AMENDED AND RESTATED PROMISSORY NOTE
 
US
$7,250,000.00                                                                                                       Colorado
Springs, Colorado
 
February 27, 2013

This Amended and Restated Promissory Note amends and restates and consolidates
that certain Promissory Note Secured by Deed of Trust, dated as of March 21,
2007 (the "Original Note"), in the original principal amount of $11,000,000, by
NetREIT, Inc., a Maryland corporation, previously NetREIT, a California
corporation (“Original Borrower”), in favor of National Integrity Life Insurance
Company, a New York corporation ("Lender"), as assumed by NetREIT Garden Gateway
LP, a California limited partnership ("Borrower") pursuant to that certain
Assumption Agreement, dated as of March 19, 2010, by and among Original
Borrower, Borrower, Lender and R&R Enterprises, and Indiana partnership, as
evidenced by that certain Memorandum of Loan Assumption, dated as of March 19,
2010, by and between Borrower, as trustor, and Lender, as beneficiary, and
recorded May 10, 2010 under Reception No. 210043360 in the Official Records of
the County of El Paso, State of Colorado (all documents evidencing such
assumption being referred to collectively herein as the “Assumption Documents”),
as amended by that certain Loan Extension and Modification Agreement dated as of
the date hereof (the “Loan Modification”).

FOR VALUE RECEIVED, the undersigned promises to pay Lender at its home office
located at 400 Broadway, Cincinnati, Ohio  45202 or at such other place as
Lender may from time to time designate in writing, the principal sum of Seven
Million Two Hundred Fifty Thousand Dollars ($7,250,000.00) (the “Loan”),
together with interest on the unpaid principal balance from time to time
outstanding in accordance with the provisions of this Amended and Restated
Promissory Note (the “Note”).

1.  
INTEREST RATE.

 
 
1.1.
Fixed Rate.  Effective as of February 5, 2013, the unpaid principal balance
under the Loan shall bear interest at the rate (the “Contract Rate”) of five
percent (5.00%) per annum.

 
 
1.2
Calculation of Interest.  All interest payable under this Note shall be paid in
arrears and shall be calculated on the basis of a 360-day year, 30-day month,
except that first and last month shall be calculated by the actual number of
days principal is outstanding.  Under no circumstances shall the interest, fees,
and charges collected or to be collected under this Note exceed the maximum, if
any, permitted by applicable law.  If any such law is interpreted so that said
interest, fees, and/or charges would exceed any such maximum, and Borrower is
entitled to the benefit of such law, then:

 
 
(i)
such interest, fees, and/or charges shall be reduced by the amount necessary to
reduce the same to the permitted maximum; and

 
 
(ii)
any sums already collected from Borrower that exceed the permitted maximum will
be refunded.  Lender may choose to make any refund either by treating the
payments, to the extent of the excess, as prepayment of principal or by making a
direct payment to Borrower.  No prepayment premium shall be assessed on
prepayments under this subsection.  The provisions of this subsection shall
control over any inconsistent provision of this Note or any other Loan Documents
(as defined in Section 6 below).

 

2.  
MANNER OF PAYMENT.  Principal and interest shall be payable in installments as
follows:

 
 
2.1
Commencing March 5, 2013, and on the fifth (5th) day of each succeeding month
throughout the term of this Note, Borrower shall make level monthly payments of
principal and interest of Forty-Two Thousand Three Hundred Eighty-Two and 78/100
Dollars ($42,382.78).  Borrower understands that the first payment will include
principal, interest under the balance hereof, and interest on principal being
repaid under the Original Note as of the date hereof.

 
 
2.2
The entire unpaid principal balance on this Note, together with all accrued but
unpaid interest and all other sums due under this Note and under any document
securing this Note (collectively, the "Indebtedness") shall be due and payable
on February 5, 2020 (the "Maturity Date"), if not sooner paid.

 
TIME IS OF THE ESSENCE IN THE PAYMENT OF ALL SUMS DUE UNDER THIS NOTE.
 
3.
APPLICATION OF PAYMENTS.  All payments received from, or on behalf of, Borrower
shall be applied in the following order: (i) to any advancements of, or funds
established for, payment of any insurance costs or premiums, taxes, assessments,
or other advances or to any unpaid charges or fees as provided for in this Note
or any other “Loan Documents” (as defined in Section 6 below), together with
interest thereon at the “Default Rate” (as defined herein); (ii) any late
charges as set forth in this Note; (iii) to any prepayment premiums payable
pursuant to this Note; (iv) to interest on the unpaid principal balance of this
Note; and then (v) to the unpaid principal balance of this Note. Without
limitation of the foregoing, in the event of any partial payment hereunder,
Lender shall have the sole right and authority to determine which portion of the
Indebtedness any such partial payment made by Borrower and received by Lender
hereunder may be applied against, if any; provided, however, that, nothing in
the foregoing shall impose upon Lender any duty or obligation to accept or apply
any partial payment received by Lender hereunder or under the “Deed of Trust”
(as defined in Section 6 below).

