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<SEC-DOCUMENT>0000950123-09-022446.txt : 20090715
<SEC-HEADER>0000950123-09-022446.hdr.sgml : 20090715
<ACCEPTANCE-DATETIME>20090715160424
ACCESSION NUMBER:		0000950123-09-022446
CONFORMED SUBMISSION TYPE:	PRE 14A
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20090828
FILED AS OF DATE:		20090715
DATE AS OF CHANGE:		20090715

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			NETREIT
		CENTRAL INDEX KEY:			0001080657
		STANDARD INDUSTRIAL CLASSIFICATION:	REAL ESTATE INVESTMENT TRUSTS [6798]
		IRS NUMBER:				330841255
		STATE OF INCORPORATION:			CA
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		PRE 14A
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-53673
		FILM NUMBER:		09946062

	BUSINESS ADDRESS:	
		STREET 1:		1282 PACIFIC OAKS PLACE
		CITY:			ESCONDIDO
		STATE:			CA
		ZIP:			92029-2900
		BUSINESS PHONE:		760-471-8536

	MAIL ADDRESS:	
		STREET 1:		1282 PACIFIC OAKS PLACE
		CITY:			ESCONDIDO
		STATE:			CA
		ZIP:			92029-2900
</SEC-HEADER>
<DOCUMENT>
<TYPE>PRE 14A
<SEQUENCE>1
<FILENAME>c87641pre14a.htm
<DESCRIPTION>PRELIMINARY PROXY STATEMENT
<TEXT>
<HTML>
<HEAD>
<TITLE>Preliminary Proxy Statement</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="center" style="font-size: 14pt; margin-top: 6pt"><B>UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION</B>
</DIV>

<DIV align="center" style="font-size: 12pt"><B>Washington, D.C. 20549</B>
</DIV>

<DIV align="center" style="font-size: 18pt; margin-top: 12pt"><B>SCHEDULE 14A</B>
</DIV>

<DIV align="center" style="font-size: 12pt; margin-top: 12pt">Proxy Statement Pursuant to Section&nbsp;14(a) of the Securities<BR>
Exchange Act of 1934 (Amendment No.&nbsp;___)</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Filed by the Registrant <FONT face="wingdings" size="2">&#254;</FONT><BR>
Filed by a Party other than the Registrant <FONT face="wingdings" size="2">&#111;</FONT>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Check the appropriate box:

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="1%" nowrap align="left" valign="top">
<FONT face="wingdings" size="2">&#254;</FONT></TD>
<TD width="1%">&nbsp;</TD>
<TD>Preliminary Proxy Statement</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="1%" nowrap align="left" valign="top">
<FONT face="wingdings" size="2">&#111;</FONT></TD>
<TD width="1%">&nbsp;</TD>
<TD><B>Confidential, for Use of the Commission Only (as permitted by Rule&nbsp;14a-</B><B>6(e)(2)</B><B>)</B></TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="1%" nowrap align="left" valign="top">
<FONT face="wingdings" size="2">&#111;</FONT></TD>
<TD width="1%">&nbsp;</TD>
<TD>Definitive Proxy Statement</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="1%" nowrap align="left" valign="top">
<FONT face="wingdings" size="2">&#111;</FONT></TD>
<TD width="1%">&nbsp;</TD>
<TD>Definitive Additional Materials</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="1%" nowrap align="left" valign="top">
<FONT face="wingdings" size="2">&#111;</FONT></TD>
<TD width="1%">&nbsp;</TD>
<TD>Soliciting Material Pursuant to &#167;240.14a-12</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center" style="font-size: 10pt; margin-top: 6pt">&nbsp;</DIV>

<DIV align="center" style="font-size: 14pt; margin-top: 0pt"><b>NETREIT</b></DIV>
<DIV align="center" style="font-size: 10pt"><DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>
(Name of Registrant as Specified In Its Charter)</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt">&nbsp;</DIV>

<DIV align="center" style="font-size: 10pt">
Not Applicable</DIV>
<DIV align="center" style="font-size: 10pt"><DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Payment of Filing Fee (Check the appropriate box):

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="1%" nowrap align="left" valign="top">
<FONT face="wingdings" size="2">&#254;</FONT></TD>
<TD width="1%">&nbsp;</TD>
<TD>No fee required.</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="1%" nowrap align="left" valign="top">
<FONT face="wingdings" size="2">&#111;</FONT></TD>
<TD width="1%">&nbsp;</TD>
<TD>Fee computed on table below per Exchange Act Rules&nbsp;14a-6(i)(1) and 0-11.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="2%" style="background: transparent">&nbsp;</TD>
<TD width="3%" nowrap align="left">(1)</TD>
<TD width="1%">&nbsp;</TD>
<TD>Title of each class of securities to which transaction applies:</TD>
</TR>

<TR>
<TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
<TD width="2%">&nbsp;</TD>
<TD width="3%">&nbsp;</TD>
<TD width="1%">&nbsp;</TD>
<TD style="font-size: 10pt"><DIV align="left">

</DIV></TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="2%" style="background: transparent">&nbsp;</TD>
<TD width="3%" nowrap align="left">&nbsp;</TD>
<TD width="1%">&nbsp;</TD>
<TD><DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV></TD>
</TR>

<TR>
<TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="2%" style="background: transparent">&nbsp;</TD>
<TD width="3%" nowrap align="left">(2)</TD>
<TD width="1%">&nbsp;</TD>
<TD>Aggregate number of securities to which transaction applies:</TD>
</TR>

<TR>
<TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
<TD width="2%">&nbsp;</TD>
<TD width="3%">&nbsp;</TD>
<TD width="1%">&nbsp;</TD>
<TD style="font-size: 10pt"><DIV align="left">

</DIV></TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="2%" style="background: transparent">&nbsp;</TD>
<TD width="3%" nowrap align="left">&nbsp;</TD>
<TD width="1%">&nbsp;</TD>
<TD><DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV></TD>
</TR>

<TR>
<TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="2%" style="background: transparent">&nbsp;</TD>
<TD width="3%" nowrap align="left">(3)</TD>
<TD width="1%">&nbsp;</TD>
<TD>Per unit price or other underlying value of transaction computed pursuant to Exchange Act
Rule&nbsp;0-11 (set forth the amount on which the filing fee is calculated and state how it was
determined):</TD>
</TR>

<TR>
<TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
<TD width="2%">&nbsp;</TD>
<TD width="3%">&nbsp;</TD>
<TD width="1%">&nbsp;</TD>
<TD style="font-size: 10pt"><DIV align="left">

</DIV></TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="2%" style="background: transparent">&nbsp;</TD>
<TD width="3%" nowrap align="left">&nbsp;</TD>
<TD width="1%">&nbsp;</TD>
<TD><DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV></TD>
</TR>

<TR>
<TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="2%" style="background: transparent">&nbsp;</TD>
<TD width="3%" nowrap align="left">(4)</TD>
<TD width="1%">&nbsp;</TD>
<TD>Proposed maximum aggregate value of transaction:</TD>
</TR>

<TR>
<TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
<TD width="2%">&nbsp;</TD>
<TD width="3%">&nbsp;</TD>
<TD width="1%">&nbsp;</TD>
<TD style="font-size: 10pt"><DIV align="left">

</DIV></TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="2%" style="background: transparent">&nbsp;</TD>
<TD width="3%" nowrap align="left">&nbsp;</TD>
<TD width="1%">&nbsp;</TD>
<TD><DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV></TD>
</TR>

<TR>
<TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="2%" style="background: transparent">&nbsp;</TD>
<TD width="3%" nowrap align="left">(5)</TD>
<TD width="1%">&nbsp;</TD>
<TD>Total fee paid:</TD>
</TR>

<TR>
<TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
<TD width="2%">&nbsp;</TD>
<TD width="3%">&nbsp;</TD>
<TD width="1%">&nbsp;</TD>
<TD style="font-size: 10pt"><DIV align="left">

</DIV></TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="2%" style="background: transparent">&nbsp;</TD>
<TD width="3%" nowrap align="left">&nbsp;</TD>
<TD width="1%">&nbsp;</TD>
<TD><DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="1%" nowrap align="left" valign="top">
<FONT face="wingdings" size="2">&#111;</FONT></TD>
<TD width="1%">&nbsp;</TD>
<TD>Fee paid previously with preliminary materials.</TD>
</TR>

<TR>
<TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="1%" nowrap align="left" valign="top">
<FONT face="wingdings" size="2">&#111;</FONT></TD>
<TD width="1%">&nbsp;</TD>
<TD>Check box if any part of the fee is offset as provided by Exchange Act Rule&nbsp;0-11(a)(2)
and identify the filing for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or Schedule and the date of its
filing.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="2%" style="background: transparent">&nbsp;</TD>
<TD width="3%" nowrap align="left">(1)</TD>
<TD width="1%">&nbsp;</TD>
<TD>Amount Previously Paid:</TD>
</TR>

<TR>
<TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
<TD width="2%">&nbsp;</TD>
<TD width="3%">&nbsp;</TD>
<TD width="1%">&nbsp;</TD>
<TD style="font-size: 10pt"><DIV align="left">

</DIV></TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="2%" style="background: transparent">&nbsp;</TD>
<TD width="3%" nowrap align="left">&nbsp;</TD>
<TD width="1%">&nbsp;</TD>
<TD><DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV></TD>
</TR>

<TR>
<TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="2%" style="background: transparent">&nbsp;</TD>
<TD width="3%" nowrap align="left">(2)</TD>
<TD width="1%">&nbsp;</TD>
<TD>Form, Schedule or Registration Statement No.:</TD>
</TR>

<TR>
<TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
<TD width="2%">&nbsp;</TD>
<TD width="3%">&nbsp;</TD>
<TD width="1%">&nbsp;</TD>
<TD style="font-size: 10pt"><DIV align="left">

</DIV></TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="2%" style="background: transparent">&nbsp;</TD>
<TD width="3%" nowrap align="left">&nbsp;</TD>
<TD width="1%">&nbsp;</TD>
<TD><DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV></TD>
</TR>

<TR>
<TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="2%" style="background: transparent">&nbsp;</TD>
<TD width="3%" nowrap align="left">(3)</TD>
<TD width="1%">&nbsp;</TD>
<TD>Filing Party:</TD>
</TR>

<TR>
<TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
<TD width="2%">&nbsp;</TD>
<TD width="3%">&nbsp;</TD>
<TD width="1%">&nbsp;</TD>
<TD style="font-size: 10pt"><DIV align="left">

</DIV></TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="2%" style="background: transparent">&nbsp;</TD>
<TD width="3%" nowrap align="left">&nbsp;</TD>
<TD width="1%">&nbsp;</TD>
<TD><DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV></TD>
</TR>

<TR>
<TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="2%" style="background: transparent">&nbsp;</TD>
<TD width="3%" nowrap align="left">(4)</TD>
<TD width="1%">&nbsp;</TD>
<TD>Date Filed:</TD>
</TR>

<TR>
<TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
<TD width="2%">&nbsp;</TD>
<TD width="3%">&nbsp;</TD>
<TD width="1%">&nbsp;</TD>
<TD style="font-size: 10pt"><DIV align="left">

</DIV></TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<TD width="2%" style="background: transparent">&nbsp;</TD>
<TD width="3%" nowrap align="left">&nbsp;</TD>
<TD width="1%">&nbsp;</TD>
<TD><DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV></TD>
</TR>

</TABLE>
</DIV>

<P align="center" style="font-size: 10pt">
</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>NETREIT</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 10pt"><B>Notice of Annual Meeting of Shareholders<BR>
To Be Held August&nbsp;28, 2009</B>

</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">This is the formal agenda for our 2009 annual shareholder meeting. It tells you what matters
will be voted on and if you can attend the meeting in person, the time and place of the meeting.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>To the Shareholders of NetREIT</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">The Annual Meeting of Shareholders will be held on Friday, August&nbsp;28, 2009 at 9:30 a.m.,
Pacific Time, at the Company&#146;s headquarters, 1282 Pacific Oaks Place, Escondido, California, 92029.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Items of Business.
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">To elect eight (8)&nbsp;Members to the Board of Directors to serve until the 2010 annual
shareholders&#146; meeting or until their respective successors are duly elected and qualify.</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">To adopt the amended Bylaws and Articles of Incorporation.</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">To consider and act any other business which may properly come before the meeting or
any adjournments or postponements of the Annual Meeting.</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Management will report on the current activities of NetREIT and comment on its future plans. A
discussion period is planned so that shareholders will have an opportunity to ask questions and
make appropriate comments.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Only shareholders of record at the close of business on July&nbsp;7, 2009 will be entitled to notice of
and to vote at the Annual Meeting or adjournment or postponement thereof. A list of shareholders
will be available for inspection at NetREIT corporate offices at 1282 Pacific Oaks Place,
Escondido, California, 92029 at least ten (10)&nbsp;days prior to the Annual Meeting.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%"><B>YOUR VOTE MATTERS. We urge you to mark, sign, date, and return the enclosed proxy in the
postage paid envelope so you will be represented at the meeting.</B>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">BY ORDER OF THE BOARD OF DIRECTORS
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Jack K. Heilbron<BR>
Chief Executive Officer and Chairman of the Board<BR>
July <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>, 2009

</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->-2-<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>NetREIT<BR>
1282 Pacific Oaks Place<BR>
Escondido, California 92029</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 10pt"><B>PROXY STATEMENT<BR>
FOR<BR>
ANNUAL MEETING OF SHAREHOLDERS</B><BR>
<B><I>To Be Held on August&nbsp;28, 2009</I></B>

</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">This proxy statement, with the enclosed proxy card, is furnished to the Company&#146;s shareholders
in connection with the solicitation by the Board of Directors of NetREIT (the &#147;Board&#148;) of your
proxy card to be voted at the 2009 annual meeting of shareholders of NetREIT (the &#147;Company&#148;) to be
held on Friday, August&nbsp;28, 2009 at 9:30 a.m., at the Company&#146;s corporate headquarters, 1282 Pacific
Oaks Place, Escondido, California, 92029 and at any adjournments or postponement thereof. The
Notice of Annual Meeting, this Proxy Statement, and the accompanying proxy/voting instruction card
are being mailed to all shareholders on or about July&nbsp;<U>&nbsp;&nbsp;</U>, 2009.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>PURPOSE OF THE MEETING</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">At the Annual Meeting, the shareholders of the Company will be asked to elect the eight (8)
members to serve on the Board of Directors until the 2010 annual meeting or until their respective
successors are duly elected and qualified; adopt the amended and restated Bylaws and Articles of
Incorporation; and consider and vote upon the transaction of such other business as may properly
come before the Annual Meeting or any adjournments or postponements of the Annual Meeting.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">In the event that proxies sufficient in number to constitute a quorum are not received before
the meeting starts, the shareholders present at the meeting and/or the persons named as proxies may
vote to adjourn the meeting to permit further solicitation of proxies. Such adjournments will
require the affirmative vote of the holders of a majority of the Company&#146;s common stock (&#147;share&#148;)
present in person or by proxy at the meeting. The persons named as proxies will vote in favor of
such adjournment.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>VOTING RIGHTS</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">Only holders of record of shares at the close of business on July&nbsp;7, 2009 are entitled to
receive notice of and to vote their shares at the Annual Meeting or any adjournments thereof. As
of that date there were issued and outstanding 8,142,557&nbsp;shares. Each outstanding share is
entitled to one vote on each matter properly brought before the Annual Meeting.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 8%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->-3-<!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>VOTING PROCEDURES</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">The presence of the holders of a majority of outstanding shares entitled to vote at the Annual
Meeting, present in person or represented by proxy, is necessary to constitute a quorum for the
transaction of business at the Annual Meeting. Shares that abstain from voting on any proposal and
&#147;broker non-votes&#148; are counted as present and entitled to vote for purposes of determining a
quorum. A &#147;broker non-vote&#148; occurs when a bank, broker, or other holder of record holding shares
for a beneficial owner does not vote because that holder does not have discretionary voting power
and has not received voting instructions from the beneficial owner.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">If you are a stockholder of record, you may revoke a proxy at any time before it is voted at
the Annual Meeting by (a)&nbsp;delivering a proxy revocation or another duly executed proxy bearing a
later date to the Secretary of the Company at 1282 Pacific Oaks Place, Escondido, CA 92029 or (b)
attending the Annual Meeting and voting in person. Attendance at the Annual Meeting will not
revoke a proxy unless you actually vote in person at the meeting. For shares you hold beneficially
in street name, you may change your vote by submitting a new voting instruction to your broker or
other nominee following the instruction they provided, or, if you have obtained a legal proxy from
your broker or other nominee giving you the right to vote your shares, by attending the Annual
Meeting and voting in person.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Election of Directors</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">Voting for the election of Directors is cumulative. In voting for Directors, you may cumulate
your total votes and cast all of your votes for any one or combination of candidates. Your total
votes equal the number of candidates (8)&nbsp;multiplied by the number of shares you are entitled to
vote. In the event a quorum is not present and the meeting is not convened, each of the Company&#146;s
current Directors will remain in office and continue to serve until their successors are duly
elected and qualified. By completing the Proxy, you give the proxy the right to vote for the
persons named in the table above. If you elect to withhold authority for any individual nominee or
nominees, you may do so by making an &#147;X&#148; in the box marked &#147;VOTE FOR NOMINEE(S) NOT LINED OUT,&#148; and
by striking a line through the nominees&#146; name or names on the Proxy.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>SOLICITATION OF PROXIES</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">If you cannot attend the meeting, the accompanying Proxy Card should be used to instruct the
person named as the proxy to vote your shares in accordance with your directions. The persons named
in the accompanying proxy card will vote shares of Common Stock represented by all valid proxies in
accordance with the contained instructions. In the absence of instructions, shares represented by
properly executed proxies will be voted FOR the election of those eight (8)&nbsp;persons designated
hereinafter as nominees for Directors of NetREIT and in the discretion of the named proxies with
respect to any other matters presented at the Annual Meeting.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">Your proxy may be revoked before the meeting by giving written notice of revocation to the
Secretary of the Company at any time prior to voting and it shall be suspended if you are a
shareholder of record or valid proxyholder who attends the Annual Meeting and elects to vote in
person. Unless revoked, properly executed proxies with respect to the Company will be voted as
indicated in this Proxy Statement. An &#147;abstention&#148; on any proposal will be counted as present for
purposes of determining whether a quorum of shares is present at the meeting with respect to the
proposal on which the abstention is noted, but will be counted as a vote &#147;against&#148; such proposal.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">The expense of solicitation of proxies, including the cost of preparing and mailing the Notice
of Shareholders&#146; Meeting and this Proxy Statement, will be paid by the Company. In addition to
solicitation by
mail, our Directors, officers, employees and agents may solicit proxies by telephone, internet
or otherwise. These Directors, officers and employees will not be additionally compensated for the
solicitation, but may be reimbursed for their out-of-pocket expenses. Brokerage firms, fiduciaries
and other custodians who forward soliciting material to the beneficial owners of shares of our
common stock held of record by them will be reimbursed for their reasonable expenses incurred in
forwarding such material. The Company does not expect to employ anyone else to assist in the
solicitation of proxies.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 8%">&nbsp;

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>ANNUAL REPORT OF THE COMPANY</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">The annual report of the Company containing financial statements for the fiscal year ended
December&nbsp;31, 2008 is included with this notice of shareholder meeting.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B><I>PROPOSAL 1</I></B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>ELECTION OF DIRECTORS</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Pursuant to a resolution adopted by a majority of the authorized number of Directors, the
authorized number of members of the Board has been set at eight (8).
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">At the meeting, you will be asked to elect eight (8)&nbsp;members to the Board. The seven (7)&nbsp;current
Directors will be up for election at the Annual Meeting. In addition, the Board has recommended
that Mr.&nbsp;William Allen be elected to the Board. For your review and consideration, a biography of
each nominee for Director is contained in this proxy under the section titled Corporate Governance,
Director Nominees. The term of office of each person elected to be a Director of the Company will
be until the next regular or annual meeting of the shareholders at which election of Directors is
an agenda item, and until his successor is duly elected and shall qualify. If any unforeseen event
prevents one or more of the nominees from serving as a Director, your votes will be cast for the
election of a substitute or substitutes selected by the Board. In no event, however, can the
proxies be voted for a greater number of persons than the number of nominees named. Unless
otherwise instructed, the proxies will vote for the election of each current Director and the
nominees to serve as a Director of the Company.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>The Board recommends a vote &#147;FOR&#148; the election of each of the Directors nominated.</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B><I>PROPOSAL 2</I></B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>AMENDMENT TO THE BY-LAWS &#038;<BR>
ARTICLES OF INCORPORATION</B>
</DIV>


