GRIFFIN LAND & NURSERIES INC (Form: 10-Q, Received: 10/10/2013 10:43:43)

/s/ Randy Gudauskas

Name: Randy Gudauskas

Notary Public

DATE COMMISSION EXPIRES: April 30, 2015

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

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

FOR THE QUARTERLY PERIOD ENDED August 31, 2013

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

FOR THE TRANSITION PERIOD FROM TO

Commission File No. 1-12879

GRIFFIN LAND & NURSERIES, INC.

(Exact name of registrant as specified in its charter)

Delaware		06-0868496
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification Number)

One Rockefeller Plaza, New York, New York		10020
(Address of principal executive offices)		(Zip Code)

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

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

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

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

	Large accelerated filer o	Accelerated filer x

	Non-accelerated filer o	Smaller reporting company o

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

Number of shares of Common Stock outstanding at October 4, 2013: 5,146,366

Table of Contents

GRIFFIN LAND & NURSERIES, INC.

FORM 10-Q

Index

PART I -		FINANCIAL INFORMATION

	ITEM 1	Financial Statements

		Consolidated Balance Sheets (unaudited) August 31, 2013 and December 1, 2012	3

		Consolidated Statements of Operations (unaudited) 13 and 39 Weeks Ended August 31, 2013 and September 1, 2012	4

		Consolidated Statements of Comprehensive Income (Loss) (unaudited) 13 and 39 Weeks Ended August 31, 2013 and September 1, 2012	5

		Consolidated Statements of Changes in Stockholders’ Equity (unaudited) 39 Weeks Ended August 31, 2013 and September 1, 2012	6

		Consolidated Statements of Cash Flows (unaudited) 39 Weeks Ended August 31, 2013 and September 1, 2012	7

		Notes to Consolidated Financial Statements (unaudited)	8-25

	ITEM 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26-40

	ITEM 3	Quantitative and Qualitative Disclosures About Market Risk	40

	ITEM 4	Controls and Procedures	41

PART II -		OTHER INFORMATION

	ITEM 1	Not Applicable

	ITEM 1A	Risk Factors	42

	ITEMS 2-5	Not Applicable

	ITEM 6	Exhibits	42-45

		SIGNATURES	46

Table of Contents

PART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

GRIFFIN LAND & NURSERIES, INC.

Consolidated Balance Sheets

(dollars in thousands, except per share data)

(unaudited)

	August 31, 2013			December 1, 2012
ASSETS
Current Assets:
Cash and cash equivalents	$	15,185		$	10,181
Accounts receivable, less allowance of $144 and $128	2,702			1,846
Inventories, net	14,639			14,206
Deferred income taxes	39			525
Other current assets	4,184			3,564
Total current assets	36,749			30,322
Real estate assets, net	130,721			123,927
Available for sale securities - Investment in Centaur Media plc	2,526			4,226
Deferred income taxes	2,345			2,222
Property and equipment, net	2,020			2,125
Real estate held for sale, net	1,632			1,186
Proceeds held in escrow	—			6,934
Other assets	8,636			9,172
Total assets	$	184,629		$	180,114

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Current portion of long-term debt	$	2,104		$	1,869
Accounts payable and accrued liabilities	3,838			4,904
Deferred revenue	1,582			3,742
Total current liabilities	7,524			10,515
Long-term debt	65,203			57,692
Other noncurrent liabilities	6,753			7,761
Total liabilities	79,480			75,968

Commitments and contingencies (Note 12)

Stockholders’ Equity:
Common stock, par value $0.01 per share, 10,000,000 shares authorized, 5,534,687 and 5,527,911 shares issued, respectively, and 5,146,366 and 5,139,590 shares outstanding, respectively	55			55
Additional paid-in capital	107,494			107,056
Retained earnings	11,491			11,222
Accumulated other comprehensive loss, net of tax	(425		)	(721		)
Treasury stock, at cost, 388,321 shares	(13,466		)	(13,466		)
Total stockholders’ equity	105,149			104,146
Total liabilities and stockholders’ equity	$	184,629		$	180,114

See Notes to Consolidated Financial Statements.

Table of Contents

GRIFFIN LAND & NURSERIES, INC.

Consolidated Statements of Operations

(dollars in thousands, except per share data)

(unaudited)

	For the 13 Weeks Ended,						For the 39 Weeks Ended,
	August 31, 2013			September 1, 2012			August 31, 2013			September 1, 2012
Rental revenue and property sales	$	5,387		$	9,866		$	17,166		$	18,755
Landscape nursery net sales and other revenue	2,844			2,681			12,018			11,139
Total revenue	8,231			12,547			29,184			29,894

Costs related to rental revenue and property sales	3,364			3,747			10,422			9,669
Costs of landscape nursery net sales and other revenue	2,801			2,434			10,606			9,769
Total costs of goods sold and costs related to rental revenue and property sales	6,165			6,181			21,028			19,438

Gross profit	2,066			6,366			8,156			10,456

Selling, general and administrative expenses	2,424			2,354			8,518			7,774
Operating (loss) profit	(358		)	4,012			(362		)	2,682
Gain on sale of investment in Shemin Nurseries Holding Corporation	—			—			3,397			—
Gain on sale of common stock in Centaur Media plc	—			—			504			—
Interest expense	(938		)	(817		)	(2,881		)	(2,522		)
Loss on debt extinguishment	—			—			(286		)	—
Investment income	—			10			51			479
Income (loss) before income tax (provision) benefit	(1,296		)	3,205			423			639
Income tax (provision) benefit	367			(1,323		)	(154		)	(294		)
Income (loss) from continuing operations	(929		)	1,882			269			345
Discontinued operation, net of tax:
Income from operations, net of tax	—			—			—			117
Gain on sale of warehouse, net of tax	—			—			—			1,530
Total discontinued operation, net of tax	—			—			—			1,647

Net income (loss)	$	(929	)	$	1,882		$	269		$	1,992

Basic net income (loss) per common share:
Income (loss) from continuing operations	$	(0.18	)	$	0.37		$	0.05		$	0.07
Income from discontinued operation	—			—			—			0.32
Basic net income (loss) per common share	$	(0.18	)	$	0.37		$	0.05		$	0.39

Diluted net income (loss) per common share:
Income (loss) from continuing operations	$	(0.18	)	$	0.37		$	0.05		$	0.07
Income from discontinued operation	—			—			—			0.32
Diluted net income (loss) per common share	$	(0.18	)	$	0.37		$	0.05		$	0.39

See Notes to Consolidated Financial Statements .

Table of Contents

GRIFFIN LAND & NURSERIES, INC.

Consolidated Statements of Comprehensive Income (Loss)

(dollars in thousands)

(unaudited)

	For the 13 Weeks Ended,						For the 39 Weeks Ended,
	August 31, 2013			September 1, 2012			August 31, 2013			September 1, 2012

Net income (loss)	$	(929	)	$	1,882		$	269		$	1,992

Other comprehensive income (loss), net of tax:

Reclassifications included in net income (loss)	122			105			20			312

Increase (decrease) in fair value of Centaur Media plc	324			257			(348		)	61

Unrealized gain (loss) on cash flow hedges	357			(249		)	624			(804		)

Total other comprehensive income (loss), net of tax	803			113			296			(431		)

Total comprehensive income (loss)	$	(126	)	$	1,995		$	565		$	1,561

See Notes to Consolidated Financial Statements.

Table of Contents

GRIFFIN LAND & NURSERIES, INC.

Consolidated Statements of Changes in Stockholders’ Equity

For the Thirty-Nine Weeks Ended August 31, 2013 and September 1, 2012

(dollars in thousands)

(unaudited)

	Shares of Common Stock Issued	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss			Treasury Stock			Total
Balance at December 3, 2011	5,521,170	$	55	$	106,370	$	11,284	$	(978	)	$	(13,426	)	$	103,305

Stock-based compensation expense	—	—		428		—		—			—			428

Exercise of stock options	5,322	—		80		—		—			—			80

Net income	—	—		—		1,992		—			—			1,992

Total reclassifications included in net income	—	—		—		—		312			—			312

Other comprehensive loss from cash flow hedging transactions, net of tax	—	—		—		—		(804		)	—			(804		)

Other comprehensive income from Centaur Media plc, net of tax	—	—		—		—		61			—			61

Balance at September 1, 2012	5,526,492	$	55	$	106,878	$	13,276	$	(1,409	)	$	(13,426	)	$	105,374

Balance at December 1, 2012	5,527,911	$	55	$	107,056	$	11,222	$	(721	)	$	(13,466	)	$	104,146

Stock-based compensation expense	—	—		358		—		—			—			358

Exercise of stock options	6,776	—		80		—		—			—			80

Net income	—	—		—		269		—			—			269

Total reclassifications included in net income	—	—		—		—		20			—			20

Other comprehensive income from cash flow hedging transactions, net of tax	—	—		—		—		624			—			624

Other comprehensive loss from Centaur Media plc, net of tax	—	—		—		—		(348		)	—			(348		)

Balance at August 31, 2013	5,534,687	$	55	$	107,494	$	11,491	$	(425	)	$	(13,466	)	$	105,149

See Notes to Consolidated Financial Statements.

Table of Contents

GRIFFIN LAND & NURSERIES, INC.

Consolidated Statements of Cash Flows

(dollars in thousands)

(unaudited)

	For the 39 Weeks Ended,
	August 31, 2013			September 1, 2012
Operating activities:
Net income	$	269		$	1,992
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization	4,984			4,593
Gain on sale of investment in Shemin Nurseries Holding Corporation	(3,397		)	—
Gain on sales of properties	(2,312		)	(7,510		)
Gain on sale of common stock in Centaur Media plc	(504		)	—
Stock-based compensation expense	358			428
Provision for inventory losses	300			250
Loss on debt extinguishment	286			—
Amortization of debt issuance costs	205			222
Deferred income taxes	154			1,115
Provision for bad debts	35			17
Income from equity investments	(4		)	(6		)
Changes in assets and liabilities:
Accounts receivable	(891		)	(764		)
Inventories	(733		)	(97		)
Other current assets	(620		)	73
Accounts payable and accrued liabilities	733			648
Deferred revenue	208			217
Other noncurrent assets and noncurrent liabilities, net	38			340
Net cash (used in) provided by operating activities	(891		)	1,518

Investing activities:
Additions to real estate assets	(12,262		)	(12,330		)
Proceeds from property sale returned from escrow	6,934			—
Proceeds from the sale of investment in Shemin Nurseries Holding Corporation	3,418			—
Proceeds from the sale of common stock in Centaur Media plc	1,160			—
Proceeds from sales of properties, net of expenses	505			22,466
Additions to property and equipment	(104		)	(130		)
Proceeds from property sale deposited in escrow	—			(6,931		)
Return of capital from Shemin Nurseries Holding Corporation	—			309
Net cash (used in) provided by investing activities	(349		)	3,384

Financing activities:
Proceeds from debt	9,100			—
Payments of debt	(1,402		)	(1,233		)
Dividends paid to stockholders	(1,028		)	(513		)
Debt issuance costs	(436		)	—
Exercise of stock options	80			80
Debt modification costs	(70		)	—
Net cash provided by (used in) financing activities	6,244			(1,666		)
Net increase in cash and cash equivalents	5,004			3,236
Cash and cash equivalents at beginning of period	10,181			7,431
Cash and cash equivalents at end of period	$	15,185		$	10,667

See Notes to Consolidated Financial Statements.

Table of Contents

GRIFFIN LAND & NURSERIES, INC.

Notes to Consolidated Financial Statements

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

(unaudited)

1. Summary of Significant Accounting Policies

Basis of Presentation

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

The accompanying financial statements have been prepared in accordance with the accounting policies stated in Griffin’s audited financial statements for the fiscal year ended December 1, 2012 (“fiscal 2012”) included in Griffin’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission, and should be read in conjunction with the Notes to Consolidated Financial Statements appearing in that report. All adjustments, comprising only normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of results for the interim periods, have been reflected and all intercompany transactions have been eliminated. The consolidated balance sheet data as of December 1, 2012 was derived from Griffin’s audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America (“U.S. GAAP”).

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

As of August 31, 2013, Griffin was a party to several interest rate swap agreements to hedge its interest rate exposures. Griffin does not use derivatives for speculative purposes. Griffin applies FASB ASC 815-10, “Derivatives and Hedging,” (“ASC 815-10”) as amended, which establishes accounting and reporting standards for derivative instruments and hedging activities. ASC 815-10 requires Griffin to recognize all derivatives as either assets or liabilities on its consolidated balance sheet and measure those instruments at fair value. The changes in the fair values of the interest rate swap agreements are assessed in accordance with ASC 815-10 and reflected in the carrying values of the interest rate swap agreements on Griffin’s consolidated balance sheet. The estimated fair values are based primarily on projected future swap rates.

Table of Contents

Griffin applies cash flow hedge accounting to its interest rate swap agreements that are designated as hedges of the variability of future cash flows from floating rate liabilities based on the benchmark interest rates. The change in fair values of Griffin’s interest rate swap agreements are recorded as components of accumulated other comprehensive income in stockholders’ equity to the extent they are effective. Any ineffective portion of the change in fair value of these instruments would be recorded as interest expense.

The results of operations for the thirteen weeks ended August 31, 2013 (the “2013 third quarter”) and the thirty-nine weeks ended August 31, 2013 (the “2013 nine month period”) are not necessarily indicative of the results to be expected for the full year. The thirteen weeks ended September 1, 2012 is referred to herein as the “2012 third quarter” and the thirty-nine weeks ended September 1, 2012 is referred to herein as the “2012 nine month period.”

Recent Accounting Pronouncements

In February 2013, the FASB issued Accounting Standards Update No. 2013-02, “Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income,” which amends the presentation of comprehensive income. This update does not require new disclosures but creates new presentation requirements related to amounts reclassified out of accumulated other comprehensive income. More specifically, this update requires: (a) disclosure of the changes in the components of accumulated other comprehensive income; (b) disclosure of the effects on the individual line items in net income for each item of accumulated other comprehensive income that is reclassified in its entirety to net income; and (c) cross-references to other disclosures that provide additional details for other comprehensive income items that are not reclassified in their entirety to net income. For items that are required to be reclassified to net income in their entirety, this new guidance requires an entity to present this information either on the face of the statement where net income is presented or in the footnotes to the financial statements. For items that are not required to be reclassified in their entirety to net income, this new guidance requires cross-references to other disclosures that provide additional information about those amounts. This update was required to be adopted by Griffin no later than the 2013 second quarter; however, Griffin adopted the new presentation requirements in the 2013 first quarter. The adoption of this guidance requires new disclosures related to amounts reclassified out of accumulated other comprehensive income but did not have an impact on Griffin’s financial position or results of operations.

In July 2013, the FASB issued Accounting Standards Update No. 2013-10, “Inclusion of the Fed Funds Effective Swap Rate (or Overnight Index Swap Rate) as a Benchmark Interest Rate for Hedge Accounting Purposes,” which permits the Fed Funds Effective Swap Rate (also referred to as the Overnight Index Swap Rate) to be used as a U.S. benchmark interest rate for hedge accounting purposes, in addition to interest rates on direct Treasury obligations of the U.S. government and the London Interbank Offered Rate (“LIBOR”). This update also removes the restriction on using different benchmark rates for similar hedges. This update is required prospectively for qualifying new or redesignated hedging relationships entered into on or after July 17, 2013. The adoption of this guidance did not have an impact on Griffin’s financial position or results of operations.

In July 2013, the FASB issued Accounting Standards Update No. 2013-11, “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists,” which provides guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. Specifically, this update requires that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, with certain exceptions.

Table of Contents

This update will be effective for Griffin in the 2014 second quarter. Griffin is evaluating the impact that the application of this update will have on its consolidated financial statements.

2. Discontinued Operation

On January 31, 2012, Griffin Land closed on the sale of its Manchester, Connecticut warehouse to its full building tenant in that building. Net cash proceeds from the sale, after selling expenses of $438 paid out of the proceeds at closing and $25 paid separately, were $15,537, and a pretax gain of $2,886 is included in the results for discontinued operation in the 2012 nine month period. Upon completion of the sale, Griffin Land deposited the cash of $15,562 received from the sale at closing into an escrow account for the potential purchase of a replacement property under a Section 1031 like-kind exchange. Because Griffin Land did not identify a replacement property within the time frame required under the tax rules and regulations governing a Section 1031 like-kind exchange, on March 19, 2012 the cash that was being held in escrow was released to Griffin Land.

The operating results of the Manchester warehouse prior to its sale are reflected as a discontinued operation in Griffin’s consolidated statement of operations for the 2012 nine month period. Rental revenue and pretax operating profit from the Manchester warehouse in the 2012 nine month period were $273 and $221, respectively.

3. Industry Segment Information

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

Table of Contents

	For the 13 Weeks Ended,						For the 39 Weeks Ended,
	August 31, 2013			September 1, 2012			August 31, 2013			September 1, 2012
Total net sales and other revenue:
Rental revenue and property sales	$	5,387		$	9,866		$	17,166		$	18,755
Landscape nursery net sales and other revenue	2,844			2,681			12,018			11,139
	$	8,231		$	12,547		$	29,184		$	29,894
Operating profit (loss):
Real estate	$	1,393		$	5,498		$	4,604		$	7,138
Landscape nursery	(703		)	(468		)	(1,112		)	(1,075		)
Industry segment totals	690			5,030			3,492			6,063
General corporate expense	(1,048		)	(1,018		)	(3,854		)	(3,381		)
Operating (loss) profit	(358		)	4,012			(362		)	2,682
Gain on sale of investment in Shemin Nurseries Holding Corporation	—			—			3,397			—
Gain on sale of common stock in Centaur Media plc	—			—			504			—
Interest expense	(938		)	(817		)	(2,881		)	(2,522		)
Loss on debt extinguishment	—			—			(286		)	—
Investment income	—			10			51			479

Income (loss) before income tax (provision) benefit	$	(1,296	)	$	3,205		$	423		$	639

The above table reflects the net sales and other revenue and operating profit (loss) included in continuing operations on Griffin’s consolidated statements of operations. Operating results of the Manchester, Connecticut warehouse and the gain on the sale of that building are included in the results of the discontinued operation on Griffin’s consolidated statements of operations (see Note 2).

Continuing operations of the real estate segment include property sales revenue of $331 and $2,805 in the 2013 third quarter and 2013 nine month period, respectively. The 2013 nine month period primarily includes the recognition of previously deferred revenue on a land sale that was completed in the 2012 third quarter (see Note 11). Included in property sales revenue in the 2013 nine month period is $177 from an amended agreement related to that 2012 land sale. Continuing operations of the real estate segment in the 2012 third quarter and 2012 nine month period include property sales revenue of $5,360 which was also related to that same land sale.

In fiscal 2009, Imperial shut down operations on its Florida farm and entered into a lease with another landscape nursery grower for that property. Other revenue of the landscape nursery segment includes revenue from the rental of Imperial’s Florida farm as follows:

	For the 13 Weeks Ended,				For the 39 Weeks Ended,
	August 31, 2013		September 1, 2012		August 31, 2013		September 1, 2012

Rental revenue from Imperial’s Florida farm	$	117	$	117	$	351	$	352

Table of Contents

Identifiable assets:	August 31, 2013		December 1, 2012
Real estate	$	141,354	$	142,440
Landscape nursery	21,769		20,693
Industry segment totals	163,123		163,133
General corporate	21,506		16,981
Total assets	$	184,629	$	180,114

4. Fair Value

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

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

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, such as quoted prices for similar assets or liabilities in active markets; quoted prices for assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 2 liabilities include Griffin’s interest rate swap derivatives (see Note 9). Beginning in the 2013 first quarter, the fair values of Griffin’s interest rate swap derivative instruments were based on discounted cash flow models that incorporate the cash flows of the derivatives as well as the current Overnight Indexed Swap (“OIS”) rate and swap curve along with other market data. Prior to the beginning of fiscal 2013, the fair values of Griffin’s interest rate swap derivative instruments were based on discounted cash flow models that incorporated the cash flows of the derivatives as well as the current LIBOR rate and swap curve along with other market data. The change to using the OIS rate from the LIBOR rate is consistent with current industry best practices. The OIS rate is now considered the best discount rate to utilize since it is the best proxy for the risk-free rate. These inputs are readily available in public markets or can be derived from information available in publicly quoted markets, therefore, Griffin has categorized these derivative instruments as Level 2 within the fair value hierarchy.

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

During the 2013 nine month period, Griffin did not transfer any assets or liabilities in or out of Levels 1 or 2. The following are Griffin’s financial assets and liabilities carried at fair value and measured at fair value on a recurring basis:

Table of Contents

	August 31, 2013
	Quoted Prices in		Significant		Significant
	Active Markets for		Observable		Unobservable
	Identical Assets		Inputs		Inputs
	(Level 1)		(Level 2)		(Level 3)
Marketable equity securities	$	2,526	$	—	$	—
Interest rate swap liabilities	$	—	$	1,642	$	—

	December 1, 2012
	Quoted Prices in		Significant		Significant
	Active Markets for		Observable		Unobservable
	Identical Assets		Inputs		Inputs
	(Level 1)		(Level 2)		(Level 3)
Marketable equity securities	$	4,226	$	—	$	—
Interest rate swap liabilities	$	—	$	3,191	$	—

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

	Fair Value	August 31, 2013				December 1, 2012
	Hierarchy	Carrying		Estimated		Carrying		Estimated
	Level	Value		Fair Value		Value		Fair Value
Financial assets:
Cash and cash equivalents	1	$	15,185	$	15,185	$	10,181	$	10,181
Available-for-sale securities	1	2,526		2,526		4,226		4,226

Financial liabilities:
Mortgage debt	2	67,213		68,552		59,489		61,781
Interest rate swaps	2	1,642		1,642		3,191		3,191

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

Table of Contents

5. Inventories

Inventories consist of:

	August 31, 2013		December 1, 2012

Nursery stock	$	13,876	$	13,058
Materials and supplies	763		1,148
	$	14,639	$	14,206

In the 2013 third quarter and 2013 nine month period, a charge of $300 was included in costs of landscape nursery sales to increase reserves for unsaleable inventories and plants that are expected to be sold below cost as seconds. The 2012 third quarter and 2012 nine month period included a charge of $250 to increase inventory reserves for unsaleable inventories and plants that were expected to be sold below cost as seconds.

6. Real Estate Assets

Real estate assets consist of:

	Estimated Useful Lives	August 31, 2013			December 1, 2012
Land		$	17,385		$	10,267
Land improvements	10 to 30 years	15,367			15,138
Buildings and improvements	10 to 40 years	127,151			125,971
Tenant improvements	Shorter of useful life or terms of related lease	16,191			14,738
Development costs		15,415			14,557
		191,509			180,671
Accumulated depreciation		(60,788		)	(56,744		)
		$	130,721		$	123,927

Included in real estate assets, net as of August 31, 2013 and December 1, 2012 was $1,771 and $1,921, respectively, reflecting the net book value of Imperial’s Florida farm that was shut down in fiscal 2009 and is being leased to another landscape nursery grower.

Total depreciation expense and capitalized interest related to real estate assets, net were as follows:

Table of Contents

	For the 13 Weeks Ended,				For the 39 Weeks Ended,
	August 31, 2013		September 1, 2012		August 31, 2013		September 1, 2012

Depreciation expense	$	1,388	$	1,269	$	4,136	$	3,839

Capitalized interest	$	—	$	227	$	—	$	596

In the 2012 third quarter, Griffin Land sold 93 acres of undeveloped land in the New England Tradeport (“Tradeport”), Griffin Land’s industrial park located in Windsor and East Granby, Connecticut, for cash proceeds of $7,000, before transaction costs (the “Dollar Tree Sale”). Under the terms of the Dollar Tree Sale, Griffin Land was required to construct a sewer line to service the land that was sold. As a result of Griffin Land’s continuing involvement with the land sold, the Dollar Tree Sale was accounted for under the percentage of completion method. Accordingly, the revenue and the pretax gain on sale were recognized on a pro rata basis in a ratio equal to the percentage of the total costs incurred to the total anticipated costs of sale, including the costs of the required construction of the sewer line. Costs included in determining the percentage of completion included the cost of the land sold, allocated master planning costs of Tradeport, selling and transaction costs and the cost to construct the required sewer line. Upon completion of the sale, Griffin Land deposited the cash of $6,929 received from the Dollar Tree Sale at closing into an escrow account, reflected as Proceeds Held in Escrow on Griffin’s consolidated balance sheet as of December 1, 2012, for the potential purchase of a replacement property under a Section 1031 like-kind exchange.