 
4.
LATE CHARGES; DEFAULT INTEREST RATE.  Borrower recognizes that a default by
Borrower in making the payments agreed to be paid under this Note and pursuant
to the Deed of Trust when due, including any agreed Lender charges or fees,
shall result in Lender incurring additional expense in servicing the Loan, in
loss to Lender of the use of the money due, and in frustration to Lender in
meeting its loan commitments.  Borrower therefore agrees as follows:

 
 
4.1
Borrower shall pay, on demand, an amount equal to five percent (5%) of each
delinquent sum (the "Late Payment Charge") if any monthly installment or other
payment is not paid by the date when such payment is due.  An additional sum of
five percent (5%) of any delinquent sum shall be charged for each successive
month that the monthly installment or other payment remains past due and shall
be incurred on the fifth (5th) day of each month without a daily pro rata
adjustment for payment made after the fifth (5th) day of the month.  Acceptance
of such late charge by Lender shall not constitute a waiver of the default with
respect to the overdue amount and shall not prevent Lender from exercising any
other rights and remedies available to it.  Upon maturity, whether by
acceleration, demand or otherwise, and at the Lender's option upon the
occurrence and continuation of any Event of Default (as defined in paragraph 8
below), the Late Payment Charge shall not thereafter continue to apply;
provided, however, that in either such event, the Loan shall bear interest at
the Default Rate as set forth below.

 
4.2  
Upon the occurrence of an “Event of Default” (as defined in Section 8 below)
(including failure to pay the outstanding principal balance hereof upon the
Maturity Date), the Loan shall bear interest thereafter until paid in full at a
default rate equal to the lesser of (i) the highest rate of interest allowable
under the laws of the state where the Property is located or (ii) the Contract
Rate plus five (5) percentage points per annum (the “Default Rate”).  The
Default Rate shall continue to apply whether or not judgment shall be entered on
the Note.

 
4.3  
Borrower agrees that both the Late Payment Charge and the Default Rate are
imposed as liquidated damages for the purpose of defraying the Lender’s expenses
incident to the handling of delinquent payments or other defaults under the
terms of this Note and any other Loan Documents and that such charges are in
addition to, and not in lieu of, the Lender’s exercise of any rights and
remedies under this Note, under any other Loan Documents, or under applicable
law and any reasonable fees and expenses of any agents or attorneys that the
Lender may employ.  Borrower further acknowledges that the Late Payment Charge
and Default Rate hereunder represent the reasonable estimate of those damages
which would be incurred by Lender, and a fair return to Lender for the loss of
the use of the funds not timely received from Borrower on account of a default
by Borrower as herein specified, established by Borrower and Lender through good
faith consideration of the facts and circumstances surrounding the transaction
contemplated under this Note as of the date hereof. In addition, the Default
Rate reflects the increased credit risk to the Lender of carrying a loan that is
in default.  Borrower and Lender agree that such Late Payment Charge and Default
Rate represent a fair and reasonable estimate of the anticipated and actual
losses Lender will incur by reason of such late payment and default, and that
the actual harm incurred by Lender cannot be estimated with certainty and
without difficulty.

 
5.
PREPAYMENTS.  Borrower shall not have the privilege to prepay, and Lender shall
not have an obligation to accept tendered prepayments of, the whole or any
portion of the Loan, except as expressly stated below.

 
 
5.1
Upon not less than thirty (30) days prior written notice to Lender, Borrower
shall have the privilege to fully prepay the Indebtedness, provided that
Borrower simultaneously pays to Lender a premium (the “Prepayment Premium”)
equal to the greater of:

 
 
(a)
the sum of (i) the present value of the scheduled monthly payments on this Note
from the date of prepayment to the Maturity Date and (ii) the present value of
the amount of principal and interest due on the Maturity Date of this Note
(assuming all scheduled monthly payments due prior to the Maturity Date were
made when due); minus (iii) the outstanding principal balance of this Note as of
the date of prepayment.  The present values described in (i) and (ii) are to be
computed on a monthly basis as of the date of prepayment, discounted at the
yield to maturity of the U.S. Treasury Note or Bond that is closest in maturity
with a price closest to 100 to the Maturity Date of this Note, as reported in
The Wall Street Journal, absent manifest error, on the fifth (5th) business day
preceding the date of prepayment; or

 
 
(b)
one percent (1%) of the outstanding principal balance of this Note as of the
date of prepayment.