<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><B>A.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify"><B>Proposal to Amend the Company&#146;s Bylaws and Provide for Change in Shareholder Meeting
Date.</B></DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Background of Proposal</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Article&nbsp;III, Section&nbsp;2, of the Bylaws currently require the Company to hold the Annual Shareholder
Meeting within five (5)&nbsp;months after the end of the calendar year, and within fifteen (15)&nbsp;months
after the last annual meeting. It is the Company&#146;s intention to have the annual shareholder
meeting at approximately the same time each year with updated and current Company information.
However, the hard deadline of five (5)&nbsp;months may have the effect of not allowing the Company
sufficient time to prepare the annual report and proxy materials in light of the additional filings
and requirements that are required of a public company. The Board has approved the deletion of the
five (5)&nbsp;month requirement, and believes the interests of the Company and the shareholders are met
by allowing the flexibility of the minimum fifteen (15)&nbsp;month window. A copy of our proposed
amended Bylaws are attached to this Proxy as Annex A.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Article&nbsp;III Section&nbsp;2 Annual Meeting</B>
</DIV>

<P><DIV style="position: relative; float: left; width: 46%">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>New Bylaws</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The annual meeting of shareholders
shall be held at least once each
year on a date and at a time
designated by the Board of Directors
at a location convenient to the
shareholders. The date so
designated shall be within fifteen
(15)&nbsp;months after the last annual
meeting. At each annual meeting
directors shall be elected and any
other proper business may be
transacted.
</DIV>
</DIV>
<DIV style="position: relative; float: right; width: 46%">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Old Bylaws</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The annual meeting of shareholders
shall be held at least once each
year on a date and at a time
designated by the board of directors
at a location convenient to the
shareholders. The date so
designated shall be within five (5)
months after the end of the calendar
year and fifteen (15)&nbsp;months after
the last annual meeting. At each
annual meeting directors shall be
elected and any other proper
business may be transacted.
</DIV>
</DIV>
<BR clear="all"><BR>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->-5-<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><B>B.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify"><B>Proposal to Amend the Company&#146;s Bylaws and Articles of Incorporation to Correct
Inconsistency for Number of Directors</B></DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Background of Proposal</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The Bylaws and the Articles of Incorporation have existed in conflict since inception regarding the
maximum and minimum number of Directors allowed by the Company. While Article&nbsp;IV, Section&nbsp;2 of the
Bylaws allowed for a minimum number of four (4)&nbsp;and maximum number of nine (9)&nbsp;Directors, Section&nbsp;V
of the Articles of Incorporation stated the minimum number of Directors to be four (4)&nbsp;and the
maximum number of Directors to be seven (7). The Bylaws also contained a confusing reference
indicating that the exact number of Directors would be four (4).
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The Board has approved and recommends a change to clarify and fix the inconsistency and in
accordance with California law, amend Article&nbsp;IV, Section&nbsp;2 of the Bylaws to reflect the number of
Directors of the Company shall be not less than five (5)&nbsp;nor more than nine (9). The Board believes
that by selecting an odd number for both the minimum and maximum number, and allowing for a larger
number of Directors to serve, it will help prevent potential deadlock and ensure sufficient
diversity.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Since there is no legal requirement that the Articles of Incorporation specify the number of
Directors, the Board recommends that the Articles be amended by deleting Section&nbsp;V in its entirety,
and renumbering Section&nbsp;VI to be Section&nbsp;V. A copy of our proposed Restated and Amended Articles
of Incorporation are attached to this Proxy as Annex B.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Article&nbsp;IV Section&nbsp;2 Number and Qualification of Directors</B>
</DIV>

<P><DIV style="position: relative; float: left; width: 46%">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>New Bylaws</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The number of Directors of the
Corporation shall be not less than
five (5)&nbsp;nor more than nine (9).
The exact number of Directors may be
changed, from time to time, within
the limits specified above, by
approval of the majority of the
Board of Directors or by the
shareholders. A majority of the
Directors shall be Independent
Directors.
</DIV>
</DIV>
<DIV style="position: relative; float: right; width: 46%">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Old Bylaws</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The number of directors of the
Corporation shall be not less than
four (4)&nbsp;nor more than nine (9).
The exact number of directors shall
be four (4)&nbsp;which number may be
changed, from time to time, within
the limits specified above, by
approval of the majority of the
board of directors or by the
shareholders. A majority of the
directors shall be Independent
Directors.
</DIV>
</DIV>
<BR clear="all"><BR>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><B>C.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify"><B>Proposal to Amend the Company&#146;s Bylaws to Require a 66 2/3 Majority For Reduction of
Directors to Less than Five (5).</B></DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Background of Proposal</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Article&nbsp;IV, Section&nbsp;2 of the Bylaws currently states that an amendment reducing the fixed number or
the minimum directors to a number less than four (4)&nbsp;cannot be adopted if the votes cast against
its adoption at a meeting, or the shares not consenting in the case of an action by written
consent, are equal to more than sixteen and two-thirds percent (16-2/3) of the outstanding shares
entitled to vote thereon.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The Board has reviewed the current Bylaws and California law and, in conjunction with Proposal 2A,
the Board recommends amending Article&nbsp;IV to state that a bylaw or amendment of the articles
reducing the fixed number or the minimum number of Directors to a number less than five (5)&nbsp;cannot
be adopted if the votes cast against its adoption at a meeting or the shares not consenting in the
case of action by written consent are equal to more than 66 2/3% (sixty-six and two thirds
percent) of the outstanding shares entitled to vote.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The pertinent section of California law, as written, states that after the issuance of shares, a
bylaw or amendment of the articles reducing the fixed number or the minimum number of directors to
a number less than five cannot be adopted if the votes cast against its adoption at a meeting or
the shares not consenting in the case of action by written consent are equal to more than
<U><B>162/3</B></U> percent of the outstanding shares entitled to vote &#091;emphasis added&#093;.
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->-6-<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">In order to maintain the integrity and consistency of the Directors and the Board and in
compliance with California law and in the best interest of the Shareholders, the Company believes a
super-majority vote of outstanding shares should be required to reduce the number of Directors
below the minimum number of less than five (5). The Company further believes the threshold for the
minimum number of Directors requiring the super majority vote should equal the minimum number of
five (5)&nbsp;Directors proposed in 2A. While the number written in the California law is ambiguous and
subject to potentially more than one mathematical interpretation, a super-majority of sixty-six and
two-thirds (66 &#038; 2/3) would exceed any minimum percentage that could be interpreted as required by
California law.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Article&nbsp;IV Section&nbsp;2 Number and Qualification of Directors</B>
</DIV>

<P><DIV style="position: relative; float: left; width: 46%">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>New Bylaws</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The indefinite number of Directors
may be changed, or a definite number
fixed without provision for an
indefinite number, but a duly
adopted amendment to the Articles of
Incorporation or by an amendment to
this Bylaw duly adopted by the vote
or written consent of holders of a
majority of outstanding shares
entitled to vote; provided however
than an amendment reducing the fixed
number or the minimum Directors to a
number less than five (5)&nbsp;cannot be
adopted if the votes cast against
its adoption at a meeting, or the
shares not consenting in the case of
an action by written consent, are
equal to or more than sixty-six and
two-thirds percent (66 2/3%) of the
outstanding shares entitled to vote
thereon. No amendment may change the
stated maximum number of authorized
Directors to a number greater than
two times the stated minimum number
minus one.
</DIV>
</DIV>
<DIV style="position: relative; float: right; width: 46%">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Old Bylaws</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The indefinite number of directors
may be changed, or a definite number
fixed without provision for an
indefinite number, but a duly
adopted amendment to the Articles of
Incorporation or by an amendment to
this Bylaw duly adopted by the vote
or written consent of holders of a
majority of outstanding shares
entitled to vote; provided however
than an amendment reducing the fixed
number or the minimum directors to a
number less than four (4)&nbsp;cannot be
adopted if the votes cast against
its adoption at a meeting, or the
shares not consenting in the case of
an action by written consent, are
equal to or more than sixteen and
two-thirds percent (16 2/3%) of the
outstanding shares entitled to vote
thereon. No amendment may change the
stated maximum number of authorized
directors to a number greater than
two times the stated minimum number
minus one.
</DIV>
</DIV>
<BR clear="all"><BR>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><B>D.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify"><B>Proposal to Amend Bylaws to allow certain investments for hedging purposes only and not
speculation.</B></DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Background of Proposal</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">In order to maintain diversity and flexibility, the Board recommends the following change to allow
for certain investments for hedging purposes only. Such an investment would allow both growth and
the Company flexibility to make such investments should the Company and the Board of Directors
believe that it is in the best interests of the Company and the Shareholders. Therefore, the Board
recommends the change to the Bylaws, and believes the impact will be minimal.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Article&nbsp;VIII Section&nbsp;2 Investment Prohibitions</B>
</DIV>

<P><DIV style="position: relative; float: left; width: 46%">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>New Bylaws</B>
</DIV>


<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">Invest in commodities,
commodities futures contracts,
foreign currency and bullion
except interest rate futures,
unless solely for hedging but
not speculation purposes.</DIV></TD>
</TR>

</TABLE>
</DIV>
</DIV>
<DIV style="position: relative; float: right; width: 46%">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Old Bylaws</B>
</DIV>


<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">Invest in commodities,
commodities futures contracts,
foreign currency and bullion except
interest rate futures.</DIV></TD>
</TR>

</TABLE>
</DIV>
</DIV>
<BR clear="all"><BR>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><B>E.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify"><B>Proposal to Amend Bylaws to allow additional company structures that may be used for
investment in real property ownership.</B></DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Background of Proposal</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Since the inception of the Company, the number of investment structures currently in use and
available to REITs has grown tremendously. As such, the Board believes that adding the additional
entities as vehicles for real property ownership, while removing the eighteen month restriction,
allows the Company greater flexibility and the ability to compete with other REITs that currently
invest in these types of structures. Therefore the Board recommends the Shareholders approve this
change.
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->-7-<!-- /Folio -->
</DIV>
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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Article&nbsp;VIII Section&nbsp;2 Investment Prohibitions</B>
</DIV>

<P><DIV style="position: relative; float: left; width: 46%">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>New Bylaws</B>
</DIV>


<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">Invest in the equity
securities of non-governmental
issuer other than the
Corporation&#146;s REIT subsidiary
or non-REIT subsidiary,
including another REIT, or
partnership, limited
partnership, limited liability
company, joint venture, or
other ventures for the
ownership of Real Property or
invest in equity securities of
a Director or Affiliate
thereof.</DIV></TD>
</TR>

</TABLE>
</DIV>
</DIV>
<DIV style="position: relative; float: right; width: 46%">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Old Bylaws</B>
</DIV>


<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">Investments in the equity
securities of non-governmental
issuer other than the Corporation&#146;s
REIT subsidiary or non-REIT
subsidiary, including another REIT,
or partnership for a period in
excess of eighteen months or
investment in equity securities of
an advisor, director or Affiliate
thereof.</DIV></TD>
</TR>

</TABLE>
</DIV>
</DIV>
<BR clear="all"><BR>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><B>F.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify"><B>Proposal to Amend Bylaws to allow for issuance of redeemable, voting equity preferred
stock.</B></DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Background of Proposal</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The Company has both common and preferred stock outstanding. Since it is common practice that
preferred stock is redeemable, by limiting the issuance of redeemable securities, the Company could
be potentially limiting an important source for future capital raising. Therefore, the Board has
approved and now recommends the amendment to allow for the issuance of redeemable, equity preferred
stock, as such an issuance is in the best interests of the Shareholders and Company.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Article&nbsp;VIII Section&nbsp;4 Prohibited Security Issuances</B>
</DIV>

<P><DIV style="position: relative; float: left; width: 46%">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>New Bylaws</B>
</DIV>


<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">Redeemable, or assessable securities except for redeemable, equity preferred stock; or</DIV></TD>
</TR>

</TABLE>
</DIV>
</DIV>
<DIV style="position: relative; float: right; width: 46%">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Old Bylaws</B>
</DIV>


<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">Redeemable, assessable or non-voting equity securities; or</DIV></TD>
</TR>

</TABLE>
</DIV>
</DIV>
<BR clear="all"><BR>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><B>G.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify"><B>Proposal to Amend Bylaws to remove all references to Advisor and Advisory Contracts.</B></DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Background of Proposal</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The Bylaws currently contain out-dated references to &#147;Advisors&#148; and &#147;Advisory Contracts&#148; as defined
in Article&nbsp;I of the Bylaws. Since the Company is a self-administered REIT, meaning that all major
real estate functions are performed in-house by the REIT personnel, the Company no longer employs
or relies on outside advisors to present investment opportunities to the Board. Additionally, the Company
does not intend to work with advisors in the future. Since the Board believes a self-advised
structure is more efficient and provides the potential for better performance and growth, it has
approved and now recommends the Bylaws be amended to delete all references to &#147;advisors&#148; and
&#147;advisory contracts&#148;.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Articles and Sections of the Old Bylaws affected by this deletion are:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Article&nbsp;I, Sections&nbsp;1, 2, 13, 20, 26<BR>
Article&nbsp;IV, Sections&nbsp;1, 16<BR>
Article&nbsp;VII, Sections&nbsp;2, 11<BR>
Article&nbsp;VIII, Sections&nbsp;2, 3<BR>
Article&nbsp;IX in its entirety

</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>The Board recommends a vote &#147;FOR&#148; each Amendment to the Bylaws and Articles of Incorporation.</B>
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->-8-<!-- /Folio -->
</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>CORPORATE GOVERNANCE</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">Management does not intend to present any business at the meeting not mentioned in this Proxy
Statement, and at the time of preparation of this Proxy Statement knows of no other business to be
presented. If any other matters are properly brought before the meeting, the appointed proxies
will vote all proxies on such matters in accordance with their judgment of the best interests of
the Company.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B><I>DIRECTOR NOMINEES</I></B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">Pertinent information regarding each nominee for the past five (5)&nbsp;years is set forth
following his name below.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="21%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="53%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="22%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Positions with the Company</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Name and (Age)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>and Principal Occupations</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Business Address</B></TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Bruce Staller (72)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Mr. Staller has served as
a Director since June
2004. Until December&nbsp;31,
2005, Mr.&nbsp;Staller was an
investment counselor
registered as an
Investment Advisor under
California Law. From
1988 through May&nbsp;2003,
Mr.&nbsp;Staller served as a
Director of New Plan
Excel Realty Trust, Inc.,
and its predecessor Excel
Realty Trust, a New York
Stock Exchange traded
REIT. From 1988 until
1994, Mr.&nbsp;Staller served
as President and
Compliance Officer of
First Wilshire Securities
Management, Inc., a
Pasadena based investment
advisory firm. Since
1987, Mr.&nbsp;Staller served
has served as Trustee and
since 2000, he has served
as Trustee and President
of Monrovia Schools
Foundations, Inc., a
non-profit education
corporation based in
Monrovia, California.
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">3229 Elda Street
Duarte, CA 91010</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Sumner J. Rollings
(60)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Mr. Rollings has served
as a Director of NetREIT
since April&nbsp;2001. Mr.
Rollings is Chief
Executive Officer and
sole shareholder of Wagon
Wheel Corp. Inc., which
owns the Wagon Wheel
Restaurant in Escondido,
California. From May
1999 to May&nbsp;2001 Mr.
Rollings served as sales
executive for Joseph Webb
Foods of Vista,
California and previously
from 1985 to 1999, sales
executive for Alliant
Food Service Sales.
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">1282 Pacific Oaks
Place, Escondido,
CA 92029</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->-9-<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="21%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="53%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="22%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Positions with the Company</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Name and (Age)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>and Principal Occupations</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Business Address</B></TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Thomas E. Schwartz
(68)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Mr. Schwartz has served
as a Director since April
2001. He also served as
a Director of the
Centurion Counsel Funds,
an investment company
registered under the
Investment Company Act of
1940, from March&nbsp;10, 2001
until 2005. Mr.&nbsp;Schwartz
has been a Certified
Financial Planner since
1990 and an Independent
Certified Financial
Planner since 2001. Since
March&nbsp;1999 he has served
as a Director of Gold
Terra, Inc., a
closely-held Nevada
corporation which
participates in mining
operations for gold,
silver and other valuable
mineral deposits.
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">1282 Pacific Oaks
Place, Escondido, California</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Jack K. Heilbron (58)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Mr. Heilbron has served
as a Director and officer
of the Company since its
inception. Mr.&nbsp;Heilbron
is a founding officer,
Director, shareholder of
CI Holding Group, Inc.
and of its subsidiary
corporations and
currently serves as
Chairman of these
companies. Mr.&nbsp;Heilbron
also serves as Chairman
of Centurion Counsel,
Inc., a licensed
investment advisor. From
1994 until its
dissolution in 1999, Mr.
Heilbron served as the
Chairman and/or Director
of Clover Income and
Growth REIT (&#147;Clover
REIT&#148;). Mr.&nbsp;Heilbron
presently holds a license
as a registered
securities principal with
Centurion Institutional
Services, Inc., a FINRA
member broker-dealer.
Mr.&nbsp;Heilbron graduated
with a B.S. degree in
Business Administration
from California
Polytechnic College, San
Luis Obispo, California.
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">1282 Pacific Oaks
Place, Escondido,
California 92029</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Larry G. Dubose (59)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Mr. Dubose has served as
a Director since June
2005. Mr.&nbsp;Dubose
currently serves as the
President of Dubose Model
Homes, a residential real
estate investment company
headquartered in Houston,
Texas that he founded in
1985. After selling
Dubose Model Homes in
2004, he returned to
serve as the company&#146;s
President. Prior to
forming that company, Mr.
Dubose served as Vice
President and Chief
Financial Officer of a
full service real estate
brokerage company in
Houston for six years.
From June&nbsp;1973 to
February&nbsp;1976, he served
as a staff accountant
with PriceWaterhouseCoopers f/k/a Price Waterhouse.
Mr.&nbsp;Dubose graduated with
a B.A. degree in
Accounting from Lamar
University in 1973.
Although not active at
present, Mr.&nbsp;Dubose was a
Certified Public
Accountant in the state
of Texas. He also holds
a real estate brokerage
license.
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">14405 Walters Road
Suite&nbsp;310
Houston, Texas 77014</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->-10-<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="21%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="53%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="22%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Positions with the Company</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Name and (Age)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>and Principal Occupations</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Business Address</B></TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">David Bruen (65)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Mr. Bruen has served as a
Director since 2008. Mr.
Bruen has been in the
banking industry for over
thirty years in both
commercial lending and
administration. Mr.&nbsp;Bruen
began his career at Bank
of America where he
assumed additional
responsibilities and
ultimately became a
Credit Administrator. He
later held executive
management positions at
two independent banks in
Northern California, as
Chief Credit Officer and
President, respectively.
During the past seventeen
years, Mr.&nbsp;Bruen has been
in commercial lending to
mid-size businesses in
San Diego County for
First Interstate Bank,
Wells Fargo Bank, Mellon
1<SUP style="font-size: 85%; vertical-align: text-top">st</SUP> Business
Bank, and San Diego
National Bank. Mr.&nbsp;Bruen
recently retired from
San Diego National Bank
after 6&nbsp;years as a senior
commercial lending
officer. Mr.&nbsp;Bruen is a
graduate of San Diego
State University and has
an M.B.A. from the
University of Southern
California. He is a Life
Member of the Pacific
Life Holiday Bowl
Committee and has been a
member of the Presidents
Association for Palomar
College, Financial
Executives International,
San Diego MIT Enterprise
Forum, and the
Association for Corporate
Growth.
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">1282 Pacific Oaks
Place, Escondido,
CA 92029</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Kenneth W. Elsberry
(71)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Mr. Elsberry has served
as a Director since 2008.
Mr.&nbsp;Elsberry has served
as our chief financial
officer since our
inception. He also has
served as chief financial
officer and a Director of
CI Holding Group, Inc.
and certain of its
affiliates. From December
2004 to October&nbsp;2007, Mr.
Elsberry served as chief
financial officer of
Trusonic, Inc., a startup
technology company based
in San Diego, California.
From 1994 until 1998, Mr.
Elsberry served as chief
financial officer of
Clover REIT. Since 1990,
Mr.&nbsp;Elsberry has operated
his own consulting firm,
which provides financial
and administrative
consultation services to
small and medium-sized
companies. Mr.&nbsp;Elsberry
received his Bachelor of
Science degree in
accounting from Colorado
State University and is a
registered securities
principal. He is a member
of the California Society
of Certified Public
Accountants, American
Institute of Certified
Public Accountants and
National Association of
Accountants.
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">1282 Pacific Oaks
Place, Escondido,
CA 92029</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->-11-<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="21%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="53%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="22%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Positions with the Company</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Name and (Age)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>and Principal Occupations</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Business Address</B></TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">William Allen (64)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Mr. Allen is a nominee
for Director. For 28
years, Mr.&nbsp;Allen was
employed with
PriceWaterhouseCoopers
and was the tax partner
in charge of the San
Diego, California office
until his retirement in
2000. From 2002 to 2006,
Mr.&nbsp;Allen served as
Chairman of the Board of
Directors for Arrowhead
General Insurance, and is
currently on the Board of
Directors for The Copley
Press, Inc. Mr.&nbsp;Allen
graduated from the
University of Arizona
with a Bachelor of
Science degree in
accounting. He is a
member of the American
Society of Certified
Public Accountants, and
the California Society of
Certified Public
Accountants.
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">1282 Pacific Oaks
Place, Escondido,
CA 92029</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B><I>INFORMATION REGARDING OUR BOARD OF DIRECTORS AND ITS COMMITTEES</I></B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Board Committees</I></B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">Our board has adopted a charter for each of the Audit Committee, the Compensation Committee,
and the Nominating/Corporate Governance Committee. Our board may, from time to time, establish
certain other committees to facilitate our management. We have also adopted Corporate Governance
Guidelines. The Committee Charters and Corporate Governance Guidelines are posted on our website
at <u>www.netreit.com</u> and will be provided without charge upon request to the Corporate Secretary,
NetREIT, 1282 Pacific Oaks Place, Escondido, California, 92029. The information contained on our
website is not incorporated by reference into and does not form a part of this Proxy Statement.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Board Independence</I></B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">Our Board has determined that each of our current Directors and nominees, except for Mr.
Heilbron and Mr.&nbsp;Elsberry, have no material relationship with us (either directly or as a partner,
stockholder or officer of an organization that has a relationship with us) and is &#147;independent&#148;
within the meaning of our Director independence standards. Our board established and employed the
following categorical standards in determining whether a relationship is material and thus would
disqualify such Director from being independent.
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">The Director is, or has been within the last three (3)&nbsp;years, our employee or an
employee of any of our subsidiaries;</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">An immediate family member of the Director is, or has been within the last three (3)
years, our executive officer or an executive officer of any of our subsidiaries;</DIV></TD>
</TR>
</table>
</div>

