EMPLOYMENT AGREEMENT
 
THIS EMPLOYMENT AGREEMENT (this “Agreement”), effective as of January 1, 2011,
(“Effective Date”) and executed as of the date below, is entered into by and
between NetREIT, Inc., a Maryland corporation (the “Company”), and Jack K.
Heilbron (the “Executive”).
 
WHEREAS, the Company desires to employ Executive and to enter into an agreement
embodying the terms of such employment; and
 
WHEREAS, Executive desires to accept employment with the Company, subject to the
terms and conditions of this Agreement.
 
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
 
1. Employment Period. Subject to the provisions for earlier termination
hereinafter provided, the Executive’s employment hereunder shall be for a term
(the “Employment Period”) commencing on the Effective Date and ending on the
third anniversary of the Effective Date (unless Executive’s employment is
terminated prior to such date pursuant to Section 3 below) (the “Initial
Termination Date”); provided, however, that this Agreement shall be
automatically extended for one (1) additional year on the Initial Termination
Date and on each subsequent anniversary of the Initial Termination Date (each
such extension, a “Renewal Year”), unless either the Executive or the Company
elects not to so extend the term of the Agreement by notifying the other party,
in writing, of such election not less than three (3) months prior to the last
day of the Employment Period as then in effect.
 
2. Terms of Employment.
 
(a) Position and Duties.
 
(i) During the Employment Period, the Executive shall serve as Chief Executive
Officer and President of the Company and shall perform such employment duties as
are assigned by the Company’s Board of Directors and are usual and customary for
such positions. In such position, the Executive shall report to the Company’s
Board of Directors. At the Company’s request, the Executive shall serve the
Company and/or its subsidiaries and affiliates in other offices and capacities
in addition to the foregoing. In the event that the Executive, during the
Employment Period, serves in any one or more of such additional capacities, the
Executive’s compensation shall not be increased beyond that specified in
Section 2(b) of this Agreement. In addition, in the event the Executive’s
service in one or more of such additional capacities is terminated, the
Executive’s compensation, as specified in Section 2(b) of this Agreement, shall
not be diminished or reduced in any manner as a result of such termination for
so long as the Executive otherwise remains employed under the terms of this
Agreement.
 
 
(ii) Location. Executive’s primary place of work shall be the Company’s
corporate office in Escondido, California, or such other location within San
Diego County as may be designated by the Board from time to time
 
(iii) Compliance. Executive shall be subject to and comply with the policies and
procedures generally applicable to senior executives of the Company to the
extent the same are not inconsistent with any term of this Agreement.
 
(iv) Exclusive Services. During the Employment Period, and excluding any periods
of paid time off to which the Executive is entitled, the Executive agrees to
devote substantially all of his business time to the business and affairs of the
Company. Subject to the provisions of Section 5, during the Employment Period it
shall not be a violation of this Agreement for the Executive to (A) serve on
corporate, civic or charitable boards or committees, (B) fulfill limited
teaching, speaking and writing engagements or (C) manage his personal
investments, so long as such activities do not significantly interfere with the
performance of the Executive’s responsibilities as an employee, director and
officer of the Company in accordance with this Agreement or; (D) such other
employment which is approved in writing by the Board of Directors Board or
appropriate designated Board committee.  It is expressly understood and agreed
that to the extent that any such activities have been conducted by the Executive
prior to the Effective Date, the continued conduct of such activities (or the
conduct of activities similar in nature and scope thereto) subsequent to the
Effective Date shall not thereafter be deemed to interfere with the performance
of the Executive’s responsibilities to the Company; provided, that (I) no such
activity that violates the provisions of Section 5 shall be permitted and (II)
Executive shall notify the Board prior to engaging in any new real estate
related business activities after the Effective Date that are unrelated to the
performance of Executive’s duties hereunder.
 
(v) Board Position. In addition, during the Employment Period, the Company shall
use its best efforts to cause the Executive to be nominated and elected as
Chairman of the Company’s Board of Directors; provided, however, that the
Company shall not be so obligated if cause exists for the removal of the
Executive from the Company’s Board of Directors or for the failure to nominate
or elect the Executive as Chairman to the Company’s Board of Directors. Provided
that the Executive is so nominated and elected, the Executive hereby agrees to
serve as Chairman of the Company’s Board of Directors.
 
(b) Compensation.
 
(i) Base Salary. During the Employment Period, the Executive shall receive a
base salary (the “Base Salary”) of $260,000 per annum. The Base Salary shall be
paid by the Company at such intervals as the Company pays executive salaries
generally. The Executive shall provide services to the Company as described in
this Agreement for no additional salary. The Base Salary may be reviewed
annually by the Company’s Board of Directors, or the Compensation Committee
thereof, and may be increased in the discretion of the Company’s Board of
Directors, or the Compensation Committee thereof. The term “Base Salary” as
utilized in this Agreement shall refer to Base Salary as so increased from time
to time.
 
(ii) Annual Bonus. In addition to the Base Salary, the Executive shall be
eligible to earn, for each fiscal year of the Company ending during the
Employment Period, an annual bonus (an “Annual Bonus”) in the Company’s bonus
program applicable to senior executives. Executive will be eligible to receive
an Annual Bonus under any such plan at a target level of one hundred percent
(100%) of Base Salary upon the achievement of targets and other objectives
established by the Board or the Compensation Committee for each fiscal year.
Executive must be employed on the date of payment of the Annual Bonus in order
to be eligible to receive an Annual Bonus for such fiscal year. The Annual Bonus
shall be paid to the Executive by the Company within ninety (90) days following
the end of each fiscal year.
 
 (iii) Incentive, Savings and Retirement Plans. During the Employment Period,
the Executive shall be entitled to participate in all other incentive plans,
practices, policies and programs, and all savings and retirement plans,
practices, policies and programs, in each case that are applicable generally to
senior executives of the Company under the terms and conditions therein as in
effect from time to time.

(iv) Welfare Benefit Plans. During the Employment Period, the Executive and the
Executive’s eligible family members shall be eligible for participation at the
Company’s expense, in the welfare benefit plans, practices, policies and
programs (including, if applicable, medical, dental, disability, employee life,
group life and accidental death insurance plans and programs) maintained by the
Company for its senior executives under the terms and conditions therein as in
effect from time to time. In addition, the Executive shall be entitled to
long-term disability coverage providing benefits (to continue for such period as
is provided in the applicable disability plan or program, as amended from time
to time) equal to sixty percent (60%) of Annual Salary in the case of a covered
disability and life insurance benefits with a face amount equal to three times
Annual Salary. The Company shall pay the premiums for a life insurance policy on
Executive’s life having total death benefits not exceeding $2.1 million,
purchased by Executive, and having such terms and conditions as Executive may,
in his sole discretion, determine from time to time.
 
(v) Expenses. During the Employment Period, the Executive shall be entitled to
receive prompt reimbursement for all reasonable business expenses incurred by
the Executive in accordance with the policies, practices and procedures of the
Company provided to senior executives of the Company under the terms and
conditions therein as in effect from time to time. Any amounts payable to the
Executive under this Section 2(b)(v) shall be made in accordance with Treasury
Regulation Section 1.409A-3(i)(1)(iv) and shall be paid on or before the last
day of the Executive’s taxable year following the taxable year in which the
Executive incurred the expenses. The amounts provided under this
Section 2(b)(v) during any taxable year of the Executive’s will not affect such
amounts provided in any other taxable year of the Executive’s, and the
Executive’s right to reimbursement for such amounts shall not be subject to
liquidation or exchange for any other benefit.
 
(vi) Vacation. During the Employment Period, the Executive shall be entitled to
paid time off per year to be used and accrued in accordance with Company policy.
 
 (vii) Automobile. The Company shall, at its sole expense, provide an
automobile, selected by mutual agreement of the Company and Executive, for
Executive’s exclusive use during the Term.
 
3. Termination of Employment.
 
(a) At-Will Employment. Employee shall be considered an employee of the Company
while performing his duties and services pursuant to this Agreement. The Company
and Employee acknowledge that Employee’s employment during the Employment Period
will be at-will, as defined under applicable law, and that Employee’s employment
with the Company during the Employment Period may be terminated by either party
at any time, with or without Cause, and for any or no reason, with or without
notice. If Employee’s employment during the Employment Period terminates for any
reason, Employee shall not be entitled to any payments, benefits, damages,
awards or compensation other than as expressly provided in this Agreement.
 
 (b) Death or Disability. The Executive’s employment shall terminate
automatically upon the Executive’s death or Disability during the Employment
Period. For purposes of this Agreement, “Disability” shall mean the absence of
the Executive from the Executive’s duties with the Company on a full-time basis
for ninety (90) consecutive days or for a total of one hundred eighty (180) days
in any twelve (12) month period, in either case as a result of incapacity due to
mental or physical illness which is determined to be total and permanent by a
physician selected by the Company and reasonably acceptable to the Executive or
the Executive’s legal representative.
 
(c) Cause. The Company may terminate the Executive’s employment during the
Employment Period for Cause or without Cause. For purposes of this Agreement,
“Cause” shall mean the occurrence of any one or more of the following events
unless the Executive fully corrects the circumstances constituting Cause within
thirty (30) days following the date written notice is delivered to the Executive
which specifically identifies the circumstances constituting Cause (provided
such circumstances are capable of correction):
 
(i) the Executive’s willful and continued failure substantially to perform his
duties with the Company (other than any such failure resulting from the
Executive’s incapacity due to physical or mental illness or subsequent to the
issuance of a Notice of Termination by Executive for Good Reason), after a
written demand for substantial performance is delivered to the Executive by the
Company’s Board of Directors, which demand specifically identifies the manner in
which the Company’s Board of Directors believes that the Executive has not
substantially performed his duties;
 
(ii) the Executive’s willful or gross misconduct resulting in economic,
reputational or financial damage to the Company or any subsidiary or affiliate;
 
(iii) the Executive’s gross negligence, insubordination or material violation of
any fiduciary duty to the Company;
 
(iv) the Executive’s conviction of, or entry by the Executive of a guilty or no
contest plea to, the commission of a felony or misdemeanor of a crime involving
moral turpitude; or
 
(v) the Executive’s willful and material breach of any provision of this
Agreement, including, without limitation, the Executive’s covenants set forth in
Section 5 hereof.
 
For purposes of this provision, no act or failure to act, on the part of the
Executive, shall be considered “willful” unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive’s action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Company’s Board of Directors or based upon the advice of counsel
for the Company shall be presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company. The cessation
of employment of the Executive shall not be deemed to be for Cause unless and
until there shall have been delivered to the Executive a copy of a resolution
duly adopted by the affirmative vote of a majority of the Company’s Board of
Directors at a meeting of the Company’s Board of Directors called and held for
such purpose (after reasonable notice is provided to the Executive and the
Executive is given an opportunity,
 
together with counsel for the Executive, to be heard before the Company’s Board
of Directors), finding that, in the good faith opinion of the Board, the
Executive is guilty of any of the conduct described in Section 3(c), and
specifying the particulars thereof in detail; provided, that if the Executive is
a member of the Company’s Board of Directors, the Executive shall not vote on
such resolution nor shall the Executive be counted in determining the “entire
membership” of the Company’s Board of Directors.
 
(d) Good Reason. The Executive’s employment may be terminated by the Executive
for Good Reason or by the Executive without Good Reason. For purposes of this
Agreement, “Good Reason” shall mean the occurrence of any one or more of the
following events without the Executive’s prior written consent, unless the
Company fully corrects the circumstances constituting Good Reason within thirty
(30) days following the date written notice is delivered to the Company’s Board
of Directors by the Executive which specifically identifies the circumstances
constituting Good Reason (provided such circumstances are capable of
correction), after:
 
(i) a material diminution in the Executive’s base compensation;
 
(ii) a material diminution in the Executive’s authority, duties or
responsibilities, including a requirement that the Executive report to a
corporate officer or employee instead of reporting directly to the Board of
Directors;
 
(iii) a material change in the geographic location at which the Executive must
perform his duties; or
 
(iv) any other action or inaction that constitutes a material breach by the
Company of its obligations to the Executive under this Agreement.
 
Notwithstanding the foregoing, “Good Reason” shall only exist if the Executive
shall have provided the Company’s Board of Directors with written notice within
ninety (90) days of the initial occurrence of any of the foregoing events or
conditions which specifically identifies the circumstances constituting Good
Reason (provided such circumstances are capable of correction), and the Company
fails to eliminate the conditions constituting Good Reason within thirty
(30) days after receipt of written notice of such event or condition from the
Executive. The Executive’s termination by reason of resignation from employment
with the Company for Good Reason shall be treated as involuntary. The
Executive’s resignation from employment with the Company for Good Reason must
occur within six (6) months following the initial existence of the event or
condition constituting Good Reason.
 
(e) Failure to Extend. A failure to extend the Employment Period pursuant to
Section 1 by either party shall not be treated as a termination of Executive’s
employment for purposes of this Agreement.
 
(f) Notice of Termination. Any termination by the Company, or by the Executive,
shall be communicated by Notice of Termination to the other parties hereto given
in accordance with Section 9(c) of this Agreement. For purposes of this
Agreement, a “Notice of Termination” means a written notice which (i) indicates
the specific termination provision in this Agreement relied upon, (ii) to the
extent applicable, sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive’s employment under
the provision so indicated and (iii) if the Date of Termination (as defined
below) is other than the date of receipt of such notice, specifies the
termination date (which date shall be not more than sixty (60) days after the
giving of such notice). The failure by the Executive or the Company to set forth
in the Notice of Termination any fact or circumstance which contributes to a
showing of Good Reason or Cause shall not waive any right of the Executive or
the Company, respectively, hereunder or preclude the Executive or the Company,
respectively, from asserting such fact or circumstance in enforcing the
Executive’s or the Company’s rights hereunder.
 
(g) Date of Termination. “Date of Termination” means (i) if the Executive’s
employment is terminated by the Company for Cause, or by the Executive for Good
Reason, the date specified in the Notice of Termination (which date shall not be
prior to the expiration of the applicable correction period and shall not be
more than sixty (60) days after the giving of such notice), as the case may be,
(ii) if the Executive’s employment is terminated by the Company other than for
Cause or Disability, the Date of Termination shall be the date on which the
Company notifies the Executive of such termination (or such other date specified
by the Company, which date shall not be more than sixty (60) days after the
giving of such notice), (iii) if the Executive’s employment is terminated by the
Executive without Good Reason, the Date of Termination shall be the thirtieth
(30th) day after the date on which the Executive notifies the Company of such
termination, unless otherwise agreed by the Company and the Executive, and
(iv) if the Executive’s employment is terminated by reason of death or
Disability, the Date of Termination shall be the date of death or Disability of
the Executive, as the case may be.
 