 
 
5.2
In the event that (i) Lender exercises its right to accelerate the Maturity Date
following an Event of Default by Borrower in any of the terms of this Note or
any other Loan Documents, or (ii) payment is tendered of the full amount due at
any time prior to a foreclosure sale or other similar proceeding, either by
Borrower, its successors, or assigns or by anyone on its behalf, it shall be
deemed by the Lender that such events shall constitute an evasion of the
Prepayment Premium and to be a voluntary prepayment; therefore, to the extent
permitted by applicable law, such prepayment shall include the premium required
to be paid under Section 5.1 above.

 
 
5.3
Notwithstanding Sections 5.1 and 5.2 above, (a) provided that Borrower gives not
less than thirty (30) days prior written notice to Lender of its intent to
prepay, Borrower shall have the privilege to prepay this Note in full, without
any prepayment premium, at any time on or after November 5, 2019, and (b) no
Prepayment Premium shall be due and payable in the event Lender elects to apply
any insurance proceeds or condemnation awards payable with respect to the
“Property” (defined in Section 6 below) to the Indebtedness in accordance with
the terms of the Deed of Trust.

 
 
5.4
The prepayment premium required by this Section 5 is acknowledged by Borrower to
be partial compensation to Lender for the cost of reinvesting the Loan proceeds
and for the loss of the contracted rate of return on the Loan.  Furthermore,
Borrower acknowledges that the loss that may be sustained by Lender as a result
of such a prepayment by Borrower is not susceptible of precise calculation and
the prepayment premium represents the good faith effort of Borrower and Lender
to compensate Lender for such loss.

 
 
5.5
No partial prepayments shall be permitted except with the prior written consent
of Lender, which may be withheld in Lender’s sole discretion.   In the event
that a partial prepayment is permitted by Lender in writing, the Prepayment
Premium shall be pro rated based on the amount of the principal prepaid.

 
6.
SECURITY.  This Note is given for the Loan in the above amount and is secured by
the Deed of Trust to Public Trustee, Security Agreement, Assignment of Leases
and Rents and Fixture Filing in favor of Lender and dated as of March 21, 2007
(the "Deed of Trust"), as assumed by Borrower pursuant to the Assumption
Documents, which Deed of Trust is a first lien on certain real and personal
property located in El Paso County, Colorado and more fully described in the
Deed of Trust (the "Property").  The Deed of Trust, this Note, and all other
documents executed in connection with the Loan are hereinafter collectively
referred to as the “Loan Documents.”  Borrower hereby agrees to perform and
comply with each of the terms, covenants and provisions contained in this Note
and in all other Loan Documents, all such terms, covenants and provisions being
hereby made a part of this Note to the same extent and with the same force and
effect as if fully set forth in this Note.  The term “Property” shall mean both
the real and personal property that is encumbered by the Deed of Trust.

 
7.  
DISBURSEMENTS.  Funds representing the proceeds of the Loan and evidenced by
this Note that are disbursed by wire transfer, or other delivery to Borrower, to
escrows, or otherwise delivered for the benefit of Borrower shall, for all
purposes, be deemed outstanding under this Note and to have been received by
Borrower as of the date of such wire transfer or other delivery, and interest
shall accrue and be payable upon such funds from and after the date of such wire
transfer or delivery and until repaid to Lender, notwithstanding the fact that
such funds may not, at any time, have been received or remitted by such escrows
to Borrower.

 
8.  
DEFAULT.  The occurrence of any of the following events shall be deemed an
“Event of Default” under this Note: an Event of Default has occurred as defined
in the Deed of Trust.

9.  
REMEDIES. Upon the occurrence of an Event of Default and the expiration of any
applicable cure period, if any, then (i) the entire Indebtedness shall
immediately become due and payable without further notice (which is hereby
expressly waived by Borrower), at the option of Lender, and (ii) Lender may
exercise any rights or remedies available to it under this Note and the Loan
Documents and at law or in equity.  The remedies of the Lender as provided in
this Note and the Loan Documents shall be cumulative and concurrent and may be
pursued singly, successively, or together against the Borrower, the Property,
any guarantor or indemnitor of this Note, and/or any other security at the sole
discretion of the Lender.  Time is of the essence.