<P align="center" style="font-size: 10pt; text-indent: 8%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->-12-<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">The Director (or an immediate family member of the Director) received during any
twelve-month period within the last three (3)&nbsp;years, more than $60,000 in direct
compensation from us and/or any of our subsidiaries, other than Director and committee
fees and pension or other forms of deferred compensation for prior service (provided
such compensation is not contingent in any way on continued service);</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">The Director was affiliated with or employed within the last three (3)&nbsp;years by our
present or former (internal or external) auditor or an immediate family member of the
Director was affiliated with or employed in a professional capacity by our present or
former (internal or external) auditor;</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">The Director (or an
immediate family member of the Director) is, or has been within
the last three (3)&nbsp;years, employed as an executive officer of another company where any
of our executives served on that company&#146;s compensation committee;</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">The Director is a current employee, or an immediate family member of the Director is
a current executive officer of another company that made payments to, or received
payments from us or any of our subsidiaries for property or services in an amount
which, in any of the last three (3)&nbsp;fiscal years, exceeds the greater of $200,000, or
two percent (2%) of such other company&#146;s consolidated gross revenue;</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">The Director (or an immediate family member of the Director) was, within the last
three (3)&nbsp;years, an affiliate or executive officer of another company which was
indebted to us, or to which we were indebted, where the total amount of either
company&#146;s indebtedness to the other was five percent (5%) or more of our total
consolidated assets or the total consolidated assets of the company he or she served as
an affiliate or executive officer;</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">The Director (or an immediate family member of the Director) was, within the last
three (3)&nbsp;years, an officer, Director or trustee of a charitable organization where our
(or an affiliated charitable foundation&#146;s) annual discretionary charitable
contributions to the charitable organization exceeded the greater of $1&nbsp;million or five
percent (5%) of that organization&#146;s revenues;</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">Within the last three (3)&nbsp;fiscal years has been an officer, Director or trustee of a
charitable organization where NetREIT&#146;s contributions (or an affiliated charitable
foundation&#146;s annual discretionary charitable contributions to the charitable
organization) exceeded the greater of One Hundred Thousand Dollars ($100,000) or five
percent (5%) of that organization&#146;s consolidated gross revenue.</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">An &#147;Affiliate&#148; includes any person beneficially owning in excess of 10% of the voting power
of, or a general partner or managing member of, a company.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Meetings and Attendance</I></B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">Our Board of Directors met three (3)&nbsp;times during 2008. All Directors attended at least 75%
of the aggregate meetings. Although we have no policy with regard to board members&#146; attendance at
our annual meeting of shareholders, it is customary for, and we expect, all board members to
attend.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">To ensure free and open discussion among the Independent Directors of our board, the
Independent Directors meet prior to each full board meeting.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 8%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->-13-<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Communications with the Board</I></B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">Shareholders and other interested parties may communicate with our Lead Independent Director
or with the non-management Directors, as a group, by sending an email to
<U>kelsberry@netreit.com</U> or by regular mail addressed to the Lead Independent Director, c/o
the Corporate Secretary, NetREIT, 1282 Pacific Oaks Place, Escondido, California, 92029. All
correspondence will be forwarded promptly by the corporate secretary to the Lead Independent
Director.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Audit Committee</I></B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">Our Audit Committee of our Board of Directors is comprised of Mr.&nbsp;Larry Dubose (Chairman), Mr.
David Bruen and Mr.&nbsp;Bruce Staller. Our Board has determined that Mr.&nbsp;Dubose qualifies as an audit
committee financial expert, as defined by the regulations of the Securities and Exchange Commission
(SEC). All of the members of the Audit Committee are &#147;independent&#148; within the meaning of our
Director of independence standards and the audit committee requirements of the SEC.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The Audit Committee&#146;s principal responsibilities include:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">Assisting our board in fulfilling its responsibility for oversight of the quality
and integrity of our accounting, auditing and reporting practices;</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">The ultimate authority over the appointment, retention, compensation, oversight and
evaluation of the work of the certified public accounting firm, and;</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">The selection, approval and engagement of our independent certified public
accounting firm, approving any special assignments given to the independent accounting
firm and reviewing:</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="16%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">The scope and results of the audit engagement with the
independent accounting firm and management, including the independent
accounting firm&#146;s letters to the Audit Committee;</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="16%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">The independence of the independent accounting firm;</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="16%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">The effectiveness and efficiency of our internal accounting function; and</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="16%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">Any proposed significant accounting changes.</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Compensation Committee</I></B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">The Compensation Committee of our Board of Directors is comprised of Messrs.&nbsp;Staller
(Chairman), and Rolling. All of the members of the Compensation Committee are &#147;independent&#148; within
the meaning of our Director independence standards, as described above, and the audit committee
requirements of the SEC. The Compensation Committee&#146;s principal responsibilities include:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">Assessing the Company&#146;s financial and non financial performance against a
number of factors it considers significant and relevant, evaluate the executive
officers performance and set their compensation levels;</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">Reviewing and provide oversight of the Company&#146;s compensation philosophy and
shall approve the establishment of competitive targets for all equity-based plans
requiring stockholder approval;</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">Reviewing the design and management of the significant employee benefits
programs; and</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">Reviewing eligibility criteria and award guidelines for corporate-wide
compensation programs that management level employees participate in including bonus
plans, stock option and other equity-base programs, deferred compensation plans and any
other cash or stock incentive programs.</DIV></TD>
</TR>




</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->-14-<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV style="margin-top: 10pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


</TABLE>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">The Compensation Committee regularly reviews and approves our executive compensation
philosophy to ensure that they are aligned with our business strategy and objectives, encourages
high performance, promotes accountability and assures that employee interests are aligned with the
interests of our shareholders.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">The Compensation Committee has the authority to determine and approve the individual elements
of total compensation paid to the chief executive officer and other executives holding the title of
vice president or higher. The Compensation Committee reviews the performance and compensation of
the chief executive officer, and all of the executive officers named in this Proxy Statement. The
chief executive officers and president annually assist in the review of the compensation of our
other executive officers. The chief executive officer makes recommendations with respect to salary
adjustments and annual bonus and nonvested stock awards to the Compensation Committee based on his
review and market data.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Nominating/Corporate Governance Committee</I></B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">The Nominating/Corporate Governance Committee of our Board of Directors is comprised of
Messrs.&nbsp;Rollings (Chairman) and Schwartz. All the members of the Nominating/Corporate Governance
Committee are &#147;independent&#148; within the meaning of our Director independence standards, as described
above, and the audit committee requirements of the SEC. The Corporate Governance Committee&#146;s
principal purpose is to provide counsel to our Board of Directors with respect to:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">purpose, structure and membership of the committees of our Board of Directors;</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">reviewing the succession planning for our executive management;</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">assisting our Board of Directors in developing and implementing our corporate
governance guidelines;</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">considering questions of possible conflicts of interest of the Board members,
as such questions arise;</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">determining the size, needs and composition of our board and its committees;</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">monitoring a process to assess the effectiveness of our board; and</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">recommending nominations to the full board.</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">When assessing potential nominees for election to our board, the Nominating/Corporate
Governance Committee considers a variety of factors, such as the candidates&#146; education, experiences
and knowledge of our industry and experience in other industries that are relevant to us,
understanding real estate investing and financing, prior service as a director of other companies
and relevant commercial experience. The committee may consider candidates recommended by
shareholders, as well as recommendations from other sources, such as other directors or officers,
third-party search firms or other appropriate sources. See Shareholders&#146; Nominations below for
procedures.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 8%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->-15-<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Director Qualifications</I></B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">The Director qualifications currently focus on what the Nominating/Corporate Governance
Committee believes to be essential competencies to effectively serve on the board. In reviewing
and considering potential nominees for the board, the Nominating/Corporate Governance Committee
looks at the following qualities, skills and attributes:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">Experience in corporate governance, such as an officer or former officer of a
publicly held company;</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">Experience in the real estate industry;</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">Experience as a board member;</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">Personal and professional integrity, ethics and values;</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">Practical and mature business judgment, including the ability to make
independent analytical inquiries;</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">Academic expertise in an area of our operations; and</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">Background in financial and accounting matters.</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Stockholder Nominations for Directors</I></B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">The Nominating/Corporate Governance Committee&#146;s policy is to consider candidates recommended
by shareholders. The stockholder must submit a resume of the candidate and an explanation of the
reasons why the stockholder believes the candidate is qualified for service on our board and how
the candidate satisfies our board criteria. The stockholder must also provide such other
information about the candidate as would be required by the SEC rules to be included in a Proxy
Statement. In addition, the stockholder must include the consent of the candidate and describe any
arrangements or undertakings between the stockholder and the candidate regarding the nomination.
The stockholder must submit proof of NetREIT stockholdings. The stockholder must also comply with
the advance notice provisions of our Bylaws. All communications are to be directed to the Chairman
of the Nominating/Corporate Governance Committee, c/o the Corporate Secretary, NetREIT, 1282
Pacific Oaks Place, Escondido, California, 92029. Recommendations received less than 90&nbsp;days or
more than 120&nbsp;days prior to the anniversary of the mailing of the Proxy Statement for the previous
year&#146;s annual meeting of shareholders will not be considered timely for consideration at the
current year&#146;s annual meeting of shareholders. See &#147;Stockholder Proposals for 2010 Annual Meeting&#148;
in this Proxy Statement. Properly submitted stockholder recommendations will be evaluated by the
Nominating/Corporate Governance Committee using the same criteria used to evaluate other Director
candidates.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 8%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->-16-<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Compensation of the Company&#146;s Directors</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">We compensate our Directors with awards of restricted stock and/or stock options. We may
compensate them with cash or other future payments. Our Directors receive reimbursement of
reasonable out-of-pocket expenses incurred in connection with attendance at meetings of the Board
of Directors. Where a Director is also one of our officers, we do not pay separate compensation for
services rendered as a Director.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">None of our officers receive or will receive any compensation for serving as a member of our
Board of Directors or any of its committees. Our Directors received the following aggregate amounts
of compensation for the years ended December&nbsp;31, 2008, and 2007.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
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    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Change</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">in</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">pension</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Fees</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">value</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">earned</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Non-</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">and</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">or</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">equity</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">nonqualified</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">All</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">paid</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Stock</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">incentive</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">deferred</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">other</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">in cash</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Awards</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Option</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">plan</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">compensation</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">compensation</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Name</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(2)(3)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Awards</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">compensation</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">earnings</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(4)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Total</TD>
    <TD>&nbsp;</TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Bruce Staller</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2008</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#149;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">28,582</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#149;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,225</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">31,807</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2007</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,250</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">845</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,095</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Sumner Rollings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2008</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#149;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,583</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#149;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,873</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,456</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2007</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,250</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">845</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,095</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em; background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Thomas Schwartz</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2008</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#149;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,250</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#149;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,873</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,123</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2007</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,250</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">845</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,095</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Larry Dubose</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2008</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#149;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,250</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#149;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,014</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,264</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2007</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,250</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">845</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,095</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>





<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR style="font-size: 6pt">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="96">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">The Company pays no cash fees to any of its nonaffiliated Directors to
attend Directors&#146; meetings but does reimburse such Directors for their
travel expenses.</DIV></TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">The amounts shown represent the compensation cost recognized by us
related to the grants of restricted stock during 2008 and 2007 in
accordance with Statement of Financial Accounting Standard No.&nbsp;123R,
<I>Share Based Payments </I>(&#147;SFAS 123R&#148;). For a discussion of the valuation
assumptions used to determine the compensation cost in 2008 and 2007,
see Note 3 to the Financial Statements included in our annual report
on Form 10-K for the year ended December&nbsp;31, 2008.</DIV></TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->-17-<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR style="font-size: 6pt">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="96">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">On January&nbsp;1, 2008, each non-employee Director was awarded 3,000
shares of restricted stock. In addition the lead Director, Mr.
Staller, and the Chairman of the Audit Committee, Mr.&nbsp;Dubose, were
awarded an additional 500 and 200 shares, respectively. On January&nbsp;1,
2007, each non-employee Director was awarded 1,500 shares of
restricted stock. The fair value on the date of grant was calculated
by multiplying the number of shares by the price of our private
placement offering of common stock of $10. All restricted stock
awarded vest on the anniversary of the grant date over three years and
all shares, including shares of restricted stock, are eligible to
receive distributions from the date of grant. During 2008 and 2007,
1/3 of the shares granted vested and was recorded as Director
compensation.</DIV></TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(4)</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">For all Directors, the amount represents distributions paid
on shares of restricted stock during the years ended
December&nbsp;31, 2008 and 2007.</DIV></TD>
</TR>

</TABLE>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%"><B>THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE TO ELECT EACH OF THE NOMINEES TO THE BOARD OF
DIRECTORS OF THE COMPANY.</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>EXECUTIVE OFFICERS OF THE COMPANY</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">Certain information about the current executive officers of the Company is set forth below.
Each executive officer of the Company may be removed from office at any time by a majority of the
Board with or without cause.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="21%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="43%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Position</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Name of Officer (Age)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>With The Company</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Principal Occupations</B></TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Jack K. Heilbron (58)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chairman of the
Board, President and
Director
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Please see &#147;Director
Nominees&#148; for a
description of Mr.
Heilbron&#146;s principal
occupations.</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Kenneth W. Elsberry
(71)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chief Financial
Officer, Secretary and Director
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Please see &#147;Director
Nominees&#148; for a
description of Mr.
Elsberry&#146;s principal
occupations.</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<P align="center" style="font-size: 10pt; text-indent: 8%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->-18-<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">
<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>EXECUTIVE COMPENSATION</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">The following table sets forth information concerning the compensation earned by our Chief
Executive Officer and our Chief Financial Officer for the fiscal years ended December&nbsp;31, 2008,
2007, and 2006. Other than our Restricted Stock Award Program, there was no non-equity incentive
plan compensation or change in pension value and non-qualified deferred compensation earnings paid
to the executive officers in 2008, 2007, and 2006.
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="23%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left">Name and</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Stock</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">All other</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left">Principal</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 0px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 0px solid #000000">Bonus</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">awards</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Options</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">compensation</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Position</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Year</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Salary</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Awarded</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Total</TD>
    <TD>&nbsp;</TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">Jack K. Heilbron</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">2008</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">$</TD>
    <TD align="right" valign="top">133,583</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">$</TD>
    <TD align="right" valign="top">135,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">$</TD>
    <TD align="right">14,998</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">20,615</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">304,196</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">President/CEO</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2007</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">88,415</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,503</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">154,418</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,067</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,425</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">76,492</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Kenneth Elsberry</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2008</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">132,583</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,998</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,689</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">257,270</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Secretary/CFO</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2007</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">88,415</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,460</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">147,375</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,067</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,214</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">66,281</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>





<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR style="font-size: 6pt">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="96">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">The bonuses shown for each year were paid in January of the following year.</DIV></TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">For the years 2008 and 2007, the amounts shown represent the compensation
cost recognized by us related to the grants of restricted stock during the
respective year in accordance with SFAS 123R. For a discussion of valuation
assumptions used to determine the compensation cost in 2008 and 2007, see
Note 3 to the Notes to the Company&#146;s Financial Statements for the year
ended December&nbsp;31, 2008.</DIV></TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">The following table sets forth other compensation included above paid by us:</DIV></TD>
</TR>

</TABLE>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Distributions</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Paid on</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Group Term</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Total of All</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Restricted</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Life Insurance</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Auto</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Country</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Other</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Name</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Year</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Stock</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Payments</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Allowance</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Club</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Compensation</TD>
    <TD>&nbsp;</TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Jack K. Heilbron,</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2008</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,830</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,945</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">8,776</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7,064</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">20,615</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">President/CEO</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2007</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">845</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,509</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,095</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,054</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,503</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,799</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,033</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,593</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,425</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Kenneth W. Elsberry,</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2008</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,873</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">816</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,689</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Secretary/CFO</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2007</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">845</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">615</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,460</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">214</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,214</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="center">
<TABLE style="font-size: 8pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="19%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>Stock Option Awards (1)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="14" style="border-bottom: 1px solid #000000"><B>Restricted Stock Awards (2)(3)(4)</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Equity</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Equity</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Incentive</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Incentive</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Plan</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Plan</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Awards:</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Awards:</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Number</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Market</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Equity</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>or</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Incentive</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Unearned</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Payout</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Plan</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Value of</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Awards:</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Unearned</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Shares of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Market</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Restricted</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Shares</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Restricted</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Value of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Stock</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>of</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Underlying</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Underlying</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Stock</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Shares of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>or Other</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Restricted</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Unexercised</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Underlying</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Unexercised</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Option</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>That Have</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Restricted</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Rights</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Stock</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Options</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Unexercisable</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Unearned</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Exercise</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Option</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Not</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Stock That</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>That</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>That</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(#)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Options (#)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Options</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Price</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Expiration</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Vested</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Have Not</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Have Not</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Have Not</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Exercisable</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Unexercisable</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>(#)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>($)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Date</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>(3)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Vested (4)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Vested</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Vested</B></TD>
    <TD>&nbsp;</TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">Jack K. Heilbron</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">5,321</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">$</TD>
    <TD align="right" valign="top">8.14</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">6/30/2009 and 2010</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">2,525</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">$</TD>
    <TD align="right" valign="top">25,250</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">$</TD>
    <TD align="right" valign="top">0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Kenneth W. Elsberry</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">1,737</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">8.64</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6/30/2010</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,525</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">25,250</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR style="font-size: 6pt">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="96">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">Options were granted in 2004 and 2005. The option price represents the
weighted average price of the outstanding options. The options for
each named executive officer expire as follows: Jack K. Heilbron &#151;
1,848 on June&nbsp;30, 2009 and 3,473 on June&nbsp;30, 2010; Kenneth W. Elsberry
&#151; 1,737 on June&nbsp;30, 2010. No options have been granted since 2005.</DIV></TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">The amounts in these columns represent the stock awards held at
December&nbsp;31, 2008 that were granted on January&nbsp;1, 2007 and 2008.</DIV></TD>
</TR>
</table>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->-19-<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR style="font-size: 6pt">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="96">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">The restricted stock awards vest according to the following schedule:
1,525 shares vest on December&nbsp;31, 2009 and 1,000 shares vest on
December&nbsp;31, 2010.</DIV></TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(4)</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">Market value has been calculated by multiplying the offering price of
$10 in our ongoing private placement offering by the outstanding
restricted stock awards for each named executive officer.</DIV></TD>
</TR>