4. Obligations of the Company upon Termination.
 
(a) Without Cause or For Good Reason. If, during the Employment Period, the
Company shall terminate the Executive’s employment without Cause or the
Executive shall terminate his employment for Good Reason:
 
(i) The Executive shall be paid the aggregate amount of:
 
1.  
the Executive’s earned but unpaid Base Salary and accrued but unpaid paid time
off through the Date of Termination (the “Accrued Obligations”), which Accrued
Obligations shall be paid to Executive on the Date of Termination, plus

2.  
the Company shall pay Executive a cash payment equal to one (1) multiplied by
the mean average of the cash bonus payments received by the Executive during the
immediately preceding two (2) years, payable no later than thirty (30) days
after such termination; and

 
 (ii) For the period beginning on the Date of Termination and ending on the date
which is twelve (12) full months following the Date of Termination (or, if
earlier, the date on which Executive accepts employment with another employer
that provides comparable benefits in terms of cost and scope of coverage or the
date on which the applicable continuation period under the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended (“COBRA”) expires), the Company
shall provide the Executive and his eligible dependents who were covered under
the Company’s health plans as of the date of Executive’s termination with
healthcare benefits which are substantially the same as the benefits provided to
currently active employees at such cost to the Executive.  Executive shall be
solely responsible for all matters relating to his continuation of coverage
pursuant to COBRA, including, without limitation, his election of such coverage
and his timely payment of premiums. If any of the Company’s health benefits are
self-funded as of the Date of Termination, instead of providing continued health
insurance coverage as set forth above, the Company shall instead pay to the
Executive an amount equal to twelve (12) multiplied by the monthly premium the
Executive would be required to pay for continuation coverage pursuant to COBRA
for the Executive and his eligible dependents who were covered under the
Company’s health plans as of the Date of Termination (calculated by reference to
the premium as of the Date of Termination), which amount shall be paid in a lump
sum, subject to applicable withholding, within ten (10) days after the Release
Effective Date;
 
(iii) To the extent not theretofore paid or provided, the Company shall timely
pay or provide to the Executive any vested benefits and other amounts or
benefits required to be paid or provided or which the Executive is eligible to
receive under any plan, program, policy or practice or contract or agreement of
the Company (such other amounts and benefits shall be hereinafter referred to as
the “Other Benefits”); and
 
(iv) On the Date of Termination, 100% of any outstanding unvested stock options,
restricted stock and other equity awards granted to the Executive under any of
the Company’s equity incentive plans other than performance-based vesting awards
shall become immediately vested and exercisable in full.
 
Notwithstanding the foregoing, it shall be a condition to the Executive’s right
to receive the amounts provided for in Sections 4(a)(i)(B) and 4(a)(ii),
(iii) and (iv) above that the Executive execute, deliver to the Company and not
revoke a release of claims in substantially the form attached hereto as Exhibit
A (the “Release”). Executive shall have fifty (50) days following the Date of
Termination to execute such Release. It is understood that, in the event that
Executive is at least forty (40) years old on the Date of Termination, Executive
has a certain period to consider whether to execute such Release, and Executive
may revoke such Release within seven (7) business days after execution. In the
event Executive does not execute such Release within the fifty (50) days
following the Date of Termination, or if Executive revokes such Release within
the subsequent seven (7) business day period, the Executive shall not be
entitled to the amounts provided for in Sections 4(a)(i)(B) and 4(a)(ii),
(iii) and (iv) above. The date on which the Executive’s Release becomes
effective and the applicable revocation period lapses shall be the “Release
Effective Date.”
 
 (b) For Cause or Without Good Reason. If the Executive’s employment shall be
terminated by the Company for Cause or by the Executive without Good Reason
during the Employment Period, the Company shall have no further obligations to
the Executive under this Agreement other than the obligation to pay to the
Executive the Accrued Obligations in cash on the Date of Termination and to
provide the Other Benefits.
 
(c) Death or Disability. If the Executive’s employment is terminated by reason
of the Executive’s death or Disability during the Employment Period:

i.  
If the Executive dies during the Term, the obligations of the Company to or with
respect to the Executive shall terminate in their entirety, except as otherwise
provided under this Section. If the Executive becomes eligible for disability
benefits under the Company’s long-term disability plans and arrangements (or, if
none apply, would have been so eligible under the most recent plan or
arrangement), the Company shall have the right, to the extent permitted by law,
to terminate the employment of the Executive upon notice in writing to the
Executive; provided that the Company will have no right to terminate the
Executive’s employment if, in the opinion of a qualified physician reasonably
acceptable to the Company, it is reasonably certain that the Executive will be
able to resume the Executive’s duties on  a regular full-time basis within 90
days of the date the Executive receives notice of such termination.

ii.  
Upon death or other termination of employment by virtue of disability, (a) the
Executive (or the Executive’s estate or beneficiaries in the case of the death
of the Executive) shall have no right to receive any compensation or benefit
hereunder on and after the effective date of the termination of employment other
than Annual Salary and other benefits (but excluding any bonuses except as
provided in the Bonus Program or in clause (b) below) earned and accrued under
this Agreement prior to the date of termination (and reimbursement under this
Agreement for expenses incurred prior to the date of termination); (b) the
Executive (or the Executive’s estate or beneficiaries in the case of the death
of the Executive) shall be entitled to a cash payment equal to the accrued and
earned Executive’s Annual Salary (as in effect on the effective date of such
termination) payable no later than 30 days after such termination; and (c) this
Agreement shall otherwise terminate upon such death or other termination of
employment and there shall be no further rights with respect to the Executive
hereunder (except as provided in Section 8.16).

 
 
 (d) Exclusive Remedy. Except as otherwise expressly required by law or as
specifically provided herein, all of Executive’s rights to salary, severance,
benefits, bonuses and other amounts hereunder (if any) accruing after the
termination of Executive’s employment shall cease upon such termination. In the
event of a termination of Executive’s employment with the Company, Executive’s
sole remedy shall be to receive the payments and benefits described in this
Section 4. In addition, Executive acknowledges and agrees that he is not
entitled to any reimbursement by the Company for any taxes payable by Executive
as a result of the payments and benefits received by Executive pursuant to this
Section 4, including, without limitation, any excise tax imposed by Sections
409A and 4999 of the Internal Revenue Code of 1986, as amended (the “Code”).
 
(e) No Mitigation. Executive shall not be required to mitigate the amount of any
payment provided for in this Section 4 by seeking other employment or otherwise,
nor shall the amount of any payment or benefit provided for in this Section 4 be
reduced by any compensation earned by Executive as the result of employment by
another employer or self-employment or by retirement benefits; provided,
however, that loans, advances (other than salary advances) or other amounts owed
by Executive to the Company under a written agreement may be offset by the
Company against amounts payable to Executive under this Section 4; provided,
further, that no such offset shall operate to accelerate the payment of any
non-qualified deferred compensation.
 
5. Restrictive Covenants.
 
 (a) Confidentiality. Executive shall hold in a fiduciary capacity for the
benefit of the Company all trade secrets and confidential information, knowledge
or data relating to the Company and its subsidiaries and affiliates
(collectively, the “COMPANY Group”) and their businesses and investments, which
shall have been obtained by Executive during Executive’s employment by the
Company and which is not generally available public knowledge (other than by
acts by Executive in violation of this Agreement). Except as may be required or
appropriate in connection with his carrying out his duties under this Agreement,
Executive shall not, without the prior written consent of the Company or as may
otherwise be required by law or any legal process, or as is necessary in
connection with any adversarial proceeding against the Company (in which case
Executive shall use his reasonable best efforts in cooperating with the Company
in obtaining a protective order against disclosure by a court of competent
jurisdiction), communicate or divulge any such trade secrets, information,
knowledge or data to anyone other than the Company and those designated by the
Company or on behalf of the Company in the furtherance of its business or to
perform duties hereunder.
 
 (b) Non-Competition. During the Employment Period, the Executive will not
(i) engage, anywhere within the geographical areas in which the COMPANY Group is
conducting its business operations or providing services, in any commercial real
estate project which is being engaged in by the COMPANY Group or pursue or
attempt to develop any retail project known to Executive and which the COMPANY
Group is pursuing, developing or attempting to develop (a “Project”), directly
or indirectly, alone, in association with or as a shareholder, principal, agent,
partner, officer, director, employee or consultant of any other organization, or
(ii) divert to any entity which is engaged in any business conducted by the
COMPANY Group in the same geographic area as the COMPANY Group, any Project or
any customer of any of the COMPANY Group. Notwithstanding the preceding
sentence, Executive shall not be prohibited from owning less than three
(3%) percent of any publicly traded corporation, whether or not such corporation
is in competition with the Company. If, at any time, the provisions of this
Section 5(b) shall be determined to be invalid or unenforceable, by reason of
being vague or unreasonable as to area, duration or scope of activity, this
Section 5(b) shall be considered divisible and shall become and be immediately
amended to only such area, duration and scope of activity as shall be determined
to be reasonable and enforceable by the court or other body having jurisdiction
over the matter; and Executive agrees that this Section 5(b) as so amended shall
be valid and binding as though any invalid or unenforceable provision had not
been included herein.
 
(c) Company Property. All records, files, drawings, documents, models,
equipment, and the like relating to the Company’s business, which Executive has
control over shall not be removed from the Company’s premises without its
written consent, unless such removal is in the furtherance of the Company’s
business or is in connection with Executive’s carrying out his duties under this
Agreement and, if so removed, shall be returned to the Company promptly after
termination of Executive’s employment hereunder, or otherwise promptly after
removal if such removal occurs following termination of employment. Executive
shall assign to the Company all rights to trade secrets and other products
relating to the Company’s business developed by him alone or in conjunction with
others at any time while employed by the Company.
 
(d) Injunctive Relief. In recognition of the facts that irreparable injury will
result to the Company in the event of a breach by the Executive of his
obligations under Sections 5(a) through (d) of this Agreement, that monetary
damages for such breach would not be readily calculable, and that the Company
would not have an adequate remedy at law therefor, the Executive acknowledges,
consents and agrees that in the event of such breach, or the threat thereof, the
Company shall be entitled, in addition to any other legal remedies and damages
available under law or in equity, to specific performance thereof and to
temporary and permanent injunctive relief (without the necessity of posting a
bond) to restrain the violation or threatened violation of such obligations by
the Executive.
 
(e) Survival. This Section 5 shall survive termination of the Employment Period
or any expiration or termination of this Agreement.

6.      Insurance. The Company shall have the right to take out life, health,
accident, “key-man” or other insurance covering Executive, in the name of the
Company and at the Company’s expense in any amount deemed appropriate by the
Company. Executive shall assist the Company in obtaining such insurance,
including, without limitation, submitting to any required examinations and
providing information and data required by insurance companies. Executive shall
have no interest in any such policies obtained by the Company.

7. Successors.
 
(a) This Agreement is personal to the Executive and without the prior written
consent of the Company shall not be assignable by the Executive otherwise than
by will or the laws of descent and distribution. This Agreement shall inure to
the benefit of and be enforceable by the Executive’s legal representatives.
 
(b) This Agreement shall inure to the benefit of and be binding upon the Company
and its successors and assigns.
 
(c) The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. As used in this
Agreement, “Company” shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
 
8. Payment of Financial Obligations. The payment or provision to the Executive
by the Company of any remuneration, benefits or other financial obligations
pursuant to this Agreement shall be allocated to the Company and, if applicable,
any subsidiary and/or affiliate thereof in accordance with any agreements to
such effect by the Company, as in effect from time to time.

9. Indemnification.

a)  
During the Term and thereafter, the Company agrees to indemnify and hold the
Executive and the Executive’s heirs and representatives harmless, to the maximum
extent permitted by law, against any and all damages, costs, liabilities, losses
and expenses (including reasonable attorneys’ fees) as a result of any claim or
proceeding (whether civil, criminal, administrative or investigative), or any
threatened claim or proceeding (whether civil, criminal, administrative or
investigative), against the Executive that arises out of or relates to the
Executive’s service as an officer, director or employee, as the case may be, of
the Company, or the Executive’s service, act or inaction for the benefit of the
Company, including but not limited to, the delivery of any personal guarantee or
collateral for the benefit of the Company, in any such capacity or similar
capacity with an affiliate of the Company or other entity at the request of the
Company, both prior to and after the Effective Date, and promptly to advance to
the Executive or the Executive’s heirs or representatives any and all such
expenses upon written request with appropriate documentation of such expense and
upon receipt of an undertaking by the Executive or on the Executive’s behalf to
repay such amount if it shall ultimately be determined that the Executive is not
entitled to be indemnified by the Company.

b)  
During the Term and thereafter, the Company also shall provide the Executive
with coverage under its current directors’ and officers’ liability policy to the
same extent that it provides such coverage to its other executive officers. If
the Executive has any knowledge of any actual or threatened action, suit or
proceeding, whether civil, criminal, administrative or investigative, as to
which the Executive may request indemnity under this provision, the Executive
will give the Company prompt written notice thereof; provided that the failure
to give such notice shall not affect the Executive’s right to indemnification.
The Company shall be entitled to assume the defense of any such proceeding and
the Executive will use reasonable efforts to cooperate with such defense. To the
extent that the Executive in good faith determines that there is an actual or
potential conflict of interest between the Company and the Executive in
connection with the defense of a proceeding, the Executive shall so notify the
Company and shall be entitled to separate representation at the Company’s
expense by counsel selected by the Executive (provided that the Company may
reasonably object to the selection of counsel within ten (10) business days
after notification thereof) which counsel shall cooperate, and coordinate the
defense, with the Company’s counsel and minimize the expense of such separate
representation to the extent consistent with the Executive’s separate defense
and to the extent possible and consistent with all applicable rules of legal
ethics. This Section 9 shall continue in effect after the termination of the
Executive’s employment or the termination of this Agreement.

 
10. Miscellaneous.
 
(a) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, without reference to
principles of conflict of laws. The captions of this Agreement are not part of
the provisions hereof and shall have no force or effect. This Agreement may not
be amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.
 
(b) Arbitration. Except as set forth in Section 5(d) above, any disagreement,
dispute, controversy or claim arising out of or relating to this Agreement or
the interpretation of this Agreement or any arrangements relating to this
Agreement or contemplated in this Agreement or the breach, termination or
invalidity thereof shall be settled by final and binding arbitration before a
single, neutral arbitrator in San Diego, California in accordance with the then
existing JAMS Employment Arbitration Rules and Procedures then in effect (the
“Rules”). In the event of such an arbitration proceeding, the Executive and the
Company shall select a mutually acceptable neutral arbitrator from among the
JAMS panel of arbitrators. If the parties are unable to agree upon an
arbitrator, one shall be appointed by JAMS in accordance with its Rules. Neither
the Executive nor the Company nor the arbitrator shall disclose the existence,
content, or results of any arbitration hereunder without the prior written
consent of all parties. Arbitration may be compelled pursuant to the California
Arbitration Act (Code of Civil Procedure §§ 1280 et seq.). The arbitrator shall
apply the substantive law (and the law of remedies, if applicable) of the state
of California, or federal law, or both, as applicable, and the arbitrator is
without jurisdiction to apply any different substantive law. The arbitrator
shall render an award and a written, reasoned opinion in support thereof.
Judgment upon the award may be entered in any court having jurisdiction thereof.
Each party shall pay the fees of its own attorneys, the expenses of its
witnesses and all other expenses connected with presenting its case; provided,
however, the Executive and the Company agree that, except as may be prohibited
by law, the arbitrator may, in his or her discretion, award reasonable
attorneys’ fees to the prevailing party; provided, further, that the prevailing
party shall be reimbursed for such fees, costs and expenses within sixty
(60) days following any such award, but, to the extent the Executive is the
prevailing party, in no event later than the last day of the Executive’s taxable
year following the taxable year in which the fees, costs and expenses were
incurred; provided, further, that the parties’ obligations pursuant to the
provisos set forth above shall terminate on the tenth (10th) anniversary of the
date of Executive’s termination of employment. Other costs of the arbitration,
including the cost of any record or transcripts of the arbitration, the JAMS
administrative fees, the fee of the arbitrator, and all other fees and costs,
shall be borne by the Company. Nothing in this Section 10(b) shall prohibit or
limit the Company or the Executive from seeking provisional relief, including,
without limitation, injunctive relief, in a court of competent jurisdiction
pursuant to California Code of Civil Procedure Section 1281.8.
 
(c) Notices. All notices and other communications hereunder shall be in writing
and shall be given by hand delivery to the other party or by registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
 
If to the Executive: at the Executive’s most recent address on the records of
the Company,
 
If to the Company:
 
NetREIT, Inc.
1282 Pacific Oaks Place
Escondido, California 92029-2900
Attention:  General Counsel
 
If to the Executive:
 
Jack K. Heilbron
NetREIT, Inc.
1282 Pacific Oaks Place
Escondido, California 92029-2900
 
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
 
(d) Sarbanes-Oxley Act of 2002. Notwithstanding anything herein to the contrary,
if the Company determines, in its good faith judgment, that any transfer or
deemed transfer of funds hereunder is likely to be construed as a personal loan
prohibited by Section 13(k) of the Exchange Act and the rules and regulations
promulgated thereunder, then such transfer or deemed transfer shall not be made
to the extent necessary or appropriate so as not to violate the Exchange Act and
the rules and regulations promulgated thereunder.
 
(e) Severability. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
 
(f) Withholding. The Company may withhold from any amounts payable under this
Agreement such Federal, state, local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
 
(g) No Waiver. The Executive’s or the Company’s failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right the Executive or the Company may have hereunder, including, without
limitation, the right of the Executive to terminate employment for Good Reason
pursuant to Section 3(c) of this Agreement, shall not be deemed to be a waiver
of such provision or right or any other provision or right of this Agreement.
 
(h) Survival. Provisions of this Agreement shall survive any termination of the
Employment Period if so provided herein or if necessary or desirable to fully
accomplish the purposes of such provision, including, without limitation, the
Executive’s obligations under Section 5 hereof. The obligation of the Company to
make payments to or on behalf of the Executive under Section 4 hereof is
expressly conditioned upon the Executive’s continued full performance of his
obligations under Section 5 hereof. The Executive recognizes that, except as
expressly provided in Section 4, no compensation is earned after termination of
the Employment Period.
 
(i) Entire Agreement. This Agreement contains the entire agreement between the
parties with respect to the subject matter hereof and supersedes all prior
agreements, written or oral, with the Company or its subsidiaries (or any
predecessor of either).
 
 (j) Counterparts. This Agreement may be executed simultaneously in two
counterparts, each of which shall be deemed an original but which together shall
constitute one and the same instrument.

 
 (k) Right to Advice of Counsel. Executive acknowledges that he has the right
to, and has been advised to, consult with an attorney regarding the execution of
this Agreement and any release hereunder; by his signature below, Executive
acknowledges that he understands this right and has either consulted with an
attorney regarding the execution of this Agreement or determined not to do so.

IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and,
pursuant to the authorization from the Company’s Board of Directors, the Company
has caused these presents to be executed in its name on its behalf, all as of
the day and year first above written.
 

       
NETREIT, INC.
                 
   
     
By:
Bruce Staller
     
Title:
Board of Directors, Chairman,
       
Compensation Committee
       
Date:________________________
                 
EXECUTIVE
                         
By:
Jack K. Heilbron
     
Title:
President, Chief Executive Officer
       
Date:________________________

 
 

--------------------------------------------------------------------------------

 

EXHIBIT A
 
GENERAL RELEASE
 
[The language in this Release may change based on legal developments and
evolving best
practices; this form is provided as an example of what will be included in the
final Release document.]
 
This release is being executed pursuant to the Employment Agreement effective as
of January 1, 2011, between NetREIT, Inc. and Jack K. Heilbron (the
“Agreement”).
 
For a valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the undersigned does hereby release and forever discharge the
“Releasees” hereunder, consisting of NetREIT, Inc. and each of its partners,
subsidiaries, associates, affiliates, successors, heirs, assigns, agents,
directors, officers, employees, representatives, lawyers, insurers, and all
persons acting by, through, under or in concert with them, or any of them, of
and from any and all manner of action or actions, cause or causes of action, in
law or in equity, suits, debts, liens, contracts, agreements, promises,
liability, claims, demands, damages, losses, costs, attorneys’ fees or expenses,
of any nature whatsoever, known or unknown, fixed or contingent (hereinafter
called “Claims”), which the undersigned now has or may hereafter have against
the Releasees, or any of them, by reason of any matter, cause, or thing
whatsoever from the beginning of time to the date hereof. The Claims released
herein include, without limiting the generality of the foregoing, any Claims in
any way arising out of, based upon, or related to the employment or termination
of employment of the undersigned by the Releasees, or any of them; any alleged
breach of any express or implied contract of employment; any alleged torts or
other alleged legal restrictions on Releasee’s right to terminate the employment
of the undersigned; and any alleged violation of any federal, state or local
statute or ordinance including, without limitation, Title VII of the Civil
Rights Act of 1964, the Age Discrimination In Employment Act, the Americans With
Disabilities Act, and the California Fair Employment and Housing Act.
 
THE UNDERSIGNED ACKNOWLEDGES THAT HE HAS BEEN ADVISED BY LEGAL COUNSEL AND IS
FAMILIAR WITH THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542, WHICH
PROVIDES AS FOLLOWS:
 
“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH
IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH
THE DEBTOR.”
 
THE UNDERSIGNED, BEING AWARE OF SAID CODE SECTION, HEREBY EXPRESSLY WAIVES ANY
RIGHTS HE MAY HAVE THEREUNDER, AS WELL AS UNDER ANY OTHER STATUTES OR COMMON LAW
PRINCIPLES OF SIMILAR EFFECT.

[IN ACCORDANCE WITH THE OLDER WORKERS BENEFIT PROTECTION ACT OF 1990, THE
UNDERSIGNED IS HEREBY ADVISED AS FOLLOWS:
 
(A) HE HAS THE RIGHT TO CONSULT WITH AN ATTORNEY BEFORE SIGNING THIS RELEASE;
 
(B) HE HAS [TWENTY-ONE (21)][FORTY-FIVE (45)] DAYS TO CONSIDER THIS RELEASE
BEFORE SIGNING IT; AND
 
(C) HE HAS SEVEN (7) DAYS AFTER SIGNING THIS RELEASE TO REVOKE THIS RELEASE, AND
THIS RELEASE WILL BECOME EFFECTIVE UPON THE EXPIRATION OF THAT REVOCATION
PERIOD.]1
 
The undersigned represents and warrants that there has been no assignment or
other transfer of any interest in any Claim which he may have against Releasees,
or any of them, and the undersigned agrees to indemnify and hold Releasees, and
each of them, harmless from any liability, Claims, demands, damages, costs,
expenses and attorneys’ fees incurred by Releasees, or any of them, as the
result of any such assignment or transfer or any rights or Claims under any such
assignment or transfer. It is the intention of the parties that this indemnity
does not require payment as a condition precedent to recovery by the Releasees
against the undersigned under this indemnity.
 
The undersigned agrees that if he hereafter commences any suit arising out of,
based upon, or relating to any of the Claims released hereunder or in any manner
asserts against Releasees, or any of them, any of the Claims released hereunder,
then the undersigned agrees to pay to Releasees, and each of them, in addition
to any other damages caused to Releasees thereby, all attorneys’ fees incurred
by Releasees in defending or otherwise responding to said suit or Claim.
 
The undersigned further understands and agrees that neither the payment of any
sum of money nor the execution of this Release shall constitute or be construed
as an admission of any liability whatsoever by the Releasees, or any of them,
who have consistently taken the position that they have no liability whatsoever
to the undersigned.
 
IN WITNESS WHEREOF, the undersigned has executed this Release this      day of
            ,         .
 

     

 

                     
Jack K. Heilbron