 
Borrower hereby agrees to pay all costs and expenses of collection when incurred
(which costs and expenses may be added to the principal balance due under this
Note and be receivable therewith), including reasonable attorneys' fees and
costs.  Such attorneys’ fees and costs shall include, but not be limited to, the
reasonable fees and costs incurred in all matters of collection and enforcement,
construction, protection, and interpretation before and after suit, trial,
proceedings and appeals, as well as appearance in and connected with any
bankruptcy proceedings or creditors' reorganization or arrangement proceedings.

 
10.
LIMITATION OF LIABILITY.  Except as otherwise provided herein and in the Loan
Documents, in the event Lender should take action at any time to enforce the
collection of the Loan, Lender may exercise any remedy it may have against the
Property, including without limitation, foreclosing on the Deed of Trust.

 
10.1  
If Lender elects to foreclose the Deed of Trust, and, as a result of the
foreclosure and sale of the Property, a lesser sum is realized from the sale of
the Property than the amount due and owing on the Indebtedness, Lender shall not
seek or obtain any deficiency or other money judgment against Borrower, it being
understood and agreed that Borrower and all partners, members, stockholders, or
holders of beneficial interests in Borrower shall have no personal liability for
the payment of the Indebtedness, and the Indebtedness shall be considered
nonrecourse to Borrower, its partners, members, stockholders, or holders of
beneficial interests, except as provided in Section 10.2 below and in any other
Loan Document.

 
10.2  
The foregoing provisions of Section 10.1 notwithstanding, Lender shall have full
recourse against Borrower and guarantors, if any, and the same shall be
personally liable, jointly and severally (and Lender shall not be restricted
from obtaining any monetary or other judgment against such persons and entities)
pursuant to the terms and conditions of that certain Environmental Indemnity
Agreement by Original Borrower, dated as of March 21, 2007, assumed by Borrower
pursuant to the Assumption Documents, and Lender shall have full recourse
against Borrower and guarantors, if any, and the same shall be personally
liable, jointly and severally (and Lender shall not be restricted from obtaining
any monetary or other judgment against such persons and entities) to the extent
of any loss, cost (including reasonable attorney’s fees) or liability
(collectively, the “Recourse Obligations”) suffered by Lender as a result
of:  (1) the Borrower misapplying, or failing to remit to Lender, any
condemnation awards, casualty proceeds, or security deposits attributable to the
Property; (2) any act of fraud or breach of any representation or warranty of
the Borrower or any partner, member, or stockholder of the Borrower (or holder
of a beneficial interest therein, whether direct or indirect) contained in the
Loan Documents or any other agreement, certificate, or instrument delivered
pursuant to or in connection with the Loan Documents; (3) the Borrower
collecting rents more than one (1) month in advance or the failure after the
occurrence and during the continuance of an Event of Default to apply the rents
toward the normal and necessary operating expenses of the Property, the curing
of any default, or in the manner and for the purposes provided in the Deed of
Trust or in any other Loan Documents; (4) the presence, release, threatened
release, treatment or removal of any Hazardous Materials (including asbestos) or
any underground or other storage tanks at the Property; (5) the violation of
applicable environmental laws relating to Hazardous Materials or underground
storage tanks, and any lien against any portion of the Property permitted or
imposed by any environmental law; (6) any diminution in value of the Property or
other collateral or security for the Loan, arising from the waste (either
intentional/active or permissive/passive) of the Borrower; (7) any casualty or
loss that was self-insured or under-insured or any deductible amount under any
insurance policy relating to the Property, including, without limitation, those
relating to terrorism and/or mold coverage; (8) the failure by Borrower to
insure the Property as required under the terms of the Deed of Trust, including,
without limitation, the failure to provide terrorism and/or mold coverage; (9)
the failure by Borrower to pay any taxes or assessments on the Property; or (10)
the filing of any bankruptcy or other reorganization proceeding by Borrower.

 
 
10.3
The foregoing limitation on personal liability is not intended and shall not be
deemed to constitute a forgiveness of the Indebtedness or a release of the
obligation to repay said Indebtedness according to the terms and provisions
hereof, but shall operate solely to limit the remedies otherwise available to
the holder hereof for the enforcement and collection of such Indebtedness.

 
10.4
Notwithstanding the foregoing provisions of Section 10.1, Lender's agreement
that this Loan shall be non-recourse as provided in Section 10.1 shall be null
and void, and the Loan shall be fully recourse, in the event of a default under
Section 2.2.26 of the Deed of Trust.