</TABLE>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Stock Vested Table</I></B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">The following table sets forth summary information concerning options exercised and vesting of
stock awards for each named executive officer during the year ended December&nbsp;31, 2008.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="44%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Option Awards</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Stock Awards</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Number of</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Value</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Number of</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Value</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"> Shares</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Realized on</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Shares</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Realized on</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Acquired on</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Exercise</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Acquired on</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Vesting</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Name</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Exercise</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Vesting</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"> (2)</TD>
    <TD>&nbsp;</TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Jack K. Heilbron</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,325</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">17,758</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,525</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">15,250</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Kenneth W. Elsberry</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,127</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">26,267</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,525</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">15,250</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>




<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR style="font-size: 6pt">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="96">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">This column represents the difference between the exercise price and
the market value of the common stock based on the offering price of
$10 in our ongoing private placement offering.</DIV></TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">This column represents the value realized on vesting as calculated by
multiplying the offering price of our common stock on December&nbsp;31,
2008 of $10 by the number of shares vested.</DIV></TD>
</TR>

</TABLE>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>COMPENSATION DISCUSSION AND ANALYSIS</I></B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">Our Compensation Committee is responsible for establishing our compensation strategies and
goals for our executive officers and executive level employees. The Committee operates pursuant to
a written charter which our Board adopted in 2005. Our Compensation Committee is comprised of Mr.
Bruce Staller, Chairman, and Mr.&nbsp;Sumner Rollings. The Compensation Committee met three (3)&nbsp;times
during 2008.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Overview</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">Our executive compensation benefits program aims to encourage our management team to
continually pursue our strategic opportunities while effectively managing the risks and challenges
inherent to the real estate investment industry. We gear different compensation elements to
shorter and longer-term performance, with the overall objective of creating long-term value for our
shareholders. We utilize short term compensation, including base salary, adjustments to base
salary and cash bonuses to motivate and reward our key executives for individual performance. The
Committee&#146;s fundamental policy is to offer the executive officers competitive compensation
opportunities based upon overall Company growth and performance, their individual contribution to
the financial success of the Company, and their personal performance. It is the Committee&#146;s
objective to have a substantial portion of each officer&#146;s compensation contingent upon the
Company&#146;s performance, as well as upon his or her own level of performance.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 8%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->-20-<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Base Salary</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">Base salary provides our executive officers with a degree of financial certainty and
stability, and will be used to attract and retain highly qualified individuals. The Committee
reviews and determines the base salaries of our executive officers. Base salaries are also
evaluated at the time of a promotion or other significant changes in responsibilities. In
establishing the 2008 base salaries of the named executive officers, the Committee and management
took into account a number of factors, including the comparable salaries of comparable positions
with other REITs and the significant changes in responsibilities and time required due to the
significant growth in capital.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Employment and Severance Agreements</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">We employ Mr.&nbsp;Heilbron as President and Chief Executive Officer and Mr.&nbsp;Elsberry as Chief
Financial Officer pursuant to Employment Agreements dated January&nbsp;28, 1999. Under their respective
employment agreement, Messrs Heilbron and Elsberry are entitled to (a)&nbsp;a base annual salary of
$10,000, (b)&nbsp;an annual bonus compensation in at least the amount necessary to raise the employee&#146;s
annual salary to the median level of salaries paid to comparable executives of comparable sized
REITs. Such bonus compensation will be awarded as reasonably determined by the Compensation
Committee. The award of any bonus compensation, however, is dependent on our attaining certain
minimum performance levels as determined by the Committee, (c)&nbsp;group medical plan, and (d)&nbsp;an
automobile allowance.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">During 2008 the Committee recommended and the Board approved increases in Mr.&nbsp;Elsberry and Mr.
Heilbron&#146;s annual compensation from $10,000 to $20,000 at the first close of escrow of the 2006
Private Placement Offering and increases of $4,000 annually for each additional million of capital
raised up to ten million. After an aggregate of ten million in new capital has been raised the
salaries will increase by $2,000 annually for each additional million of capital raised until Mr.
Heilbron&#146;s salary is $200,000 and Mr.&nbsp;Elsberry&#146;s salary is $150,000. The first close of escrow
occurred on July&nbsp;29, 2005. At December&nbsp;31, 2008, both Mr.&nbsp;Heilbron and Mr.&nbsp;Elsberry&#146;s annual
salary rate was $150,000.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Annual Cash Bonus</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">The annual cash incentive is designed to supplement the pay of our executive officers (and
other key management personnel) so that overall total cash compensation (salary and bonus) is
competitive in our industry and properly rewards the executive officers for their efforts in
achieving their objectives. The cash bonuses paid to the executive officers for 2008 also
reflected the Committee&#146;s determination of each executive officer&#146;s individual performance and the
level of pay of each executive officer compared to other similarly situated officers in the
industry. Bonuses were approved by the Committee in December&nbsp;2008 and paid in January&nbsp;2009.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 8%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->-21-<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Long-Term Incentive Compensation Awards</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">We believe that an important component of our total compensation program is an effective
equity
incentive plan that provides alignment of the interests of our executive officers and those of our
shareholders. The equity compensation program consisted of stock
options in 2005 and
restricted stock commencing in 2007. The initial restricted stock grant made to each executive
officer is based on competitive conditions applicable to the executive&#146;s specific position.
Subsequent stock grants may be made at varying times and in varying amounts at the discretion of
the Committee. Equity awards are not granted automatically to our executives and employees.
Generally, the size of each grant is set at a level that the Committee deems appropriate to create
a meaningful opportunity for stock ownership based upon the individual&#146;s position with the Company,
the individual&#146;s potential for future responsibility and promotion, the individual&#146;s performance in
the recent period, and the number and value of unvested options and restricted stock held by the
individual at the time of the new grant. The relative weight given to each of these factors will
vary from individual to individual at the Committee&#146;s discretion.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">Stock awards are issued to our executive officers under our 1999 Incentive Award Plan at the
Committee meeting in December of each year. Such stock awards are effective as of January 1 of the
following year. These stock awards are designed to increase the performance, encourage officers&#146;
ownership in us, motivate our executive officers to improve long-term dividend performance,
encourage long-term dedication to us, and to operate as an executive officer retention mechanism
for key members of our management.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">Our nonvested stock awards generally vest evenly, on each anniversary of the grant date, over
three (3)&nbsp;years or five (5)&nbsp;years. Distributions are paid on the entirety of the grant from the
grant date.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">In 2008, no stock options were granted to the executive officers. In 2005, we discontinued
our practice of granting stock options in favor of only granting nonvested stock. We believe that
nonvested stock is a more appropriate incentive to our executive officers and employees given the
focus of our business on monthly dividends.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">In
2008, the Board approved adopting a Simple IRA plan. All employees are eligible to
participate except for part time employees. We match the employee&#146;s elective deferral up to three
percent (3%) of the employee&#146;s compensation. Employees may contribute up to $11,500 of their
salary, subject to annual limits under the IRS Code of 1986, as amended (&#147;Code&#148;).
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Code of Ethics and Business Conduct</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">The Board has adopted a code of ethics and business conduct for the Company that applies to
all officers and employees, including its principal executive officer, principal financial officer, vice-president finance and controller. The code is included under the
Company section of the Company&#146;s web site at <U>www.netreit.com</U>.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B><I>COMPENSATION COMMITTEE REPORT</I></B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Our Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with
management, and based on the review and discussions, the Committee recommended to our Board that
the Compensation Discussion and Analysis be included in this Proxy Statement for the 2009 Annual
Meeting of shareholders.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Submitted on March&nbsp;27, 2009 by the members of the Compensation Committee of our Board.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Bruce Staller, Chairman<br>
Sumner Rollings
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->-22-<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Pension Benefits</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">We do not currently sponsor any qualified or non-qualified defined benefit plans. The Compensation
Committee may elect to adopt qualified or non-qualified defined benefit plans if they determine
that doing so is in our best interest.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Nonqualified Deferred Compensation</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">We do not currently sponsor any non-qualified defined contribution or deferred compensation plans.
The Compensation Committee may elect to provide our officers and other employees with non-qualified
defined contribution or deferred compensation benefits if they determine that doing so is in our
best interest.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>OWNERSHIP OF COMMON STOCK</I></B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The following table sets forth certain information as of June&nbsp;30, 2009, relating to the beneficial
ownership of the Company&#146;s Common Stock by (1)&nbsp;all persons known by the Company to beneficially own
more than 5% of the outstanding common stock, (2)&nbsp;each Director, nominee Director and all Officers
of the Company, and (3)&nbsp;all Executive Officers and Directors of the Company as a group. All
Directors serve one year terms with their terms expiring at the Annual Meeting. All Officers of
the Company are elected or appointed by the Board of Directors and hold office until the Annual
Meeting or until replaced at the discretion of the Board.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="23%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">% of Total Outstanding</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Name of Beneficial Owner</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Position</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Number of Shares</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Shares (1)</TD>
    <TD>&nbsp;</TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Sumner Rollings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">23,064 </TD>
    <TD nowrap>(2)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.28</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Thomas Schwartz</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">16,677 </TD>
    <TD nowrap>(3)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.20</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Jack K. Heilbron</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Officer and Director</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">38,302 </TD>
    <TD nowrap>(4)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.47</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Bruce Staller</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Lead Director</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">17,540 </TD>
    <TD nowrap>(5)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.22</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Larry Dubose</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">12,677</TD>
    <TD nowrap>(6)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.16</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Kenneth W. Elsberry</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Officer and Director</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">33,031</TD>
    <TD nowrap>(8)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.41</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">William Allen</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Nominee for Director</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">77,907</TD>
    <TD nowrap>(9)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.95</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">David Bruen</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">5,333</TD>
    <TD nowrap>(7)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.07</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">All Directors and
Executive Officers
as a Group (8)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">224,531</TD>
    <TD nowrap>(10)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">2.71</TD>
    <TD nowrap>%</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR style="font-size: 6pt">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="96">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">Assumes 8,142,557 voting shares issued and outstanding and shares issuable under stock
options and warrants which are exercisable on or within 60&nbsp;days of June, 2009. As of June&nbsp;30,
2009, we had outstanding options for the purchase of an aggregate of 77,369 shares and
nonvested restricted shares of 43,367.</DIV></TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">Includes 13,316 Shares held and Stock Options which expire on June&nbsp;30, 2010 to purchase 3,473
Shares at price of $8.638 per Share and 6,275 nonvested restricted shares that vest equally on
December&nbsp;31, 2009, 2010, and 2011.</DIV></TD>
</TR>
</table>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->-23-<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR style="font-size: 6pt">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="96">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">Includes 6,929 Shares held and Stock Options for 3,473 Shares which expire on June&nbsp;30, 2010
at a price of $8.368 per Share and 6,275 nonvested restricted shares that vest equally on
December&nbsp;31, 2009, 2010, and 2011.</DIV></TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(4)</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">Includes 830 Shares held of record by CI Holding Group, Inc. (&#147;CI Holding&#148;), 23,952 Shares
owned by Mr.&nbsp;Heilbron, 3,772 Shares owned by Ms.&nbsp;Limoges and Stock Options expiring on June
30, 2010 held by Mr.&nbsp;Heilbron to purchase 3,473 Shares at a price of $8.368 per Share and
6,275 nonvested restricted shares that vest equally on December&nbsp;31, 2009, 2010 and 2011.</DIV></TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(5)</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">Includes 7,459 Shares beneficially owned and Stock Options which expire on June&nbsp;30, 2010 for
the purchase of 3,473 Shares at a price of $8.368 per Share and 6,608 nonvested restricted
shares that vested equally on December&nbsp;31, 2009, 2010, and 2011.</DIV></TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(6)</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">Includes 6,269 Shares held and 6,408 nonvested restricted shares that vested equally at
December&nbsp;31, 2009, 2010 and 2011.</DIV></TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(7)</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">Mr.&nbsp;Bruen owns 83 Shares held of record and 5,250 Shares of nonvested restricted shares that
vest equally on December&nbsp;31, 2009, 2010 and 2011.</DIV></TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(8)</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">Includes 25,831 Shares held of record and Stock Options which expire on June&nbsp;30, 2010 held
for the purchase of 925 Shares at a price of $8.368 per Share and nonvested restricted stock
of 6,275 shares that vest equally on December&nbsp;31, 2008, 2009 and 2010.</DIV></TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(9)</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">Mr.&nbsp;Allen owns 538
Shares held of record and an option to acquire 77,369 shares at a
price of $9.30 in exchange for his interest in the NetREIT 01 LP.</DIV></TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(10)</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">Includes 88,978 Shares beneficially held of record by the eight nominated directors and
officers and Stock Options which expire on June&nbsp;30, 2010, for the purchase of 14,817 Shares at
a price of $8.638 per Share and Stock Options for 77,369 at a price of $9.30 and nonvested
restricted stock of 43,367 Shares that vest annually on December&nbsp;31, 2008 through 2010.</DIV></TD>
</TR>

</TABLE>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Related Party Transactions</I></B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">In the last fiscal year, there has not been nor are there currently proposed any transactions
or series of similar transactions to which the Company was or is to be a party in which the amount
involved exceeds $10,000 and in which any Director, executive officer, holder of 5% of our common
stock or any member of the immediate family of any of the foregoing persons had or will have a
direct or indirect material interest.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">It is our policy that the Audit Committee approve or ratify transactions involving Directors,
executive officers or principal shareholders or members of their immediate families or entities
controlled by any of them or in which they have a substantial ownership interest. Such
transactions include employment of immediate family members of any Director or executive officer.
Management advises the Audit Committee on a regular basis of any such transaction that is proposed
to be entered into or continued and seeks approval.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>AUDIT COMMITTEE REPORT</I></B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The Audit Committee of the Board is comprised of independent Directors. The Committee is comprised
of Mr.&nbsp;Larry Dubose, Chairman, Mr.&nbsp;David Bruen and Mr.&nbsp;Bruce Staller. The Audit Committee operates pursuant to a
written charter which was adopted by NetREIT in 2005. The Committee met three (3)&nbsp;times during
2008.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The role of the Audit Committee is to oversee NetREIT&#146;s financial reporting process on behalf of
the Board and operates under a charter which is available on the Company&#146;s corporate website at
<U>www.netreit.com</U>. Management of NetREIT has the primary responsibility for the preparation
of the financial statements as well as executing the financial reporting process, principles and
internal controls. The independent registered public accounting firm is responsible for performing
an audit of NetREIT&#146;s financial statements and expressing an opinion as to the conformity of such
financial statements with accounting principles generally accepted in the United States.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->-24-<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">In this context, the Committee has reviewed and discussed the audit of the financial statements and
the management letter concerning internal controls, as of and for the year ended December&nbsp;31, 2008,
with management and the independent certified public accountants. The Audit Committee has discussed
with the independent registered public accounting firm and has received the written disclosures and
the letter from the independent registered public accounting firm required by Independence
Standards Board Standard No.&nbsp;1 (Independence Discussion with Audit Committees), as currently in
effect, and it has discussed with the auditors their independence from NetREIT. The Committee has
also considered whether the independent registered accounting firm&#146;s other non-audit service to
NetREIT is compatible with maintaining the registered public accounting firm&#146;s independence.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">In reliance on the reviews and discussions referred to above, the Audit Committee recommended to
the Board that the audited financial statements be included in NetREIT&#146;s Annual Report for the year
ended December&nbsp;31, 2008.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Submitted on March&nbsp;27, 2009 by the members of the Audit Committee of NetREIT&#146;s Board of Directors.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Larry Dubose, Chairman<BR>
Bruce Staller
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Section&nbsp;16(a) Beneficial Ownership Reporting Compliance</I></B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">Section&nbsp;16(a) of the Securities Exchange Act of 1934, as amended, and SEC rules requires the
Company&#146;s officers and Directors, and persons who own more than 10% of a registered class of our
equity securities (collectively, &#147;Insiders&#148;), to file with the SEC initial reports of ownership and
reports of changes in ownership of our common stock and other equity securities. Insiders are
required by regulation of the SEC to furnish us with copies of all
Section 16(a) forms they file.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">Effective with the filing of Form&nbsp;10 with the Securities and Exchange Commission in May&nbsp;2008
the officers and Directors, and persons who own more than 10% of a registered class of our equity
securities were required to file the initial report of ownership and reports of changes in
ownership. We have reviewed copies of reports provided to the company, as well as other records
and information. Based on that review, we concluded that the following reports were not timely
filed. The Initial Form&nbsp;3 was filed late for all officers and Directors; Mssrs. Heilbron, Elsberry,
Dubose, Staller, Schwartz, Rollings, and Bruen. The Form&nbsp;4 referencing the restricted stock awards
presented in January&nbsp;2009 was filed late for Mssrs. Heilbron, Elsberry, Dubose, Staller, Schwartz,
and Rollings. A Form&nbsp;4 disclosing a private repurchase of common stock was filed late for Mr.
Heilbron. A Form&nbsp;4 identifying a gift of shares by Mr.&nbsp;Staller was filed late, and a Form&nbsp;4
disclosing a stock option exercise and sale in connection with a cashless exercise of a stock
option for Mr.&nbsp;Rollings was filed late. Upon discovery, these matters were promptly reported.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 8%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->-25-<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Independent Registered Public Accounting Firm Fees and Services</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The audit committee has appointed J.H. Cohn LLP as the Company&#146;s independent registered public
accounting firm for the fiscal year ending December&nbsp;31, 2009.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The following table shows the fees paid or accrued by the Company for the audit and other services
provided by J.H. Cohn LLP for fiscal years 2008 and 2007:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="66%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2008</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2007</TD>
    <TD>&nbsp;</TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Audit Fees</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">143,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">167,197</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Audit-Related Fees</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tax Fees</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">All Other Fees</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">143,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">167,197</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>



<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>SHAREHOLDER PROPOSALS</I></B>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Proposals of shareholders of the Company which are intended to be presented by such shareholders at
the Company&#146;s next Annual Meeting of Shareholders must be received by the Company no later than
February&nbsp;10, 2010 in order to be considered for inclusion in the Company&#146;s proxy statement and form
of proxy relating to that meeting.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>ANNUAL REPORT ON FORM 10-K</I></B>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">This proxy statement incorporates by reference our Form 10-K and Form 10-K/A for the year ended
December&nbsp;31, 2008. These forms are included in the annual report mailed with this proxy statement
and contain important information about the Company and its financial condition that is not
included in this proxy statement.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">BY ORDER OF THE BOARD OF DIRECTORS
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">KENNETH W. ELSBERRY,<BR>
<I>Secretary</I><BR>
Dated: July<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>, 2009

</DIV>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->-26-<!-- /Folio -->
</DIV>



<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="right" style="font-size: 10pt; margin-top: 10pt"><b>ANNEX A</b>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>AMENDED AND RESTATED BYLAWS OF NETREIT<BR><BR> BYLAWS FOR<BR>
NetREIT<BR>
A California Corporation</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>As Amended Effective _____________________, 2009</B>
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">



<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>BYLAWS<BR>OF<BR>
NETREIT<BR>
A CALIFORNIA CORPORATION</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>Table of Contents</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="77%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Table of Contents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE I</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Definitions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;1 &#147;Affiliate&#148;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;2 &#147;Appraisal&#148;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;3 &#147;Appraised Value&#148;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;4 &#147;Average Invested Assets&#148;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;5 &#147;Book Value&#148;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;6 &#147;Bylaws</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;7 &#147;Code&#148;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;8 &#147;Corporation Property&#148;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;9 &#147;Directors&#148; or &#147;Board of Directors&#148;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;10 &#147;First Mortgage&#148;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;11 &#147;First Mortgage Loans&#148;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;12 &#147;Independent Directors&#148;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;13 &#147;Invested Assets&#148;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;14 &#147;Junior Mortgage&#148;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;15 &#147;Junior Mortgage Loans&#148;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;16 &#147;Mortgages&#148;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;17 &#147;Mortgage Loans&#148;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;18 &#147;Net Assets&#148;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;19 &#147;Net Income&#148;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;20 &#147;Real Property&#148;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">

<TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;21 &#147;REIT&#148;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;22 &#147;Securities&#148;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;23 &#147;Securities of the Corporation&#148;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;24 &#147;Shareholders&#148;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;25 &#147;Total Operating Expenses&#148;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;26 &#147;Unimproved Real Property&#148;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE II</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Offices</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;1 Principal Executive Office</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;2 Other Offices</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE III</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Meetings of Shareholders</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;1 Place of Meetings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;2 Annual Meeting</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;3 Special Meeting</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;4 Notice of Shareholders&#146; Meetings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->-2-<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="77%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;5 Manner of Giving Notice: Affidavit of Notice</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;6 Quorum</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;7 Adjourned Meeting: Notice</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;8 Voting</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;9 Waiver of Notice or Consent by Absent Shareholders</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;10 Shareholder Action by Written Consent Without a Meeting</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;11 Record Date for Shareholder Notice. Voting. and Giving Consents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;12 Proxies</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;13 Inspectors of Election</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE IV</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Directors</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;1 Powers</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;2 Number and Qualification of Directors</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;3 Election and Term of Office of Directors</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;4 Removal of Directors</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;5 Vacancies</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;6 Place of Meetings and Meetings by Telephone</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;7 Annual Meeting</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;8 Other Regular Meetings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;9 Special Meetings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;10 Quorum</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;11 Waiver of Notice</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;12 Adjournment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;13 Notice of Adjournment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;14 Action Without Meeting</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;15 Fees and Compensation of Directors</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE V</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Committees</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;1 Committees</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;2 Meetings and Action of Committees</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE VI</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Officers</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;1 Officers</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;2 Appointment of Officers</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;3 Subordinate Officers</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;4 Removal and Resignation of Officer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;5 Vacancies in Offices</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;6 Chairman of the Board</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;7 Chief Executive Officer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;8 President</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;9 Vice Presidents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;10 Secretary</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;11 Chief Financial Officer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE VII</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Indemnification of Directors, Officers, Employees and Other Agents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;1 Agents. Proceedings and Expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->-3-<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="77%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;2 Actions Other Than by the Corporation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;3 Actions by the Corporation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;4 Successful Defense by Agent</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;5 Required Approval</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;6 Advances of Expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;7 Other Contractual Rights</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;8 Limitations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;9 Insurance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;10 Fiduciaries of Corporate Employee Benefit Plan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;11 Indemnification of Directors</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE VIII</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Investment Policy</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;1 Statement of Investment Policy</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;2 Investment Prohibitions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;3 Transactions with Affiliates</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;4 Prohibited Security Issuances</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;5 Review by Independent Directors</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;6 Limitations on Corporate Borrowing</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;7 Distribution Policies</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;8 Distribution Reinvestment Plans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE X</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Records And Reports</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;1 Maintenance and Inspection of Share Register</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;2 Maintenance and Inspection of Bylaws</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;3 Maintenance and Inspection of Other Corporate Records</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;4 Inspection by Director</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;5 Annual Report to Shareholders</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;6 Disclosure on Distribution</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;7 Financial Statements</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;8 Annual Statement of General Information</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE XI</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">General Corporate Matters</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;1 Record Date for Purposes Other Than Notice and Voting</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;2 Checks. Drafts. Evidence of Indebtedness</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;3 Corporate Contracts and Instruments: How Executed</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;4 Issuance of Certificates</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;5 Lost Certificates</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;6 Representation of Shares of Other Corporations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;7 Redemption and Stop Transfer for Tax Purposes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;8 Provisions in Conflict with Law or Regulations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;9 Competing Activities of Officers. Directors</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;10 Construction</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE XII</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Amendments. Specific Shareholder Voting Requirements</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;1 Amendment by Shareholders</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;2 Amendment by Directors</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Section&nbsp;3 Business Combinations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

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<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>BYLAWS OF NETREIT<BR>
A CALIFORNIA CORPORATION<BR>
AS AMENDED ______________________, 2009</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>ARTICLE I</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Definitions</I></B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">For the purpose of these Bylaws the following terms shall have the respective meanings stated:
</DIV>

<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;1 <B>&#147;Affiliate&#148; </B>shall mean (a)&nbsp;any person directly or indirectly controlling,
controlled by or under common control with another person, (b)&nbsp;any person owning or controlling
ten percent (10%) or more of the outstanding voting securities of such other person, (c)&nbsp;any
officer, director, trustee, or general partner of such person, and (d)&nbsp;if such person is an
officer, director, trustee or general partner of another entity, then the entity for which that
person acts in any capacity.&#148;</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;2 <B>&#147;Appraisal&#148; </B>shall mean the evaluation of real property (which value may take
into consideration the existing state of the property or a state to be created) by an
independent qualified appraiser who is a member in good standing of the American Institute of
Real Estate Appraisers (AIREA)&nbsp;or is a disinterested person who, in the judgment of the
Directors, is qualified to make such a determination. Each Appraisal shall be maintained in the
Corporation&#146;s records for at least five (5)&nbsp;years and shall be available for inspection and
duplication by any Shareholder. &#147;The independent qualified appraiser shall be selected by a
majority of the Board of Directors (including a majority of the Independent Directors).&#148;</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;3 <B>&#147;Appraised Value&#148; </B>shall mean the value of a particular property as stated in the
Appraisal.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;4 <B>&#147;Average Invested Assets&#148; </B>shall mean for any period, the average of the Book
Values of the Invested Assets of the Corporation computed by taking the average of such values
at the end of each month during such period.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;5 <B>&#147;Book Value&#148; </B>shall mean the value of an asset or assets on the books of the
Corporation, determined on the basis of generally accepted accounting principles consistently
applied, without deduction for depreciation or bad debts or other asset valuation reserves and
without deduction for mortgages or other security interest to which such asset or assets are
subject.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;6
<B>&#147;Bylaws&#148; </B>shall mean these Bylaws as amended, restated or modified from time to
time. References in these Bylaws by the terms &#147;hereof,&#148; &#147;herein&#148; and &#147;hereunder&#148; shall be
deemed to refer to these Bylaws and shall not be limited to the particular article or section
in which such words appear.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;7 <B>&#147;Code&#148; </B>shall mean Sections&nbsp;856 through 860 of the Internal Revenue Code of 1986,
as now enacted or hereafter amended, or successor statutes, Regulations and proposed
regulations promulgated thereunder, any Revenue Rulings or Procedures issued by the Internal
Revenue Service and any administrative rulings or court decisions respecting the requirements
and conditions of the qualification and taxation of REITs.</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">



<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;8 <B>&#147;Corporation Property&#148; </B>shall mean as of any particular time any and all
property, real, personal or otherwise, tangible or intangible, which is owned by, or on behalf
of, the Corporation.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;9 <B>&#147;Directors&#148; or &#147;Board of Directors&#148; </B>shall mean those persons designated as such,
whether elected or appointed to act as Directors and their successors.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;10 <B>&#147;First Mortgage&#148; </B>shall mean a Mortgage, deed of trust, or similar interest,
which takes priority or precedence over all other charges or liens upon the same Real Property,
other than a lessee&#146;s interest therein, and which must be satisfied before such other charges
are entitled to participate in the proceeds of any sale. Such Mortgage may be upon a lessee&#146;s
interest in Real Property. Such priority shall not be deemed abrogated by liens for taxes,
assessments that are not delinquent or remain payable without penalty, contracts (other than
contracts for repayment of borrowed moneys), or leases, mechanic&#146;s and materialmen&#146;s liens for
work performed and materials furnished that are not in default or are in good faith being
contested, and other claims normally deemed in the same local jurisdiction not to abrogate the
priority of a First Mortgage.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;11 <B>&#147;First Mortgage Loans&#148; </B>shall mean Mortgage Loans secured or collateralized by
First Mortgages.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;12 <B>&#147;Independent Directors&#148; </B>shall mean Directors of the Corporation who do not
receive any consulting, or other compensatory fees from the Corporation, other than board or
committee fees and fixed amount of compensation under a retirement plan (including deferred
compensation) for prior service with the Corporation (provided that such compensation is not
contingent in any way on continued service); or are not an &#147;affiliated&#148; person of the
Corporation, using the safe harbor presumption that persons who are not executive officers or
10% shareholders of the company are presumed to not be affiliated person.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;13 <B>&#147;Invested Assets&#148; </B>shall mean the assets of the Corporation invested, directly
or indirectly, in equity interests in and loans secured by real estate before reserves for
depreciation or bad debts or other similar non-cash reserves.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;14 <B>&#147;Junior Mortgage&#148; </B>shall mean a Mortgage which (i)&nbsp;has the same priority or
precedence over charges or encumbrances upon Real Property as that required for a First
Mortgage except that it is subject to the priority of one or more other Mortgages and (ii)&nbsp;must
be satisfied before any other charges or liens over which it takes priority or precedence are
entitled to participate in the proceeds of any sale of such Real Property.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;15 <B>&#147;Junior Mortgage Loans&#148; </B>shall mean Mortgage Loans secured or collateralized by
Junior Mortgages; such loans may or may not provide for additional recourse to the borrower
personally.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;16 <B>&#147;Mortgages&#148; </B>shall mean mortgages, deeds of trust or other instruments creating
liens on or security interests in real property or on rights or interests, including leasehold
interests, in real property.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;17 <B>&#147;Mortgage Loans&#148; </B>shall mean notes, debentures, bonds and other
evidences of indebtedness or obligations, which are negotiable or non-negotiable and which
are secured or collateralized by Mortgages.</DIV>


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<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;18 <B>&#147;Net Assets&#148; </B>shall mean Invested Assets of the Corporation, less intangible
assets, less the total liabilities of the Corporation, as calculated on a basis consistently
applied no later than the fiscal quarter immediately preceding the date for which the
calculation is to be applied.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;19 <B>&#147;Net Income&#148; </B>shall mean the Corporation&#146;s total revenues after deduction of all
Corporation expenses, other than additions to reserves for depreciation or bad debts or similar
non-cash reserves.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;20 <B>&#147;Real Property&#148; </B>shall mean and include land, rights in land, leasehold
interests (including but not limited to interests of a lessor or lessee therein), and any
buildings, structures, improvements, fixtures and equipment located on or used in connection
with land, leasehold interests and rights in land or interests therein but does not include
First or Junior Mortgages, First or Junior Mortgage Loans, or interests therein.</DIV>



<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 0%">Section&nbsp;21 <B>&#147;REIT&#148; </B>shall mean a Real Estate Investment Trust.
</DIV>

<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;22 <B>&#147;Securities&#148; </B>shall mean any stock, shares, voting trust certificates, warrants,
bonds, debentures, notes, or other evidences of indebtedness, secured or unsecured,
convertible, subordinated or otherwise, interest or participation in a profit sharing
agreement, investment contract, or in general any instruments commonly known as &#147;securities,&#148;
or any certificates of interest, shares or participation in, temporary or interim certificates
for, or any option, warrant or right to subscribe to, purchase or acquire any of the foregoing.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;23 <B>&#147;Securities of the Corporation&#148; </B>shall mean any securities issued by the
Corporation.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;24 <B>&#147;Shareholders&#148; </B>shall mean, as of any particular time, all holders of record of
outstanding shares at such time.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;25 <B>&#147;Total Operating Expenses&#148; </B>for any period shall mean all cash operating
expenses of the Corporation including loan administration, servicing, engineering, inspection
and all other expenses paid by the Corporation, except for expenses related to raising capital,
for interest, taxes and direct property acquisition, operation and management costs, which
excepted expenses shall include, but not be limited to the following:</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(a)&nbsp;Expenses related to raising capital, interest, taxes and direct expenses related to the
acquisition, operation, maintenance, management and disposition of Corporation Assets (including
all premiums and other charges for insurance, fidelity bonds, payment bonds covering employees of
the Corporation or of others, and similar items);
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(b)&nbsp;Expenses incurred in connection with the prospective investments which are not acquired;
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(c)&nbsp;Costs incurred in connection with the raising of capital and the issuance of the
Corporation&#146;s Securities and any dividend reinvestment plan or similar plan which the Corporation
may from time to time maintain;
</DIV>
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<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(d)&nbsp;All expenses related to communications and reports to the Corporation&#146;s Shareholders and
any regulatory authority;
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(e)&nbsp;Insurance, interest and other borrowing costs;
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(f)&nbsp;Taxes, appraisal costs, audit fees, extraordinary legal fees (including but not limited
to fees and expenses incurred in litigation);
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(g)&nbsp;Losses on the disposition of investments and provisions for such losses; and
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(h)&nbsp;Reserves for amortization, depreciation, depletion and similar items.
</DIV>

<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;26 <B>&#147;Unimproved Real Property&#148; </B>means the property of a REIT which has the following
three characteristics: (1)&nbsp;an equity interest in property which was not acquired for the purpose
of producing rental or other operating income, (2)&nbsp;has no development or construction in process
on such land, and (3)&nbsp;no development or construction on such land is planned in good faith to
commence on such land within one year.</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>ARTICLE II</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Offices</I></B>
</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;1 <B>Principal Executive Office. </B>The principal executive office for the transaction
of the business of this Corporation is hereby fixed and located at 1282 Pacific Oaks Place,
Escondido, California, 92029. The Board of Directors may, from time to time, change the
principal executive office from one location to another. Any such change shall be noted on the
Bylaws opposite this section, or this section may be amended to state the new location.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;2 <B>Other Offices. </B>The Board of Directors may at any time establish branch or
subordinate offices at any place or places where the Corporation is qualified to do business.</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>ARTICLE III</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Meetings of Shareholders</I></B>
</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;1 <B>Place of Meetings. </B>Meetings of shareholders shall be held at any place within or
outside the State of California designated by the Board of Directors. In the absence of any
such designation, shareholders&#146; meetings shall be held at the principal executive office of the
Corporation.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;2 <B>Annual Meeting. </B>The annual meeting of shareholders shall be held at least once
each year on a date and at a time designated by the Board of Directors at a location convenient
to the shareholders. The date so designated shall be within fifteen (15)&nbsp;months after the last
annual meeting. At each annual meeting directors shall be elected and any other proper business
may be transacted.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;3 <B>Special Meeting. </B>A special meeting of the shareholders may be called at any time
by a majority of the Independent Directors, or by the Board of Directors, or by the
chairman of the board, or by the president, or by one or more shareholders holding shares
in the aggregate entitled to cast not less than ten percent (10 %) of the votes at that
meeting.</DIV>


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<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 4%">If a special meeting is called by any person or persons other than the Board of Directors,
the request shall be in writing, specifying the time of such meeting and the nature of the
business proposed to be transacted, and shall be delivered personally or sent by registered
mail or by other facsimile transmission to the chairman of the board, the president, any vice
president or the secretary of the Corporation. The officer receiving the request shall, within
twenty (20)&nbsp;business days after receipt of said request, cause notice to be given to the
shareholders entitled to vote, in accordance with the provisions of Sections&nbsp;4 and 5 of this
Article&nbsp;III, that a meeting will be held at the time requested by the person or persons calling
the meeting not less than twenty (20)&nbsp;nor more than sixty (60)&nbsp;days after the receipt of the
request. If the notice is not given within twenty (20)&nbsp;days after receipt of the request, the
person or persons requesting the meeting may give the notice. Nothing contained in this
paragraph of this Section&nbsp;3 shall be construed as limiting, fixing or affecting the time when a
meeting of shareholders called by action of the Board of Directors may be held.
</DIV>

<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;4 <B>Notice of Shareholders&#146; Meetings. </B>All notices of meetings of shareholders shall
be sent or otherwise given in accordance with Section&nbsp;5 of this Article&nbsp;III not less than ten
(10)&nbsp;nor more than sixty (60)&nbsp;days before the date of the meeting. The notice shall specify the
place, date and hour of the meeting and (i)&nbsp;in the case of a special meeting, the general
nature of the business to be transacted, or (ii)&nbsp;in the case of the annual meeting, those
matters which the Board of Directors, at the time of giving the notice, intends to present for
action by the shareholders. The notice of any meeting at which Directors are to be elected
shall include the name of any nominee or nominees whom, at the time of the notice the
Corporation&#146;s officers and/or Board of Directors intend to present for election.</DIV>



<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 4%">If action is proposed to be taken at any meeting for approval of (i)&nbsp;a contract or transaction
in which a director has a direct or indirect financial interest pursuant to Section&nbsp;310 of the
California Corporations Code, (ii)&nbsp;an amendment of the Articles of Incorporation pursuant to
Section&nbsp;902 of that Code, (iii) a reorganization of the Corporation pursuant to Section&nbsp;1201 of
that Code, (iv)&nbsp;a voluntary dissolution of the Corporation pursuant to Section&nbsp;1900 of that
Code, or (v)&nbsp;a distribution in dissolution other than in accordance with the rights of
outstanding preferred shares pursuant to Section&nbsp;2007 of that Code, then the notice shall also
state the general nature of that proposal.
</DIV>

<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;5 <B>Manner of Giving Notice: Affidavit of Notice. </B>Notice of any meeting of
shareholders shall be given either personally or by first-class mail or other written
communication, charges prepaid, addressed to the shareholder at the address of that shareholder
appearing on the books of the Corporation or given by the shareholder to the Corporation for
the purpose of notice. If no such address appears on the Corporation&#146;s books or is so given,
notice shall be deemed to have been given if sent to that shareholder by first-class mail or
other written communication to the Corporation&#146;s principal executive office, or if published at
least once in a newspaper of general circulation in the county where that office is located.
Notice shall be deemed to have been given at the time when delivered personally or deposited in
the mail or other means of written communication.</DIV>



<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 4%">If any notice addressed to a shareholder at the address of that shareholder appearing on
the books of the Corporation is returned to the Corporation by the United States Postal
Service marked to indicate that the United States Postal Service is unable to deliver the
notice to the shareholder at that address, all future notices or reports shall be deemed to
have been duly given without further mailing if these shall be available to the shareholder on
written demand of the shareholder at the principal executive office of the Corporation for a
period of one (1)&nbsp;year from the date of the giving of the notice.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 4%">An affidavit of the mailing or other means of giving any notice of any shareholders&#146;
meeting shall be executed by the secretary, assistant secretary or any transfer agent of the
Corporation, and shall be filed and maintained in the minute book of the Corporation.
</DIV>

<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;6 <B>Quorum. </B>The presence in person or by proxy of the holders of a majority of the
 shares entitled to vote at any meeting of shareholders shall constitute a quorum for the
transaction of business. The shareholders present at a duly called or held meeting at which a
quorum is present may continue to do business until adjournment, notwithstanding the withdrawal
of enough shareholders to leave less than a quorum, if any action taken (other than
adjournment) is approved by at least a majority of the shares required to constitute a quorum.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;7 <B>Adjourned Meeting: Notice. </B>Any shareholders meeting, annual or special, whether
or not a quorum is present, may be adjourned from time to time by the vote of the majority of
the shares represented at that meeting, either in person or by proxy, but in the absence of a
quorum, no other business may be transacted at that meeting, except as provided in Section&nbsp;6 of
this Article.</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 4%">When any meeting of shareholders, either annual or special, is adjourned to another time
or place, notice need not be given of the adjourned meeting if the time and place are announced
at a meeting at which the adjournment is taken, unless a new record date for the adjourned
meeting is fixed, or unless the adjournment is for more than forty-five (45)&nbsp;days from the date
set for the original meeting, in which case the Board of Directors shall set a new record date.
Notice of any such adjourned meeting shall be given to each shareholder of record entitled to
vote at the adjourned meeting in accordance with the provisions of Sections&nbsp;4 and 5 of this
Article. At any adjourned meeting the Corporation may transact any business which might have
been transacted at the original meeting.</DIV>


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<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;8 <B>Voting. </B>Unless a record date set for voting purposes is fixed as provided in
Section&nbsp;11 of this Article, then, subject to the provisions of Section&nbsp;702 to Section&nbsp;704,
inclusive of the California Corporations Code (relating to voting shares held by a
fiduciary in the name of a corporation or in joint ownership), only persons in whose names
 shares entitled to vote stand on the stock records of the Corporation at the close of business
on the business day next preceding the day on which notice is given (or, if notice is waived,
at the close of business on the business day next preceding the day on which the meeting is
held) shall be entitled to vote at such meeting. Each outstanding share entitles the holder to
one vote on all matters presented to shareholders for a vote with the exception that
shareholders have cumulative voting rights with respect to the election of the Corporation&#146;s
Board of Directors in accordance with California Corporations Code, as described in the following
paragraph of this Section&nbsp;8. The shareholders&#146; vote may be by voice vote or by ballot;
provided, however, that any election for Directors must be by ballot if demanded by any
shareholder before the voting has begun. On any matter other than elections of Directors, any
shareholder may vote part of the shares in favor of the proposal and refrain from voting the
remaining shares or vote them against the proposal, but, if the shareholder fails to specify
the
number of shares which the shareholder is voting affirmatively, it will be conclusively
presumed that the shareholder&#146;s approving vote is with respect to all shares that the
shareholder is entitled to vote. If a quorum is present, the affirmative vote of the majority
of the shares represented at the meeting and entitled to vote on any matter (other than the
election of Directors) shall be the act of the shareholders, unless the vote of a greater
number or voting by classes is required by California Corporations Code, by these Bylaws
or by the Articles of Incorporation.</DIV>




<DIV align="justify" style="margin-left: 4%; text-indent: 4%; margin-top: 10pt; font-size: 10pt">At a shareholders&#146; meeting at which Directors are to be elected, no shareholder shall be
entitled to cumulate votes (i.e. cast for anyone or more candidates a number of votes greater
than the number of the shareholder&#146;s shares) unless the candidates&#146; names have been placed in
nomination prior to commencement of the voting and a shareholder has given notice prior to
commencement of the voting of the shareholder&#146;s intention to cumulate votes. If any shareholder
has given such a notice, then every shareholder entitled to vote may cumulate votes for
candidates in nomination and give one candidate a number of votes equal to the number of
Directors to be elected multiplied by the number of votes to which that shareholder&#146;s shares
are entitled, or distribute the shareholder&#146;s votes on the same principle among any or all of
the candidates, as the shareholder thinks fit. The candidates receiving the highest number of
votes, up to the number of Directors to be elected, shall be elected.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;9 <B>Waiver of Notice or Consent by Absent Shareholders. </B>The transactions of any
meeting of shareholders, either annual or special, however called and noticed and wherever
held, shall be as valid as though they had been at a meeting duly held after regular call and
notice, if a quorum be present either in person or by proxy, and if, either before or after the
meeting, each person entitled to vote who was not present in person or by proxy, or who, though
present, has at the beginning of the meeting properly objected to the transaction of any
business because the meeting was not lawfully called or convened, or to particular matters of
business legally required to be included in the notice but not so included, signs a written
waiver of notice or a consent to a holding of the meeting or an approval of the minutes. The
waiver of notice or consent need not specify either the business to be transacted or the
purpose of any annual or special meeting of shareholders, except that if action is taken or
proposed to be taken for approval of any of those matters specified in the second paragraph of
Section&nbsp;4 of this Article, the waiver of notice or consent shall state the general nature of
the proposal. All such waivers, consents or approvals shall be filed with the corporate records
or made a part of the minutes of the meeting.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;10 <B>Shareholder Action by Written Consent Without a Meeting. </B>Any action which may
be taken at any annual or special meeting of shareholders may be taken without a meeting and
without prior notice if a consent, in writing, setting forth the action so taken is signed by
the holders of outstanding shares having not less than the minimum number of votes that would
be necessary to authorize or take that action at a meeting at which all shares entitled to vote
on that action were present and voted. In the case of election of Directors, such a consent
shall be effective only if signed by the holders of all outstanding shares entitled to vote for
the election of Directors; provided, however, that a director may be elected at any time to
fill a vacancy on the Board of Directors that has not been filled by the Directors by the
written consent of the holders of a majority of the outstanding shares entitled to vote for the
election of Directors. All such consents shall be filed with the secretary of the Corporation
and shall be maintained in the corporate records. Any shareholder giving a written consent, or
the shareholder&#146;s proxy holders, or a transferee of the shares, or a personal representative of
the shareholder or their respective proxy holders may revoke the consent by
a writing received by the secretary of the Corporation before written consents of the
number of shares required to authorize the proposed action have been filed with the secretary.</DIV>


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<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 4%">If the consents of all shareholders entitled to vote have not been solicited in writing
and if the unanimous written consent of all such shareholders shall not have been received, the
secretary shall give prompt notice of the corporate action approved by the shareholders without
a meeting. This notice shall be given in the manner specified in Section&nbsp;5 of this Article. In
the case of approval of (i)&nbsp;contracts or transactions in which a director has a direct or
indirect financial interest pursuant to Section&nbsp;310 of the California Corporations Code,
(ii)&nbsp;indemnification of agents of the Corporation pursuant to Section&nbsp;317 of the Corporation
Code, (iii)&nbsp;a reorganization of the Corporation pursuant to Section&nbsp;1201 of the Corporation
Code, and (iv)&nbsp;a distribution in dissolution other than in accordance with the rights of
outstanding preferred shares pursuant to Section&nbsp;2007 of the Corporation Code, the notice shall
be given at least ten (10)&nbsp;days before the consummation of any action authorized by that
approval.
</DIV>

<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;11 <B>Record Date for Shareholder Notice. Voting. and Giving Consents. </B>For purposes
of determining the shareholders entitled to notice of any meeting or to vote or entitled to
give consent to corporate action without a meeting, the Board of Directors may fix, in advance,
a record date which shall not be more than sixty (60)&nbsp;days nor less than ten (10)&nbsp;days before
the date of any such meeting nor more than sixty (60)&nbsp;days before any such action without a
meeting, and in this event only shareholders of record on the date so fixed are entitled to
notice and to vote or to give consents, as the case may be, notwithstanding any transfer of any
 shares on the books of the Corporation after the record date, except as otherwise provided in
the California Corporations Code.</DIV>



<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 4%">A determination of shareholders of record entitled to notice of or to vote at a meeting of
shareholders shall apply to any adjournment of the meeting unless the Board of Directors fixes
a new record date for the adjourned meeting; however, the Board of Directors shall fix a new
record date if the adjournment is to a date more than forty-five (45)&nbsp;days after the date set
for the original meeting.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">If the Board of Directors does not so fix a record date:
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(a)&nbsp;The record date for determining shareholders entitled to notice of or to vote at a meeting
of shareholders shall be at the close of business on the business day next preceding the day on
which notice is given or, if notice is waived, at the close of business on the business day next
preceding the day on which the meeting is held.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(b)&nbsp;The record date for determining shareholders entitled to give consent to corporate action
in writing without a meeting (i)&nbsp;when no prior action by the board has been taken, shall be the day
on which the first written consent is given, or (ii)&nbsp;when prior action of the board has been taken,
shall be at the close of business on the day on which the board adopts the resolution relating to
that action, or the sixtieth (60th) day before the date of such other action, whichever is later.
</DIV>

<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;12 <B>Proxies. </B>Every person entitled to vote for Directors or on any other matter
shall have the right to do so either in person or by one or more agents authorized by a written
proxy signed by the person and filed with the secretary of the Corporation. A proxy shall be
deemed signed if the shareholder&#146;s name is placed on the proxy (whether by manual signature,
typewriting, telegraphic transmission or otherwise) by the shareholder or the
shareholder&#146;s attorney-in-fact. A validly executed proxy which does not state that it is
irrevocable shall continue in full force and effect unless (i)&nbsp;revoked by the person executing
it, before the vote pursuant to that proxy, by a writing delivered to the Corporation stating
that the proxy is revoked, or by a subsequent proxy executed by, or attendance at the meeting
and voting in person by, the person executing the proxy; or (ii)&nbsp;written notice of the death or
incapacity of the maker of the proxy is received by the Corporation before the vote pursuant to
that proxy is counted; provided, however, that no proxy shall be valid after the expiration of
eleven (11)&nbsp;months from the date of the proxy unless otherwise provided in the proxy. The
revocability of a proxy that states on its face that it is irrevocable shall be governed by the
provisions of Sections 705(e) and 705(t) of the California Corporations Code.</DIV>



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<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;13 <B>Inspectors of Election. </B>Before any meeting of shareholders, the Board of
Directors may appoint any persons other than nominees for office to act as inspectors of
election at the meeting or its adjournment. If no inspectors of election are so appointed, the
chairman of the meeting may, and on the request of any shareholder or a shareholder&#146;s proxy
shall, appoint inspectors of election at the meeting. The number of inspectors shall be either
one (1)&nbsp;or three (3). If inspectors are appointed at a meeting on the request of one or more
shareholders or proxies, the holders of a majority of shares or their proxies present at the
meeting shall determine whether one (1)&nbsp;or three (3)&nbsp;inspectors are to be appointed. If any
person appointed as inspector fails to appear or fails or refuses to act, the chairman of the
meeting may, and upon the request of any shareholder or a shareholder&#146;s proxy shall, appoint a
person to fill that vacancy.</DIV>



<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">These inspectors shall:
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 4%">(a)&nbsp;Determine the number of shares outstanding and the voting power of each, the shares
represented at the meeting, the existence of a quorum, and the authenticity, validity and
effect of proxies;
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 4%">(b)&nbsp;receive votes, ballots or consents;
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 4%">(c)&nbsp;hear and determine all challenges and questions in any way arising in connection
with the right to vote;
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 4%">(d)&nbsp;count and tabulate all votes or consents;
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 4%">(e)&nbsp;determine when the polls shall close;
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 4%">(f)&nbsp;determine the result; and
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 4%">(g)&nbsp;do any other acts that may be proper to conduct the election or vote with fairness
to all shareholders.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>ARTICLE IV</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Directors</I></B>
</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;1
<B>Powers. </B>Subject to the provisions of the California Corporations Code and
any limitations in the Articles of Incorporation and these Bylaws relating to action required
to be approved by the shareholders or by the outstanding shares, the business and affairs of
the Corporation shall be managed and all corporate powers shall be exercised by or
under the direction of the Board of Directors.</DIV>


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<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 0%">Without prejudice to these general powers and subject to the same limitations, the
Directors shall have the power to:
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 4%">(a)&nbsp;subject to Article&nbsp;VI, select and remove all officers, agents and employees of
the Corporation; prescribe any powers and duties for them that are consistent with law,
with the Articles of Incorporation and with these Bylaws; fix their compensation; and
require from them security for faithful service;
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 4%">(b)&nbsp;change the principal executive office or the principal business office in the
State of California from one location to another; cause the Corporation to be qualified
to do business in any other state, territory, dependency or country and conduct business
within or outside the State of California; and designate any place within or outside the
State of California for the holding of any shareholders&#146; meeting or meetings, including
annual meetings;
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 4%">(c)&nbsp;adopt, make and use a corporate seal; prescribe the forms of certificates of
stock; and alter the form of the seal and certificates;
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 4%">(d)&nbsp;authorize
the issuance of Securities of the Corporation on any lawful terms, in consideration of money paid, labor done, services actually rendered, debts or Securities
canceled, or tangible or intangible property actually received;
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 4%">(e)&nbsp;subject
to Article&nbsp;VIII, borrow money and incur indebtedness on behalf of the Corporation and cause to be executed and delivered for the Corporation&#146;s purposes, in
the corporate name, promissory notes, bonds, debentures, deeds of trust, mortgages,
pledges, hypothecation and other evidences of debt and securities;
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 4%">(g)&nbsp;authorize the investment in real property, personal property, and First and
Second Mortgage Loans by the Corporation, subject to the limitations in Article&nbsp;VIII.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Directors shall endeavor to make investments in such a manner as to comply with the Code
with respect to composition of the Corporation&#146;s investments, derivation of its income and methods
of operations.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In the exercise of their powers, the Directors shall have full authority and power (without
liability for loss) to make any and all investments within the limitations of these Bylaws, that
they, in their absolute discretion, shall determine, even though such investments shall be of a
character or in an amount not considered by others proper for the investment of corporate funds or
which do not or may not produce income. The Directors shall use their best efforts to cause the
Corporation to qualify, and to elect to be taxed under, the Code. Once such status has been
attained, the Directors shall not cause such status to be changed without obtaining the vote or
written consent of the holders of a majority of the outstanding shares entitled to vote.
</DIV>

<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;2 <B>Number and Qualification of Directors. </B>The number of Directors of the
Corporation shall be not less than five (5)&nbsp;nor more than nine (9). The exact number of
Directors may be changed, from time to time, within the limits specified above, by approval of
the majority of the Board of Directors or by the shareholders. A majority of the Directors
shall be Independent Directors.</DIV>


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<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 4%">The indefinite number of Directors may be changed, or a definite number fixed without
provision for an indefinite number, by a duly adopted amendment to the Articles of
Incorporation or by an amendment to this Bylaw duly adopted by the vote or written consent of
holders of a majority of the outstanding shares entitled to vote; provided, however, that an
amendment reducing the fixed number or the minimum Directors to a
number less than five (5)
cannot be adopted if the votes cast against its adoption at a meeting, or the shares not
consenting in the case of an action by written consent, are equal to more than sixty-six and
two-thirds percent (66-2/3%) of the outstanding shares entitled to vote thereon. No amendment
may change the stated maximum number of authorized Directors to a number greater than two times
the stated minimum number minus one.
</DIV>

<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;3 <B>Election and Term of Office of Directors. </B>Directors shall be elected at each
annual meeting of the shareholders to hold office until the next
annual meeting. Each Director,
including a Director elected to fill a vacancy, shall hold office until the expiration of the
term for which elected and until a successor has been elected and qualified.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;4
<B>Removal of Directors. </B>A Director may be removed, with or without cause, by the
vote or written consent of the holders of at least a majority of the outstanding shares, and
may be removed at a special meeting called in a manner consistent with Sections&nbsp;3, 4 and 5 of
Article&nbsp;III.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;5 <B>Vacancies. </B>Vacancies in the Board of Directors may be filled by a majority of
the remaining Directors, though less than a quorum, or by a sole
remaining Director, except
that a vacancy created by the removal of a director by the vote or written consent of the
shareholders or by court order may be filled only by the vote of a majority of the shares
entitled to vote represented at a duly held meeting at which a quorum is present, or by the
written consent of holders of a majority of the outstanding shares entitled to vote.
Independent Directors shall nominate replacements for vacancies amongst the Independent
Directors&#146; positions. Each director so elected shall hold office until the next annual meeting
of the shareholders and until a successor has been elected and qualified.</DIV>



<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 4%">A vacancy or vacancies in the Board of Directors shall be deemed to exist in the event of
the death, resignation or removal of any Director, or if the Board of Directors by resolution
declares vacant the office of a Director who has been declared of unsound mind by an order of
court or convicted of a felony, or if the authorized number of Directors is increased, or if
the shareholders fail, at any meeting of shareholders at which any Director or Directors are
elected, to elect the number of Directors to be voted for at that meeting.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 4%">The shareholders may elect a Director or Directors at any time to fill any vacancy or
vacancies not filled by the Directors, but any such election by written consent, other than to
fill a vacancy created by removal, shall require the consent of a majority of the outstanding
 shares.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 4%">Any Director may resign effective on giving written notice to the chairman of the board,
the president, the secretary or the Board of Directors, unless the notice specifies a later
time for that resignation to become effective. If the resignation of a Director is effective at
a future time, the Board of Directors may elect a successor to take office when the resignation
becomes effective.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 4%">No reduction of the authorized number of Directors shall have the effect of removing
any director before that director&#146;s term of office expires.
</DIV>
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<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;6 <B>Place of Meetings and Meetings by Telephone. </B>Regular meetings of the Board of
Directors may be held at any place within or outside the State of California that has been
designated from time to time by resolution of the Board of Directors. In the absence of such a
designation, regular meetings shall be held at the principal executive office of the
Corporation. Special meetings of the Board of Directors shall be held at any place within or
outside the State of California that has been designated in the notice of the meeting or, if
not stated in the notice or there is no notice, at the principal executive office of the
Corporation. Any meeting, regular or special, may be held by conference telephone or similar
communication equipment, so long as all Directors participating in the meeting can hear one
another, and all such Directors shall be deemed to be present in person at the meeting.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;7 <B>Annual Meeting. </B>Immediately following each annual meeting of shareholders, the
Board of Directors shall hold a regular meeting for the purpose of organization, the election
of officers and the transaction of other business as desired. Notice of this meeting shall not
be required.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;8 <B>Other Regular Meetings. </B>Other regular meetings of the Board of Directors shall
be held without call at such time as shall from time to time be fixed by the Board of
Directors. Such regular meetings may be held without notice.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;9 <B>Special Meetings. </B>Special meetings of the Board of Directors for any purpose or
purposes may be called at any time by the chairman of the board or the president or any vice
president or the secretary or any two Directors.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: 4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Notice of the time and place of special meetings shall be delivered personally or by
telephone to each director or sent by first class mail, charges prepaid, addressed to each
Director at that Director&#146;s address as it is shown on the records of the Corporation. In case
the notice is mailed, it shall be deposited in the United States mail at least five (5)&nbsp;days
before the time of the holding of the meeting. In case the notice is delivered personally or by
telephone, at least forty-eight (48)&nbsp;hours before the time of the holding of the meeting. Any
oral notice given personally or by telephone may be communicated either to the Director or to a
person at the office of the Director who the person giving the notice has reason to believe
will promptly communicate it to the Director. The notice need not specify the purpose of the
meeting nor the place if the meeting is to be held at the principal executive office of the
Corporation.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;10 <B>Quorum. </B>A majority of the authorized number of Directors shall constitute a
quorum for the transaction of business, except to adjourn as provided in Section&nbsp;13 of this
Article&nbsp;IV. Every act or decision done or made by a majority of the Directors present at a
meeting duly held at which a quorum is present shall be regarded as the act of the Board of
Directors, subject to the provisions of Section&nbsp;310 of the California Corporations Code (as
to approval of contracts or transactions in which a Director has a direct or indirect material
financial interest), Section&nbsp;311 of the Corporations Code (as to appointment of committees),
and Section 317(e) of the Corporations Code (as to indemnification of Directors) provided,
however, that approval of a majority of the Independent Directors shall be required for all
matters related to Sections&nbsp;2, 3, 5 and 6 of this Article, Sections&nbsp;2 and 4 of Article&nbsp;III,
Article&nbsp;VIII, Article&nbsp;IX and Section&nbsp;5 of Article&nbsp;X. A meeting at which a quorum is initially
present may continue to transact business notwithstanding the withdrawal of
Directors, if any action taken is approved by at least a majority of the required quorum
for that meeting.</DIV>


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<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;11 <B>Waiver of Notice. </B>The transaction of any meeting of the Board of Directors,
however called and noticed or wherever held, shall be as valid as a meeting duly held after
regular call and notice, if a quorum is present and if, either before or after the meeting,
each of the Directors not present or who, though present, has prior to the meeting or at its
commencement, protested the lack of proper notice, signs a written waiver of notice, a consent
to holding the meeting, or an approval of the minutes. The waiver of notice or consent need not
specify the purpose of the meeting. All such waivers, consents and approvals shall be filed
with the corporate records or made a part of the minutes of the meeting.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;12 <B>Adjournment. </B>A majority of the Directors present, whether or not constituting a
quorum, may adjourn any meeting to another time and place.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;13 <B>Notice of Adjournment. </B>Notice of the time and place of resuming a meeting that
has been adjourned need not be given unless the meeting is adjourned for more than twenty-four
(24)&nbsp;hours, in which case notice of the time and place shall be given before the time set for
resuming the adjourned meeting in the manner specified in Section&nbsp;10 of this Article&nbsp;IV to the
Directors who were not present at the time of the adjournment. Notice need not be given in any
case to Directors who were present at the time of adjournment.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;14 <B>Action Without Meeting. </B>Any action required or permitted to be taken by the
Board of Directors may be taken without a meeting if all members of the Board of Directors
shall individually or collectively consent in writing to that action. Such action by written
consent shall have the same force and effect as a unanimous vote of the Board of Directors.
Such written consent or consents shall be filed with the minutes of the proceedings of the
Board of Directors.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;15 <B>Fees and Compensation of Directors. </B>Directors and members of committees may
receive such compensation, if any, for their services and such reimbursement of expenses as may
be fixed or determined by resolution of the Board of Directors. This Section&nbsp;15 shall not be
construed to preclude any Director from serving the Corporation in any other capacity as an
officer, agent, employee or otherwise, or from receiving compensation for those services.</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>ARTICLE V</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Committees</I></B>
</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;1 <B>Committees. </B>The Board of Directors may, by resolution adopted by a majority of
the authorized number of Directors, designate one or more committees, each consisting of at
least two Directors. A majority of the committee members may be Independent Directors. The
Board may designate one or more Directors as alternate members of any committee who may replace
any absent member at any meeting of the committee. Any committee shall serve at the pleasure of
the Board and, to the extent provided in the resolution of the Board, shall have all the
authority of the Board, except with respect to:</DIV>



<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 4%">(a)&nbsp;the
approval of any action which, under the California Corporations Code, also requires shareholders&#146; approval or approval of the outstanding shares;
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 4%">(b)&nbsp;the filling of vacancies on the Board of Directors or in any committee;
</DIV>
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<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 4%">(c)&nbsp;the fixing of compensation of the Directors for serving on the board or on any
committee;
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 4%">(d)&nbsp;the amendment or repeal of Bylaws or the adoption of new Bylaws;
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 4%">(e)&nbsp;the amendment or repeal of any resolution of the Board of Directors which by its
express terms is not so amendable or repealable;
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 4%">(f)&nbsp;a distribution to the shareholders of the Corporation, except at a rate or in a
periodic amount or within a price range determined by the Board of Directors; or
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 4%">(g)&nbsp;the appointment of any other committees of the Board of Directors or the members of
these committees.
</DIV>

<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;2 <B>Meetings and Action of Committees. </B>Meetings and action of committees shall be
governed by, and held and taken in accordance with, the provisions of Article&nbsp;IV of these
Bylaws, Sections&nbsp;7 (place of meetings), 9 (regular meetings), 10 (special meetings and notice),
11 (quorum), 12 (waiver of notice), 13 (adjournment), 14 (notice of adjournment), and 15
(action without meeting), with such changes in the context of those Bylaws as are necessary to
substitute the committee and its members for the Board of Directors and its members, except
that the time of regular meetings of committees may be determined either by resolution of the
Board of Directors or by resolution of the committee; special meetings of committees may also
be called by resolution of the Board of Directors; and notice of special meetings of committees
shall also be given to all alternate members who shall have the right to attend all meetings of
the committee. The Board of Directors may adopt rules for the governance of any committee not
inconsistent with the provisions of these Bylaws.</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>ARTICLE VI</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Officers</I></B>
</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;1 <B>Officers. </B>The officers of the Corporation shall include a president, a secretary
and a chief financial officer. The Corporation may also have, at the discretion of the Board of
Directors, a chairman of the board, one or more vice presidents, a treasurer, one or more
assistant secretaries, one or more assistant treasurers and such other officers as may be
appointed in accordance with the provisions of Section&nbsp;3 of this Article&nbsp;VI. If there is a
treasurer, he shall be the chief financial officer unless some other person is so appointed by
the Board of Directors. Any number of offices may be held by the same person.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;2 <B>Appointment of Officers. </B>The officers of the Corporation, except such officers
as may be appointed in accordance with the provisions of Section&nbsp;3 or Section&nbsp;5 of this Article
VI, shall be chosen by the Board of Directors, and each shall serve at the pleasure of the
Board, subject to the rights, if any, of an officer under any contract of employment.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;3 <B>Subordinate Officers. </B>The Board of Directors may appoint, and may empower the
chairman of the board or president to appoint, such other officers as the
business of the Corporation may require, each of whom shall hold office for such period,
have such authority and perform such duties as are provided in the Bylaws or as the Board of
Directors may from time to time determine.</DIV>


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<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;4 <B>Removal and Resignation of Officer. </B>Subject to the rights, if any, of an officer
under any contract of employment, any officer may be removed, either with or without cause or
notice, by the Board of Directors, at any regular or special meeting of the board or, except in
case of an officer chosen by the Board of Directors, by any officer upon whom such power of
removal may be conferred by the Board of Directors. Any officer may resign at any time by
giving written notice to the Corporation. Any resignation shall take effect on the date of the
receipt of that notice or at any later time specified in that notice; and, unless otherwise
specified in that notice, the acceptance of the resignation shall not be necessary to make it
effective. Any resignation is without prejudice to the rights, if any, of the Corporation under
any contract to which the officer is a party.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;5 <B>Vacancies in Offices. </B>A vacancy in any office because of death, resignation,
removal, disqualification or any other cause shall be filled in the manner prescribed in these
Bylaws for regular appointments to that office.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;6 <B>Chairman of the Board. </B>The chairman of the board, if such an office be elected,
shall, if present, preside at meetings of the Board of Directors and meetings of the
shareholders and shall exercise and perform such other powers and duties as may be from time to
time assigned to him by the Board of Directors or prescribed by the Bylaws. If there is no
president, the chairman of the board shall in addition be the chief executive officer of the
Corporation and shall have the powers and duties prescribed in Section&nbsp;7 of this Article&nbsp;VI.
The chairman of the board may be the chief executive officer of the Corporation,
notwithstanding that there is a president, if the Board of Directors so determines.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;7 <B>Chief Executive Officer. </B>Subject to such supervisory powers, if any, as may be
given by the Board of Directors to the chief executive officer, the chief executive officer is
the chief executive officer and general manager of the Corporation. The chief executive officer
shall, subject to the control of the Board of Directors, have general supervision, direction
and control of the business and affairs of the Corporation and of its officers, employees and
agents, including the right to employ, discharge and prescribe the duties and compensation of
all officers, employees and agents of the Corporation, except where such matters are prescribed
in the Bylaws or by the Board of Directors.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;8 <B>President. </B>Subject to such supervisory powers, if any, as may be given by the
Board of Directors to the chief executive officer and/or the chairman of the board the
president shall, subject to the control of the Board of Directors, have general supervision,
direction and control of the business and the officers of the Corporation. In the absence of
the chairman of the board or a chief executive officer, or if there be none, he shall preside
at all meetings of the shareholders and at all meetings of the Board of Directors. He shall
have the general powers and duties of management usually vested in the office of president of a
Corporation and shall have such other powers and duties as may be prescribed by the Board of
Directors or the Bylaws. The president shall be the chief executive officer of the Corporation
unless the chairman of the board or chief executive officer, if any, is so designated.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;9 <B>Vice Presidents. </B>In the absence of, or in the event of disability of, the
president, the vice presidents, if any, in order of their rank as fixed by the Board of
Directors or, if not ranked, a vice president designated by the Board of Directors, shall
perform all the duties of the president, and when so acting shall have all the powers of, and
be subject to all the restrictions upon, the president. The vice presidents shall have such
other powers and perform such other duties as from time to time may be prescribed for them
respectively by the Board of Directors or the Bylaws and the president or the chairman of the
board.</DIV>


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<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;10 <B>Secretary. </B>The secretary shall keep or cause to be kept, at the principal
executive office or such other place as the Board of Directors may direct, a book of minutes of
all meetings and actions of Directors, committees of Directors and shareholders, with the time
and place of holding, whether regular or special and, if special, how authorized, the notice
given, the names of those present at Directors&#146; meetings or committee meetings, the number of
 shares present or represented at shareholders&#146; meetings and the proceedings.</DIV>



<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 4%">The secretary shall keep, or cause to be kept, at the principal executive office or at the
office of the Corporation&#146;s transfer agent or registrar, as determined by resolution of the
Board of Directors, a share register, or a duplicate share register, showing the names of all
shareholders and their addresses, the number and classes of shares held by each, the number and
date of certificates issued for the same, and the number and date of cancellation of every
certificate surrendered for cancellation.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%; text-indent: 4%">The secretary shall give, or cause to be given, notice of all meetings of the shareholders
and of the Board of Directors required by the Bylaws or by law to be given, and he shall keep
the seal of the Corporation, if one be adopted, in safe custody, and shall have such other
powers and perform such other duties as may be prescribed by the Board of Directors or by the
Bylaws.
</DIV>

<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;11 <B>Chief Financial Officer. </B>The chief financial officer shall keep and maintain,
or cause to be kept and maintained, adequate and correct books and records of accounts of the
properties and business transactions of the Corporation, including accounts of its assets,
liabilities, receipts, disbursements, gains, losses, capital, retained earnings and shares. The
books of account shall at all reasonable times be open to inspection by any Director.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: 4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">The chief financial officer shall deposit all moneys and other valuables in the name and to
the credit of the Corporation with such depositories as may be designated by the Board of
Directors. He shall disburse the funds of the Corporation as may be ordered by the Board of
Directors, shall render to the president and Directors, whenever they request it, an account of
all of his transactions as chief financial officer and of the financial condition of the
Corporation, and shall have other powers and perform such other duties as may be prescribed by
the Board of Directors or the Bylaws.</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>ARTICLE VII</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Indemnification of Directors, Officers, Employees and Other Agents</I></B><U> </U>
</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;1 <B>Agents. Proceedings and Expenses. </B>For the purposes of this Article, &#147;agent&#148;
means any person who is or was a Director, officer, employee or other agent of this
Corporation, or is or was serving at the request of this Corporation as a Director, officer,
employee or agent of another foreign or domestic corporation, partnership, joint venture,
trust or other enterprise, or was a Director, officer, employee or agent of a foreign or
domestic corporation which was a predecessor corporation of this Corporation; &#147;proceeding&#148;
means any threatened, pending or completed action or proceeding, whether civil, criminal,
administrative or investigative; and &#147;expenses&#148; includes, without limitation, attorney fees and
any expenses of establishing a right to indemnification under Section&nbsp;4 or Section 5(c) of this
Article.</DIV>


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<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 0%">Section&nbsp;2 <B>Actions Other Than by the Corporation.</B>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(a)&nbsp;This Corporation may indemnify any person who was or is a party, or is threatened to be
made a party, to any proceeding (other than an action by or in the right of this Corporation) by
reason of the fact that such person is or was an agent of this Corporation, against expenses,
judgments, fines, settlements and other amounts actually and reasonably incurred in connection
with such proceeding if that person acted in good faith and in a manner that person reasonably
believed to be in the best interests of this Corporation and, in the case of a criminal
proceeding, had no reasonable cause to believe the conduct of that person was unlawful. The
termination of any proceeding by judgment, order, settlement, conviction or upon a plea of nolo
contendere or its equivalent shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which the person reasonably believed to be in the best interests
of this Corporation or that the person had reasonable cause to believe that the person&#146;s conduct
was unlawful.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(b)&nbsp;The foregoing notwithstanding Director shall be indemnified pursuant to this Article&nbsp;VII
unless the terms and conditions of such indemnification are first approved by a majority of the
Directors and a majority of the Independent Directors, each of whom shall be disinterested in the
transaction.
</DIV>

<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;3 <B>Actions by the Corporation. </B>This Corporation may indemnify any person who was or
is a party, or is threatened to be made a party, to any threatened, pending or completed action
by or in the right of this Corporation to procure a judgment in its favor by reason of the fact
that the person is or was an agent of this Corporation, against expenses actually and
reasonably incurred by that person in connection with the defense or settlement of that action
if that person acted in good faith, in a manner that person believed to be in the best
interests of this Corporation and with such care, including reasonable inquiry, as an
ordinarily prudent person in a like position would use under similar circumstances. No
indemnification shall be made under this Section&nbsp;3 for the following:</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(a)&nbsp;with respect to any claim, issue or matter as to which that person shall have been
adjudged to be liable to this Corporation in the performance of that person &#145;s duty to this
Corporation, unless and only to the extent that the court in which that action was brought shall
determine upon application that, in view of all the circumstances of the case, that person is
fairly and reasonably entitled to indemnity for the expenses which the court shall determine;
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(b)&nbsp;amounts paid in settling or otherwise disposing of a threatened or pending action, with
or without court approval; or
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(c)&nbsp;expenses incurred in defending threatened or pending action which is settled or otherwise
disposed of without court approval.
</DIV>

<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;4
<B>Successful Defense by Agent.</B> To the extent that an agent of this
Corporation has been successful on the merits in defense of any proceeding referred to in
Sections&nbsp;2 or 3 of this Article, or in defense of any claim, issue or matter therein, the agent
shall be indemnified against expenses actually and reasonably incurred by the agent in
connection therewith.</DIV>


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<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;5 <B>Required Approval. </B>Except as provided in Section&nbsp;4 of this Article, any
indemnification under this Article shall be made by this Corporation only if authorized in the
specific case on a determination that indemnification of the agent is proper in the
circumstances because the agent has met the applicable standard of conduct set forth in Sections
2 or 3 of this Article, by:</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(a)&nbsp;a majority vote of a quorum consisting of Directors who are not parties to the
proceeding;
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(b)&nbsp;approval by the affirmative vote of a majority of the shares of this Corporation entitled
to vote represented at a duly held meeting at which a quorum is present or by the written consent
of holders of a majority of the outstanding shares entitled to vote (for this purpose, the shares
owned by the person to be indemnified shall not be considered outstanding or entitled to vote
thereon); or
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(c)&nbsp;the court in which the proceeding is or was pending, on application made by this
Corporation or the agent or the attorney or other person rendering services in connection with the
defense, whether or not such application by the agent, attorney or other person is opposed by this
Corporation.
</DIV>

<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;6 <B>Advances of Expenses. </B>Expenses incurred in defending any proceeding may be
advanced by this Corporation before the final disposition of the proceeding on receipt of an
undertaking by or on behalf of the agent to repay the amount of the advance unless it shall be
determined ultimately that the agent is entitled to be indemnified as authorized in this
Article.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;7 <B>Other Contractual Rights. </B>Nothing contained in this Article shall affect any
right to indemnification to which persons other than Directors and officers of this Corporation
or any subsidiary hereof may be entitled by contract or otherwise.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;8 <B>Limitations. </B>No indemnification or advance shall be made under this Article,
except as provided in Section&nbsp;4 or Section 5(c) of this Article, in any circumstance where it
appears:</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(a)&nbsp;that it would be inconsistent with a provision of the Articles, a resolution of the
Shareholders or an agreement in effect at the time of the accrual of the alleged cause of action
asserted in the proceeding in which the expenses were incurred or other amounts were paid, which
prohibits or otherwise limits indemnification; or
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(b)&nbsp;that it would be inconsistent with any condition expressly imposed by a court in approving
a settlement.
</DIV>

<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;9 <B>Insurance. </B>Upon and in the event of a determination by the Board of Directors of
this Corporation to purchase such insurance, this Corporation shall purchase and maintain
insurance on behalf of any agent of the Corporation against any liability asserted against or
incurred by the agent in such capacity or arising out of the agent&#146;s status as such whether or
not this Corporation would have the power to indemnify the agent against that liability under
the provisions of this section. Notwithstanding the foregoing, if this
Corporation owns all or a portion of the shares of the company issuing the policy of
insurance, the insuring company and/or the policy shall meet the conditions set forth in
section 317 (i)&nbsp;of the California Corporations Code.</DIV>


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<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;10 <B>Fiduciaries of Corporate Employee Benefit Plan. </B>This Article does not apply to
any proceeding against any trustee, investment manager or other fiduciary of an employee
benefit plan in that person&#146;s capacity as such, even though that person may also be an agent of
the Corporation as defined in Section&nbsp;1 of this Article. Nothing contained in this Article
shall limit any right to indemnification to which such a trustee, investment manager or other
fiduciary may be entitled by contract or otherwise, which shall be enforceable to the extent
permitted by applicable law other than this Article.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;11 <B>Indemnification of Directors. </B>The foregoing provisions of this Article&nbsp;VII
notwithstanding, the Corporation may indemnify a Director for losses arising from the operation
of the Corporation only if all of the following conditions are met:</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(a)&nbsp;Such Director has determined, in good faith, that the course of conduct
which caused the loss or liability was in the best interests of the Corporation and the
shareholders; and
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(b)&nbsp;Such liability or loss was not the result of negligence or misconduct by such Director.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(c)&nbsp;The expenses of such Director incurred in defending any proceeding hereunder may not be
advanced by the Corporation if they result from legal action initiated by a Shareholder.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(d)&nbsp;The Corporation may advance funds for the expenses of defending any proceeding hereunder
initiated against such Director only if the following conditions are satisfied: (1)&nbsp;the legal
action relates to the performance of duties or services by such Director on behalf of the program;
(2)&nbsp;the legal action is initiated by a third party who is not a Shareholder; and (3)&nbsp;such Director
undertakes to repay the advanced funds to the Corporation in cases in which they would not be
entitled to indemnification.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(e)&nbsp;Indemnification will not be allowed for any liability imposed by judgment, and costs
associated therewith, including attorneys fees, arising from or out of a violation of state or
federal securities laws associated with the offer and sale of the Corporation&#146;s Securities.
Indemnification will be allowed for settlements and related expenses of lawsuits alleging
securities law violations, and for expenses incurred in successfully defending such lawsuits,
provided that a Court either:
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(i)&nbsp;Approves the settlement and finds that indemnification of the settlement and related
costs should be made; or
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(ii)&nbsp;Approves indemnification of litigation costs if a successful defense is made; and,
provided the Court is apprised by the party seeking indemnification, prior to seeking approval for
indemnification, that it is the position of the Securities and Exchange Commission and certain
state administrators, including the California Corporations Commissioner, that it is against
public policy to indemnify agents against federal and state securities law violations.
</DIV>
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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>ARTICLE VIII</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Investment Policy</I></B>
</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;1 <B>Statement of Investment Policy. </B>Subject to the prohibitions contained in Section
2 of this Article, the general investment policy of the Corporation shall be to invest the
assets of the Corporation in equity interests in Real Property.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;2 <B>Investment Prohibitions. </B>The Corporation may not:</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(a)&nbsp;Invest in commodities, commodities futures contracts, foreign currency and bullion,
except interest rate futures, unless solely for hedging but not for
speculation purposes.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(b)&nbsp;Invest in installment sales contracts for the sale or purchase of real estate (except in
connection with the disposition of a Corporation property, provided that such contract is in
recordable form and is appropriately recorded in the chain of title).
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(c)&nbsp;Invest in a Mortgage Loan except where the amount of such Mortgage Loan, plus the
outstanding amount of the Senior Debt, if any, secured by the same property does not exceed
eighty-five percent (85 %) of the Appraised Value of the property securing the Mortgage Loan, if,
after giving effect thereto, the value of all Junior Mortgage Loans of the Corporation (as shown
on the books of the Corporation in accordance with generally accepted accounting principles after
all reasonable reserves, but before provision for depreciation) would not exceed twenty-five
percent (25 %) of the Corporation&#146;s tangible assets; or if the value of all investments in Junior
Mortgage Loans of the Corporation (including those which do not meet the aforementioned
requirements) would not exceed ten percent (10%) of the Corporation&#146;s tangible assets (which would
be included within the twenty-five percent (25 %) limitation) and the Directors (including a
majority of the Independent Directors) determine substantial justification exists because of the
presence of other underwriting criteria.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(d)&nbsp;Invest in Mortgage Loans unless the following requirements are met:
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 12%">(i)&nbsp;Obtain an appraisal from an independent qualified appraiser in the event a majority of the
Independent Directors so determine, and in each instance where the transaction is with a Director,
or their Affiliates; and
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 12%">(ii)&nbsp;Obtain a mortgagee&#146;s or owner&#146;s title insurance policy or commitment as to the priority
of the mortgage or the condition of title; and
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 12%">(iii)&nbsp;The Mortgage Loan is not subordinate to any Mortgage Loan or equity interest of a
Director or their Affiliates.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(e)&nbsp;Invest in Unimproved Real Property or in Mortgage Loans secured by liens on Unimproved
Real Property, if the total of such investments exceeds ten percent (10% ) of the Corporation&#146;s
Invested Assets.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(f)&nbsp;Trade, as compared to engaging in investment activities (other than investments made
solely for hedging purposes).
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(g)&nbsp;Hold property primarily for sale to customers in the ordinary course of business.
</DIV>
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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(h)&nbsp;Engage in trading, underwriting or agency distribution of Securities issued by
others.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(i)&nbsp;Invest in the equity securities of any non-governmental issuer other than the
Corporation&#146;s REIT subsidiary or non-REIT subsidiary, including
another REIT or partnership, limited partnership, limited liability
company, joint venture, or other ventures for the ownership of Real
Property, or invest in equity securities of a Director or Affiliate
thereof.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Section&nbsp;3 <B>Transactions with Affiliates. </B>The Corporation shall not engage in the following:
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(a)&nbsp;Any transaction with a Director or their Affiliates involving the sale or
disposition of Corporation property.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(b)&nbsp;Any transaction (other than through a joint venture or partnership) with, a Director or
any Affiliate of such person, that involves the acquisition of property from such person, except:
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 12%">(i)&nbsp;The acquisition of property where such person has acquired such property for the sole
purpose of facilitating its acquisition by the Corporation and the total consideration paid by the
Corporation does not exceed the cost of such property to such person (including holding costs) and
no special benefit results to such person; or
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 12%">(ii)&nbsp;Where the transaction is unanimously approved by the Directors not otherwise interested
in the transaction (including the Independent Directors) as being fair, competitive and
commercially reasonable and no less favorable to the Corporation than transactions involving
similar properties in the same location under similar circumstances.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(c)&nbsp;Any transaction involving the sale or other disposition of Corporation property
to a Director or any Affiliate of such person.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(d)&nbsp;Any transaction with a business organization with which a Director, in his individual
capacity, is affiliated unless that transaction is approved by the disinterested Directors or the
Shareholders.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(e)&nbsp;Any loan of funds to, or borrowing of funds from, a Director or their Affiliates, unless a
majority of the Directors (including a majority of the Independent Directors) not otherwise
interested in such transaction, approve the transaction as being fair, competitive, and
commercially reasonable and no less favorable to the Corporation than loans between unaffiliated
lenders and borrowers under the same circumstances.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(f)&nbsp;Any investment in a joint venture or partnership with a Director or their
Affiliates unless a majority of the Directors (including a majority of the Independent Directors)
not otherwise interested in the transaction, approve the transaction as being fair and reasonable
to the Corporation and substantially on the same terms and conditions as those received by other
joint venturers.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(g)&nbsp;Any transaction involving the acquisition of a property by the Corporation, unless the
purchase price of the property does not exceed its Appraised Value, and unless the total
compensation paid to all persons , when added to acquisition expenses (as included in the purchase
price) paid by the Corporation does not exceed six percent (6%) of the purchase price (or in the
case of a Mortgage Loan, six percent (6%) of the funds advanced) unless a majority of
the Directors (including a majority of the Independent Directors) not otherwise interested in the
transaction approves the transaction as being commercially competitive, fair and reasonable to the
Corporation.
</DIV>
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</DIV>