On December 28, 2012, Griffin Land closed on the acquisition of approximately 49 acres of undeveloped land in the Lehigh Valley of Pennsylvania for $7,119 in cash, using the proceeds from the Dollar Tree Sale that were being held in escrow to complete the Section 1031 like-kind exchange. The land acquired will support the development of two industrial buildings totaling approximately 530,000 square feet. As governmental approvals of such development were not in place at the time of closing, the seller agreed to provide Griffin Land with rescission rights if the required approvals were not obtained or the seller did not complete certain post-closing obligations. Griffin Land has received conditional final plan approvals for its development plans for the land acquired, and expects to record the final development plans by the end of 2013.

As of the end of the 2013 second quarter, all of the costs related to the Dollar Tree Sale were incurred; therefore, from the date of the Dollar Tree Sale through the end of the 2013 second quarter, all of the revenue and the pretax gain on sale have been recognized in Griffin’s consolidated statements of operations. Griffin’s consolidated statement of operations for the 2013 nine month period includes revenue of $2,474 and a pretax gain of $2,109 from the Dollar Tree Sale. Including the pretax gain on sale of $3,942 recognized in fiscal 2012, the total pretax gain on the Dollar Tree Sale was $6,051. Included in the pretax gain is $177 from an amended agreement related to the Dollar Tree Sale whereby Griffin Land received $177 upon completion of the sewer line to service the land that was sold.

Real estate assets held for sale consist of:

Table of Contents

	August 31, 2013		December 1, 2012
Land	$	170	$	35
Development costs	1,462		1,151
	1,632		1,186
Accumulated depreciation	—		—
	$	1,632	$	1,186

See Note 13 for information related to an agreement entered into by Griffin Land for the sale of undeveloped land subsequent to August 31, 2013.

7. Investments

Centaur Media plc

Griffin’s investment in the common stock of Centaur Media plc (“Centaur Media”) is accounted for as an available-for-sale security under FASB ASC 320-10, “Investments — Debt and Equity Securities.” Accordingly, changes in the fair value of Centaur Media, net of income taxes, along with the effect of changes in the foreign currency exchange rate, net of income taxes, are included in accumulated other comprehensive income (see Note 10).

As of December 1, 2012, Griffin held 5,277,150 shares of Centaur Media common stock. In the 2013 nine month period, Griffin sold 1,324,688 shares of its Centaur Media common stock for total cash proceeds of $1,160, after transaction costs. The sale of Centaur Media common stock resulted in a pretax gain of $504 in the 2013 nine month period. Griffin held 3,952,462 shares of Centaur Media common stock as of August 31, 2013.

The cost, unrealized gain and fair value of Griffin’s investment in Centaur Media are as follows:

	August 31, 2013		December 1, 2012

Fair value	$	2,526	$	4,226
Cost	1,957		2,613
Unrealized gain	$	569	$	1,613

Shemin Nurseries Holding Corp.

As of December 1, 2012, Griffin held an approximate 14% equity interest in Shemin Nurseries Holding Corp. (“SNHC”), which operated a landscape nursery distribution business through its subsidiary. Griffin accounted for its investment in SNHC under the cost method of accounting for investments. In the 2012 first quarter, Griffin received a cash distribution from SNHC which was treated as investment income and return of investment. Accordingly, Griffin did not have any remaining book value in its investment in SNHC as of December 1, 2012.

On January 18, 2013, Griffin completed the sale of its investment in SNHC for total cash proceeds of $3,418, resulting in a pretax gain of $3,397.

Table of Contents

8. Property and Equipment

Property and equipment consist of:

	Estimated Useful Lives	August 31, 2013			December 1, 2012
Land		$	437		$	437
Land improvements	10 to 20 years	1,561			1,561
Buildings and improvements	10 to 40 years	1,865			1,857
Machinery and equipment	3 to 20 years	12,138			12,300
		16,001			16,155
Accumulated depreciation		(13,981		)	(14,030		)
		$	2,020		$	2,125

9. Long-Term Debt

Long-term debt includes:

	August 31, 2013			December 1, 2012
Nonrecourse mortgages:
6.30%, due May 1, 2014	$	148		$	289
5.73%, due August 1, 2015	18,718			19,018
8.13%, due April 1, 2016	3,690			3,943
7.0%, due October 2, 2017	5,840			6,016
Variable rate mortgage, due October 2, 2017*	6,604			6,726
Variable rate mortgage, due February 1, 2019*	11,213			11,396
Variable rate mortgage, due August 1, 2019*	7,911			8,034
Variable rate mortgage, due January 27, 2020*	3,989			4,067
Variable rate mortgage, due September 1, 2023*	9,100			—
Total nonrecourse mortgages	67,213			59,489
Revolving line of credit	—			—
Capital leases	94			72
Total	67,307			59,561
Less: current portion	(2,104		)	(1,869		)
Total long-term debt	$	65,203		$	57,692

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

As of August 31, 2013, Griffin was a party to several interest rate swap agreements related to its variable rate nonrecourse mortgages on certain of its real estate assets. Griffin accounts for its interest rate swap agreements as effective cash flow hedges (see Note 4). No ineffectiveness on the cash flow hedges was recognized as of August 31, 2013 and none is anticipated over the term of the agreements. Amounts in other comprehensive income (loss) will be reclassified into interest expense over the term of the swap agreements to achieve fixed rates on each mortgage. None of the interest rate swap agreements contain any credit risk related contingent features. In the 2013 nine month period, Griffin recognized a

Table of Contents

gain (included in other comprehensive income) before taxes of $990 on its interest rate swap agreements. In the 2012 nine month period, Griffin recognized a loss (included in other comprehensive income) before taxes of $1,276 on its interest rate swap agreements.

As of August 31, 2013, $965 is expected to be reclassified over the next twelve months from accumulated other comprehensive loss to interest expense. As of August 31, 2013, the liability for Griffin’s interest rate swap agreements was $1,642 and is included in other noncurrent liabilities on Griffin’s consolidated balance sheet.

On April 1, 2013, a subsidiary of Griffin entered into a modification agreement for its 5.25% nonrecourse mortgage loan with First Niagara Bank due January 27, 2020 (the “2020 First Niagara Mortgage”). The modification agreement changed the interest rate of the 2020 First Niagara Mortgage from a fixed rate of 5.25% to a variable rate of the one month LIBOR rate plus 2.5%. The loan modification did not change the loan’s collateral or maturity date. Griffin Land paid $70 to First Niagara Bank for the loan modification, plus transaction costs. Because the difference between the present values of the future payments under the existing loan and the modified loan is greater than 10%, the loan modification was accounted for as a debt extinguishment. As such, all deferred costs related to the 2020 First Niagara Mortgage ($216) and the fee paid to First Niagara Bank for the modification agreement are reflected as a loss on debt extinguishment on Griffin’s consolidated statement of operations. Concurrent with the completion of the loan modification agreement, Griffin Land entered into an interest rate swap agreement with First Niagara Bank to fix the interest rate on the 2020 First Niagara Mortgage at 3.91% for the duration of the loan.

On April 24, 2013, Griffin closed on a new $12.5 million revolving credit line with Webster Bank (the “Webster Credit Line”). The Webster Credit Line is for two years with an option for Griffin to extend the credit line for a third year. The Webster Credit Line replaced Griffin’s $12.5 million credit line with Doral Bank (the “Doral Credit Line”) that was scheduled to expire on May 1, 2013. Interest on the outstanding borrowings under the Webster Credit Line will be at the one month LIBOR rate plus 2.75%. Interest on outstanding borrowings under the Doral Credit Line was the higher of the prime rate plus 1.5% or 5.875%. The Webster Credit Line is collateralized by Griffin Land’s properties in Griffin Center South, aggregating approximately 235,000 square feet and an approximately 48,000 square foot single-story office building in Griffin Center. These are the same properties that collateralized the Doral Credit Line. There were no borrowings under the Doral Credit Line in fiscal 2012 or in the 2013 nine month period and there were no borrowings under the Webster Credit Line as of the date of this Quarterly Report on Form 10-Q.

On August 28, 2013, a subsidiary of Griffin closed on a $9.1 million nonrecourse mortgage loan with First Niagara Bank (the “2023 First Niagara Mortgage”), collateralized by a 228,000 square foot industrial building in Lower Nazareth, Pennsylvania that was constructed in fiscal 2012. Although this mortgage is nonrecourse, Griffin and its subsidiary entered into a master lease that is coterminous with the 2023 First Niagara Mortgage which would become effective if the full building tenant in that building does not renew its five-year lease when it is scheduled to expire in fiscal 2018. The 2023 First Niagara Mortgage has a ten-year term with monthly payments of principal and interest starting on October 1, 2013, based on a twenty-five year amortization schedule. The interest rate for the 2023 First Niagara Mortgage is a floating rate of the one month LIBOR rate plus 1.95%. At the time Griffin closed on the 2023 First Niagara Mortgage, Griffin also entered into an interest rate swap agreement with First Niagara Bank for a notional principal amount of $9.1 million at inception to fix the interest rate of the 2023 First Niagara Mortgage at 4.79%. Payments under the swap agreement commence on October 1, 2013 and will continue monthly until September 1, 2023, which is also the termination date of the 2023 First Niagara Mortgage.

Table of Contents

10. Stockholders’ Equity

Per Share Results

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

	For the 13 Weeks Ended,					For the 39 Weeks Ended,
	August 31, 2013			September 1, 2012		August 31, 2013		September 1, 2012

Income (loss) as reported from continuing operations for computation of basic and diluted per share results, net of tax	$	(929	)	$	1,882	$	269	$	345

Income as reported from discontinued operations for computation of basic and diluted per share results, net of tax	—			—		—		1,647

Net income (loss)	$	(929	)	$	1,882	$	269	$	1,992

Weighted average shares outstanding for computation of basic per share results	5,146,000			5,139,000		5,143,000		5,137,000

Incremental shares from assumed exercise of Griffin stock options (a)	—			4,000		7,000		4,000

Adjusted weighted average shares for computation of diluted per share results	5,146,000			5,143,000		5,150,000		5,141,000

(a) Incremental shares from the assumed exercise of Griffin stock options are not included in periods where the inclusion of such shares would be anti-dilutive. Such assessment is based on income (loss) from continuing operations when net income includes discontinued operations. The incremental shares from the assumed exercise of stock options in the thirteen weeks ended August 31, 2013 would have been 10,000.

Griffin Stock Option Plan

Stock options are granted by Griffin under the Griffin Land & Nurseries, Inc. 2009 Stock Option Plan (the “2009 Stock Option Plan”). Options granted under the 2009 Stock Option Plan may be either incentive stock options or non-qualified stock options issued at fair market value on the date approved by Griffin’s Compensation Committee. Vesting of all of Griffin’s previously issued stock options is solely based upon service requirements and does not contain market or performance conditions. Stock options issued will expire ten years from the grant date. In accordance with the 2009 Stock Option Plan, stock options issued to non-employee directors upon their initial election to the board of directors are fully exercisable immediately upon the date of the option grant. Stock options issued to non-employee directors upon their reelection to the board of directors vest on the second anniversary from the date of grant. Stock options issued to employees vest in equal installments on the third, fourth and fifth anniversaries from the date of grant. None of the stock options outstanding at August 31, 2013 may be exercised as stock appreciation rights.

Table of Contents

The following options were granted by Griffin under the 2009 Stock Option Plan to non-employee directors upon their re-election to Griffin’s Board of Directors:

	For the 39 Weeks Ended,
	August 31, 2013			September 1, 2012
	Number of Shares	Fair Value per Option at Grant Date		Number of Shares	Fair Value per Option at Grant Date

Non-employee directors	8,112	$	12.94	6,748	$	11.32

The fair values of all options granted were estimated as of the grant date using the Black-Scholes option-pricing model. Assumptions used in determining the fair value of the stock options granted in the 2013 and 2012 nine month periods were as follows:

	For the 39 Weeks Ended,
	August 31, 2013			September 1, 2012

Expected volatility	40.3		%	41.1	%
Risk free interest rate	1.33		%	1.16	%
Expected option term (in years)	8.5			8.5
Annual dividend yield	$	0.20		—

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

	For the 39 Weeks Ended,
	August 31, 2013				September 1, 2012
Vested Options	Number of Shares		Weighted Avg. Exercise Price		Number of Shares		Weighted Avg. Exercise Price
Outstanding at beginning of period	80,451		$	29.95	54,075		$	27.08
Exercised	(6,776	)	$	11.81	(5,322	)	$	15.03
Vested	34,143		$	32.36	33,801		$	32.69
Forfeited	(2,667	)	$	32.28	(1,419	)	$	28.18
Outstanding at end of period	105,151		$	31.85	81,135		$	30.19

Table of Contents

Range of Exercise Prices for Vested Options	Outstanding at August 31, 2013	Weighted Avg. Exercise Price		Weighted Avg. Remaining Contractual Life (in years)	Total Intrinsic Value
$23.00-$32.00	33,742	$	28.15	4.6	$	89
$32.00-$39.00	71,409	$	33.59	5.3	—
	105,151	$	31.85	5.1	$	89

	For the 39 Weeks Ended,
	August 31, 2013				September 1, 2012
Nonvested Options	Number of Shares		Weighted Avg. Exercise Price		Number of Shares		Weighted Avg. Exercise Price
Nonvested at beginning of period	163,390		$	29.84	190,443		$	30.56
Granted	8,112		$	29.58	6,748		$	23.70
Vested	(34,143	)	$	32.36	(33,801	)	$	32.69
Forfeited	(2,833	)	$	30.03	—		$	—
Nonvested at end of period	134,526		$	29.18	163,390		$	29.84

Range of Exercise Prices for Nonvested Options	Outstanding at August 31, 2013	Weighted Avg. Exercise Price		Weighted Avg. Remaining Contractual Life (in years)	Total Intrinsic Value
$23.00-$30.00	115,360	$	28.53	7.6	$	255
$33.00-$35.00	19,166	$	33.07	5.4	—
	134,526	$	29.18	7.3	$	255

Number of option holders at August 31, 2013

Compensation expense and related tax benefits for stock options were as follows:

	For the 13 Weeks Ended,				For the 39 Weeks Ended,
	August 31, 2013		September 1, 2012		August 31, 2013		September 1, 2012

Compensation expense	$	91	$	124	$	358	$	428

Related tax benefit	$	29	$	32	$	86	$	98

As of August 31, 2013, the unrecognized compensation expense related to nonvested stock options that will be recognized during future periods is as follows:

Balance of Fiscal 2013		$	107
Fiscal 2014		$	262

Table of Contents

Fiscal 2015		$	111
Fiscal 2016		$	12

Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss, net of tax, is comprised of the following:

	Unrealized			Unrealized gain			Actuarial gain
	loss on cash			on investment			on postretirement
	flow hedges			in Centaur Media			benefit plan		Total
Balance December 1, 2012	$	(2,011	)	$	1,054		$	236	$	(721	)

Before reclassfication	624			(348		)	—		276
Amount reclassified	352			(332		)	—		20
Net current period activity for other comprehensive loss	976			(680		)	—		296
Balance August 31, 2013	$	(1,035	)	$	374		$	236	$	(425	)

Changes in accumulated other comprehensive income (loss) are as follows:

	For the 13 Weeks Ended,
	August 31, 2013							September 1, 2012
	Pre-Tax		Tax (Expense) Benefit			Net-of-Tax		Pre-Tax			Tax (Expense) Benefit			Net-of-Tax

Reclassification included in net income (loss):
Loss on cash flow hedges (interest expense)	$	193	$	(71	)	$	122	$	166		$	(61	)	$	105
Total reclassification included in net income (loss)	193		(71		)	122		166			(61		)	105

Mark to market adjustment on Centaur Media for the increase in the foreign currency exchange rate	49		(17		)	32		96			(33		)	63

Mark to market adjustment on Centaur Media for the increase in fair value	450		(158		)	292		298			(104		)	194

Increase (decrease) in fair value of Griffin’s cash flow hedges	566		(209		)	357		(394		)	145			(249		)

Other comprehensive income (loss)	$	1,258	$	(455	)	$	803	$	166		$	(53	)	$	113

Table of Contents

	For the 39 Weeks Ended,
	August 31, 2013									September 1, 2012
	Pre-Tax			Tax (Expense) Benefit			Net-of-Tax			Pre-Tax			Tax (Expense) Benefit			Net-of-Tax

Reclassifications included in net income (loss):
Realized gain on sale of Centaur Media (gain on sale)	$	(509	)	$	177		$	(332	)	$	—		$	—		$	—

Loss on cash flow hedges (interest expense)	559			(207		)	352			495			(183		)	312
Total reclassifications included in net income (loss)	50			(30		)	20			495			(183		)	312

Mark to market adjustment on Centaur Media for the (decrease) increase in the foreign currency exchange rate	(174		)	61			(113		)	52			(18		)	34

Mark to market adjustment on Centaur Media for the (decrease) increase in fair value	(361		)	126			(235		)	41			(14		)	27

Increase (decrease) in fair value of Griffin’s cash flow hedges	990			(366		)	624			(1,276		)	472			(804		)

Other comprehensive income (loss)	$	505		$	(209	)	$	296		$	(688	)	$	257		$	(431	)

Cash Dividend

Griffin did not declare a cash dividend in the 2013 or 2012 nine month periods. During the 2013 first quarter, Griffin paid $1,028 for the cash dividend declared in the 2012 fourth quarter. During the 2012 first quarter, Griffin paid $513 for the cash dividend declared in the 2011 fourth quarter.

11. Supplemental Financial Statement Information

Deferred Revenue on Land Sale

In the 2012 third quarter, Griffin Land closed on the Dollar Tree Sale. Under the terms of the Dollar Tree Sale, Griffin Land was required to construct a sewer line to service the land that was sold. As a result of Griffin Land’s continuing involvement with the land sold, this transaction was accounted for under the percentage of completion method, whereby the revenue and the pretax gain on sale were recognized on a pro rata basis in a ratio equal to the percentage of the total costs incurred to the total anticipated costs of sale, including the costs of the required construction of the sewer line.

As of the end of the 2013 second quarter, all of the costs related to the Dollar Tree Sale were incurred; therefore, from the date of the transaction through the end of the 2013 second quarter, all of the revenue and pretax gain on sale have been recognized in Griffin’s consolidated statements of operations. Griffin’s consolidated statement of operations for the 2013 nine month period includes revenue of $2,474 and a pretax gain on sale of $2,109 from the Dollar Tree Sale. Including the pretax gain on sale of $3,942 recognized in fiscal 2012, the total pretax gain on the Dollar Tree Sale was $6,051.

Table of Contents

Supplemental Cash Flow Information

A decrease of $535 in the 2013 nine month period and an increase of $93 in the 2012 nine month period in Griffin’s Investment in Centaur Media reflect the mark to market adjustments of this investment and did not affect Griffin’s cash. In the 2013 nine month period, Griffin sold 1,324,688 shares of its Centaur Media common stock (see Note 7).

Included in accounts payable and accrued liabilities at August 31, 2013 and December 1, 2012 were $171 and $942, respectively, for additions to real estate assets. Accounts payable and accrued liabilities related to additions to real estate assets decreased by $771 in the 2013 nine month period and increased by $48 in the 2012 nine month period.

Griffin incurred new capital lease obligations of $48 and $54 related to equipment acquisitions in the 2013 nine month period and the 2012 nine month period, respectively.

As of December 1, 2012, Griffin’s accrued liabilities included $1,028 for a dividend on Griffin’s common stock that was declared prior to the end of fiscal 2012 and paid in the 2013 first quarter.

	For the 13 Weeks Ended,				For the 39 Weeks Ended,
	August 31, 2013		September 1, 2012		August 31, 2013		September 1, 2012

Interest payments, net of capitalized interest	$	877	$	636	$	2,724	$	2,562

Income Taxes

Griffin’s effective income tax rate on continuing operations was 36.4% for the 2013 nine month period as compared to 46.0% in the 2012 nine month period. The effective tax rate in the 2013 nine month period is based on management’s projections for the balance of the year. To the extent that actual results differ from current projections, the effective income tax rate may change.

As of August 31, 2013, Griffin’s consolidated balance sheet includes a net current deferred tax asset of $39 and a net noncurrent deferred tax asset of $2,345. Although Griffin has incurred pretax losses from continuing operations for the fiscal years ended December 1, 2012, December 3, 2011 and November 27, 2010, management has concluded that a valuation allowance against those net deferred tax assets is not required.

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

12. Commitments and Contingencies

Table of Contents

would record a significant charge to reduce Imperial’s inventory carrying costs as a result of the purchase price of Imperial’s inventory under the terms of the letter of intent. As the Proposed Transaction remains under negotiation as of the date of this Quarterly Report on Form 10-Q, there is significant doubt whether the Proposed Transaction will be completed under the terms of the letter of intent, or at all. In the event that the Proposed Transaction is not consummated, it is uncertain whether Griffin could consummate on commercially acceptable terms the sale of the growing operations of Imperial to another buyer within one year. Accordingly, the results of operations of Imperial are reported in continuing operations in Griffin’s consolidated statement of operations.

As of August 31, 2013, Griffin had committed purchase obligations of approximately $903, principally for the development of Griffin Land’s properties and the purchase of plants and raw materials by Imperial.

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 is not expected to be material, individually or in the aggregate, to Griffin’s consolidated financial position, results of operations or cash flows.

13. Subsequent Events

On September 6, 2013, Griffin Land entered into a Real Estate Sales Contract (the “Sales Contract”) for the sale of approximately 90 acres of undeveloped land for approximately $9.0 million in cash, before transaction expenses. The land to be sold is in Windsor, Connecticut and is part of an approximately 268 acre parcel of undeveloped land that straddles the town line between Windsor and Bloomfield, Connecticut. Under the terms of the Sales Contract, Griffin Land and the buyer will construct roadways connecting the land parcel to be sold with existing town roads. The roads to be built will also provide access to the remaining acreage in Griffin Land’s land parcel. The completion of this transaction is contingent on a number of factors, including the buyer obtaining all necessary final permits from governmental authorities for its development plans for the site it would acquire and the buyer receiving municipal and state economic development incentives it deems adequate. If completed under its current terms, Griffin Land expects to record a material pretax gain on this transaction. There is no guarantee that this transaction will be completed under its current terms, or at all.

Table of Contents

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

Overview

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

The significant accounting policies and methods used in the preparation of Griffin’s consolidated financial statements included in Item 1 are consistent with those used in the preparation of Griffin’s audited financial statements for the fiscal year ended December 1, 2012 included in Griffin’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission.

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses in the reporting period. Griffin regularly evaluates estimates and assumptions related to the useful life and recoverability of long-lived assets, stock-based compensation expense, deferred income tax asset valuations, valuation of derivative instruments, the recoverability of its accounts receivable and inventory reserves. Griffin bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by Griffin may differ materially and adversely from Griffin’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. The significant accounting estimates used by Griffin in the preparation of its financial statements for the thirteen and thirty-nine weeks ended August 31, 2013 are consistent with those used by Griffin to prepare its fiscal 2012 financial statements.

Summary

On August 23, 2013, Griffin entered into a letter of intent for the disposition of the landscape nursery growing operations of Imperial, to a private company grower of landscape nursery products (the “Proposed Transaction”). The Proposed Transaction is subject to the negotiation of a definitive agreement, completion of due diligence, financing and other conditions. Based on the terms of the letter of intent, the Proposed Transaction would include a sale of Imperial’s inventory with payments to be received over a period of thirty-six months and a long-term lease, with the option to purchase, of the land, land improvements and other operating assets that are used by Imperial in its Connecticut growing operations. If the Proposed Transaction as contemplated by the letter of intent is completed, Griffin would record a significant charge to reduce Imperial’s inventory carrying costs as a result of the purchase price of Imperial’s inventory under the terms of the letter of intent. As the Proposed Transaction remains under negotiation as of the date of this Quarterly Report on Form 10-Q, there is significant doubt whether the Proposed Transaction will be completed under the terms of the letter of intent, or at all. In the event that the Proposed Transaction is not consummated, it is uncertain whether Griffin could consummate on commercially acceptable terms the sale of the growing operations of Imperial to another buyer within one year. Accordingly, the results of operations of Imperial are reported in continuing operations in Griffin’s consolidated statement of operations.

Table of Contents

For the thirteen weeks ended August 31, 2013 (the “2013 third quarter”), Griffin incurred a loss from continuing operations and a net loss of approximately $0.9 million as compared to income from continuing operations and net income of approximately $1.9 million for the thirteen weeks ended September 1, 2012 (the “2012 third quarter”). The loss from continuing operations and net loss in the 2013 third quarter as compared to income from continuing operations and net income in the 2012 third quarter principally reflects a consolidated operating loss of approximately $0.4 million in the 2013 third quarter as compared to consolidated operating profit of approximately $4.0 million in the 2012 third quarter. The effect of the lower operating results in the 2013 third quarter as compared to the 2012 third quarter were partially offset by an income tax benefit of approximately $0.4 million in the 2013 third quarter as compared to income tax expense of approximately $1.3 million in the 2012 third quarter.

The lower consolidated operating results in the 2013 third quarter as compared to the 2012 third quarter principally reflects a decrease of approximately $4.1 million of operating profit at Griffin Land and an increase of approximately $0.3 million in the operating loss incurred by Imperial. The lower operating profit at Griffin Land reflects an approximate $4.4 million decrease in gain from property sales partially offset by an increase of approximately $0.3 million of profit from leasing operations. The increase in the operating loss at Imperial principally reflects lower gross profit in the 2013 third quarter as compared to the 2012 third quarter. Griffin’s general corporate expense was essentially unchanged in the 2013 third quarter as compared to the 2012 third quarter.

The decrease in gain from property sales at Griffin Land was due to the 2012 third quarter including gain of approximately $4.6 million from the sale to Dollar Tree Distribution, Inc. of approximately 93 acres of undeveloped land in New England Tradeport (the “Dollar Tree Sale”) that closed in the 2012 third quarter. The Dollar Tree Sale was accounted for under the percentage of completion method whereby the revenue and the gain on sale were recognized in Griffin Land’s operating results as the total costs related to the property sold were incurred. All of the revenue and gain from the Dollar Tree Sale were recognized as of the end of the 2013 second quarter.

For the thirty-nine weeks ended August 31, 2013 (the “2013 nine month period”), Griffin had income from continuing operations and net income of approximately $0.3 million as compared to income from continuing operations of approximately $0.3 million and net income of approximately $2.0 million for the thirty-nine weeks ended September 1, 2012 (the “2012 nine month period”). The 2012 nine month period included income of approximately $1.6 million, net of tax, from Griffin’s discontinued operation (see below). Griffin’s income from continuing operations for the 2013 nine month period was essentially unchanged as compared to the 2012 nine month period, as a decrease in Griffin’s consolidated operating results of approximately $3.0 million, an increase in interest expense of approximately $0.4 million and a loss on debt extinguishment of approximately $0.3 million in the 2013 nine month period were essentially offset by a net increase in investment gains and investment income of approximately $3.5 million and a decrease in income tax expense of approximately $0.1 million in the 2013 nine month period as compared to the 2012 nine month period.

The lower consolidated operating results in the 2013 nine month period as compared to the 2012 nine month period principally reflects a decrease of approximately $2.5 million of operating profit at Griffin Land and an increase of approximately $0.5 million in general corporate expense. The operating loss incurred by Imperial in the 2013 nine month period was essentially unchanged from the operating loss incurred by Imperial in the 2012 nine month period. The lower operating profit at Griffin Land reflects an approximate $2.3 million decrease in gain from property sales, principally reflecting approximately $2.1 million of gain from the Dollar Tree Sale recognized in the 2013 nine month period as compared to approximately $4.6 million of gain from the Dollar Tree recognized in the 2012 nine month period.

The higher interest expense in the 2013 nine month period as compared to the 2012 nine month period is principally due to interest being capitalized in the 2012 nine month period related to the

Table of Contents

construction of Griffin Land’s 228,000 square foot industrial building in the Lehigh Valley that was under construction during the 2012 nine month period. That building was completed and placed in service at the end of the 2012 third quarter. There was no interest capitalized in the 2013 nine month period. The loss on debt extinguishment in the 2013 nine month period reflects the writeoff of debt issuance costs and a fee paid to First Niagara Bank (“First Niagara”) as a result of Griffin Land and First Niagara entering into a loan modification agreement on one of Griffin Land’s mortgage loans with First Niagara. The loan modification effectively reduced the interest rate on one of Griffin Land’s mortgage loans with First Niagara from 5.25% to 3.91% and was accounted for as a debt extinguishment.

For the 2012 nine month period, Griffin’s results from discontinued operations reflect Griffin Land’s 308,000 square foot warehouse building in Manchester, Connecticut (the “Manchester Warehouse”) that was sold in the 2012 first quarter for $16.0 million in cash. The sale of the Manchester Warehouse resulted in a gain, before taxes, of approximately $2.9 million in the 2012 nine month period. Griffin Land also had an operating profit from the Manchester Warehouse of approximately $0.2 million, before taxes, in the 2012 nine month period prior to the sale of that facility. In the 2011 fourth quarter, Griffin Land had given notice to the lessee of the Manchester Warehouse that it was exercising the put option under its lease to sell the building to the lessee. Accordingly, under U.S. GAAP, the results of operations of the Manchester Warehouse and the gain on the sale of that property were reported as a discontinued operation in the 2012 nine month period.

Results of Operations

Thirteen Weeks Ended August 31, 2013 Compared to the Thirteen Weeks Ended September 1, 2012

Griffin’s consolidated total revenue decreased from approximately $12.5 million in the 2012 third quarter to approximately $8.2 million in the 2013 third quarter, reflecting a decrease of approximately $4.5 million in revenue at Griffin Land partially offset by an increase of approximately $0.2 million in net sales and other revenue at Imperial.

Total revenue at Griffin Land decreased from approximately $9.9 million in the 2012 third quarter to approximately $5.4 million in the 2013 third quarter, reflecting a decrease of approximately $5.0 million of revenue from property sales partially offset by an increase of approximately $0.5 million in rental revenue. Revenue from property sales decreased from approximately $5.4 million in the 2012 third quarter to approximately $0.3 million in the 2013 third quarter. The 2012 third quarter property sales revenue reflected the initial amount of revenue recognized from the Dollar Tree Sale. As Griffin Land was required, under the terms of the Dollar Tree Sale, to construct a sewer line to service the property sold, Griffin Land accounted for the Dollar Tree Sale under the percentage of completion method. Accordingly, approximately $5.4 million of the total proceeds of $7.0 million from the Dollar Tree Sale was recognized as revenue in the 2012 third quarter. The balance of the revenue of the Dollar Tree Sale was recognized in the 2012 fourth quarter and the first two quarters of fiscal 2013, when the required construction of the sewer line was completed. In the 2013 third quarter, Griffin Land closed on two land sales for total revenue of approximately $0.3 million. Property sales occur periodically, and changes in revenue from year to year from those transactions may not be indicative of any trends in the real estate business. In the first nine months of fiscal 2013, there was an increase in requests for proposals received by Griffin Land regarding land purchases and development transactions, particularly related to industrial space. Subsequent to the end of the 2013 third quarter, Griffin Land entered into a contract for the sale of approximately 90 acres of undeveloped land for approximately $9.0 million in cash, before transaction expenses (see Liquidity and Capital Resources). There is no guarantee that this transaction will be completed under its current terms, or at all, and there is no guarantee that this increase in market activity will result in any additional agreements for such transactions.

Table of Contents

The net increase of approximately $0.5 million in rental revenue in the 2013 third quarter as compared to the 2012 third quarter is due to higher occupancy in Griffin Land’s rental properties in the 2013 third quarter as compared to the 2012 third quarter. Rental revenue increased approximately $0.6 million due to new leases in buildings that were in service in both the 2012 and 2013 third quarters and approximately $0.2 million from the commencement of a full building lease in the 2013 third quarter of the Lehigh Valley industrial building that was completed at the end of the 2012 third quarter. Partially offsetting the increase in rental revenue from new leasing was a decrease in rental revenue of approximately $0.2 million from space that was under lease in the 2012 third quarter but subsequently became vacant as leases expired and were not renewed.

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

	Total Square Footage	Square Footage Leased	Percentage Leased

As of September 1, 2012	2,460,000	1,737,000	71	%
As of December 1, 2012	2,460,000	1,822,000	74	%
As of August 31, 2013	2,460,000	2,094,000	85	%

The increase in square footage leased as of August 31, 2013, as compared to December 1, 2012, reflects the full building lease for the new Lehigh Valley industrial building along with several other new leases aggregating approximately 72,000 square feet of previously vacant space (approximately 41,000 square feet of office/flex space and approximately 31,000 square feet of industrial/warehouse space) that started during the 2013 nine month period, partially offset by leases aggregating approximately 29,000 square feet that expired and were not renewed.

Market activity for industrial space, which comprises most of Griffin Land’s currently vacant space, in the north submarket of Hartford, Connecticut, where most of Griffin Land’s real estate portfolio is located, was moderate through the first half of fiscal 2013, but slowed in the third quarter. Griffin Land believes that it has been able to secure new leases because of its reputation as a stable, well capitalized company that maintains its properties to a high standard, meets its obligations and is able to deliver space to tenants timely and in accordance with the tenant’s requirements and budget.

Imperial’s net sales and other revenue increased from approximately $2.7 million in the 2012 third quarter to approximately $2.8 million in the 2013 third quarter. Imperial’s net sales and other revenue in both the 2013 third quarter and 2012 third quarter include approximately $0.1 million of rental revenue from its Florida farm and approximately $0.1 million of revenue from royalties. The increase in net sales in the 2013 third quarter, as compared to the 2012 third quarter, principally reflects a 3% increase in unit sales volume, which was partly offset by the effect of slightly lower pricing in the 2013 third quarter as compared to the 2012 third quarter. Imperial’s landscape nursery business is highly seasonal, with sales peaking in the spring months of March, April and May, which comprise Griffin’s second quarter.

Griffin incurred a consolidated operating loss, including general corporate expense, of approximately $0.4 million in the 2013 third quarter as compared to consolidated operating profit, including general corporate expense, of approximately $4.0 million in the 2012 third quarter. Operating profit at Griffin Land decreased from approximately $5.5 million in the 2012 third quarter to approximately $1.4 million in the 2013 third quarter. Imperial’s operating loss increased from approximately $0.5 million in the 2012 third quarter to approximately $0.7 million in the 2013 third quarter. Griffin’s general corporate expense was approximately $1.0 million in both the 2012 and 2013 third quarters.

Table of Contents

Operating profit at Griffin Land in the 2013 and 2012 third quarters were as follows:

	2013			2012
	Third Qtr.			Third Qtr.
	(amounts in thousands)
Rental revenue	$	5,056		$	4,506
Costs related to rental revenue excluding depreciation and amortization expense (a)	(1,673		)	(1,619		)
Profit from leasing activities before general and administrative expenses and before depreciation and amortization expense (a)	3,383			2,887

Revenue from property sales	331			5,360
Costs related to property sales	(128		)	(736		)
Gain from property sales	203			4,624
Profit from leasing activities and gain from property sales before general and administrative expenses and before depreciation and amortization expense (a)	3,586			7,511
General and administrative expenses excluding depreciation and amortization expense (a)	(627		)	(617		)
Profit before depreciation and amortization expense (a)	2,959			6,894
Depreciation and amortization expense related to costs of rental revenue	(1,563		)	(1,392		)
Depreciation and amortization expense - other	(3		)	(4		)
Operating profit	$	1,393		$	5,498

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

Profit from leasing activities before general and administrative expenses and before depreciation and amortization expense increased by approximately $0.5 million in the 2013 third quarter as compared to the 2012 third quarter, due principally to the increase in rental revenue. Costs related to rental revenue excluding depreciation and amortization expense increased from approximately $1.6 million in the 2012

Table of Contents

third quarter to approximately $1.7 million in the 2013 third quarter due principally to overall slightly higher expenses across all properties.

Depreciation and amortization expense increased from approximately $1.4 million in the 2012 third quarter to approximately $1.6 million in the 2013 third quarter. The increase of approximately $0.2 million principally reflects approximately $0.1 million of depreciation expense on the new 228,000 square foot industrial building that was completed and placed in service at the end of the 2012 third quarter and an increase of approximately $0.1 million of depreciation expense on new tenant improvements. Griffin’s general and administrative expenses were essentially unchanged in the 2013 third quarter as compared to the 2012 third quarter.

Imperial’s operating losses in the 2013 and 2012 third quarters were as follows:

	2013			2012
	Third Qtr.			Third Qtr.
	(amounts in thousands)
Net sales and other revenue	$	2,844		$	2,681
Cost of goods sold	2,801			2,434
Gross profit	43			247
Selling, general and administrative expenses	(746		)	(715		)
Operating loss	$	(703	)	$	(468	)

Imperial’s operating loss increased by approximately $0.2 million in the 2013 third quarter as compared to the 2012 third quarter due to a decrease of approximately $0.2 million in gross profit. The decrease in gross profit principally reflects higher costs of goods sold in the 2013 third quarter as compared to the 2012 third quarter, which more than offset the increase in net sales and other revenue in the 2013 third quarter as compared to the 2012 third quarter. Imperial’s cost of goods sold in both the 2013 third quarter and the 2012 third quarter include a charge of approximately $0.3 million to increase Imperial’s reserve for unsaleable inventory. Imperial’s cost of goods sold in both the 2013 third quarter and the 2012 third quarter also include approximately $0.1 million related to the rental revenue from the Florida farm. Excluding the effect of the revenue from royalties and the rental revenue and expenses of the Florida farm, Imperial’s non-U.S. GAAP gross margin on sales decreased from 4.7% in the 2012 third quarter to a negative gross margin in the 2013 third quarter. The decrease in gross margin principally reflects higher plant costs in the 2013 third quarter as compared to the 2012 third quarter. Gross margin excluding the effects of royalty revenue and rental revenue and expenses of the Florida farm is presented because Griffin believes it assists investors in assessing Imperial’s performance in its core business of growing and selling containerized plants. On a U.S. GAAP basis, Imperial’s gross margin on net sales and other revenue decreased from 9.2% in the 2012 third quarter to 1.6% in the 2013 third quarter. Imperial’s selling, general and administrative expenses were essentially unchanged in the 2013 third quarter as compared to the 2012 third quarter. As a percentage of net sales, Imperial’s selling, general and administrative expenses decreased from 26.7% in the 2012 third quarter to 26.2% in the 2013 third quarter.

Griffin’s consolidated interest expense was approximately $0.9 million in the 2013 third quarter, as compared to consolidated interest expense of approximately $0.8 million in the 2012 third quarter. The increase of approximately $0.1 million is principally due to interest of approximately $0.2 million being capitalized in the 2012 third quarter, as compared to no capitalized interest in the 2013 third quarter. The capitalized interest in the 2012 third quarter was primarily on the 228,000 square foot Lehigh Valley industrial building that was under construction during that period and certain offsite improvements related to Griffin Land’s residential development also being constructed during that period. Partially offsetting the effect of not having any capitalized interest in the 2013 third quarter was a decrease of approximately

Table of Contents

$0.1 million in interest expense due to lower interest rates on two of Griffin Land’s nonrecourse mortgage loans that were refinanced.

Griffin’s effective tax rate was 28.3% in the 2013 third quarter as compared to 41.3% in the 2012 third quarter. The effective tax rate for the 2013 third quarter is based on management’s projections of operating results for the fiscal 2013 full year. To the extent that actual results differ from current projections, the effective tax rate may change.

Thirty-Nine Weeks Ended August 31, 2013 Compared to the Thirty-Nine Weeks Ended September 1, 2012

Griffin’s consolidated total revenue decreased from approximately $29.9 million in the 2012 nine month period to approximately $29.2 million in the 2013 nine month period, reflecting a decrease of approximately $1.6 million in revenue at Griffin Land partially offset by an increase of approximately $0.9 million in net sales and other revenue at Imperial.

Total revenue at Griffin Land decreased from approximately $18.8 million in the 2012 nine month period to approximately $17.2 million in the 2013 nine month period, reflecting a decrease of approximately $2.6 million of revenue from property sales partially offset by an increase of approximately $1.0 million in rental revenue. Revenue from property sales decreased from approximately $5.4 million in the 2012 nine month period to approximately $2.8 million in the 2013 nine month period. The 2012 nine month period property sales revenue of approximately $5.4 million was entirely from the Dollar Tree Sale, while the 2013 nine month period included approximately $2.5 million of revenue from the Dollar Tree Sale and approximately $0.3 million of revenue from two smaller land sales. As Griffin Land was required, under the terms of the Dollar Tree Sale, to construct a sewer line to service the property sold, Griffin Land accounted for the Dollar Tree Sale under the percentage of completion method. Accordingly, approximately $5.4 million of the total proceeds of $7.0 million from the Dollar Tree Sale was recognized as revenue in the 2012 third quarter. The balance of the revenue of the Dollar Tree Sale was recognized in the 2012 fourth quarter and the first two quarters of fiscal 2013, when the required construction of the sewer line was completed. Property sales occur periodically, and changes in revenue from year to year from those transactions may not be indicative of any trends in Griffin Land’s real estate business. In the first nine months of fiscal 2013, there was an increase in requests for proposals received by Griffin Land regarding land purchases and development transactions, particularly related to industrial space. Subsequent to the end of the 2013 third quarter, Griffin Land entered into a contract for the sale of approximately 90 acres of undeveloped land for approximately $9.0 million in cash, before transaction expenses (see Liquidity and Capital Resources). There is no guarantee that this transaction will be completed under its current terms, or at all, and there is no guarantee that this increase in market activity will result in any additional agreements for such transactions.

The increase of approximately $1.0 million in rental revenue in the 2013 nine month period as compared to the 2012 nine month period is due to higher occupancy levels at Griffin Land’s rental properties in the 2013 nine month period as compared to the 2012 nine month period. Rental revenue increased approximately $1.6 million due to new leases in buildings that were in service in both the 2013 and 2012 nine month periods and approximately $0.2 million from the commencement of the full building lease of the Lehigh Valley industrial building that was completed at the end of the 2012 third quarter. Partially offsetting the increase in rental revenue from new leasing was a decrease of approximately $0.8 million of rental revenue from leases in place during the 2012 nine month period that expired and were not renewed.

Net sales and other revenue at Imperial increased from approximately $11.1 million in the 2012 nine month period to approximately $12.0 million in the 2013 nine month period. The increase in net sales in the 2013 nine month period, as compared to the 2012 nine month period, reflects a 9% increase in unit sales volume (adjusted for the size of plants sold) and slightly lower pricing in the 2013 nine month

Table of Contents

period as compared to the 2012 nine month period. Imperial’s net sales and other revenue in both the 2013 nine month period and the 2012 nine month period include approximately $0.4 million of rental revenue from its Florida farm and approximately $0.1 million of revenue from royalties.

Griffin incurred a consolidated operating loss, including general corporate expense, of approximately $0.4 million in the 2013 nine month period as compared to consolidated operating profit, including general corporate expense, of approximately $2.7 million in the 2012 nine month period. Operating profit at Griffin Land decreased from approximately $7.1 million in the 2012 nine month period to approximately $4.6 million in the 2013 nine month period. Imperial’s operating loss of approximately $1.1 million in the 2013 nine month period was essentially unchanged from the 2012 nine month period. Griffin’s general corporate expense increased from approximately $3.4 million in the 2012 nine month period to approximately $3.9 million in the 2013 nine month period.

Operating profit at Griffin Land in the 2013 and 2012 nine month periods were as follows:

	2013			2012
	Nine Month			Nine Month
	Period			Period
	(amounts in thousands)
Rental revenue	$	14,361		$	13,395
Costs related to rental revenue excluding depreciation and amortization expense (a)	(5,312		)	(4,778		)
Profit from leasing activities before general and administrative expenses and before depreciation and amortization expense (a)	9,049			8,617
Revenue from property sales	2,805			5,360
Costs related to property sales	(493		)	(736		)
Gain from property sales	2,312			4,624
Profit from leasing activities and gain from property sales before general and administrative expenses and before depreciation and amortization expense (a)	11,361			13,241
General and administrative expenses excluding depreciation and amortization expense	(2,131		)	(1,936		)
Profit before depreciation and amortization expense (a)	9,230			11,305
Depreciation and amortization expense related to costs of rental revenue	(4,617		)	(4,155		)
Depreciation and amortization expense - other	(9		)	(12		)
Operating profit	$	4,604		$	7,138

Table of Contents

believes they are useful financial indicators for measuring results in its real estate business segment. However, they should not be considered as an alternative to operating profit as a measure of operating results in accordance with U.S. GAAP. The aggregate of: (i) costs related to rental revenue excluding depreciation and amortization expense; (ii) costs related to property sales; and (iii) depreciation and amortization expense related to costs of rental revenue, equals the costs related to rental revenue and property sales as reported on Griffin’s consolidated statement of operations.

As noted above, approximately $2.5 million of the approximately $2.8 million of revenue from property sales in the 2013 nine month period was from the Dollar Tree Sale. Accordingly, most of the gain from property sales in the 2013 nine month period is also due to the Dollar Tree Sale. At the end of the 2013 nine month period, construction of the sewer line was completed and all of the costs related to the Dollar Tree Sale have been incurred; therefore, from the date of the Dollar Tree Sale through the end of the 2013 nine month period, all of the gain on sale has been recognized in Griffin’s consolidated statements of operations. Including the gain on sale of approximately $3.9 million recognized in fiscal 2012 and approximately $2.1 million recognized in the 2013 nine month period, the total pretax gain on the Dollar Tree Sale was approximately $6.0 million, including the approximately $0.2 million from an amended agreement between Dollar Tree and Griffin Land.

Profit from leasing activities before general and administrative expenses and before depreciation and amortization expense increased by approximately $0.4 million in the 2013 nine month period as compared to the 2012 nine month period, as the approximately $1.0 million increase in rental revenue was partially offset by an approximately $0.5 million increase in costs related to rental revenue excluding depreciation and amortization expense, which increased from approximately $4.8 million in the 2012 nine month period to approximately $5.3 million in the 2013 nine month period principally reflecting an increase of approximately $0.3 million in snow removal expenses and an increase of approximately $0.2 million in repair and maintenance expenses in the 2013 nine month period as compared to the 2012 nine month period. The higher snow removal expenses in the 2013 nine month period reflect the effect of the relatively mild winter weather in the 2012 nine month period when there was a minimal amount of snowfall, as compared to a higher amount of snowfall in the 2013 nine month period.

Griffin Land’s general and administrative expenses increased from approximately $1.9 million in the 2012 nine month period to approximately $2.1 million in the 2013 nine month period. The increase of approximately $0.2 million principally reflects approximately $0.1 million due to higher real estate tax expense in the 2013 nine month period and small increases in other general and administrative expenses that aggregated approximately $0.1 million in total.

Depreciation and amortization expense increased from approximately $4.2 million in the 2012 nine month period to approximately $4.6 million in the 2013 nine month period. The increase of approximately $0.4 million in the 2013 nine month period as compared to the 2012 nine month period was due principally to depreciation expense of approximately $0.2 million in the 2013 nine month period on the 228,000 square foot Lehigh Valley industrial building that was completed and placed in service at the end of the 2012 third quarter, an increase of approximately $0.1 million in depreciation expense related to new tenant improvements in several of Griffin Land’s buildings and approximately $0.1 million from accelerating depreciation on tenant improvements during the 2013 nine month period as a result of a tenant exercising its early lease termination option effective at the end of the 2013 third quarter.

Imperial’s operating losses for the 2013 and 2012 nine month periods were as follows:

Table of Contents

	2013			2012
	Nine Month Period			Nine Month Period
	(amounts in thousands)

Net sales and other revenue	$	12,018		$	11,139
Cost of goods sold	10,606			9,769
Gross profit	1,412			1,370
Selling, general and administrative expenses	(2,524		)	(2,445		)
Operating loss	$	(1,112	)	$	(1,075	)

Imperial’s operating loss of approximately $1.1 million in the 2013 nine month period was essentially unchanged from the operating loss incurred in the 2012 nine month period, as gross profit of approximately $1.4 million and selling, general and administrative expenses of approximately $2.5 million in the 2013 nine month period were each essentially unchanged as compared to the 2012 nine month period. The increase of approximately $0.9 million in Imperial’s net sales and other revenue in the 2013 nine month period as compared to the 2012 nine month period was offset by an increase in cost of goods sold of an approximately equal amount. Imperial’s cost of goods sold in both the 2013 nine month period and the 2012 nine month period each include approximately $0.2 million related to the rental revenue from the Florida farm. Excluding the effect of the revenue from royalties and the rental revenue and expenses of the Florida farm, Imperial’s non-U.S. GAAP gross margin on sales decreased from 10.4% in the 2012 nine month period to 9.3% in the 2013 nine month period. The decrease in gross margin principally reflects higher plant costs in the 2013 nine month period as compared to the 2012 nine month period. Gross margin excluding the effects of royalty revenue and rental revenue and expenses of the Florida farm is presented because Griffin believes it assists investors in assessing Imperial’s performance in its core business of growing and selling containerized plants. On a U.S. GAAP basis, Imperial’s gross margin on net sales and other revenue decreased from 12.3% in the 2012 nine month period to 11.7% in the 2013 nine month period. Imperial’s selling, general and administrative expenses were essentially unchanged in the 2013 nine month period as compared to the 2012 nine month period. As a percentage of net sales, Imperial’s selling, general and administrative expenses decreased from 21.9% in the 2012 nine month period to 21.0% in the 2013 nine month period.

Griffin’s general corporate expense increased from approximately $3.4 million in the 2012 nine month period to approximately $3.9 million in the 2013 nine month period. The increase of approximately $0.5 million principally reflects an increase of approximately $0.3 million in expenses related to Griffin’s non-qualified deferred compensation plan, an increase of approximately $0.1 million in legal expenses and smaller increases in all other general and administrative expenses that aggregate to approximately $0.1 million. The higher expenses of the non-qualified deferred compensation plan reflect the effect on participants’ balances of generally higher overall stock market performance during the 2013 nine month period as compared to the 2012 nine month period.

Griffin’s consolidated interest expense increased from approximately $2.5 million in the 2012 nine month period to approximately $2.9 million in the 2013 nine month period principally due to approximately $0.6 million of interest capitalized in the 2012 nine month period (there was no interest capitalized in the 2013 nine month period) partially offset by a decrease of approximately $0.1 million in the 2013 nine month period due a lower interest rate on a mortgage loan with Webster Bank that was refinanced in the 2012 fourth quarter, a mortgage loan with First Niagara Bank that was refinanced in the 2013 second quarter and a decrease of approximately $0.1 million due to a lower amount of debt outstanding during the 2013 nine month period. Interest capitalized in the 2012 nine month period was on the construction projects ongoing during the 2012 nine month period, principally the Lehigh Valley industrial building that was being built by Griffin Land. Griffin’s average outstanding debt in the 2013

Table of Contents

nine month period was approximately $58.8 million as compared to approximately $60.6 million in the 2012 nine month period, reflecting principal payments made on Griffin’s nonrecourse mortgages subsequent to the 2012 nine month period.

In the 2013 nine month period, Griffin incurred a loss on debt extinguishment of approximately $0.3 million, related to the loan modification agreement on a mortgage loan with First Niagara Bank due in January 2020 (the “2020 First Niagara Mortgage”). On April 1, 2013, Griffin Land and First Niagara Bank entered into an agreement that reduced the interest rate on the 2020 First Niagara Mortgage from a fixed rate of 5.25% to a variable rate of the one month LIBOR rate plus 2.5%. Because the difference between the present value of the future payments under the modified loan and the present value of payments under the existing loan was greater than 10% of the present value of the payments under the existing loan, the loan modification was accounted for as a debt extinguishment. As such, all deferred costs related to the 2020 First Niagara Mortgage (approximately $0.2 million) and the fee paid to First Niagara Bank for the loan modification (approximately $0.l million) are reflected as a loss on debt extinguishment. Concurrent with that agreement, Griffin also entered into an interest rate swap agreement with First Niagara Bank to fix the interest rate on the 2020 First Niagara Mortgage at 3.91% for the remainder of the loan term.

In the 2013 nine month period, the sale of Griffin’s investment in SNHC was completed, with Griffin receiving cash proceeds of approximately $3.4 million. Because of the low carrying cost of its investment in SNHC, Griffin’s gain on sale was approximately $3.4 million, essentially equal to the cash proceeds received. Also in the 2013 nine month period, Griffin sold 1,324,688 shares of its common stock of Centaur Media for cash proceeds of approximately $1.2 million. Griffin’s gain from the sale of its Centaur Media common stock in the 2013 nine month period was approximately $0.5 million. After the sales of Centaur Media common stock, Griffin owned 3,952,462 shares of Centaur Media common stock. There were no sales of investments in the 2012 nine month period, however, the 2012 nine month period did include investment income of approximately $0.5 million principally from a cash distribution from SNHC.

Griffin’s effective tax rate was 36.4% for the 2013 nine month period, as compared to an effective tax rate of 46.0% for the 2012 nine month period. The lower effective tax rate in the 2013 nine month period as compared to the 2012 nine month period reflects the effect of lower state income taxes in the 2012 nine month period. Griffin’s effective tax rate for the 2013 nine month period is based on management’s projections for the balance of the year. To the extent that actual results differ from current projections, the effective income tax rate may change.

O ff Balance Sheet Arrangements

Griffin does not have any material off balance sheet arrangements.

Liquidity and Capital Resources

Net cash used in operating activities was approximately $0.9 million in the 2013 nine month period as compared to net cash provided by operating activities of approximately $1.5 million in the 2012 nine month period, principally reflecting a decrease of approximately $0.7 million from the change from net income in the 2012 nine month period to a net loss in the 2013 nine month period, after adjusting for the non cash items, and approximately $1.7 million more cash used in operating activities as a result of changes in assets and liabilities in the 2013 nine month period as compared to the 2012 nine month period. The increase in cash used as a result of changes in assets and liabilities principally reflects an increase in inventories of approximately $0.7 million in the 2013 nine month period as compared to an increase of $0.1 million in the 2012 nine month period and an increase in other current assets of approximately $0.6 million during the 2013 nine month period as compared to a reduction in other current assets of approximately $0.1 million in the 2012 six month period. The increase in inventories reflects

Table of Contents

more plants purchased by Imperial in the 2013 nine month period as compared to the 2012 nine month period. The change in other current assets principally reflects the 2012 nine month period including cash proceeds of approximately $0.5 million collected in the 2012 nine month period from an insurance claim that was settled in the previous year.

Net cash used in investing activities was approximately $0.3 million in the 2013 nine month period as compared to net cash provided by investing activities of approximately $3.4 million in the 2012 nine month period. The net cash used in investing activities in the 2013 nine month period principally reflects approximately $12.3 million of cash used for additions to real estate assets and approximately $0.1 million of cash used for additions to property and equipment, substantially offset by approximately $6.9 million of proceeds from a property sale returned from escrow, approximately $3.4 million of proceeds from the sale of Griffin’s investment in SNHC, approximately $1.2 million of proceeds from the sale of Centaur Media common stock, and approximately $0.5 million of proceeds from property sales. The cash proceeds that were returned from escrow were used for the acquisition of an approximately 49 acre parcel of undeveloped land in the Lehigh Valley of Pennsylvania for approximately $7.1 million in cash, before transaction costs, that closed on December 28, 2012 (see below). In addition to the acquisition of undeveloped land in the 2013 nine month period, Griffin Land’s additions to its real estate assets included approximately $2.9 million of expenditures principally for tenant improvements related to new leases and approximately $0.8 million of expenditures for the construction of the sewer line related to the Dollar Tree Sale. The approximately $0.1 million of additions to property and equipment in the 2013 nine month period was mostly for purchases of equipment at both Imperial and Griffin Land.

The 49 acre parcel of undeveloped land acquired in the 2013 nine month period will support the development of two industrial buildings totaling approximately 530,000 square feet. As governmental approvals of such development were not in place at the time of closing, the seller agreed to provide Griffin Land with recission rights if the required approvals were not obtained or the seller did not complete certain post-closing obligations. Griffin Land has recently received conditional final plan approvals of its development plans for the land acquired and expects to record the final development plans by the end of 2013.

Net cash provided by investing activities of approximately $3.4 million in the 2012 nine month period reflected the net cash proceeds of approximately $22.5 million from property sales, which included approximately $15.6 million from the sale of the Manchester Warehouse and approximately $6.9 million from the Dollar Tree Sale. The proceeds from the Dollar Tree Sale were placed in escrow to acquire a replacement property as part of a Section 1031 like-kind exchange, which was completed in the 2013 nine month period (see above). Also in the 2012 nine month period, Griffin received cash of approximately $0.7 million from SNHC, approximately $0.4 million of which was reflected as dividend income and included in operating activities with the remaining balance of approximately $0.3 million reflected as a return of capital and included in investing activities. Partially offsetting the cash received from the Manchester Warehouse sale and the return of capital from SNHC was approximately $12.3 million of additions to real estate assets, principally for Griffin Land’s construction, on speculation, of the 228,000 square foot industrial building on an undeveloped land parcel in the Lehigh Valley of Pennsylvania that was acquired in 2010 and the site work for the second industrial building to be built on the acquired land. In the 2012 nine month period Griffin also had approximately $0.1 million of additions to property and equipment, mostly for purchases of equipment at Imperial.

Net cash provided by financing activities was approximately $6.2 million in the 2013 nine month period as compared to net cash used in financing activities of approximately $1.7 million in the 2012 nine month period. The net cash provided by financing activities in the 2013 nine month period reflects proceeds of $9.1 million from a new nonrecourse mortgage loan that closed in the 2013 nine month period (see below) and cash of approximately $0.1 million received from the exercise of stock options. These were partially offset by approximately $1.4 million for payments of principal on Griffin Land’s nonrecourse mortgages, the payment of approximately $1.0 million for the dividend on Griffin’s common

Table of Contents

stock that was declared in the 2012 fourth quarter and paid in the 2013 first quarter, approximately $0.4 million of debt issuance costs related to a new revolving credit agreement (see below) and the new nonrecourse mortgage loan both of which were completed in the 2013 nine month period and approximately $0.1 million related to the modification of the First Niagara mortgage loan (see below). Net cash used in financing activities in the 2012 nine month period reflected cash of approximately $1.2 million for payments of principal on Griffin Land’s nonrecourse mortgages and approximately $0.5 million for the payment of a dividend on Griffin’s common stock, partially offset by approximately $0.1 million received from the exercise of stock options in the 2012 nine month period.

On April 24, 2013, Griffin closed on a new $12.5 million revolving credit agreement with Webster Bank (the “Webster Credit Line”). The Webster Credit Line is for two years with an option for Griffin to extend the credit line for a third year. The Webster Credit Line replaced Griffin’s $12.5 million credit line with Doral Bank (the “Doral Credit Line”) that was scheduled to expire on May 1, 2013. Interest on the outstanding borrowings under the Webster Credit Line will be at the one month LIBOR rate plus 2.75%. Interest on outstanding borrowings under the Doral Credit Line was the higher of the prime rate plus 1.5% or 5.875%. The Webster Credit Line is collateralized by Griffin Land’s properties in Griffin Center South, aggregating approximately 235,000 square feet and an approximately 48,000 square foot single-story office building in Griffin Center. These are the same properties that collateralized the Doral Credit Line. There were no borrowings under the Doral Credit Line in fiscal 2012 and the 2013 nine month period, and there were no amounts borrowed under the Webster Credit Line as of the date of this Quarterly Report on Form 10-Q.

On April 1, 2013, Griffin Land entered into a loan modification agreement on the 2020 First Niagara Mortgage. The loan modification agreement changed the loan’s interest rate from a fixed rate of 5.25% to a variable rate of the one month LIBOR rate plus 2.5%. The loan modification did not change the loan’s collateral or maturity date. Griffin Land paid approximately $0.1 million for the loan modification, which included a fee paid to First Niagara Bank and third party transaction costs. Concurrent with the loan modification, Griffin Land entered into an interest rate swap agreement with First Niagara Bank to fix the interest rate on the 2020 First Niagara Mortgage at 3.91% for the duration of the loan.

On August 28, 2013, a subsidiary of Griffin closed on a $9.1 million nonrecourse mortgage with First Niagara Bank (the “2023 First Niagara Mortgage”), collateralized by the 228,000 square foot Lehigh Valley industrial building that was constructed in fiscal 2012. Although this mortgage is nonrecourse, Griffin and its subsidiary entered into a springing master lease that would become effective if the full building tenant in the industrial building does not renew its five-year lease when it is scheduled to expire in fiscal 2018. The 2023 First Niagara Mortgage has a ten-year term with monthly payments of principal and interest starting on October 1, 2013, based on a twenty-five year amortization schedule. The interest rate for the 2023 First Niagara Mortgage is a floating rate of the one month LIBOR rate plus 1.95%. At the time Griffin closed on the First Niagara Mortgage, Griffin also entered into an interest rate swap agreement with First Niagara Bank for a notional principal amount of $9.1 million at inception to fix the interest rate at 4.79%. Payments under the swap agreement commence on October 1, 2013 and will continue monthly until September 1, 2023, which is also the termination date of the 2023 First Niagara Mortgage.

Griffin expects to use substantially all of the proceeds from the 2023 First Niagara Mortgage for the construction, on speculation, of a new approximately 303,000 square foot industrial building in the Lehigh Valley of Pennsylvania. The new building to be constructed will be located in Lehigh Valley Tradeport on contiguous land to the 228,000 square foot industrial building that was built in fiscal 2012 and recently leased. Construction is expected to begin in the 2013 fourth quarter with completion expected in the 2014 second quarter. Much of the site work for this new building was done in conjunction with the site work for the first building in Lehigh Valley Tradeport. Griffin Land expects to expend approximately $9.4 million to complete the construction of the shell of this new building.

Table of Contents

Griffin’s payments (including principal and interest) under contractual obligations as of August 31, 2013 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	$	80.1	$	5.5	$	29.5	$	16.1	$	29.0
Revolving Line of Credit	—		—		—		—		—
Capital Lease Obligations	0.1		—		0.1		—		—
Operating Lease Obligations	0.5		0.2		0.3		—		—
Purchase Obligations (1)	0.9		0.9		—		—		—
Other (2)	3.6		—		—		—		3.6
	$	85.2	$	6.6	$	29.9	$	16.1	$	32.6

(1) Reflects expenditures for Griffin Land’s real estate assets.

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

Subsequent to the end of the 2013 third quarter, Griffin Land entered into a Real Estate Sales Contract (the “Sales Contract”) for the sale of approximately 90 acres of undeveloped land for approximately $9.0 million in cash, before transaction expenses. The land to be sold is in Windsor, Connecticut and is part of an approximately 268 acre parcel of undeveloped land that straddles the town line between Windsor and Bloomfield, Connecticut. Under the terms of the Sales Contract, Griffin Land and the buyer will construct roadways connecting the land parcel to be sold with existing town roads. The roads to be built will also provide access to the remaining acreage in Griffin Land’s land parcel. The completion of this transaction is contingent on a number of factors, including the buyer obtaining all necessary final permits from governmental authorities for its development plans for the site it would acquire and the buyer receiving state economic development incentives it deems adequate. There is no guarantee that this transaction will be completed under its current terms, or at all.

In the near-term, Griffin plans to continue to invest in its real estate business, including the construction of buildings on its undeveloped land, expenditures to build out interiors of its buildings as new leases are signed, infrastructure improvements required for future development of its real estate holdings and the potential acquisition of additional properties and/or undeveloped land parcels in New England or the mid-Atlantic states to expand the industrial/warehouse portion of Griffin Land’s real estate business. Real estate acquisitions may or may not occur based on many factors, including real estate pricing. Griffin Land does not expect to commence any speculative construction projects for its Connecticut real estate portfolio until a substantial portion of its currently vacant space is leased.

As of August 31, 2013, Griffin had cash and cash equivalents of approximately $15.2 million. Management believes that its cash and cash equivalents and borrowing capacity under the Webster Credit Line will be sufficient to meet Griffin’s seasonal working capital requirements, the continued investment in Griffin’s real estate assets and the payment of dividends on its common stock, when and if declared by the Board of Directors. Griffin may also continue to seek additional financing secured by nonrecourse mortgages on its properties. Griffin Land’s real estate portfolio currently includes five buildings located in Connecticut aggregating approximately 411,000 square feet that are not mortgaged.

Table of Contents

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 completion and terms of the proposed Imperial transaction, the expected timing and costs of the construction of a new industrial building in the Lehigh Valley, leasing of currently vacant space, obtaining final governmental approvals for Griffin Land’s development plans for the undeveloped land acquired in the 2013 nine month period, construction of additional facilities in the real estate business, completion of land sales currently under contract, the ability to obtain mortgage financing on Griffin Land’s unleveraged properties and Griffin’s anticipated future liquidity. The projected information disclosed herein is based on assumptions and estimates that, while considered reasonable by Griffin as of the date hereof, are inherently subject to significant business, economic, competitive and regulatory uncertainties and contingencies, many of which are beyond the control of Griffin.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

For fixed rate mortgage debt, changes in interest rates generally affect the fair market value of the debt instrument, but not earnings or cash flows. Griffin does not have an obligation to prepay any fixed rate debt prior to maturity and, therefore, interest rate risk and changes in the fair market value of fixed rate debt should not have a significant impact on earnings or cash flows until such debt is refinanced, if necessary. Griffin’s mortgage interest rates are described in Note 9 to the unaudited consolidated financial statements included in Item 1.

For variable rate debt, changes in interest rates generally do not impact the fair market value of the debt instrument, but do affect future earnings and cash flows. As of August 31, 2013, Griffin had several nonrecourse mortgage loans aggregating approximately $38.8 million that have variable interest rates, for which Griffin has entered into interest rate swap agreements which effectively fix the interest rates on all of these mortgage loans. There were no other variable rate borrowings outstanding as of August 31, 2013.

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

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

Table of Contents

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

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

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

Changes in Internal Control over Financial Reporting

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

Table of Contents

PART II

OTHER INFORMATION

ITEM 1A.

RISK FACTORS

There have been no material changes from risk factors as previously disclosed in Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended December 1, 2012.

ITEM 6.

EXHIBITS

	Exhibit No.		Description

	3.1*		Amended and Restated Certificate of Incorporation of Griffin Land & Nurseries, Inc.

	3.2*		Bylaws of Griffin Land & Nurseries, Inc.

	10.7		Form of 401(k) Plan of Griffin Land & Nurseries, Inc. (incorporated by reference to the Form 10 of Griffin Land & Nurseries, Inc., filed April 8, 1997, as amended)

	10.21		Mortgage Deed, Security Agreement, Financing Statement and Fixture Filing with Absolute Assignment of Rents and Leases dated September 17, 2002 between Tradeport Development I, LLC and Farm Bureau Life Insurance Company (incorporated by reference to Form 10-Q dated August 31, 2002, filed October 11, 2002)

	10.24		Mortgage Deed and Security Agreement dated December 17, 2002 between Griffin Center Development IV, LLC and Webster Bank (incorporated by reference to Form 10-K dated November 30, 2002, filed February 28, 2003)

	10.28		Secured Installment Note and First Amendment of Mortgage and Loan Documents dated April 16, 2004 among Tradeport Development I, LLC, Griffin Land & Nurseries, Inc. and Farm Bureau Life Insurance Company (incorporated by reference to Form 10-Q dated May 29, 2004, filed July 13, 2004)

	10.29		Mortgage Deed Security Agreement, Fixture Filing, Financing Statement and Assignment of Leases and Rents dated July 6, 2005 by Tradeport Development II, LLC in favor of First Sunamerica Life Insurance Company (incorporated by reference to Form 10-Q dated May 28, 2005, filed November 2, 2005)

	10.30		Promissory Note dated July 6, 2005 (incorporated by reference to Form 10-Q dated May 28, 2005, filed November 2, 2005)

	10.31		Guaranty Agreement as of July 6, 2005 by Griffin Land & Nurseries, Inc. in favor of Sunamerica Life Insurance Company (incorporated by reference to Form 10-Q dated May 28, 2005, filed November 2, 2005)

Table of Contents

	10.32		Amended and Restated Mortgage Deed Security Agreement, Fixture Filing, Financing Statement and Assignment of Leases and Rents dated November 16, 2006 by Tradeport Development II, LLC in favor of First Sunamerica Life Insurance Company (incorporated by reference to Form 10-K dated December 2, 2006, filed February 15, 2007)

	10.33		Amended and Restated Promissory Note dated November 16, 2006 (incorporated by reference to Form 10-K dated December 2, 2006, filed February 15, 2007)

	10.34		Guaranty Agreement as of November 16, 2006 by Griffin Land & Nurseries, Inc. in favor of Sunamerica Life Insurance Company (incorporated by reference to Form 10-K dated December 2, 2006, filed February 15, 2007)

	10.35		Employment Agreement by and between Imperial Nurseries, Inc. and Gregory Schaan dated January 1, 2001, as amended April 9, 2008 (incorporated by reference to Form 10-Q dated March 1, 2008, filed April 10, 2008)

	10.36		Construction Loan and Security Agreement dated February 6, 2009 by and between Tradeport Development III, LLC, Griffin Land & Nurseries, Inc., and Berkshire Bank (incorporated by reference to Form 10-Q dated February 28, 2009, filed April 9, 2009)

	10.37		$12,000,000 Construction Note dated February 6, 2009 (incorporated by reference to Form 10-Q dated February 28, 2009, filed April 9, 2009)

	10.40		Loan and Security Agreement dated July 9, 2009 between Griffin Land & Nurseries, Inc. and People’s United Bank (incorporated by reference to Form 10-Q dated August 29, 2009, filed October 8, 2009)

	10.41		$10,500,000 Promissory Note dated July 9, 2009 (incorporated by reference to Form 10-Q dated August 29, 2009, filed October 8, 2009)

	10.42		Mortgage and Security Agreement dated January 27, 2010 between Riverbend Crossings III Holdings LLC and NewAlliance Bank (incorporated by reference to Form 10-Q dated August 28, 2010, filed October 6, 2010)

	10.43		$4,300,000 Promissory Note dated January 27, 2010 (incorporated by reference to Form 10-Q dated February 27, 2010, filed April 8, 2010)

	10.44		First Modification of Promissory Note, Mortgage Deed and Security Agreement and Other Loan Documents between Riverbend Crossings III Holdings LLC and NewAlliance Bank dated October

Table of Contents

			27, 2010 (incorporated by reference to Form 10-K dated November 27, 2010, filed February 10, 2011)

	10.45		Revolving Line of Credit Loan Agreement with Doral Bank, FSB dated April 28, 2011 (incorporated by reference to Form 10-Q dated May 28, 2011, filed July 7, 2011)

	10.46		Open-End Mortgage and Security Agreement dated April 28, 2011 between Griffin Land & Nurseries, Inc., as Mortgagor and Doral Bank, FSB, as Mortgagee (incorporated by reference to Form 10-Q dated May 28, 2011, filed July 7, 2011)

	10.47		Open-End Mortgage and Security Agreement dated April 28, 2011 between Griffin Land & Nurseries, Inc., as Mortgagor and Doral Bank, FSB, as Mortgagee (incorporated by reference to Form 10-Q dated May 28, 2011, filed July 7, 2011)

	10.48		Third Modification Agreement between Griffin Center Development IV, LLC, Griffin Center Development V, LLC, Griffin Land & Nurseries, Inc. and Webster Bank, National Association dated June 15, 2012 (incorporated by reference to Form 8-K dated June 15, 2012, filed June 20, 2012)

	10.49		Second Amendment to Mortgage Deed and Security Agreement and other Loan Documents between Riverbend Crossings III Holdings LLC and First Niagara Bank dated April 1, 2013 (incorporated by reference to Form 10-Q dated June 1, 2013, filed July 11, 2013)

	10.50		Amended and Restated Term Note dated April 1, 2013 (incorporated by reference to Form 10-Q dated June 1, 2013, filed July 11, 2013)

	10.51		Revolving Line of Credit Loan Agreement with Webster Bank, N.A. dated April 24, 2013 (incorporated by reference to Form 10-Q dated June 1, 2013, filed July 11, 2013)

	10.52		Revolving Line of Credit Note dated April 24, 2013 (incorporated by reference to Form 10-Q dated June 1, 2013, filed July 11, 2013)

	10.53*		Mortgage and Security Agreement between Riverbend Bethlehem Holdings I LLC and First Niagara Bank, N.A. effective August 28, 2013

	10.54*		$9,100,000 Term Note effective August 28, 2013

	31.1 *		Certifications of Chief Executive Officer Pursuant to Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

	31.2 *		Certifications of Chief Financial Officer Pursuant to Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Table of Contents

	32.1 *		Certifications of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

	32.2 *		Certifications of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

	101.INS*		XBRL Instance Document

	101.SCH*		XBRL Taxonomy Extension Schema Document

	101.CAL*		XBRL Taxonomy Calculation Linkbase Document

	101.LAB*		XBRL Taxonomy Label Linkbase Document

	101.PRE*		XBRL Taxonomy Presentation Linkbase Document

	101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document

* Filed herewith.

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	GRIFFIN LAND & NURSERIES, INC.


	BY:	/s/ FREDERICK M. DANZIGER
DATE: October 10, 2013	Frederick M. Danziger
	Chairman and Chief Executive Officer


	BY:	/s/ ANTHONY J. GALICI
DATE: October 10, 2013	Anthony J. Galici
	Vice President, Chief Financial Officer and Secretary,
	Chief Accounting Officer

Exhibit 3.1

AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION
OF
GRIFFIN LAND & NURSERIES, INC.

Griffin Land & Nurseries, Inc. (the “Corporation”), a corporation organized and existing under the General Corporation Law of the State of Delaware (the “DGCL”), does hereby certify as follows:

1. The present name of the Corporation is Griffin Land & Nurseries, Inc. The Corporation was originally incorporated under the name “Culbro Realty and Development Corporation” and its original certificate of incorporation was filed with the office of the Secretary of State of the State of Delaware on March 10, 1970.

2. This Amended and Restated Certificate of Incorporation was duly adopted by the Board of Directors of the Corporation (the “Board”) and by the sole stockholder of the Corporation in accordance with Sections 228, 242, and 245 of the DGCL.

3. This Amended and Restated Certificate of Incorporation restates and integrates and amends the certificate of incorporation of the Corporation, as heretofore amended, supplemented and/or restated (the “Certificate of Incorporation”).

4. Upon the filing (the “Effective Time”) of this Certificate of Incorporation pursuant to the DGCL, each share of the Corporation’s Class B Common Stock, $0.01 par value per share, issued and outstanding immediately prior to the Effective Time (the “Old Common Stock”) shall be reclassified as and changed into one validly issued, fully paid, and non-assessable share of Common Stock authorized by subparagraph (a) of Article FOURTH of the Certificate of Incorporation (totaling 1,000 shares of Common Stock), without any action by the holder thereof (the “Reclassification”). Each certificate that theretofore represented a share or shares of Old Common Stock shall thereafter represent that number of shares of Common Stock into which the share or shares of Old Common Stock represented by such certificate shall have been reclassified.

5. The text of the Certificate of Incorporation is amended and restated in its entirety as follows:

FIRST: The name of the corporation (the “Corporation”) is Griffin Land & Nurseries, Inc.

SECOND: The address of the registered office of the Corporation in the State of Delaware is 1209 Orange Street, Wilmington, Delaware 19801, in the City of Wilmington, County of New Castle. The name of its registered agent at that address is The Corporation Trust Company.

THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which a corporation may be organized under the DGCL.

FOURTH: (a) Authorized Capital Stock. The Corporation is authorized to issue 15 million shares of capital stock, of which 10 million shares shall be shares of Common Stock, $0.01 par value (“Common Stock”) and 5 million shares shall be shares of Preferred Stock, $0.01 par value (“Preferred Stock”).

(b) Preferred Stock. The Board is expressly authorized to provide for the issuance of all or any shares of the Preferred Stock in one or more classes or series, and to fix for each such class or series such voting powers, full or limited, or no voting powers, and such designations, preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof, as shall be stated and expressed in the resolution or resolutions adopted by the Board providing for the issuance of such class or series, including, without limitation, the authority to provide that any such class or series may be (i) subject to redemption at such time or times and at such price or prices; (ii) entitled to receive dividends (which may be cumulative or non-cumulative) at such rates, on such conditions, and at such times, and payable in preference to, or in such relation to, the dividends payable on any other class or classes or any other series; (iii) entitled to such rights upon the dissolution of, or upon any distribution of the assets of, the Corporation; or (iv) convertible into, or exchangeable for, shares of any other class or classes of stock, or of any other series of the same or any other class or classes of stock, of the Corporation at such price or prices or at such rates of exchange and with such adjustments; all as may be stated in such resolution or resolutions.

FIFTH: The following provisions are inserted for the management of the business and the conduct of the affairs of the Corporation, and for further definition, limitation and regulation of the powers of the Corporation and of its directors and stockholders:

(a) The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors.

(b) The directors shall have concurrent power with the stockholders to adopt, amend, or repeal the By-Laws of the Corporation.

(c) The number of directors of the Corporation shall be as from time to time fixed by, or in the manner provided in, the By-Laws of the Corporation. Election of directors need not be by written ballot unless the By-Laws so provide.

(d) No director shall be personally liable to the Corporation or any of its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the DGCL or (iv) for any transaction from which the director derived an improper personal benefit. If the DGCL is amended hereafter to

authorize the further elimination or limitation of liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent authorized by the DGCL, as so amended. Any repeal or modification of this Article FIFTH by the stockholders of the Corporation shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification with respect to acts or omissions occurring prior to such repeal or modification.

(e) In addition to the powers and authority hereinbefore or by statute expressly conferred upon them, the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation, subject, nevertheless, to the provisions of the DGCL, this Certificate of Incorporation and any By-Laws adopted by the stockholders; provided, however, that no By-Laws hereafter adopted by the stockholders shall invalidate any prior act of the directors which would have been valid if such By-Laws had not been adopted.

(f) The Corporation expressly elects not to be governed by Section 203 of the DGCL.

SIXTH: Meetings of stockholders may be held within or without the State of Delaware, as the By-Laws may provide. The books of the Corporation may be kept (subject to any provision contained in the DGCL) outside the State of Delaware at such place or places as may be designated from time to time by the Board or in the ByLaws.

SEVENTH: The Corporation shall indemnify its directors and officers to the fullest extent authorized or permitted by law, as now or hereafter in effect, and such right to indemnification shall continue as to a person who has ceased to be a director or officer of the Corporation and shall inure to the benefit of his or her heirs, executors and personal and legal representatives; provided, however, that, except for proceedings to enforce rights to indemnification, the Corporation shall not be obligated to indemnify any director or officer (or his or her heirs, executors or personal or legal representatives) in connection with a proceeding (or part thereof) initiated by such person unless such proceeding (or part thereof) was authorized or consented to by the Board of Directors. The right to indemnification conferred by this Article SEVENTH shall include the right to be paid by the Corporation the expenses incurred in defending or otherwise participating in any proceeding in advance of its final disposition.

The Corporation may, to the extent authorized from time to time by the Board of Directors, provide rights to indemnification and to the advancement of expenses to employees and agents of the Corporation similar to those conferred in this Article SEVENTH to directors and officers of the Corporation.

The rights to indemnification and to the advance of expenses conferred in this Article SEVENTH shall not be exclusive of any other right which any person may have or hereafter acquire under this Certificate of Incorporation, the By-Laws, any statute, agreement, vote of stockholders or disinterested directors or otherwise.

Any repeal or modification of this Article SEVENTH by the stockholders of the Corporation shall not adversely affect any rights to indemnification and to the advancement of expenses of a director or officer of the Corporation existing at the time of such repeal or modification with respect to any acts or omissions occurring prior to such repeal or modification.

EIGHTH: The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed in this Certificate of Incorporation, the By-Laws or the laws of the State of Delaware, and all rights herein conferred upon stockholders are granted subject to such reservation.

IN WITNESS WHEREOF, the Corporation has caused this Amended and Restated Certificate of Incorporation to be duly executed this day of June 12, 1997.

GRIFFIN LAND & NURSERIES, INC.

	By:	/s/ Frederick M. Danziger
	Name: Frederick M. Danziger
	Title: President

Exhibit 3.2

BY-LAWS

GRIFFIN LAND & NURSERIES, INC.

ARTICLE I

Offices

Section 1.1. Registered Offices. The registered office shall be in the City of Wilmington, County of New Castle, State of Delaware.

Section 1.2. Other Offices. The corporation may also have offices at such other places both within and without the State of Delaware as the Board of Directors may from time to time determine or the business of the corporation may require.

ARTICLE II

Stockholders

Section 2.1. Annual Meetings. An annual meeting of stockholders shall be held for the election of directors at such date, time and place, either within or without the State of Delaware, as may be designated by resolution of the Board of Directors from time to time. Any other proper business may be transacted at the annual meeting.

Section 2.2. Special Meetings. Special meetings of stockholders for any purpose or purposes may be called at any time by the Board of Directors, but such special meetings may not be called by any other person or persons.

Section 2.3. Notice of Meetings. Whenever stockholders are required or permitted to take any action at a meeting, a written notice of the meeting shall be given that shall state the place, date and hour of the meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called. Unless otherwise provided by law, the certificate of incorporation or these by-laws, the written notice of any meeting shall be given not less than ten nor more than sixty days before the date of the meeting to each stockholder entitled to vote at such meeting. If mailed, such notice shall be deemed to be given when deposited in the United States mail, postage prepaid, directed to the stockholder at his address as it appears on the records of the corporation.

Section 2.4. Adjournments. Any meeting of stockholders, annual or special, may adjourn from time to time to reconvene at the same or some other place, and notice need not be given of any such adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.

Section 2.5. Quorum. Except as otherwise provided by law, the certificate of incorporation or these by-laws, at each meeting of stockholders the presence in person or by proxy of the holders of a majority in voting power of the outstanding shares of stock entitled to vote at the meeting shall be necessary and sufficient to constitute a quorum. In the absence of a quorum, the stockholders so present may, by a majority in voting power thereof, adjourn the meeting from time to time in the manner provided in Section 2.4 of these by-laws until a quorum shall attend. Shares of its own stock belonging to the corporation or to another corporation, if a majority of the shares entitled to vote in the election of directors of such other corporation is held, directly or indirectly, by the corporation, shall neither be entitled to vote nor be counted for quorum purposes, provided, however, that the foregoing shall not limit the right of the corporation or any subsidiary of the corporation to vote stock, including but not limited to its own stock, held by it in a fiduciary capacity.

Section 2.6. Organization. Meetings of stockholders shall be presided over by the Chairman of the Board, if any, or in his absence by the Vice Chairman of the Board, if any, or in his absence by the President, or in his absence by a Vice President, or in the absence of the foregoing persons by a chairman designated by the Board of Directors, or in the absence of such designation by

a chairman chosen at the meeting. The Secretary shall act as secretary of the meeting, but in his absence the chairman of the meeting may appoint any person to act as secretary of the meeting.

Section 2.7. Voting; Proxies. Except as otherwise provided by the certificate of incorporation, each stockholder entitled to vote at any meeting of stockholders shall be entitled to one vote for each share of stock held by him which has voting power upon the matter in question. Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for him by proxy, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. A proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A stockholder may revoke any proxy which is not irrevocable by attending the meeting and voting in person or by filing an instrument in writing revoking the proxy or by delivering a proxy in accordance with applicable law bearing a later date to the Secretary of the corporation. Voting at meetings of stockholders need not be by written ballot. At all meetings of stockholders for the election of directors a plurality of the votes cast shall be sufficient to elect. All other elections and questions shall, unless otherwise provided by law, the certificate of incorporation or these by-laws, be decided by the affirmative vote of the holders of a majority in voting power of the shares of stock which are present in person or by proxy and entitled to vote thereon.

Section 2.8. Fixing Date for Determination of Stockholders of Record. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date: (1) in the case of determination of stockholders entitled to vote at any meeting of stockholders or adjournment thereof, shall, unless otherwise required by law, not be more than sixty nor less than ten days before the date of such meeting; (2) in the case of determination of stockholders entitled to express consent to corporate action in writing without a meeting, shall not be more than ten days from the date upon which the resolution fixing the record date is adopted by the Board of Directors; and (3) in the case of any other action, shall not be more than sixty days prior to such other action. If no record date is fixed: (1) the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held; (2) the record date for determining stockholders entitled to express consent to corporate action in writing without a meeting, when no prior action of the Board of Directors is required by law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the corporation in accordance with applicable law, or, if prior action by the Board of Directors is required by law, shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action; and (3) the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

Section 2.9. List of Stockholders Entitled to Vote. The Secretary shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof and may be inspected by any stockholder who is present. Upon the willful neglect or refusal of the directors to produce such a list at any meeting for the election of directors, they shall be ineligible for election to any office at such meeting. Except as otherwise provided by law, the stock ledger shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list of stockholders or the books of the corporation, or to vote in person or by proxy at any meeting of stockholders.

Section 2.10. Action By Written Consent of Stockholders. Unless otherwise restricted by the certificate of incorporation, any action required or permitted to be taken at any annual or special meeting of the stockholders may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the corporation having custody of the book in which proceedings of minutes of stockholders are recorded. Delivery made to the corporation’s registered office shall be by hand or by certified or registered mail, return receipt requested. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall, to the extent required by law, be given to those stockholders who have not consented in writing.

Section 2.11. Inspectors of Election. The corporation may, and shall if required by law, in advance of any meeting of stockholders, appoint one or more inspectors of election, who may be employees of the corporation, to act at the meeting or any adjournment thereof and to make a written report thereof. The corporation may designate one or more persons as alternate inspectors to replace any inspector who fails to act. In the event that no inspector so appointed or designated is able to act at a meeting of stockholders, the person presiding at the meeting shall appoint one or more inspectors to act at the meeting. Each inspector, before entering upon the discharge of his or her duties, shall take and sign an oath to execute faithfully the duties of inspector with strict impartiality and according to the best of his or her ability. The inspector or inspectors so appointed or designated shall (i) ascertain the number of shares of capital stock of the corporation outstanding and the voting power of each such share, (ii) determine the shares of capital stock of the corporation represented at the meeting and the validity of proxies and ballots, (iii) count all votes and ballots, (iv) determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspectors, and (v) certify their determination of the number of shares of capital stock of the corporation represented at the meeting and such inspectors’ count of all votes and ballots. Such certification and report shall specify such other information as may be required by law. In determining the validity and counting of proxies and ballots cast at any meeting of stockholders of the corporation, the inspectors may consider such information as is permitted by applicable law. No person who is a candidate for an office at an election may serve as an inspector at such election.

Section 2.12. Conduct of Meetings. The date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting shall be announced at the meeting by the person presiding over the meeting. The Board of Directors of the corporation may adopt by resolution such rules and regulations for the conduct of the meeting of stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the Board of Directors, the chairman of any meeting of stockholders shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chairman, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board of Directors or prescribed by the chairman of the meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) rules and procedures for maintaining order at the meeting and the safety of those present; (iii) limitations on attendance at or participation in the meeting to stockholders of record of the corporation, their duly authorized and constituted proxies or such other persons as the chairman of the meeting shall determine; (iv) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (v) limitations on the time allotted to questions or comments by participants. Unless and to the extent determined by the Board of Directors or the chairman of the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.

ARTICLE III

Board of Directors

Section 3.1. Number; Qualifications. The Board of Directors shall consist of one or more members, the number thereof to be determined from time to time by resolution of the Board of Directors. Directors need not be stockholders.

Section 3.2. Election; Resignation; Vacancies. The Board of Directors shall initially consist of the persons named as directors in the statement of sole incorporator, and each director so elected shall hold office until the first annual meeting of stockholders or until his successor is elected and qualified. At the first annual meeting of stockholders and at each annual meeting thereafter, the stockholders shall elect directors each of whom shall hold office for a term of one year or until his successor is elected and qualified. Any director may resign at any time upon written notice to the corporation. Any newly created directorship or any vacancy occurring in the Board of Directors for any cause may be filled by a majority of the remaining members of the Board of Directors, although such majority is less than a quorum, or by a plurality of the votes cast at a meeting of stockholders, and each director so elected shall hold office until the expiration of the term of office of the director whom he has replaced or until his successor is elected and qualified.

Section 3.3. Compensation of Directors. Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, the Board of Directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings.

Section 3.4. Regular Meetings. Regular meetings of the Board of Directors may be held at such places within or without the State of Delaware and at such times as the Board of Directors may from time to time determine, and if so determined notices thereof need not be given.

Section 3.5. Special Meetings. Special meetings of the Board of Directors may be held at any time or place within or without the State of Delaware whenever called by the President, any Vice President, the Secretary, or by any member of the Board of Directors. Notice of a special meeting of the Board of Directors shall be given by the person or persons calling the meeting at least twenty-four hours before the special meeting.

Section 3.6. Telephonic Meetings Permitted. Members of the Board of Directors, or any committee designated by the Board of Directors, may participate in a meeting thereof by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this by-law shall constitute presence in person at such meeting.

Section 3.7. Quorum; Vote Required for Action. At all meetings of the Board of Directors a majority of the whole Board of Directors shall constitute a quorum for the transaction of business. Except in cases in which the certificate of incorporation, these by-laws or applicable law otherwise provides, the vote of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors.

Section 3.8. Organization. Meetings of the Board of Directors shall be presided over by the Chairman of the Board, if any, or in his absence by the Vice Chairman of the Board, if any, or in his absence by the President, or in their absence by a chairman chosen at the meeting. The Secretary shall act as secretary of the meeting, but in his absence the chairman of the meeting may appoint any person to act as secretary of the meeting.

Section 3.9. Action by Written Consent of Directors. Unless otherwise restricted by the certificate of incorporation or these by-laws, any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof, may be taken without a meeting if all members of the Board of Directors or such committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board of Directors or such committee.

ARTICLE IV

Committees

Section 4.1. Committees. The Board of Directors may designate one or more committees, each committee to consist of one or more of the directors of the corporation. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of the committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in place of any such absent or disqualified member. Any such committee, to the extent permitted by law and to the extent provided in the resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it.

Section 4.2. Committee Rules. Unless the Board of Directors otherwise provides, each committee designated by the Board of Directors may make, alter and repeal rules for the conduct of its business. In the absence of such rules each committee shall conduct its business in the same manner as the Board of Directors conducts its business pursuant to Article III of these by-laws.

ARTICLE V

Officers

Section 5.1. Executive Officers; Election; Qualifications; Term of Office; Resignation; Removal; Vacancies. The Board of Directors shall elect a President and Secretary, and it may, if it so determines, choose a Chairman of the Board and a Vice Chairman of the Board from among its members. The Board of Directors may also choose one or more Vice Presidents, one or more Assistant Secretaries, a Treasurer and one or more Assistant Treasurers. Each such officer shall hold office until the first meeting of the Board of Directors after the annual meeting of stockholders next succeeding his election, and until his successor is elected and qualified or until his earlier resignation or removal. Any officer may resign at any time upon written notice to the corporation. The Board of Directors may remove any officer with or without cause at any time, but such removal shall be without prejudice to the contractual rights of such officer, if any, with the corporation. Any number of offices may be held by the same person. Any vacancy occurring in any office of the corporation by death, resignation, removal or otherwise may be filled for the unexpired portion of the term by the Board of Directors at any regular or special meeting.

Section 5.2. Powers and Duties of Executive Officers. The officers of the corporation shall have such powers and duties in the management of the corporation as may be prescribed in a resolution by the Board of Directors and, to the extent not so provided, as generally pertain to their respective offices, subject to the control of the Board of Directors. The Board of Directors may require any officer, agent or employee to give security for the faithful performance of his duties.

Section 5.3. Compensation. The rates and method of compensation of all officers of the corporation shall be fixed by the Board of Directors or a committee thereof.

ARTICLE VI

Stock

Section 6.1. Certificates. Every holder of stock shall be entitled to have a certificate signed by or in the name of the corporation by the Chairman or Vice Chairman of the Board of Directors, if any, or the President or a Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary, of the corporation certifying the number of shares owned by him in the corporation. Any of or all the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent, or registrar at the date of issue.

Section 6.2. Lost, Stolen or Destroyed Stock Certificates; Issuance of New Certificates. The corporation may issue a new certificate of stock in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the corporation may require the owner of the lost, stolen or destroyed certificate, or his legal representative, to give the corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate.

Section 6.3. Legends. If the corporation shall be authorized to issue more than one class of stock or more than one series of any class, the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualification, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate which the corporation shall issue to represent such class or series of stock, provided that, except as otherwise provided in section 202 of the General Corporation Law of the State of Delaware, in lieu of the foregoing requirements, there may be set forth on the face or back of the certificate which the corporation shall issue to represent such class or series of stock, a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative, participating, optional or other special rights or each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.

Section 6.4. Transfer of Stock. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Upon receipt of proper transfer instructions from the registered owner of uncertificated shares such uncertificated shares shall be canceled and issuance of new equivalent uncertificated shares or certificated shares shall be made to the person entitled thereto and the transaction shall be recorded upon the books of the corporation.

ARTICLE VII

Indemnification

Section 7.1. Right to Indemnification. The corporation shall indemnify and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter be amended, any person (an “Indemnitee”) who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”), by reason of the fact that he, or a person for whom he is the legal representative, is or was a director or officer of the corporation or, while a director or officer of the corporation, is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or nonprofit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses (including attorneys’ fees) reasonably incurred by such Indemnitee. Notwithstanding the preceding sentence, except as otherwise provided in Section 7.3, the corporation shall be required to indemnify an Indemnitee in connection with a Proceeding (or part thereof) commenced by such Indemnitee only if the commencement of such Proceeding (or part thereof) by the Indemnitee was authorized by the Board of Directors of the corporation.

Section 7.2. Prepayment of Expenses. The corporation shall pay the expenses (including attorneys’ fees) incurred by an Indemnitee in defending any Proceeding in advance of its final disposition, provided, however, that, to the extent required by law, such payment of expenses in advance of the final disposition of the Proceeding shall be made only upon receipt of an undertaking by the Indemnitee to repay all amounts advanced if it should be ultimately determined that the Indemnitee is not entitled to be indemnified under this Article VII or otherwise.

Section 7.3. Claims. If a claim for indemnification or payment of expenses under this Article VII is not paid in full within sixty days after a written claim therefor by the Indemnitee has been received by the corporation, the Indemnitee may file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim. In any such action the corporation shall have the burden of proving that the Indemnitee is not entitled to the requested indemnification or payment of expenses under applicable law.

Section 7.4. Nonexclusivity of Rights. The rights conferred on any Indemnitee by this Article VII shall not be exclusive of any other rights which such Indemnitee may have or hereafter acquire under any statute, provision of the certificate of incorporation, these by-laws, agreement, vote of stockholders or disinterested directors or otherwise.

Section 7.5. Other Sources. The corporation’s obligation, if any, to indemnify or to advance expenses to any Indemnitee who was or is serving at its request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, enterprise or nonprofit entity shall be reduced by any amount such Indemnitee may collect as indemnification or advancement of expenses from such other corporation, partnership, joint venture, trust, enterprise or non-profit enterprise.

Section 7.6. Amendment or Repeal. Any repeal or modification of the foregoing provisions of this Article VII shall not adversely affect any right or protection hereunder of any

Indemnitee in respect of any act or omission occurring prior to the time of such repeal or modification.

Section 7.7. Other Indemnification and Prepayment of Expenses. This Article VII shall not limit the right of the corporation, to the extent and in the manner permitted by law, to indemnify and to advance expenses to persons other than Indemnitees when and as authorized by appropriate corporate action.

ARTICLE VIII

Miscellaneous

Section 8.1. Dividends. Dividends upon the capital stock of the corporation subject to the provisions of the Certificate of Incorporation, if any, may be declared by the Board of Directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the Certificate of Incorporation.

Section 8.2. Reserves. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created.

Section 8.3. Fiscal Year. The fiscal year of the corporation shall be determined by resolution of the Board of Directors.

Section 8.4. Seal. The corporate seal shall have the name of the corporation inscribed thereon and shall be in such form as may be approved from time to time by the Board of Directors.

Section 8.5. Waiver of Notice of Meetings of Stockholders, Directors and Committees. Any written waiver of notice, signed by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at nor the purpose of any regular or special meeting of the stockholders, directors, or members of a committee of directors need be specified in any written waiver of notice.

Section 8.6. Interested Directors; Quorum. No contract or transaction between the corporation and one or more of its directors or officers, or between the corporation and any other corporation, partnership, association, or other organization in which one or more of its directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board of Directors or committee thereof which authorizes the contract or transaction, or solely because his or their votes are counted for such purpose, if: (1) the material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee, and the Board of Directors or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or (2) the material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (3) the contract or transaction is fair as to the corporation as of the time it is authorized, approved or ratified, by the Board of Directors, a committee thereof, or the stockholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction.

Section 8.7. Form of Records. Any records maintained by the corporation in the regular course of its business, including its stock ledger, books of account, and minute books, may be kept on, or be in the form of, punch cards, magnetic tape, photographs, microphotographs, or any other information storage device, provided that the records so kept can be converted into clearly legible form within a reasonable time.

Section 8.8. Amendment of By-Laws. These by-laws may be altered or repealed, and new by-laws made, by the Board of Directors, but the stockholders may make additional by-laws and may alter and repeal any by-laws whether adopted by them or otherwise.

Exhibit 10.53

MORTGAGE AND SECURITY AGREEMENT

THIS MORTGAGE AND SECURITY AGREEMENT (this “Mortgage”) made this 26th day of August, 2014, but effective as of August 28th, 2013, by RIVERBEND BETHLEHEM HOLDINGS I LLC , a limited liability company, organized under the law of Pennsylvania and having its principal place of business at c/o Griffin Land & Nurseries, Inc., 204 West Newberry Road, Bloomfield, Connecticut 06002 (“Mortgagor”) to FIRST NIAGARA BANK, N.A., a national banking association with a banking office at 726 Exchange Street, Buffalo, NY 14210, Attention: Commercial Loan Administration and any affiliate of the First Niagara Financial Group, Inc. (“Mortgagee”).

TO secure payment of the Indebtedness (as herein defined) of Mortgagor, Mortgagor, intending to be legally bound, hereby irrevocably grants, sells, transfers, conveys, assigns, grants a security interest in and mortgages to Mortgagee, upon the terms and subject to the conditions hereinafter set forth, all of Mortgagor’s right, title and interest, now owned or hereafter acquired, in and to the property described on Schedule A annexed hereto and made a part hereof (the “Land”),

TOGETHER with (i) the appurtenances and all the estate and rights of Mortgagor in and to said property; (ii) all buildings and other improvements now or hereafter thereon; (iii) all fixtures (the “Fixtures”) and all personal property (the “Personal Property”) now or hereafter affixed to the Land or improvements; (iv) all the right, title and interest of Mortgagor in and to all streets, alleys, roads, waterways and public places adjoining said property; (v) all easements and rights of way, now or hereafter used or existing in connection with said property; (vi) all leases, licenses and subleases or any other use or occupancy agreement relating to the Land or improvements; (vii) all insurance policies covering said property, and all proceeds to be received under or from such insurance policies, whether by reason of loss or cancellation; (viii) all proceeds of the conversion, voluntary or involuntary, of any of the foregoing into cash or liquidated claims, including, without limitation, any proceeds of sale, proceeds of insurance and condemnation awards (including any consequential damages on account thereof); and (ix) all Rents (as defined below). All of the aforesaid property, rights and interests, however denominated, are herein called the “Premises.”

TO HAVE AND TO HOLD the Premises unto Mortgagee and its successors and assigns, forever.

PROVIDED ALWAYS, and these presents are upon the express condition that, if the Indebtedness shall have been satisfied in full and all obligations of Mortgagor under each of the documents evidencing or securing the Indebtedness have been terminated then this Mortgage and the estate hereby granted shall cease and become void. Upon the occurrence of such event, Mortgagee will, if requested to do so by Mortgagor and at Mortgagor’s expense, execute and deliver to Mortgagor such documents as Mortgagor shall reasonably request to evidence or otherwise effect such event.

As used in this Mortgage, “Indebtedness” shall mean (i) all indebtedness, together with interest thereon, evidenced by the following instruments or agreements: The Term Note of even date herewith from Mortgagor to Mortgagee in the original principal amount of $9,100,000.00 (the “Loan”) having a maturity date of September 1, 2023, and any renewals, supplements, amendments, modifications and extensions thereof (the foregoing documents, together with this Mortgage, and all other documents, agreement or instruments delivered in connection with or in support of the Indebtedness are collectively referred to as the “Loan Documents”), (ii) any and all obligations and liabilities of Mortgagor to Mortgagee, whether absolute or contingent, whether now existing or hereafter created, arising, evidenced or acquired under any agreement, device or arrangement designed to protect Mortgagor from fluctuations of interest rates, exchange rates or forward rates, including, but not limited to, dollar-denominated or cross-currency exchange agreements, forward currency exchange agreements, interest rate caps, collars or floors, forward rate currency or interest rate options, puts, warrants, swaps, swaptions, U.S. Treasury locks and U.S. Treasury options, and any and all cancellations, buybacks, reversals, terminations or assignments of any of the foregoing (any such agreement, device or arrangement being referred to as an

“Interest Rate Protection Agreement”), and (iii) all other indebtedness and other liabilities of Mortgagor to Mortgagee and affiliates of Mortgagee of every kind and character, arising under this Mortgage or any other Loan Documents or by operation of law, whether direct, indirect, primary, absolute, contingent, as borrower or guarantor, matured or unmatured, now owing or existing or hereafter incurred or created, originally contracted with Mortgagee or with others, evidenced by a negotiable or non-negotiable instrument or other writing, and all amendments, extensions, renewals and replacements thereof, including, without limitation, all principal, interest, charges, expenses, commitment or facility fees, collateral management or other fees, treasury management obligations, obligations due pursuant to any interest rate protection agreement entered into by Mortgagor, reasonable attorneys’ fees and expenses related to collection of the foregoing and any other amount payable by Mortgagor under this Mortgage and any other agreement between the parties whether executed in connection herewith or otherwise.

1. Covenants of Mortgagor . Mortgagor agrees with Mortgagee. that so long as this Mortgage is in effect:

(a) Taxes . Mortgagor will pay all taxes, assessments, sewer bills and water rates (collectively “Taxes”) affecting the Premises, and if in default thereof, Mortgagee may pay the same. Mortgagor shall be permitted to withhold payment of such Taxes in connection with an appeal thereof, taken in accordance with appropriate procedures, provided enforcement action against the Premises is stayed pending the outcome of such appeal. Mortgagor will, upon demand, deliver to Mortgagee, receipts for the payment of any Taxes;

(b) Insurance . Mortgagor will keep the Premises insured for the benefit of, and by insurers acceptable to, Mortgagee against such risks, and in such form and amount, as Mortgagee may from time to time require, including, without limitation, flood insurance, if available, and fire and extended coverage casualty insurance for the full replacement value of the buildings and other improvements on the Premises; will have endorsed on such policies standard mortgagee and lender loss payee clauses in the name of Mortgagee; and will deliver a copy of each policy to Mortgagee (or such other evidence thereof as is acceptable to Mortgagee). If the Premises is located in an area which has been identified by any governmental agency, authority or body as a flood hazard area or the like, then Mortgagor shall maintain a flood insurance policy covering the Premises in an amount not less than the original principal amount of the Indebtedness secured hereunder or the maximum limit of coverage available under the federal program, whichever amount is less. Mortgagor may provide the coverage required hereunder through a blanket policy of insurance specifically listing the Premises as a covered property. Acceptance of any insurance policy shall not constitute approval by Mortgagee of the insurer, coverage, form, amount or sufficiency of the policy. Mortgagor will comply promptly with all applicable requirements of any insurance rating authorities. Mortgagor will give immediate notice to Mortgagee of any damage by fire or other casualty to the Premises. Any insurance proceeds received by Mortgagee may, at Mortgagee’s sole option, be paid wholly or in part to finance repair or replacement of improvements to the Premises or for other purposes proposed by Mortgagor which are acceptable to Mortgagee, without affecting the lien of this Mortgage for the full amount of Indebtedness owing prior to receipt of such proceeds, or may be applied by Mortgagee on the Indebtedness. If no Event of Default has occurred and is continuing, and the cost to repair the damage to the Premises does not exceed $500,000.00, then the insurance proceeds shall be paid to Mortgagor and used for the restoration of the Premises. If the cost to repair the damage exceeds $500,000.00, provided no Event of Default has occurred and is continuing, and further provided that Mortgagor demonstrates to the full satisfaction of Mortgagee in Mortgagee’s reasonable discretion that: (i) the subject insurance proceeds are sufficient to restore the damage to the Premises, (ii) the restoration of damage caused by such casualty can be completed within two hundred forty (240) days following such casualty; and (iii) the restoration of damage is permitted under applicable state and local regulations, then Mortgagee will permit the use of such insurance proceeds received by Mortgagee and Mortgagor to be used for the restoration of the Premises subject to the following additional conditions. The foregoing shall apply only to such insurance proceeds as may be needed to defray the cost of restoration and any excess over the actual cost of restoration shall be paid over to Mortgagor. Any insurance proceeds made available shall be held by Mortgagee until Mortgagor furnishes complete plans and specifications for the restoration of the Premises, reasonably satisfactory to Mortgagee and accompanied by all required governmental approvals and permits and shall be disbursed to the Mortgagor solely for the purpose of restoring the Premises to its former condition as the work progresses, the time and amount of each disbursement to be at the sole discretion and upon the estimate of Mortgagee. The foregoing shall not apply to any casualty which occurs during the last one hundred eighty (180) days prior to the maturity date of the Loan.

(c) Estoppel Certificate . Mortgagor, within ten days after request, will furnish a duly acknowledged written statement of the then outstanding Indebtedness secured by this Mortgage and whether any offsets or defenses exist against such Indebtedness;

(d) Property Status; Right of Entry and Inspection . Mortgagor will comply with all government requirements respecting the Premises and will not use the Premises in any way that violates any law, ordinance, rule, regulation or requirement, or in any way that violates any enforceable restrictive covenant on the use of the Premises. No building, Fixture or Personal Property on the Premises will be removed, demolished or altered without the prior written consent of Mortgagee. Mortgagor will repair or replace to the satisfaction of Mortgagee any buildings or improvements of the Premises damaged by casualty, will maintain the Premises in good condition and repair and will not suffer any waste. Mortgagee or its agents shall have the right to enter and inspect the Premises at any reasonable time;

(e) Tenancies and Leases . Except for terminations in the event of a default thereunder, Mortgagor will not cancel, abridge or otherwise modify any tenancies, subtenancies, leases or subleases of the Premises, nor accept prepayments of installments of rent, without Mortgagee’s prior written consent, which shall not be unreasonably withheld or delayed;

(f) Liens and Encumbrances . Mortgagor will keep the Premises free from all liens and encumbrances, except (i) the lien in favor of Mortgagee, (ii) encumbrances of record on the date of this Mortgage, (iii) liens for taxes attaching prior to payment becoming due, if payment is made when due, and (iv) easements granted to utility companies which may benefit the Premises;

(g) Prepayment of Rent . Mortgagor shall include in all future leases of any part of the Premises a provision prohibiting the prepayment of any rent without the prior written consent of Mortgagee;

(h) Existence; Compliance with Laws . If Mortgagor is a corporation, limited liability company, limited partnership or like entity, so long as this Mortgage remains in effect, Mortgagor will do all things necessary to preserve and keep in full force and effect the existence, franchises, rights and privileges of Mortgagor as such type of entity under the laws of the state of its incorporation, formation, or organization, as applicable. Mortgagor will comply with all regulations, rules, ordinances, statutes, orders and decrees of any governmental authority or court applicable to Mortgagor or to the Premises or any part thereof; and

(i) Operating Statements . Mortgagor shall furnish to Mortgagee the financial and operating statements described in the Note.

2. Representations and Warranties .

(a) Title . Mortgagor warrants good and marketable title to the Premises, subject only to those encumbrances set forth in the loan policy of title insurance provided to Mortgagor in connection with the Loan or otherwise approved by Mortgagee in writing.

(b) Authority . Mortgagor represents and warrants that the execution and delivery of this Mortgage has been duly authorized and that no other authorization is required under the terms of its organizational documents.

(c) Commercial Purpose . Mortgagor represents and warrants that the Loan or other financial accommodations included in the Indebtedness secured by this Mortgage were obtained solely for a business or commercial purpose and not for personal, residential, consumer or household purposes.

3. Certain Rights and Obligations .

(a) Mortgagee may take, but is not obligated to take, such action as Mortgagee deems appropriate to protect the Premises or the status or priority of the lien of this Mortgage, including, but not limited to: (i) entry upon the Premises to protect the Premises from deterioration or damage, or to cause the Premises to be put in compliance with any governmental, insurance rating or contract requirements; (ii) payment of amounts due on liens having

priority over this Mortgage; (iii) payment of any tax or charge for purposes of assuring the priority or enforceability of this Mortgage; (iv) obtaining insurance on the Premises; (v) commencement or defense of any legal action or proceeding to assert or protect the validity or priority of the lien of this Mortgage; or (vi) reappraisal of the Premises, if required by policy, at Mortgagee’s expense unless an Event of Default is then occurring, in which case such appraisal shall be at Mortgagor’s expense. On demand, Mortgagor shall reimburse Mortgagee for all expenses in taking any such action, with interest, and the amount thereof shall be Indebtedness secured by this Mortgage and shall, to the extent permitted by law, be in addition to the maximum amount of the Indebtedness heretofore stated;

(b) Mortgagor authorizes Mortgagee, without notice, demand or any reservation of rights and without affecting this Mortgage, from time to time: (i) to accept from any person or entity and hold additional collateral for the payment of the Indebtedness or any part thereof, and to exchange, enforce or refrain from enforcing, or release such collateral or any part thereof; (ii) to accept and hold any indorsement or guaranty of payment of the Indebtedness or any part thereof, and to release or substitute any such obligation of any such indorser or guarantor, or any person or entity who has given any collateral as security for the payment of the Indebtedness or any part thereof, or any other person or entity in any way obligated to pay the Indebtedness or any part thereof, and to enforce or refrain from enforcing, or compromise or modify, the terms of any obligation of any such indorser, guarantor, person or entity; (iii) to direct the order or manner of the disposition of any and all collateral and the enforcement of any and all indorsements and guaranties relating to the Indebtedness or any part thereof as Mortgagee, in its sole discretion, may determine; and (iv) to determine the manner, amount and time of application of payments and credits, if any, to be made on all or any part of any component or components of the Indebtedness (whether principal, interest, costs and expenses, or otherwise);

(c) If any default shall occur in the payment of any of the Indebtedness, this Mortgage shall remain valid, binding and enforceable: (i) without deduction by reason of any setoff, defense or counterclaim of Mortgagor; (ii) without requiring protest or notice of nonpayment or notice of default to Mortgagor, or to any other person; (iii) without demand for payment or proof of such demand; (iv) without requiring Mortgagee to resort first to Mortgagor or to any other guaranty or any collateral which Mortgagee may hold; (v) without requiring notice of acceptance hereof or assent hereto by Mortgagee; and (vi) without requiring notice that any indebtedness has been incurred or of the reliance by Mortgagee upon this Mortgage; all of which Mortgagor hereby waives;

(d) The enforceability of this Mortgage shall not be affected by: (i) any failure to perfect or continue the perfection of any security interest in or other lien on any collateral securing payment of the Indebtedness; (ii) the invalidity, unenforceability, or loss or change in priority of any such security interest or other lien; (iii) any failure to protect, preserve or insure any such collateral; or (iv) the invalidity or unenforceability of any of the Indebtedness; all of which Mortgagor hereby waives; and

(e) If Mortgagee shall receive from or on behalf of Mortgagor any sum less than the full amount then due and payable, Mortgagee may, but shall not be obligated to, accept the same and, if it elects to accept any such payment, it may without waiving any demand or Event of Default: (i) apply such payment on account of the Indebtedness or any amount payable hereunder, or (ii) hold same or any part thereof, without liability for interest, in a special account and from time to time apply same or any part thereof as specified in Section 3(e)(i).

4. Mortgagee’s Costs and Expenses .

(a) Mortgagor will pay all filing, registration, and recording fees and all expenses incident to the preparation, execution, acknowledgement, filing and recording of this Mortgage, and any financing statements, releases, continuation statements, and any instruments of further assurance, and all federal, state, county and municipal stamp taxes and other taxes, duties, imposts, assessments, and charges arising out of or in connection with the execution and delivery of this Mortgage. Mortgagor shall further pay all reasonable costs and expenses of Mortgagee, including, without limitation, reasonable attorneys’ fees, for the release, discharge and satisfaction of this Mortgage and any other lien or encumbrance relating to this Mortgage, and the preparation of any and all documents necessary to effectuate the foregoing.

(b) If any action is commenced to foreclose this Mortgage or to collect the Indebtedness, Mortgagor agrees to pay to Mortgagee all costs and expenses of every kind incurred by Mortgagee in connection with such action, which costs and expenses may be collected in such action and shall, to the extent permitted by law, be a lien on the Premises prior to any interest in, or claim upon the Premises arising subsequent to the lien hereof. “Costs and expenses” as

used in the preceding sentence shall include, without limitation, the actual attorneys’ fees incurred by Mortgagee in retaining counsel for advice, suit, appeal, or any insolvency or other proceedings under the Federal Bankruptcy Code or otherwise.

5. Default and Remedies .

(a) In addition to any Events of Default set forth in any other Loan Documents, any of the following events or conditions shall constitute an “Event of Default”: (i) if legal or equitable title to, or any interest in, the Premises sold or transferred in whole or in part, or if any rentals from the Premises are assigned to anyone while this Mortgage shall remain a lien thereon; (ii) failure of Mortgagor to perform or comply with the terms of any lease of the Premises or any part thereof; or (iii) default by Mortgagor under any mortgage affecting any part of the Premises which is, or is claimed to be, superior in lien to this Mortgage;

(b) Mortgagee, at its sole election, may declare all or any part of any Indebtedness not payable on demand to be immediately due and payable without demand or notice of any kind upon the happening of any Event of Default. The provisions of this paragraph are not intended in any way to affect any rights of Mortgagee with respect to any Indebtedness which may now or hereafter be payable on demand;

(c) Upon the occurrence of an Event of Default, whether or not foreclosure proceedings have been instituted, Mortgagor shall, upon demand, surrender possession of the Premises to Mortgagee. If Mortgagor remains in possession of the Premises after the happening of an Event of Default, the possession shall be as tenant of Mortgagee and Mortgagor agrees to pay in advance upon demand to Mortgagee a reasonable monthly rental for the Premises or portion so occupied. Mortgagee may dispossess, by summary proceedings or otherwise, any tenant or Mortgagor defaulting in the payment of rent. If a receiver is appointed, this covenant shall inure to the benefit of such receiver. Notwithstanding any provision of law to the contrary, Mortgagee may, at its option, foreclose this Mortgage subject to the rights of tenants of the Premises which are subordinate to the lien of this Mortgage;

(d) The holder of this Mortgage, in any action to foreclose it, shall be entitled to the appointment of a receiver;

(e) If the Indebtedness shall exceed the amount secured by this Mortgage, or as evidenced by a combination of instruments that singularly or in part collectively may be less than said secured amount but combined exceed said secured amount, Mortgagee, in any foreclosure hereof, shall have the right to sue and collect the excess in the same action as commenced for the foreclosure hereof, and recover a money judgment for said excess with all the rights attendant thereto, including, without limitation, the issuance of an execution to the Sheriff for collection thereof, and Mortgagor hereby waives any defense based upon a claim that in doing so, Mortgagee is splitting its cause of action if it seeks to foreclose this Mortgage for part of the Indebtedness and recover at law for another part;

(f) In the event of foreclosure of this Mortgage, the Premises may, at the option of Mortgagee, be sold in one or more parcels, notwithstanding any provision of law to the contrary;

(g) Upon the happening of an Event of Default, Mortgagee may pursue, take or refrain from pursuing any remedy for collection of the Indebtedness, including an action to foreclose this Mortgage or to sell the Premises or any part thereof pursuant to procedures provided by applicable law. Any reference in this Mortgage to an action or right of Mortgagee in regard to or in connection with a foreclosure or a foreclosure proceeding shall be deemed to include a sale and/or proceeding under this subsection; and

(h) Upon the happening of an Event of Default, Mortgagee may exercise its rights of enforcement with respect to the Fixtures and Personal Property under the UCC.

6. Due on Sale Clause . Mortgagor shall not sell, convey or otherwise transfer any interest in the Premises (whether voluntarily or by operation of law), or agree to do so, without Mortgagee’s prior written consent, including (a) any sale, conveyance, encumbrance, assignment, or other transfer of (including installment land sale contracts), or the grant of a security interest in, all or any part of the legal or equitable title to the Premises, except as otherwise permitted hereunder; (b) any lease of all or any portion of the Premises (in which case Mortgagee’s consent shall not be unreasonably withheld or delayed); or (c) any sale, conveyance, encumbrance, assignment, or other transfer of, or the grant of

a security interest in, any share of stock of Mortgagor, if a corporation or any partnership interest in Mortgagor, if a partnership, or any membership interest, if a limited liability entity, except in favor of Mortgagee. Any default under this Section shall cause an immediate acceleration of the Indebtedness without any demand by Mortgagee.

7. Real Estate Tax and Insurance Account .

(a) Upon Mortgagee’s request, Mortgagee will engage, at Mortgagor’s expense (which shall consist of a one-time payment upon such engagement), for a lifetime monitoring service to monitor real property tax accounts affecting the Premises.

(b) Upon Mortgagee’s request following the failure by Mortgagor to pay the Impositions (defined below) prior to their delinquency, Mortgagor will pay to Mortgagee by depositing into a non-interest bearing deposit account with Mortgagee (“Imposition Account”) on the first day of each month during the term hereof, or any renewal term, a sum equal to one-twelfth (1/12) of the annual aggregate amount, as estimated from time to time by Mortgagee, of the aggregate of all taxes, assessments and sewer charges (collectively “Impositions”) on the Premises. If such payments shall be deemed by Mortgagee to be insufficient to pay such Impositions, Mortgagor will pay the amount of such deficiency, on demand, to Mortgagee.

Mortgagor hereby pledges all sums in the possession of Mortgagee to Mortgagee as additional security for the Indebtedness secured hereby. Mortgagee shall have no obligation to apply any sums held by Mortgagee pursuant to this Section 7(b) to the payment of such Impositions unless directed to do so by Mortgagor in writing delivered during a period of time when no uncured Event of Default shall exist setting forth the particular Imposition to be paid. Notwithstanding the foregoing, Mortgagee may, in its discretion but shall not be required to, pay any such Imposition without written direction from Mortgagor or contrary to the direction of Mortgagor. So long as no Event of Default shall exist and after giving written notice to Mortgagee, Mortgagor may in good faith contest any Imposition and permit such Imposition to remain unpaid during the period under any such contest provided that (i) the amounts held by Mortgagee in the Imposition Account are at all times sufficient to pay such contested Impositions and all other non-contested Impositions as and when the same shall come due and payable or Mortgagor shall, upon demand by Mortgagee, deposit amounts sufficient for these purposes with Mortgagee, (ii) Mortgagor shall deposit with Mortgagee as and when the same shall accrue all late charges, interest and penalties which result from the contest or which would ultimately be payable in the event such contest is unsuccessful, and (iii) no portion of the Premises shall be at risk of forfeiture or foreclosure on account of the non-payment of any amounts under contest or otherwise. Upon the occurrence and during the continuation of any Event of Default or if any conditions set forth in clauses (i), (ii) or (iii) of this paragraph shall fail to be satisfied, then Mortgagee may, in its discretion but shall not be required to, pay any such contested Imposition out of the Imposition Account or otherwise even if such payment is to prejudice Mortgagor’s ability thereafter to contest such items.

8. Assignment of Rents and Awards .

(a) Mortgagor hereby assigns to Mortgagee all rents, issues, and profits of the Premises (collectively “Rents”). This assignment is a present, absolute and unconditional assignment, effective immediately upon execution and delivery of this Mortgage and shall continue in effect until the Indebtedness is finally and irrevocably paid in full. Mortgagor grants to Mortgagee the right, subject to the rights of any tenants, to enter upon and take possession of the Premises for purposes of collecting the Rents and letting the Premises, or any part thereof, and to apply the Rents on account of the Indebtedness after payment of all charges and expenses, including, without limitation, management and operation fees. Before or after an Event of Default, Mortgagee may notify all or any tenants of this present assignment and during the continuance of an Event of Default may direct such tenants to make all rent payments to Mortgagee. Until such notice by Mortgagee, Mortgagor may collect the Rents. Any third party may completely rely upon Mortgagee’s notice of its right to collect the Rents at any time without such third party having to independently determine the actual existence of such right.

(b) Any awards made for any taking by eminent domain or in any condemnation proceeding, or for consequential damages on account thereof, are hereby assigned to Mortgagee with power to collect, receive and apply same on the Indebtedness, whether or not then due and payable, but such application shall not affect any obligation to continue making payments in accordance with the terms of any note or other obligation evidencing the Indebtedness.

purposes set forth in the preceding paragraphs.

9. No Modifications or Waivers .

(a) This Mortgage is absolute and unconditional and shall not be changed or affected by any representation, oral agreement, act or thing whatsoever, except as herein provided. This Mortgage is intended by Mortgagor to be the final, complete and exclusive expression of the agreement between Mortgagor and Mortgagee. No modification or amendment of any provision of this Mortgage shall be effective unless in writing, which writing shall make a specific reference to this Mortgage and shall be signed by a duly authorized officer of Mortgagee; and

(b) No course of dealing between Mortgagor and Mortgagee and no act, delay or omission by Mortgagee in exercising any right or remedy hereunder, including, without limitation, acceptance of any partial payment on the Indebtedness, shall operate as a waiver of any right, remedy or default hereunder, or of any other right or remedy, and no single or partial exercise of any right or remedy shall preclude any other or further exercise thereof or the exercise of any other right or remedy. All rights and remedies of Mortgagee hereunder are cumulative.

10. Financial Covenants . Mortgagor covenants and agrees with, and represents to, Mortgagee, as follows:

(a) The debt service coverage ratio (“DSCR”) for the Premises shall not be less than 1.35 to 1.00, as reasonably determined by Mortgagee and measured annually as of December 31. If the Lease of even date herewith between Mortgagor and Griffin Land & Nurseries, Inc. (the “Master Lease”) is in effect such that the tenant is actually paying rent thereunder, the DSCR for the Premises shall not be less than 1.00 to 1.00. The DSCR shall be based on the ratio of (a) Net Operating Income (defined below) to (b) Financial Obligations (defined below). As used herein, “Net Operating Income” means, with respect to any fiscal period, the sum of (i) the aggregate amount of cash revenues actually received by Mortgagor in connection with the Premises during such fiscal period, minus (ii) the aggregate amount of operating expenses actually incurred by Mortgagor in connection with the ownership, maintenance and operation of the Premises and paid in cash during such fiscal period, excluding from operating expenses, however, any depreciation, amortization, non-cash type adjustments, and any capital expenses or expenses of capitalized items, improvements and/or replacements. As used herein, “Financial Obligations” shall mean, for any fiscal period, an amount equal to the sum of all payments of principal and interest on the Note that become due and payable, or that are to become due and payable, during such fiscal period. For purposes hereof, interest on the Note will be deemed to be the fixed interest rate charged under the Interest Rate Protection Agreement.

11. Environmental Covenants . Mortgagor covenants and agrees with and represents to Mortgagee, as follows:

(a) Mortgagor has not heretofore obtained any information or notice or request from any governmental agency, other entity or person (collectively, “Authority”) for information, or provided any information or notice to any such Authority, concerning the unpermitted or unauthorized presence or release of hazardous substances, hazardous wastes or other raw materials or wastes (including petroleum products) as such are defined by any applicable federal, state or local law, on, above, within, in the vicinity of, related to or affecting the Premises.

(b) To Mortgagor’s knowledge, Mortgagor has performed all of its obligations under, has obtained all necessary approvals, permits, authorizations or other consents required by, and is not in material violation of, any applicable federal, state or local health, safety or environmental law, ordinance, rule, regulation or order.

(c) Mortgagor shall conduct its operations in compliance with the provisions of all applicable federal, state or local laws, ordinances, rules, regulations and orders related to any natural or environmental resource or media located on, above, within or in the vicinity of, related to, or affected by, the Premises. Mortgagor shall promptly notify Mortgagee in writing if Mortgagor receives any information or notice or request from any Authority for information, or if Mortgagor provides any information or notice to any such Authority, concerning the unpermitted or unauthorized presence or release of hazardous substances, hazardous wastes or other raw materials or wastes (including petroleum products) as such terms are defined by any applicable federal, state or local law, on, above, within, in the vicinity of, related to or affecting the Premises.

(d) Mortgagor shall indemnify and hold Mortgagee harmless against any and all claims, expenses, demands, losses, costs, fines or liabilities of whatever kind or nature (including, without limitation, arising from personal injury or property damage) in any way related to any environmental condition on, above, within, in the vicinity of, related to or affected by the Premises, all as more particularly provided in that certain Environmental Compliance and Indemnity Agreement of even date herewith between Mortgagor and Mortgagee.

12. Consents and Waivers Relating to Legal Proceedings .

(a) MORTGAGOR KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND IRREVOCABLY (i) CONSENTS IN EACH ACTION AND OTHER LEGAL PROCEEDING COMMENCED BY MORTGAGEE AND ARISING OUT OF OR OTHERWISE RELATING TO THIS AGREEMENT, ANY OF THE OBLIGATIONS, ANY OF THE COLLATERAL OR ANY OTHER COLLATERAL TO THE JURISDICTION OF ANY COURT THAT IS EITHER A COURT OF RECORD OF THE STATE OF CONNECTICUT OR THE COMMONWEALTH OF PENNSYLVANIA OR A COURT OF THE UNITED STATES LOCATED IN THE STATE OF CONNECTICUT OR THE COMMONWEALTH OF PENNSYLVANIA, (ii) WAIVES EACH OBJECTION TO THE LAYING OF VENUE OF ANY SUCH ACTION OR OTHER LEGAL PROCEEDING AND (iii) WAIVES ANY DEFENSE BASED UPON ANY STATUTE OF LIMITATIONS OR CLAIM OF LACHES .

(b) MORTGAGOR KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND IRREVOCABLY WAIVES EACH RIGHT MORTGAGOR MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO, AND IN, ANY ACTION OR OTHER LEGAL PROCEEDING OF ANY NATURE, RELATING TO (i) THIS MORTGAGE, ANY RELATED LOAN DOCUMENT OR ANY COLLATERAL RELATED HERETO, (ii) ANY TRANSACTION CONTEMPLATED BY ANY SUCH DOCUMENT OR (iii) ANY NEGOTIATION, PERFORMANCE OR ENFORCEMENT OF THIS MORTGAGE, OR ANY COLLATERAL RELATED HERETO. MORTGAGOR ACKNOWLEDGES THAT IT HAS BEEN REPRESENTED BY INDEPENDENT LEGAL COUNSEL AS NECESSARY AND APPROPRIATE.

(c) MORTGAGOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY LAW, THE BENEFITS OF ALL VALUATION, APPRAISEMENT, HOMESTEAD, EXEMPTION, STAY, REDEMPTION AND MORATORIUM LAWS, NOW IN FORCE OR WHICH MAY HEREAFTER BECOME LAW.

(d) PREJUDGMENT REMEDY WAIVER . MORTGAGOR ACKNOWLEDGES THAT THE TRANSACTION OF WHICH THIS MORTGAGE IS A PART IS A COMMERCIAL TRANSACTION, AND HEREBY WAIVES ALL RIGHTS TO NOTICE AND PRIOR COURT HEARING OR COURT ORDER UNDER CONNECTICUT GENERAL STATUTES, SECTIONS 52-278a ET SEQ ., AS AMENDED, OR UNDER ANY OTHER STATE OR FEDERAL LAW WITH RESPECT TO ANY AND ALL PREJUDGMENT REMEDIES MORTGAGEE MAY EMPLOY TO ENFORCE ITS RIGHTS AND REMEDIES HEREUNDER. MORE SPECIFICALLY, MORTGAGOR ACKNOWLEDGES THAT MORTGAGEE’S ATTORNEY MAY, PURSUANT TO CONNECTICUT GENERAL STATUTES, SECTION 52-278f, ISSUE A WRIT FOR A PREJUDGMENT REMEDY WITHOUT SECURING A COURT ORDER. MORTGAGOR ACKNOWLEDGES AND RESERVES ITS RIGHT TO NOTICE AND A HEARING SUBSEQUENT TO THE ISSUANCE OF A WRIT FOR PREJUDGMENT REMEDY BY MORTGAGEE’S ATTORNEY, AND MORTGAGEE ACKNOWLEDGES MORTGAGOR’S RIGHT TO SAID HEARING SUBSEQUENT TO THE ISSUANCE OF SAID WRIT. MORTGAGOR FURTHER HEREBY WAIVES ANY REQUIREMENT OR OBLIGATION OF MORTGAGEE TO POST A BOND OR OTHER SECURITY IN CONNECTION WITH ANY PREJUDGMENT REMEDY OBTAINED BY MORTGAGEE AND WAIVES ANY OBJECTIONS TO ANY PREJUDGMENT REMEDY OBTAINED BY MORTGAGEE BASED ON ANY OFFSETS, CLAIMS, DEFENSES OR COUNTERCLAIMS OF MORTGAGOR OR ANY OTHER OBLIGATED PARTY TO ANY ACTION BROUGHT BY MORTGAGEE. MORTGAGOR ACKNOWLEDGES AND AGREES THAT ALL OF THE WAIVERS CONTAINED IN THIS SECTION HAVE BEEN MADE KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND INTELLIGENTLY, AND WITH THE ADVICE OF ITS COUNSEL.

13. Security Agreement/Fixture Filing .

(a) This Mortgage is a Security Agreement as defined in the Pennsylvania Uniform Commercial Code (“UCC”). Notwithstanding the filing of any financing statement covering any of the Premises in the records normally pertaining to personal property, at Mortgagee’s option, all of the Premises, for all purposes and in all proceedings, legal or equitable, shall be regarded (to the extent permitted by law) as part of the Land. The mention in any such financing statement of any of the Premises shall not be construed as in any way altering any of the rights of Mortgagee or adversely affecting the priority of the lien granted hereby or by the Loan Documents, but such mention in the financing statement is hereby declared to be for the protection of Mortgagee in the event any court shall at any time hold that notice of Mortgagee’s priority of interest, to be effective against any third party, must be filed in the UCC records.

(b) Mortgagor shall execute and deliver to Mortgagee such documents, instruments and further assurances, in each case in form and substance satisfactory to Mortgagee, as Mortgagee may, from time to time, reasonably consider necessary to create, perfect and preserve Mortgagee’s security interest hereunder. Mortgagor hereby irrevocably authorizes Mortgagee to cause financing statements (and amendments thereto and continuations thereof) and any such documents, instruments and assurances to be recorded and filed, at such times and places as may be required or permitted by law to so create, perfect and preserve such security interest, and Mortgagor shall pay all reasonable costs and expenses incurred by Mortgagee in connection therewith, including, without limitation, reasonable attorneys’ fees and costs of filing or recordation.

(c) This Mortgage shall also constitute a “fixture filing” for the purposes of the UCC against all of the Premises which is or is to become fixtures related to the Premises. Mortgagor is the “Debtor” and its name and mailing address are set forth in the preamble of this Mortgage. Mortgagee is the “Secured Party” and its name and mailing address from which information concerning the security interest granted herein may be obtained are also set forth in the preamble of this Mortgage.

14. Miscellaneous .

(a) Mortgagor hereby appoints Mortgagee as attorney-in-fact of Mortgagor, irrevocably and with power of substitution, in the same manner, to the same extent and with the same effect as if Mortgagor were to do the same to file financing statements relating to the Premises or to execute and file any such financing statement in Mortgagor’s name, all as Mortgagee may deem appropriate to perfect and continue its lien and security interest in the Premises; during the continuance of an Event of Default (i) to make, adjust or settle and receive payment on any insurance claims with respect to the Premises; (ii) to endorse the name of Mortgagor on any instruments, documents or other evidences of the Premises that may come into Mortgagee’s possession; (iii) to execute proofs of claim and loss; (iv) to execute endorsements, assignments or other instruments of conveyance or transfer; and (v) to perform all other acts which Mortgagee deems appropriate to protect and preserve the Premises and to enforce the terms of this Mortgage. The agency hereunder is unconditional and shall not terminate until all of the Indebtedness is paid in full;

(b) All notices, elections or demands permitted or required herein shall be in writing, signed by the party giving such notice, election or demand, and given personally or by mail, addressed to the appropriate party at the address designated for such party in the heading of this Mortgage, or such other address in the continental United States as the party who is to receive such notice may designate by notice to the other party. Notice by mail shall be by registered or certified United States mail, addressed to the party to be notified, and with the proper amount of postage affixed thereto. The effective date of the notice, election or demand shall be the date of personal delivery or the third business day following the date of mailing, as the case may be. Rejection or other refusal to accept, or inability to deliver because of a change of address of which no notice was given shall be deemed to be receipt of the notice, election or demand sent;

(c) If more than one party joins in the execution of this Mortgage, their obligations hereunder shall be joint and several and shall be binding upon their heirs, executors, administrators, successors, and assigns;

(d) Any reference herein to “Mortgagee” shall be deemed to include and apply to every subsequent holder of this Mortgage and any reference herein to “Mortgagor” shall be deemed to include and apply to every subsequent owner of the Premises and every person liable upon the Indebtedness, unless the language or circumstances clearly requires the contrary;

(e) “Mortgagor” shall include: (i) any successor individual or individuals, association, partnership, limited liability company or corporation to which all or substantially all of the business or assets of Mortgagor shall have been transferred; (ii) in the case of a partnership Mortgagor, any new partnership which shall have been created by reason of the admission of any new partner or partners therein, or by reason of the dissolution of the existing partnership by voluntary agreement or the death, resignation or other withdrawal of any partner; and (iii) in the case of a corporate or limited liability company Mortgagor, any other corporation or limited liability company into or with which Mortgagor shall have been merged, consolidated, reorganized, or absorbed;

(f) If after receipt of any payment of all or any part of the Indebtedness, Mortgagee is for any reason compelled to surrender such payment to any person or entity because such payment is determined to be void or voidable as a preference, impermissible setoff, or a diversion of trust funds, or for any other reason, this Mortgage shall continue in full force notwithstanding any contrary action which may have been taken by Mortgagee in reliance upon such payment, and any such contrary action so taken shall be without prejudice to Mortgagee’s rights under this Mortgage and shall be deemed to have been conditioned upon such payment having become final and irrevocable;

(g) Without limiting any other right of Mortgagee, whenever Mortgagee has the right to declare any Indebtedness to be immediately due and payable (whether or not it has so declared), Mortgagee at its sole election may set off against the Indebtedness any and all moneys then owed to Mortgagor by Mortgagee or any other direct or indirect subsidiary of First Niagara Financial Group, Inc. (in any capacity), whether or not the Indebtedness or the obligation to pay such moneys owed by Mortgagee is then due, and Mortgagee shall be deemed to have exercised such right of setoff immediately at the time of such election even though any charge therefor or evidence thereof is made or entered on Mortgagee’s records subsequent thereto;

(h) Captions of the paragraphs of this Mortgage are solely for the convenience of Mortgagor and Mortgagee, and are not an aid in the interpretation of this Mortgage; and

(i) If any provision of this Mortgage is unenforceable in whole or in part, the remaining provisions shall continue to be effective.

(j) To the fullest extent permitted by applicable law, Mortgagor and Mortgagee shall not assert, and each hereby waives any claim against the other, on any theory of liability, for special, indirect, consequential or punitive damages (but excluding direct or actual damages) arising out of, in connection with or as a result of, this Mortgage, any related Loan Documents, the transactions contemplated hereby or thereby or any loan or the use of the proceeds.

(The Remainder of this Page Intentionally Left Blank)

IN WITNESS WHEREOF , Mortgagor has duly executed this Mortgage, with the intent to be legally bound hereby, dated as of the date first set forth above.

		RIVERBEND BETHLEHEM HOLDINGS I LLC

		By:	Riverbend Lehigh Valley Holdings II LLC
			Its Sole Member

			By:	Griffin Land , LLC
				Its Sole Member

				By:	Griffin Land & Nurseries, Inc.
					Its Sole Member


					By:	/s/ Michael Gamzon
						Name: Michael Gamzon
						Title: President


STATE OF CONNECTICUT		)
	)	SS: Bloomfield
COUNTY OF HARTFORD	)

On this, the 26 th day of August, 2013, before me, the undersigned, a Notary Public in and for said state, personally appeared Michael Gamzon, personally known to me or proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his capacity, and that by his signature on the instrument, the person or entity upon behalf of which the person acted, executed the instrument.

Signature page to Mortgage and Security Agreement

The address of the within named Mortgagee is 195 Church Street, New Haven, CT 06510

FIRST NIAGARA BANK, N.A.


By:	/s/ Peter M. Hausherr
Print Name:		Peter M. Hausherr
		Vice President

Signature page to Mortgage and Security Agreement

Schedule A

Description of Property

ALL THAT CERTAIN parcel of land situate in the Township of Lower Nazareth, County of Northampton, Commonwealth of Pennsylvania, bounded and described in accordance with and shown as “Lot 1” on a Subdivision Plan for Griffin Land, Riverbend Bethlehem Holdings I, LLC, prepared by Pany and Lentz Engineering Company, dated December 23, 2009, last revised March 7, 2011, recorded in Map Book Volume 2011-5, Page 442 as follows, to wit:

Beginning at the iron pin being the northwest corner of lands now or formerly Darcy S. Mortazavi said point also being the terminus point of the easterly right-of-way line of Fritch Drive (70’ wide); thence along the northerly boundary line of Fritch Drive South 89° 54’ 42” West 35.00 feet to a point, the True Point of Beginning; thence along the terminus line of Fritch Drive and by lands now or formerly Fritch Incorporated South 89° 54’ 42” West 1146.33 feet to a point on lands now or formerly Opus Real Estate Pa VIII BC3 LP; thence along said lands of Opus Real Estate and lands now or formerly ASR Realty Corporation North 1° 45’ 29” East 423.86 feet to a point, a concrete monument; thence along said lands of ASR Realty Corporation and lands now or formerly Old Mill Recycling, Incorporated the following three (3) courses and distances;

North 63° 36’ 24” East 844.87 feet to a point;

North 1° 45’ 28” East 116.62 feet to a point;

North 2° 43’ 48” East 168.79 feet to a point on the southerly right-of-way line of CONRAIL, formerly known as Lehigh and New England Railroad;

Thence along said right-of-way South 85° 48’ 55” East 145.22 feet to a point in line with Lot 2; thence along said Lot 2 the following three (3) courses and distances;

South 14° 03’ 28” East 874.15 feet to a point of curvature;

Thence by the arc of a circle deflecting to the right having a radius of 200.00 feet, an arc length of 47.08 feet, a chord bearing South 7° 18’ 49” East a chord distance of 46.98 feet to a point of tangency;

Thence South 0° 34’ 10” East 177.47 feet to a point, the True Point of Beginning.

Containing 17.71 Acres

Schedule A to Mortgage and Security Agreement

Exhibit 10.54

TERM NOTE

(LIBOR SWAP TRANSACTION)

$9,100,000.00

Effective as of August 28, 2013

FOR VALUE RECEIVED, and intending to be legally bound RIVERBEND BETHLEHEM HOLDINGS I LLC , a limited liability company organized under the laws of the Commonwealth of Pennsylvania, with a mailing address at c/o Griffin Land & Nurseries, Inc., 204 West Newberry Road, Bloomfield, Connecticut 06002 (the “ Borrower ”), promises to pay to FIRST NIAGARA BANK, N.A., a national banking association with a banking office at P.O. Box 28, Buffalo, NY 14240-0028 (together with its successors and assigns, “ Lender ”) or order, on or before September 1, 2023 (“ Maturity ”), the principal sum of Nine Million One Hundred Thousand and 00/100 Dollars ($9,100,000.00), together with interest thereon (the “ Loan ”), until paid in full.

1. INTEREST RATE. Subject to the terms of this Note, the outstanding principal balance of this Note shall bear interest at a rate per annum equal to the LIBOR Rate for the Interest Period plus 1.95% (the “ LIBOR-Based Rate ”).

For purposes hereof, the following terms shall have these meanings:

“Business Day” shall mean any day other than a Saturday, Sunday or legal holiday on which commercial banks in New York or Connecticut are required or permitted by law to close.

“Interest Period” shall mean with respect to any LIBOR Advance, the one (1)-month period commencing on the first day of each month; provided, however, that only the first Interest Period hereunder shall commence on the later of the date hereof or the date of the initial loan hereunder until the initial payment date.

“LIBOR Advance” shall mean any advances under this Note bearing interest based upon the LIBOR-Based Rate.

“LIBOR Rate” shall mean a variable interest rate per annum (rounded upwards, if necessary) determined by Lender by dividing (a) the LIBOR rate which is published on Bloomberg Screen, BBAM1 (or any successor as may replace such page in said service for the purposes of display of the interbank interest rates offered on the London market) at 11:00 a.m. London time two (2) Business Days prior to the commencement of the Interest Period; provided, however, if such rate is not available, “LIBOR Rate” shall mean either (i) the rate of interest per annum determined by Lender to be the average rate per annum at which United States dollar deposits in a similar amount are offered for such Interest Period by major banks in the London interbank deposit market at approximately 11:00 a.m. London time two (2) Business Days prior to the commencement of the Interest Period, or (ii) a similar rate based upon a comparable index chosen by Lender in its sole discretion, by (b) a number equal to 1.00 less the Reserve Requirement.

“Mortgage” shall mean the Mortgage Deed and Security Agreement on the Property dated the date hereof from Borrower to Lender securing this Note, as the same may be amended from time to time.

“Prime Rate” shall mean the variable rate of interest announced by Lender from time to time as its prime rate for calculating interest on certain loans. The Prime Rate may or may not be the most favorable rate charged by Lender to its customers from time to time.

“Property” means the property owned by Borrower located at 4275 Fritch Drive, Bethlehem, Pennsylvania, which has been mortgaged to Lender as security for the Loan.

“Reserve Requirement” shall mean the percentage which Lender determines to be the maximum reserve requirement (including, without limitation, any emergency, marginal, special or supplemental reserve requirement) prescribed for so-called “Eurocurrency liabilities” (or any other category of eurocurrency funding) prescribed by the Board of Governors of the Federal Reserve System (or under any successor regulation which Lender determines to be applicable) with each

change in such maximum reserve requirement automatically, immediately and without notice changing the LIBOR Rate thereafter applicable to each LIBOR Advance.

“Variable Rate” shall mean the Prime Rate plus one-half percent (0.50%) per annum. The Variable Rate shall change simultaneously with changes to the Prime Rate.

“Variable Rate Advance” shall mean any advances under the Note bearing interest based upon the Variable Rate.

2. ADDITIONAL INTEREST PROVISIONS.

(a) Borrower shall pay interest, calculated on the basis of a 360-day year for the actual number of days of each year (365 or 366, as applicable), on the outstanding principal amount from and including the date of this Note to, but not including, the date the outstanding principal amount is paid in full.

(b) If pursuant to the terms of this Note, Borrower is at any time obligated to pay interest on the principal balance of this Note at a rate in excess of the maximum interest rate permitted by applicable law, the applicable interest rate shall be immediately reduced to such maximum rate and all previous payments in excess of the maximum rate shall be deemed to have been payments in reduction of principal and not on account of the interest due hereunder.

(c) After the occurrence of an Event of Default, at Lender’s option, interest shall accrue at a rate per annum equal to the aggregate of 3% plus the rate otherwise applicable (the “ Default Rate ”), and such rate shall continue to apply whether or not judgment shall be entered on this Note.

(d) Upon request, Lender shall give prompt notice to Borrower of the LIBOR Rate as determined and adjusted herein, which determination shall be conclusive absent manifest error.

(e) Except as otherwise provided, each Interest Period shall commence on the first day of each month and end on the last day of the Interest Period; provided, however, that (i) no Interest Period shall extend beyond Maturity, and (ii) each subsequent Interest Period, to the extent applicable, shall commence automatically and immediately following the end of the preceding Interest Period.

(f) In the event that Lender shall determine that by reason of circumstances affecting the London Interbank Eurodollar market, adequate and reasonable means do not exist for determining the LIBOR Rate or dollar deposits are not available to Lender in the Interbank Eurodollar market with respect to a proposed LIBOR Advance, Lender shall give Borrower notice of such determination and (i) any requested LIBOR Advance shall be made as a Variable Rate Advance, unless Borrower gives Lender two (2) Business Days’ prior notice that its request for such borrowing is canceled; (ii) any advance which was to have been converted to a LIBOR Advance shall be continued as a Variable Rate Advance; and (iii) any outstanding LIBOR Advance shall be converted to a Variable Rate Advance on the last Business Day of the applicable Interest Period. Thereafter, Lender shall have no obligation to make LIBOR Advances or maintain outstanding LIBOR Advances and Borrower shall not have the right to request LIBOR Advances. Lender shall be entitled to fund and maintain its funding of all or any part of any LIBOR Advance in any manner Lender may from time to time deem advisable, Borrower hereby acknowledging that all determinations relating to LIBOR Advances shall be made as if Lender had actually funded and maintained each such LIBOR Advance by the purchase of deposits in an amount similar to the amount of that advance, with a maturity similar to the Interest Period for that advance and bearing interest at LIBOR with respect to that advance.

(g) If Lender shall determine that any applicable law, treaty, regulation, guideline or directive, or any change therein or in the interpretation or application thereof, shall make it unlawful or impossible for Lender to make or maintain any LIBOR Advance, the obligation of Lender hereunder to make or maintain such LIBOR Advance shall terminate and Borrower shall, if any such LIBOR Advance is outstanding, promptly upon request from Lender, prepay such LIBOR Advance or convert such LIBOR Advance to a Variable Rate Advance. If any such payment is made on a day that is not the last Business Day of the then current Interest Period, Borrower shall pay Lender, upon Lender’s request, any amount required under Section 5 hereof.

3. REPAYMENT. On the date hereof, if requested by Lender, Borrower shall pay to Lender interest only in advance for the month in which this Note is dated. Borrower shall repay the outstanding balance of this Note in 119

consecutive monthly payments of principal in the amount set forth on Schedule A hereto plus accrued interest at the applicable interest rate, commencing October 1, 2013 and continuing on the first day of each consecutive month until Maturity, when the remaining unpaid principal and unpaid accrued interest shall be due and payable in full. Interest shall be payable, in arrears, on the first day of each month commencing the month following the date of this Note and on the date the LIBOR Advances are paid in full.

4. APPLICATION; BUSINESS DAY. Borrower shall make all payments on this Note to Lender at its address stated above or at such other place as the holder of this Note may designate. All payments shall be made absolutely net of, without deduction or offset and free and clear of taxes, deductions, charges or withholding of any kind. Lender shall apply all payments received on this Note to any accrued and unpaid interest then due and owing, then to the reduction of principal of this Note, then to other sums due hereunder in such order and in such amounts as Lender may determine from time to time. The sum or sums shown on Lender’s records shall be evidence of the correct unpaid balances of principal and interest on this Note, absent manifest error. If any payment comes due on a day that is not a Business Day, as defined above, Borrower may make the payment on the first Business Day following the payment date and pay the additional interest accrued to the date of payment.

5. PREPAYMENT. This Note may be prepaid in whole or in part at any time without the payment of any prepayment fee.

6. LATE FEE. If any payment due under this Note is unpaid for five (5) Business Days or more, Borrower shall pay, in addition to any other sums due under this Note (and without limiting Lender’s other remedies on account thereof), a late charge in an amount equal to 5% of such unpaid amount.

7. MAINTAIN OPERATING ACCOUNTS. Borrower, or an affiliate of Borrower, shall maintain a business checking account at Lender. Borrower shall deposit all rents and other income received from the Property monthly into said account. Borrower shall also deposit all tenant security deposits from the Property in an account or accounts at Lender.

8. EVENTS OF DEFAULT. The happening of any of the following events or occurrence of the following conditions, shall be events of default hereunder (individually, an “Event of Default” and collectively “Events of Default”):

(a) Nonpayment . Nonpayment when due, whether by acceleration or otherwise, of principal of, interest on, or any fee or premium provided for under, this Note.