11.
WAIVER; NO RELEASE.  The Borrower, any endorsers, sureties, guarantors,
successors in interest, and all others who may become liable for all or any part
of this obligation (i) severally waive presentment and demand for payment,
protest, notice of protest, demand and dishonor, and nonpayment of this Note,
(ii) expressly agree that the Maturity Date of this Note, or any payment
hereunder, may be extended from time to time without in any way affecting the
liability of each, and (iii) agree that the Lender hereof may release all or any
part of the Property or any other collateral securing the Indebtedness on the
payment hereof or release any party liable for this obligation, and such
extension or release may be made without notice to any of such parties and
without discharging the liability of any such party.  The Borrower also waives,
to the extent applicable, all defenses based upon suretyship or impairment of
collateral.  It is further agreed that no alteration, amendment or waiver of any
provision of this Note or any of the Loan Documents made by agreement between
Lender and any other person or party shall release, discharge, modify, change or
affect the liability of Borrower under this Note of the Loan Documents.  The
right to plead any and all statutes of limitation as a defense to any demand on
this Note, or any agreement to pay the same, or any demand secured by the Loan
Documents, or any and all obligations and liabilities arising out of or in
connection with this Note or in the Loan Documents, is expressly waived by the
Borrower and endorsers to the fullest extent permitted by law.  No delay or
omission on the part of Lender in exercising any right hereunder shall operate
as a waiver of such right or any other remedy under this Note.  A waiver on any
one occasion shall not be construed as a bar to or waiver of such right or
remedy on a future occasion.

 
12.  
CONTROLLING LAW.  This Note will be interpreted under, and the rights and
liabilities of the Lender and the Borrower determined in accordance with, the
laws of the state in which the Property is located, excluding its conflict of
laws rules.  The Borrower hereby irrevocably consents to the exclusive
jurisdiction of any state or federal court in such state; provided, however,
that nothing contained in this Note will prevent the Lender from bringing any
action, enforcing any award or judgment, or exercising any rights against the
Borrower individually, against any security, or against any property of the
Borrower within any other county, state or other foreign or domestic
jurisdiction. The Borrower acknowledges and agrees that the venue provided above
is the most convenient forum for both the Lender and the Borrower.  The Borrower
waives any objection to venue and any objection based on a more convenient forum
in any action instituted under this Note.

 
13.
COMPLIANCE WITH LAWS; SEVERABILITY. If, under any circumstances whatsoever, the
fulfillment of any provision of this Note conflicts with the mandatory
requirements or prohibitions prescribed by any applicable statute or other
applicable law with regard to obligations of like character or amount, then, to
the fullest extent possible, this Note shall be construed so as to give effect
to the intent manifested by any provision held to be invalid, illegal,
unenforceable, or otherwise contrary to law.  If any provision of this Note is
found to be invalid or unenforceable by a court, all other provisions of this
Note will remain in full force and effect.

 
14.  
WAIVER OF JURY TRIAL.  THE BORROWER IRREVOCABLY WAIVES ANY AND ALL RIGHTS THE
BORROWER MAY HAVE TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM OF ANY
NATURE RELATING TO THIS NOTE, ANY OTHER LOAN DOCUMENTS, OR ANY TRANSACTION
CONTEMPLATED IN ANY OF SUCH DOCUMENTS.  THE BORROWER ACKNOWLEDGES THAT THE
FOREGOING WAIVER IS KNOWING AND VOLUNTARY.

 
15.  
NOTICES.  All notices provided for or required by this Note shall be given as
provided in the Loan Modification.

 
16.  
CAPTIONS.  The captions and headings of the Sections of this Note are for
reference only and are not to be used to interpret or define the provisions
hereof.

 
17.  
STATE-SPECIFIC PROVISIONS.

 
 
18.1
Borrower acknowledges and agrees that the loss which Lender may sustain from the
late payment of any payment due under this Note may likely be difficult to
prove, and that the amount of the late charge is reasonable and proportionate to
the loss that Lender may sustain from any late payment.  Therefore, Borrower and
Lender desire to liquidate the damages in advance to avoid such uncertainty.

 
 
18.2
Borrower acknowledges and agrees that the loss which Lender may sustain from any
default under this Note may likely be difficult to prove, and that the default
interest rate is reasonable and proportionate to the loss that Lender may
sustain from any default.  Therefore, Borrower and Lender desire to liquidate
the damages in advance to avoid such uncertainty.

 
The Borrower acknowledges that it has read and understood all the provisions of
this Note, including the waiver of jury trial, and has been advised by counsel
as necessary or appropriate.
 
IN WITNESS WHEREOF, Borrower has executed this Note as of the day and year first
above written.
 
BORROWER:

NETREIT GARDEN GATEWAY LP,
a California limited partnership

By:           NetREIT, Inc.,
a Maryland corporation,
its general partner

By:                                                      
Name:                                                                
Title: