary Public
My Commission Expires:

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Exhibit 10.24

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Exhibit 10.25

SECOND AMENDMENT AGREEMENT

SECOND AMENDMENT AGREEMENT (this " Amendment Agreement ") dated as of January 31, 2003 by and between Griffin Land & Nurseries, Inc. (the " Borrower ") and Fleet National Bank (the " Bank "), amending a certain Credit Agreement dated as of February 8, 2002 between the Borrower and the Bank, as amended by an Amendment Agreement dated as of August 31, 2002 (as amended, the " Credit Agreement ").

W I T N E S S E T H

WHEREAS , pursuant to the terms of the Credit Agreement, the Bank has made and continues to make loans to the Borrower; and

WHEREAS , the Borrower has requested, among other things, that the Bank amend certain terms and conditions of the Credit Agreement; and

WHEREAS , the Bank is willing to amend certain terms and conditions of the Credit Agreement on the terms and conditions set forth herein.

NOW, THEREFORE , for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

§1. Definitions. Capitalized terms used herein without definition that are defined in the Credit Agreement shall have the same meanings herein as therein.

§2. Ratification of Existing Agreements. All of the Borrower's obligations and liabilities to the Bank as evidenced by or otherwise arising under the Credit Agreement, the Note and the other Loan Documents, except as otherwise expressly modified in this Amendment Agreement upon the terms set forth herein, are, by the Borrower's execution of this Amendment Agreement, ratified and confirmed in all respects. In addition, by the Borrower's execution of this Amendment Agreement, the Borrower represents and warrants that no counterclaim, right of set-off or defense of any kind exists or is outstanding as of the date hereof with respect to such obligations and liabilities.

§3. Representations and Warranties. The Borrower hereby represents and warrants to the Bank that all of the representations and warranties made by the Borrower and the Guarantors in the Credit Agreement, the Note and the other Loan Documents are true and correct on the date hereof as if made on and as of the date hereof, except to the extent that any of such representations and warranties expressly relate by their terms to a prior date and for matters previously disclosed to the Bank in writing.

§4. Conditions Precedent. The effectiveness of the amendments contemplated hereby shall be subject to the satisfaction on or before the date hereof of each of the following conditions precedent:

(a) Representations and Warranties. All of the representations and warranties made by the Borrower herein, whether directly or incorporated by reference, shall be true and correct on the date hereof, except as provided in §3 hereof.

(b) Performance; No Event of Default. The Borrower shall have performed and complied in all material respects with all terms and conditions herein required to be performed or complied with by it prior to or at the time hereof, and there shall exist no Event of Default or condition which, with either or both the giving of notice of the lapse of time, would result in an Event of Default upon the execution and delivery of this Amendment Agreement after giving effect to the amendments to the Credit Agreement contained herein.

(c) Corporate Action. All requisite corporate action necessary for the valid execution, delivery and performance by the Borrower and the Guarantors of this Amendment Agreement and all other instruments and documents delivered by the Borrower and the Guarantors in connection therewith shall have been duly and effectively taken.

(d) Delivery. The parties hereto shall have executed and delivered this Amendment Agreement in form and substance satisfactory to the Bank.

(e) Fees and Expenses. The Borrower shall have paid to the Bank all fees and expenses incurred by the Bank in connection with this Amendment Agreement, the Credit Agreement or the other Loan Documents on or prior to the date hereof.

§5. Amendment to the Credit Agreement.

5.1. Amendment to §1.

(a) The second sentence of the definition of the term " EBITDA " appearing in Section 1 of the Credit Agreement is hereby amended in its entirety to read as follows:

"For the purpose of calculating the Fixed Charge Coverage Ratio only, (x) any operating income from any Real Estate owned by the Borrower or any of its Subsidiaries which is encumbered by a Non-Recourse Mortgage as to which no default exists at the time that the Fixed Charge Coverage Ratio is being determined and which is Cash Flow Positive for the fiscal period as to which the Fixed Charge Coverage Ratio is being determined shall be excluded from the calculation of "EBITDA" up to and including the amount necessary to satisfy the corresponding debt service for the relevant period in respect of the Indebtedness incurred by the Borrower or such Subsidiary which is secured by such Non-Recourse Mortgage (including all principal and interest) and (y) any write-off of inventory up to an amount equal to $400,000 for the fiscal quarter ending June 1, 2002, up to an amount equal to $930,000 for the fiscal quarter ended August 31, 2002 and up to an amount equal to $70,000 for the fiscal quarter ended December 1, 2002 shall be excluded from the calculation of "EBITDA" so long as the Occupancy Condition is being met.

§6. Additional Covenants. Without any prejudice or impairment whatsoever to any of the Bank's rights and remedies contained in the Credit Agreement and the covenants contained therein, the Note or in any of the other Loan Documents, the Borrower additionally covenants and agrees with the Bank that the Borrower shall comply and continue to comply with all of the terms, covenants and provisions contained in the Credit Agreement, the Note and the other Loan Documents, except as such terms, covenants and provisions are expressly modified by this Amendment Agreement upon the terms set forth herein. The Borrower expressly acknowledges and agrees that any failure by the Borrower to comply with the terms and conditions of this §6 or any other provisions contained in this Amendment Agreement shall constitute an Event of Default under the Credit Agreement.

§7. Expenses. The Borrower agrees to pay to the Bank upon demand an amount equal to any and all out-of-pocket costs or expenses (including reasonable legal fees and disbursements and appraisal expenses) incurred or sustained by the Bank in connection with the preparation of this Amendment Agreement.

§8. Miscellaneous.

(a) This Amendment Agreement shall be governed by and construed in accordance with the laws of the State of Connecticut.

(b) Except as otherwise expressly provided by this Amendment Agreement, all of the respective terms, conditions and provisions of the Credit Agreement shall remain the same. It is declared and agreed by each of the parties hereto that the Credit Agreement, as amended hereby, shall continue in full force and effect, and that this Amendment Agreement and the Credit Agreement be read and construed as one instrument, and all references in the Loan Documents to the Credit Agreement shall hereafter refer to the Credit Agreement, as amended by this Amendment Agreement.

IN WITNESS WHEREOF, each of the parties hereto have caused this Amendment Agreement to be executed in its name and behalf by its duly authorized officer as of the date first written above.

		FLEET NATIONAL BANK
		By:	/s/ MATTHEW HUMMEL Title: Senior Vice President
		GRIFFIN LAND & NURSERIES, INC.
		By:	/s/ ANTHONY GALICI Title: Vice President, Chief Financial Officer and Secretary

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Exhibit 10.25

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Exhibit 23.2

EXHIBIT 23.2 REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULES

To the Stockholders and Directors of Griffin Land & Nurseries, Inc.

Our audits of the consolidated financial statements referred to in our report dated February 24, 2003 appearing in the 2002 Annual Report to Stockholders of Griffin Land & Nurseries, Inc. (which report and consolidated financial statements are incorporated by reference in this Annual Report on Form 10-K) also included an audit of the Financial Statement Schedules listed in Item 15(a)(2) of the Form 10-K. In our opinion, these Financial Statement Schedules present fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.

/s/ PricewaterhouseCoopers LLP

February 24, 2003
Hartford, Connecticut

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Exhibit 23.2