(b) Default under Related Documents . The occurrence of an “Event of Default”, uncured at the end of any applicable cure period, under any loan agreement, security agreement or other document evidencing or securing this Note (individually, a “Loan Document” and collectively, the “Loan Documents”).

(d) Bankruptcy Proceedings . (i) If Borrower or any guarantor hereof (each a “Loan Party”) shall (A) file a petition or request for liquidation, reorganization, arrangement, adjudication as a bankrupt or similar relief under the bankruptcy, insolvency or similar laws of the United States of America or any state or territory thereof or any foreign jurisdiction now or hereafter in effect, (B) consent to the filing of a petition in any bankruptcy, liquidation, reorganization or insolvency proceedings, (C) consent to the appointment of a receiver, trustee, agent or officer performing similar functions with respect to any substantial part of its assets, (D) make a general assignment for the benefit of its creditors, or (E) institute or execute a consent to any other type of insolvency proceedings (under the federal Bankruptcy Code or otherwise) or any formal or informal proceeding for the dissolution or liquidation of, or settlement of claims against or winding up of affairs of Loan Party; or (ii) the appointment of a receiver, custodian, trustee or officer performing similar functions for any Loan Party or for any of their respective assets, or the filing against any Loan Party of a request or petition for liquidation, reorganization, arrangement or adjudication as a bankrupt or other relief under the bankruptcy, insolvency or similar laws of the United States of America, or any state or territory thereof, or any foreign jurisdiction, now or hereafter in effect, or the institution against any Loan Party of any other type of insolvency proceedings (under the federal Bankruptcy Code or otherwise) or any formal or informal proceeding for the dissolution or liquidation of, settlement of claims against or winding up of affairs of such Loan Party, and the failure

to have such appointment vacated or such petition or proceeding dismissed within 90 days after such appointment, filing or institution.

(e) Insolvency . If Borrower or any guarantor hereof shall (i) become “insolvent” as defined in any applicable state or federal statute; or (ii) incur debts beyond its ability to pay them as they mature.

(f) Other Covenants . Default in the observance of any of the covenants or agreements of Borrower set forth herein and the failure of Borrower to cure such default within thirty (30) days after notice thereof from Lender, provided that if such cure cannot reasonably be effectuated within said thirty (30) day period, Borrower shall have such additional time as is reasonably necessary to cure such default so long as Borrower has commenced such cure within said thirty (30) day period and is diligently pursuing such cure.

(g) Representations . If any certificate, statement, representation, warranty or financial statement furnished by or on behalf of Borrower pursuant to or in connection with this Note (including, without limitation, representations and warranties contained herein) or as an inducement to Lender or any Lender affiliate to enter into any lending agreement with Borrower shall prove to have been false in any material respect at the time as of which the facts therein set forth were certified, or to have omitted any material contingent or unliquidated liability or claim against Borrower, or if on the date of the execution of this Note there shall have been any materially adverse change in any of the facts disclosed by any such statement or certificate, which change shall not have been disclosed by Borrower to Lender at or prior to the time of such execution.

(h) Judgments . If any judgment or judgments (other than any judgment for which it is fully insured) against Borrower remains unpaid, unstayed on appeal, undischarged, unbonded or undismissed for a period of thirty (30) days.

(i) Guarantor Default . Any guaranty of this Note shall cease, for any reason, to be in effect without the prior consent of Lender, or any guarantor or Borrower shall so assert in writing; or any individual guarantor shall die or become incapacitated, incarcerated and, if requested by Lender in its sole discretion, Borrower shall have failed to agree to a replacement guaranty, cash collateral or other arrangement satisfactory to Lender as an adequate substitution for the guaranty of such guarantor; or any guarantor shall fail to perform or observe any covenant contained in the guaranty to which such guarantor is a party; or any representation, warranty or financial statement made or furnished by a guarantor in connection with this Note or the applicable guaranty shall prove to have been false in any material respect, or to have omitted any material contingent or unliquidated liability.

(j) Challenge to Collateral Documents . If Borrower, any guarantor, or any other Person providing collateral support for Borrower’s obligations hereunder (the “Obligor”) directly or indirectly, shall challenge, or indicate their intention to challenge, the validity and binding effect of any provision of this Note or any document evidencing or securing Borrower’s indebtedness under this Note (each a “Collateral Document” and collectively, the “Collateral Documents”) or this Note or the Collateral Documents shall for any reason (except to the extent permitted by their express terms) cease to be effective or cease to have the priority lien position required by the terms thereof or the collateral is no longer available, for any reason.

(k) Change of Ownership . If there is a change of control of Borrower.

(l) Cross Default . Nonpayment by Borrower of any other indebtedness owing by Borrower to Lender, or to any other party (if such indebtedness to such other party is in excess of $50,000.00), when due (or, if permitted by the terms of the applicable document, within any applicable grace period), whether such indebtedness shall become due by scheduled maturity, by required prepayment, by acceleration, by demand or otherwise, or failure of Borrower to perform any material term, covenant or agreement on its part to be performed under any agreement or instrument (other than this Note) evidencing or securing or relating to any indebtedness owing by Borrower to Lender, or to any other party (if such indebtedness is in excess of $50,000.00) when required to be performed if the effect of such failure is to permit the holder to accelerate the maturity of such indebtedness.

(m) Termination of Business . Any Obligor terminates its business or ceases to operate as a going concern.

Upon the occurrence of any Event of Default (other than an Event of Default under paragraphs (d) or (e) above), Lender shall have the absolute right, at its option and in its sole discretion, to declare immediately due and payable all unpaid amounts of principal and interest on this Note, and all other sums payable at the time of, or as the result of, such declaration under this Note or any other document securing this Note and Borrower shall no longer be permitted to obtain loans hereunder. Upon the happening of one or more Events of Default under paragraphs (d) or (e) hereof, Lender’s obligations hereunder shall be cancelled immediately, automatically and without notice, and all amounts outstanding under this Note, and all other sums payable at the time of, or as the result of, such declaration under this Note or any other document securing this Note, shall become immediately due and payable without presentation, demand or notice of any kind to Borrower. Lender may, in its sole discretion, exercise alternately or cumulatively any of the remedies available under this Note or any other document securing this Note, or at law or equity. The failure to exercise one or more of such remedies upon the happening of an Event of Default shall not constitute a waiver of the right to exercise the same at any subsequent time in respect of the same Event of Default or any other Event of Default. Neither the acceptance by Lender of any payment hereunder which is less than payment in full of all amounts due and payable at the time of such payment, or any negotiation or discussion with Borrower, shall constitute a waiver of the right to exercise one or more of such remedies at that time or at any subsequent time or nullify any prior exercise of any remedy, except as and to the extent otherwise provided by law.

9. SETOFF. If the unpaid principal amount of this Note, interest accrued on the unpaid principal amount thereof or other amount owing by Borrower under this Note or the other loan documents shall have become due and payable (at maturity, by acceleration or otherwise), Lender will have the right, in addition to all other rights and remedies available to it, without notice to Borrower, to setoff against and to appropriate and apply to such due and payable amounts any obligations owing to, and any other funds held in any manner for the account of, Borrower by Lender or any other direct or indirect subsidiary of First Niagara Financial Group, Inc. (“ FNFG ”), including, without limitation, all funds in all deposit accounts (whether time or demand, general or special, provisionally credited or finally credited, or otherwise) now or in the future maintained by Borrower. Borrower consents to and confirms the foregoing arrangements and confirms the rights of banker’s lien and setoff. Nothing in this Note will be deemed a waiver or prohibition of or restriction on such rights of banker’s lien or setoff.

10. CHANGE OF LAW. If the adoption of, any change in or any change in the interpretation of, any law regulation or guideline applicable to financial institutions by any applicable governmental authority exercising control over Lender or FNFG (a “ Governmental Rule ”), or the compliance by Lender with the Governmental Rule (including, without limitation, Regulation D of the Board of Governors of the Federal Reserve System and regulations of the Securities and Exchange Commission relating to financial instruments), imposes any reserve, deposit, allocation of capital or similar requirement, or any tax (other than taxes on Lender’s income) on Lender or FNFG which reduces the rate of return on Lender’s capital then, and in each such case, Lender may require Borrower to pay the amount necessary to compensate Lender or FNFG for such reduced rate of return. Lender will deliver to Borrower a statement of the justification for the payment(s) and the determination by Lender shall be conclusive absent obvious error and shall be payable by Borrower to Lender upon Lender’s demand. In determining any such amount, Lender may use reasonable averaging and attribution methods.

11. PAYMENT OF FEES AND EXPENSES. Borrower agrees to pay, upon demand, costs of collection of all amounts due under this Note, including, without limitation, principal, interest and fees, or in connection with the enforcement of, or realization on, any security for this Note, including, without limitation, to the extent permitted by applicable law, reasonable attorneys’ fees and expenses.

12. GOVERNING LAW. This Note shall be interpreted and the rights and liabilities of the parties shall be governed by the laws of the State of Connecticut, without regard to principles of the conflict of laws. This Note has been delivered to and accepted by Lender and will be deemed to be made in the State of Connecticut.

13. GENERAL PROVISIONS.

(a) Borrower waives presentment, demand, notice, protest and all other demands and notices in connection with delivery, acceptance, performance or enforcement of this Note.

(b) This Note, together with any related loan and security agreements, guaranties, and documents ancillary thereto contains the entire agreement between Lender and Borrower with respect to the subject matter hereof,

and supersedes every course of dealing, other conduct, oral agreement, commitment letter or other correspondence related thereto and representation previously made by Lender.

(c) Borrower agrees that in any legal proceeding, a copy of this Note kept in Lender’s course of business may be admitted into evidence as an original.

(d) This Note is a binding obligation enforceable against Borrower and its permitted successors and assigns and shall inure to the benefit of Lender and its successors and assigns. Borrower may not assign any of its rights or obligations hereunder without the prior written consent of Lender. If a court deems any provision of this Note invalid, the remainder of this Note shall remain in effect.

(e) If there is more than one Borrower, each of them shall be jointly and severally liable for all amounts and obligations which become due under this Note and the term “Borrower” shall include each as well as all of them.

(f) Borrower shall furnish to Bank the following financial information, in each instance prepared in accordance with generally accepted accounting principles consistently applied: (i) not later than one hundred twenty (120) days after the end of each fiscal year, financial information of Borrower including, without limitation, an operating statement, a cash flow statement and a balance sheet and any other information reasonably requested by Lender, prepared by Borrower’s chief financial officer or if Borrower has no such officer, the chief financial officer of Borrower’s manager; and (ii) such other information respecting the operations of Borrower and/or the Property as Lender may from time to time reasonably request. Borrower shall promptly notify Lender of the occurrence of any default, Event of Default, adverse litigation or material adverse change in its financial condition.

(g) If payment of this Note is secured by collateral, the collateral is specified in the collateral records of Lender.

(h) No failure by the holder hereof to exercise, and no delay in exercising, any right or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise by such holder of any right or remedy hereunder preclude any other or further exercise thereof or the exercise of any other right or remedy. The rights and remedies of the holder hereof as herein specified are cumulative and not exclusive of any other rights or remedies which such holder may otherwise have.

(i) All notices, demands, or other communications hereunder must be in writing and will be effective when delivered or mailed to the address set forth herein or such other address as provided by such party via overnight delivery service or personal service or, if mailed, three (3) days after deposit, postage prepaid, in an official depository maintained by the United States Post Office.

(j) Borrower agrees to indemnify Lender and its affiliates and their respective officers, directors and employees (collectively, “ Indemnitees ”) and hereby holds Indemnitees harmless against all liabilities, claims, actions, suits, proceedings, penalties, costs, expenses, brokerage or other fees (including, without limitation, reasonable legal fees and expenses), losses, damages and liabilities of any kind or nature including in tort, penalties and interest, which Lender may incur in any manner other than Lender’s own negligence or willful misconduct, by reason of any matter relating, directly or indirectly, to this Note and the related Loan Documents. This indemnity shall survive the termination of this Note.

(k) To the fullest extent permitted by applicable law, Borrower and Lender shall not assert, and each hereby waives any claim against the other, on any theory of liability, for special, indirect, consequential or punitive damages (but excluding direct or actual damages) arising out of, in connection with or as a result of, this Note, any related loan documents, the transactions contemplated hereby or thereby or any loan or the use of the proceeds.

(l) USA Patriot Act. Lender hereby notifies Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56), Lender is required to obtain, verify and record information that identifies Borrower, which information includes the name and address of Borrower and other information that will allow Lender to identify Borrower in accordance with the USA Patriot Act.

14. JURISDICTION AND VENUE. BORROWER KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND IRREVOCABLY (A) CONSENTS IN EACH ACTION AND OTHER LEGAL PROCEEDING COMMENCED BY LENDER AND ARISING OUT OF OR OTHERWISE RELATING TO THIS NOTE OR ANY COLLATERAL RELATED HERETO TO THE JURISDICTION OF ANY COURT THAT IS EITHER A COURT OF RECORD OF THE STATE OF CONNECTICUT OR A COURT OF THE UNITED STATES LOCATED IN THE STATE OF CONNECTICUT, AND (B) WAIVES EACH OBJECTION TO THE LAYING OF VENUE OF ANY SUCH ACTION OR OTHER LEGAL PROCEEDING.

15. WAIVER OF JURY TRIAL. BORROWER KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND IRREVOCABLY WAIVES EACH RIGHT BORROWER MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO, AND IN, ANY ACTION OR OTHER LEGAL PROCEEDING OF ANY NATURE, RELATING TO (A) THIS NOTE, ANY RELATED LOAN DOCUMENT OR ANY COLLATERAL RELATED HERETO, (B) ANY TRANSACTION CONTEMPLATED BY ANY SUCH DOCUMENTS OR (C) ANY NEGOTIATION, PERFORMANCE OR ENFORCEMENT OF THIS NOTE, OR ANY COLLATERAL RELATED HERETO. BORROWER ACKNOWLEDGES THAT IT HAS BEEN REPRESENTED BY INDEPENDENT LEGAL COUNSEL AS NECESSARY AND APPROPRIATE.

16. PREJUDGMENT REMEDY WAIVER. BORROWER HEREBY REPRESENTS, COVENANTS AND AGREES THAT THE PROCEEDS OF THE LOAN SHALL BE USED FOR GENERAL COMMERCIAL PURPOSES AND THAT THE LOAN IS A “COMMERCIAL TRANSACTION” AS DEFINED BY THE STATUTES OF THE STATE OF CONNECTICUT. BORROWER HEREBY WAIVES ALL RIGHTS TO NOTICE AND PRIOR COURT HEARING OR COURT ORDER UNDER CONNECTICUT GENERAL STATUTES, SECTIONS 52-278a ET SEQ ., AS AMENDED, OR UNDER ANY OTHER STATE OR FEDERAL LAW WITH RESPECT TO ANY AND ALL PREJUDGMENT REMEDIES LENDER MAY EMPLOY TO ENFORCE ITS RIGHTS AND REMEDIES HEREUNDER. MORE SPECIFICALLY, BORROWER ACKNOWLEDGES THAT LENDER’S ATTORNEY MAY, PURSUANT TO CONNECTICUT GENERAL STATUTES, SECTION 52-278f, ISSUE A WRIT FOR A PREJUDGMENT REMEDY WITHOUT SECURING A COURT ORDER. BORROWER ACKNOWLEDGES AND RESERVES ITS RIGHT TO NOTICE AND A HEARING SUBSEQUENT TO THE ISSUANCE OF A WRIT FOR PREJUDGMENT REMEDY BY LENDER’S ATTORNEY, AND LENDER ACKNOWLEDGES BORROWER’S RIGHT TO SAID HEARING SUBSEQUENT TO THE ISSUANCE OF SAID WRIT. BORROWER FURTHER HEREBY WAIVES ANY REQUIREMENT OR OBLIGATION OF LENDER TO POST A BOND OR OTHER SECURITY IN CONNECTION WITH ANY PREJUDGMENT REMEDY OBTAINED BY LENDER AND WAIVES ANY OBJECTIONS TO ANY PREJUDGMENT REMEDY OBTAINED BY LENDER BASED ON ANY OFFSETS, CLAIMS, DEFENSES OR COUNTERCLAIMS OF BORROWER OR ANY OTHER OBLIGATED PARTY TO ANY ACTION BROUGHT BY LENDER. BORROWER ACKNOWLEDGES AND AGREES THAT ALL OF THE WAIVERS CONTAINED IN THIS SECTION HAVE BEEN MADE KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND INTELLIGENTLY, AND WITH THE ADVICE OF ITS COUNSEL.

RIVERBEND BETHLEHEM HOLDINGS I LLC

By:	Riverbend Lehigh Valley Holdings II LLC
	Its Sole Member

	By:	Griffin Land, LLC
		Its Sole Member

		By:	Griffin Land & Nurseries, Inc.
			Its Sole Member


			By:	/s/ Michael Gamzon
				Name: Michael Gamzon
				Title: President

SCHEDULE A

Loan Amortization Schedule

Payment Date	Balance Prior to Payment	Principal Payment Amount

October 1, 2013	9,100,000.00	15,620.00
November 1, 2013	9,084,380.00	15,620.00
December 1, 2013	9,068,760.00	15,620.00
January 1, 2014	9,053,140.00	15,620.00
February 1, 2014	9,037,520.00	16,241.00
March 1, 2014	9,021,279.00	16,241.00
April 1, 2014	9,005,038.00	16,241.00
May 1, 2014	8,988,797.00	16,241.00
June 1, 2014	8,972,556.00	16,241.00
July 1, 2014	8,956,315.00	16,241.00
August 1, 2014	8,940,074.00	16,241.00
September 1, 2014	8,923,833.00	16,241.00
October 1, 2014	8,907,592.00	16,241.00
November 1, 2014	8,891,351.00	16,241.00
December 1, 2014	8,875,110.00	16,241.00
January 1, 2015	8,858,869.00	16,241.00
February 1, 2015	8,842,628.00	17,048.00
March 1, 2015	8,825,580.00	17,048.00
April 1, 2015	8,808,532.00	17,048.00
May 1, 2015	8,791,484.00	17,048.00
June 1, 2015	8,774,436.00	17,048.00
July 1, 2015	8,757,388.00	17,048.00
August 1, 2015	8,740,340.00	17,048.00
September 1, 2015	8,723,292.00	17,048.00
October 1, 2015	8,706,244.00	17,048.00
November 1, 2015	8,689,196.00	17,048.00
December 1, 2015	8,672,148.00	17,048.00
January 1, 2016	8,655,100.00	17,048.00
February 1, 2016	8,638,052.00	17,795.00
March 1, 2016	8,620,257.00	17,795.00
April 1, 2016	8,602,462.00	17,795.00
May 1, 2016	8,584,667.00	17,795.00
June 1, 2016	8,566,872.00	17,795.00
July 1, 2016	8,549,077.00	17,795.00
August 1, 2016	8,531,282.00	17,795.00
September 1, 2016	8,513,487.00	17,795.00
October 1, 2016	8,495,692.00	17,795.00
November 1, 2016	8,477,897.00	17,795.00
December 1, 2016	8,460,102.00	17,795.00
January 1, 2017	8,442,307.00	17,795.00
February 1, 2017	8,424,512.00	18,778.00
March 1, 2017	8,405,734.00	18,778.00
April 1, 2017	8,386,956.00	18,778.00

Payment Date	Balance Prior to Payment	Principal Payment Amount
May 1, 2017	8,368,178.00	18,778.00
June 1, 2017	8,349,400.00	18,778.00
July 1, 2017	8,330,622.00	18,778.00
August 1, 2017	8,311,844.00	18,778.00
September 1, 2017	8,293,066.00	18,778.00
October 1, 2017	8,274,288.00	18,778.00
November 1, 2017	8,255,510.00	18,778.00
December 1, 2017	8,236,732.00	18,778.00
January 1, 2018	8,217,954.00	18,778.00
February 1, 2018	8,199,176.00	19,711.00
March 1, 2018	8,179,465.00	19,711.00
April 1, 2018	8,159,754.00	19,711.00
May 1, 2018	8,140,043.00	19,711.00
June 1, 2018	8,120,332.00	19,711.00
July 1, 2018	8,100,621.00	19,711.00
August 1, 2018	8,080,910.00	19,711.00
September 1, 2018	8,061,199.00	19,711.00
October 1, 2018	8,041,488.00	19,711.00
November 1, 2018	8,021,777.00	19,711.00
December 1, 2018	8,002,066.00	19,711.00
January 1, 2019	7,982,355.00	19,711.00
February 1, 2019	7,962,644.00	20,690.00
March 1, 2019	7,941,954.00	20,690.00
April 1, 2019	7,921,264.00	20,690.00
May 1, 2019	7,900,574.00	20,690.00
June 1, 2019	7,879,884.00	20,690.00
July 1, 2019	7,859,194.00	20,690.00
August 1, 2019	7,838,504.00	20,690.00
September 1, 2019	7,817,814.00	20,690.00
October 1, 2019	7,797,124.00	20,690.00
November 1, 2019	7,776,434.00	20,690.00
December 1, 2019	7,755,744.00	20,690.00
January 1, 2020	7,735,054.00	20,690.00
February 1, 2020	7,714,364.00	21,628.00
March 1, 2020	7,692,736.00	21,628.00
April 1, 2020	7,671,108.00	21,628.00
May 1, 2020	7,649,480.00	21,628.00
June 1, 2020	7,627,852.00	21,628.00
July 1, 2020	7,606,224.00	21,628.00
August 1, 2020	7,584,596.00	21,628.00
September 1, 2020	7,562,968.00	21,628.00
October 1, 2020	7,541,340.00	21,628.00
November 1, 2020	7,519,712.00	21,628.00
December 1, 2020	7,498,084.00	21,628.00
January 1, 2021	7,476,456.00	21,628.00
February 1, 2021	7,454,828.00	22,791.00
March 1, 2021	7,432,037.00	22,791.00
April 1, 2021	7,409,246.00	22,791.00
May 1, 2021	7,386,455.00	22,791.00
June 1, 2021	7,363,664.00	22,791.00
July 1, 2021	7,340,873.00	22,791.00
August 1, 2021	7,318,082.00	22,791.00
September 1, 2021	7,295,291.00	22,791.00
October 1, 2021	7,272,500.00	22,791.00

Payment Date	Balance Prior to Payment	Principal Payment Amount
November 1, 2021	7,249,709.00	22,791.00
December 1, 2021	7,226,918.00	22,791.00
January 1, 2022	7,204,127.00	22,791.00
February 1, 2022	7,181,336.00	23,924.00
March 1, 2022	7,157,412.00	23,924.00
April 1, 2022	7,133,488.00	23,924.00
May 1, 2022	7,109,564.00	23,924.00
June 1, 2022	7,085,640.00	23,924.00
July 1, 2022	7,061,716.00	23,924.00
August 1, 2022	7,037,792.00	23,924.00
September 1, 2022	7,013,868.00	23,924.00
October 1, 2022	6,989,944.00	23,924.00
November 1, 2022	6,966,020.00	23,924.00
December 1, 2022	6,942,096.00	23,924.00
January 1, 2023	6,918,172.00	23,924.00
February 1, 2023	6,894,248.00	24,946.00
March 1, 2023	6,869,302.00	24,946.00
April 1, 2023	6,844,356.00	24,946.00
May 1, 2023	6,819,410.00	24,946.00
June 1, 2023	6,794,464.00	24,946.00
July 1, 2023	6,769,518.00	24,946.00
August 1, 2023	6,744,572.00	24,946.00
September 1, 2023	6,719,626.00	6,719,626.00

Exhibit 31.1

I, Frederick M. Danziger, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Griffin Land & Nurseries, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 10, 2013	/s/ FREDERICK M. DANZIGER
	Frederick M. Danziger
	Chairman and Chief Executive Officer

Exhibit 31.2

I, Anthony J. Galici, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Griffin Land & Nurseries, Inc.;

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 10, 2013	/s/ ANTHONY J. GALICI
	Anthony J. Galici
	Vice President, Chief Financial Officer and Secretary

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 UNITED STATES CODE SECTION 1350

In connection with the Quarterly Report of Griffin Land & Nurseries, Inc. (the “Company”) on Form 10-Q for the quarter ended August 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Periodic Report”), I, Frederick M. Danziger, Chairman and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Periodic Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	/s/ FREDERICK M. DANZIGER
	Frederick M. Danziger
	Chairman and Chief Executive Officer
	October 10, 2013

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO 18 UNITED STATES CODE SECTION 1350

In connection with the Quarterly Report of Griffin Land & Nurseries, Inc. (the “Company”) on Form 10-Q for the quarter ended August 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Periodic Report”), I, Anthony J. Galici, Vice President, Chief Financial Officer and Secretary of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Periodic Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	/s/ ANTHONY J. GALICI
	Anthony J. Galici
	Vice President, Chief Financial Officer and Secretary
	October 10, 2013