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<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(h)&nbsp;Any transaction between the Corporation and a Director or their Affiliates,
unless approved by a majority of the Directors (including a majority of the Independent Directors)
not otherwise interested in the transaction as being fair and reasonable to the Corporation and on
terms and conditions not less favorable to the Corporation than those available from unaffiliated
third parties.
</DIV>

<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;4 <B>Prohibited Security Issuances. </B>The Corporation is prohibited from issuing the
following:</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(a)&nbsp;Warrants,
options or rights, except as part of a public offering, a financing arrangement, a ratable distribution to its Shareholders or a stock option plan for Directors,
officers or employees of the Corporation;
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(b)&nbsp;Debt securities, unless the historical debt service coverage (in the most recently
completed fiscal year), as adjusted for known changes, is sufficient to properly service that
higher level of debt;
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(c)&nbsp;Options or warrants to purchase shares at an exercise price less than the fair market
value of such Securities on the date of grant and for consideration (which may include services)
that in the judgment of the Independent Directors, has a market value less than the value of such
option or warrant on the date of issuance. In no event shall such options or warrants be
exercisable later than ten (10)&nbsp;years from the date of the issuance thereof;
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(d)&nbsp;Redeemable,
or assessable or equity securities except for redeemable, equity
preferred stock; or
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(e)&nbsp;Shares on a deferred payment basis or similar arrangement.
</DIV>

<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;5 <B>Review by Independent Directors. </B>The Independent Directors shall review the
investment policies of the Corporation with sufficient frequency (at least annually) to
determine that the policies being followed by the Corporation at any time are in the best
interests of the Shareholders. Each such determination and the basis therefor shall be set
forth in the minutes of the Board of Directors.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;6 <B>Limitations on Corporate Borrowing. </B>Unless eighty percent (80%) or more of the
Corporation&#146;s assets are invested in First Mortgage Loans, the Corporation shall not engage in
any short sale, or borrow on an unsecured basis if such borrowing would result in an asset
coverage of less than three hundred percent (300%) or incur any indebtedness which would result
in an aggregate amount of indebtedness in excess of three hundred percent (300%) of adjusted
net worth. For the purposes of this paragraph asset coverage means the ratio which the value of
the total assets of the Corporation, less all liabilities and indebtedness, except indebtedness
for unsecured borrowing, bears to the aggregate amount of all unsecured borrowing of the
Corporation.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;7 <B>Distribution Policies. </B>The Directors may, from time to time, in their sole
discretion, determine by a majority vote (including a majority vote of the Independent
Directors) to make distributions to the Shareholders. The source of funds for such
distributions may be from the capital of the Corporation, or from earnings and profits.</DIV>


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</DIV>

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<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;8 <B>Distribution Reinvestment Plans. </B>The Directors, by a majority vote (including a
majority vote of the Independent Directors) may, from time to time, establish distribution
reinvestment plans for the Corporation. At a minimum, any such plan shall provide for the
following:</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(a)&nbsp;All material information regarding the distribution to the Shareholders and the effect of
reinvesting such distribution, including the tax consequences thereof, shall be provided to the
Shareholders at least annually; and
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(b)&nbsp;Each Shareholder participating in the distribution reinvestment plan shall have a
reasonable opportunity to withdraw from the plan, at least annually, after receipt of the
information required in subparagraph (a)&nbsp;above.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>ARTICLE X</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Records And Reports</I></B>
</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;1
<B>Maintenance and Inspection of Share Register.</B> The Corporation shall keep
at its principal executive office, or at the office of its transfer agent or registrar, if
either be appointed and as determined by resolution of the Board of Directors, a record of its
Shareholders, giving the names and addresses of all Shareholders and the number and class of
 shares held by each Shareholder.</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%; margin-left: 0%">A Shareholder or Shareholders of the Corporation holding at least 5% in the aggregate of the
outstanding voting shares of the Corporation (or who hold at least 1 % of such voting shares and
have filed a Schedule&nbsp;14B with the United States Securities and Exchange Commission relating to
the election of Directors of the Corporation) shall have an absolute right to do either or both of
the following: (i)&nbsp;inspect and copy the record of Shareholders&#146; names and addresses during usual
business hours upon five (5)&nbsp;days prior written demand upon the Corporation, and (ii)&nbsp;obtain from
the transfer agent of the Corporation, on written demand and on the tender of such transfer
agent&#146;s usual charges for such list (the amount of which charges shall be stated to the
Shareholder by the transfer agent upon request), a list of the Shareholders&#146; names and addresses
who are entitled to vote for the election of Directors as of the most recent record date for which
that list has been complied or as of a date specified by the Shareholder after the date of demand.
This list shall be made available to any such Shareholder by the transfer agent on or before the
later of five (5)&nbsp;days after the demand is received or the date specified in the demand as the
date as of which the list is to be compiled. The record of Shareholders shall also be open to
inspection on the written demand of any Shareholder or holder of a voting trust certificate, at
any time during usual business hours, for a purpose reasonably related to the holder&#146;s interests
as a Shareholder or as the holder of a voting trust certificate. Any inspection and copying under
this Section&nbsp;1 may be made in person or by an agent or attorney of the Shareholder or holder of a
voting trust certificate making the demand.
</DIV>

<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;2 <B>Maintenance and Inspection of Bylaws. </B>The Corporation shall keep its principal
executive office, or if its principal executive office is not in the State of California, at its
principal business office in this state, the original or a copy of the Bylaws as amended to date,
which shall be open to inspection by the Shareholders at all reasonable times during office hours.
If the principal executive office of the Corporation is outside the State of California and the
Corporation has no principal business office in this state, the secretary shall, upon the written
request of any Shareholder, furnish to that Shareholder a copy of the Bylaws as amended to date.</DIV>


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</DIV>

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<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;3 <B>Maintenance and Inspection of Other Corporate Records. </B>The accounting books and
records and minutes of proceedings of the Shareholders and the Board of Directors and any
committee or committees of the Board of Directors shall be kept at such place or places
designated by the Board of Directors or, in the absence of such designation, at the principal
executive office of the Corporation. The minutes shall be kept in written form and the
accounting books and records shall be kept either in written form or in any other form capable
of being converted into written form. The minutes and accounting books and records shall be
open to inspection upon the written demand of any Shareholder or holder of a voting trust
certificate, at any reasonable time during usual business hours, for a purpose reasonably
related to the holder&#146;s interests as a Shareholder or as the holder of a voting trust
certificate. The inspection may be made in person or by an agent or attorney and shall include
the right to copy and make extracts. These rights of inspection shall extend to the records of
each subsidiary corporation of the Corporation.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;4
<B>Inspection by Director.</B> Every director shall have the absolute right at
any reasonable time to inspect all books, records and documents of every kind and the physical
properties of the Corporation and each of its subsidiary corporations. This inspection by a
Director may be made in person or by an agent or attorney and the right of inspection includes
the right to copy and make extracts of documents.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;5 <B>Annual Report to Shareholders. </B>The Board of Directors shall cause an annual
report to be sent to the Shareholders not later than one hundred twenty (120)&nbsp;days after the
close of each year. This report shall be sent at least fifteen (15)&nbsp;days before the annual
meeting of Shareholders to be held during the next fiscal year and in the manner specified in
Section&nbsp;5 of Article&nbsp;III of these Bylaws for giving notice to Shareholders of the Corporation.
The annual report shall contain financial statements (balance sheet, statement of income,
statement of changes of financial position) prepared in accordance with generally accepted
accounting principles and accompanied by an auditor&#146;s report containing the opinion of an
independent certified public accountant or independent public accountant or, if there is no
such report, the certificate of an authorized officer of the Corporation that the statements
were prepared without audit from the Corporation&#146;s books and records. The foregoing requirement
of an annual report shall be waived so long as the shares of the Corporation are held by fewer
than one hundred (100)&nbsp;holders of record.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;6 <B>Disclosure on Distribution. </B>Any distribution of income or capital assets of the
Corporation to holders of Securities of the Corporation other than its promissory notes shall
be accompanied by a written statement disclosing the source of the funds distributed. If, at
the time of distribution, this information is not available, a written explanation of the
relevant circumstances shall accompany the distribution and the written statement disclosing
the sources of the funds distributed shall be sent to such holders not later than sixty (60)
days after the close of the year in which the distribution was made.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;7 <B>Financial Statements. </B>A copy of any annual financial statement and any income
statement of the Corporation for each quarterly period of each year and any accompanying
balance sheet of the Corporation as of the end of each such period that has been prepared by
the Corporation shall be kept on file in the principal executive office of the Corporation for
twelve (12)&nbsp;months, and each such statement shall be exhibited at all reasonable times to any
Shareholder demanding an examination of any such statement or a copy shall be mailed to any
such Shareholder.</DIV>


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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">



<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">If the holder or holders of at least five percent (5%) of the outstanding shares of any class
of stock of the Corporation make a written request to the Corporation for an income statement of
the Corporation for the three (3)&nbsp;month, six (6)&nbsp;month or nine (9)month period of the then current
year ended more than thirty (30)&nbsp;days before the date of the request, and a balance sheet of the
Corporation as of the end of that period, the chief financial officer shall cause the statement to
be prepared, if not already prepared, and shall deliver personally or mail that statement or
statements to the person making the request within thirty (30)&nbsp;days after the receipt of the
request. If the Corporation has not sent to the Shareholders its annual report for the last year,
this report shall likewise be delivered or mailed to the Shareholders within thirty (30)&nbsp;days after
the request. A balance sheet, income statement and a statement of changes in financial position for
the also last fiscal year shall also be included unless the Corporation has sent the Shareholders
an annual report for the last fiscal year.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">The Corporation shall also, on the written request of any Shareholder, mail to the
Shareholder a copy of the last annual, semi-annual or quarterly income statement which it has
prepared, and a balance sheet as of the end of that period.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">The quarterly income statements and balance sheets referred to in this section shall be
accompanied by the report, if any, of any independent accountants engaged by the Corporation or
the certificate of an authorized officer of the Corporation that the financial statements were
prepared without audit from the books and records of the Corporation.
</DIV>

<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;8 <B>Annual Statement of General Information. </B>The Corporation shall annually, during
the period prescribed by law, file with the Secretary of State of the State of California, on
the prescribed form, a statement setting forth the authorized number of Directors, the names and
complete business or residence addresses of all incumbent Directors, the names and complete
business or residence addresses of the chief executive officer, secretary and chief financial
officer, the street address of its principal executive office or principal business office in
this state, and the general type of business constituting the principal business activity of the
Corporation, together with a designation of the agent of the Corporation for the purpose of
service of process, all in compliance with Section&nbsp;1502 of the
California Corporations Code.</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>ARTICLE XI</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>General Corporate Matters</I></B>
</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;1 <B>Record Date for Purposes Other Than Notice and Voting. </B>For purposes of
determining the Shareholders entitled to receive payment of any dividend or other
distributions or allotment of any rights or entitled to exercise any rights in respect of any
other lawful action (other than action by Shareholders by written consent without a meeting),
the Board of Directors may fix, in advance, a record date which shall not be more than sixty
(60), nor less than ten (10)&nbsp;days before any such action, and in that case only shareholders
of record on the date so fixed are entitled to receive the dividend, distribution or allotment
of rights or to exercise the rights, as the case may be, notwithstanding any transfer of any
 shares on the books of the Corporation after the record date so fixed, except as otherwise
provided in the California General Corporation Law.</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">If the Board of Directors does not so fix a record date, the record date for determining
Shareholders for any such purpose shall be at the close of business on the day on which the
Board adopts the applicable resolution or the sixtieth (60th) day before the date of that
action, whichever is later.
</DIV>
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<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;2 <B>Checks. Drafts. Evidence of Indebtedness. </B>All checks, drafts or other orders
for payment of money, notes or other evidences of indebtedness, issued in the name of or
payable to the Corporation, shall be signed or endorsed by such person or persons and in such
manner as from time to time shall be determined by resolution of the Board of Directors.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;3 <B>Corporate Contracts and Instruments: How Executed. </B>The Board of Directors,
except as otherwise provided in these Bylaws, may authorize any officer or officers, agent or
agents, to enter into any contract or execute any instrument in the name of and on behalf of
the Corporation, and this authority may be general or confined to specific instances; and,
unless so authorized or ratified by the Board of Directors or within the agency power of an
officer, no officer, agent or employee shall have any power or authority to bind the
Corporation by any contract or engagement or to pledge its credit or to render it liable for
any purpose or for any amount.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;4 <B>Issuance of Certificates. </B>Every holder of shares of equity or debt Securities
of the Corporation shall be entitled, upon request, to have a certificate signed in the name
of the Corporation by the chairman or vice chairman of the board or the president or a vice
president and by the chief financial officer or an assistant treasurer or the secretary or any
assistant secretary, certifying the number of shares and the class or series of shares owned
by the Security holder. Any or all of the signatures on the certificate may be facsimile. In
the event any officer, transfer agent or register who has signed or whose facsimile signature
has been placed upon a certificate has ceased to be such officer, transfer agent or register
before such certificate is issued, it may be issued by the Corporation with the same effect as
if such person were an officer, transfer agent or register at the date of issuance. The
foregoing provisions notwithstanding, the Board of Directors may adopt a system of issuance,
recordation and transfer of its Securities by electronic or other means not involving any
issuance of certificates, including provisions for notice to purchasers and substitution for
required statements on the certificates as may be required by Sections&nbsp;417, 418 and 1302 of
the California Corporations Code, as amended, and as may be required by the Commissioner of
Corporations in administering the California Corporate Securities Law of 1968, which system
(a)&nbsp;has been approved by the United States Securities and Exchange Commission, (b)&nbsp;is
authorized in any statute of the United States, or (c)&nbsp;is in accordance with Division 8
(commencing with Section&nbsp;8101) of the California Commercial Code, as amended.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;5 <B>Lost Certificates. </B>Except as provided in this Section&nbsp;5, no new certificates
for shares shall be issued to replace an old certificate unless the latter is surrendered to
the Corporation and canceled at the same time. The Board of Directors may, in case any share
certificate or certificate for any other security is lost, stolen, or destroyed, authorize the
issuance of a replacement certificate on such terms and conditions as the board may require,
including provision for indemnification of the Corporation secured by a bond or other adequate
security sufficient to protect the Corporation against any claim that may be made against it,
including any expense or liability, on account of the alleged loss, theft or destruction of
the certificate or the issuance of the replacement certificate.</DIV>


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<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;6 <B>Representation of Shares of Other Corporations. </B>The chairman of the
board, the president or any vice president, or any other person authorized by resolution
of the Board of Directors or by any of the foregoing designated officers, is authorized to vote
on behalf of the Corporation any and all shares of any other corporation or corporations,
foreign or domestic, standing in the name of the Corporation. The authority granted to these
officers to vote or represent on behalf of the Corporation any and all shares held by the
Corporation in any other corporation or corporations may be exercised by any of these officers
in person or by any person authorized to do so by a proxy duly executed by these officers.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;7 <B>Redemption and Stop Transfer for Tax Purposes. </B>If the Directors shall, at any
time and in good faith, be of the opinion that ownership of Securities of the Corporation has
or may become concentrated to an extent that may prevent the Corporation from qualifying as a
real estate investment trust under the Code, then the Directors shall have the power, by lot
or other means deemed equitable by them, to prevent the transfer of and/or to call for
redemption a number of Securities of the Corporation sufficient, in the opinion of the
Directors, to maintain or bring the direct or indirect ownership thereof into conformity with
the requirements of such a real estate investment trust under the Code. The redemption price
to be paid for Securities of the Corporation so called for redemption, on the date fixed for
redemption, shall be the average of the highest bid and the lowest asked quotations on the
last business day prior to the redemption date as reported by Pink Sheets, LLC or a similar
organization selected from time to time by the Corporation or if there be no such bid and
asked quotations, as determined by the Board of Directors in good faith. From and after the
date fixed for redemption by the Directors, the holder of any Securities of the Corporation so
called for redemption shall cease to be entitled to any distributions, voting rights and other
benefits with respect to such Securities of the Corporation, other than the right to payment
of the redemption price determined as aforesaid.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;8 <B>Provisions in Conflict with Law or Regulations. </B>The provisions of these Bylaws
are severable, and if the Directors shall determine, with the advice of counsel, that anyone
or more of such provisions (&#147;Conflicting Provisions&#148;) are in conflict with the Code or with
other applicable federal or California laws and regulations, the Conflicting Provisions shall
be deemed never to have constituted a part of these Bylaws; provided, however, that such
determination by the Directors shall not affect or impair any of the remaining provisions of
these Bylaws or render invalid or improper any action taken or omitted (including but not
limited to the election of Directors) prior to such determination. Such determination shall
become effective when a certificate signed by a majority of the Directors setting forth any
such determination and reciting that it was duly adopted by the Directors, shall be filed with
the books and records of the Corporation. The Directors shall not be liable for failure to
make any determination under this Section. Nothing in this Section shall in any way limit or
affect the right of the Directors or the shareholders to amend these Bylaws.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;9 <B>Competing Activities of Officers. Directors. </B>Nothing in these Bylaws shall be
interpreted as prohibiting the officers and Directors of the Corporation from engaging
directly or indirectly in activities which are, or may be, competitive with the business of
the Corporation and, except as may be required by the California
Corporations Code, as
amended, they shall have no obligation to present to the Corporation any investment
opportunities which become available to them pursuant to such other activities.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;10 <B>Construction. </B>Unless the context requires otherwise, the general provisions,
rules of construction and definitions in the California Corporations
Code shall govern the construction of these Bylaws.</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">



<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>ARTICLE XII</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>Amendments. Specific Shareholder Voting Requirements</I></B>
</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;1 <B>Amendment by Shareholders. </B>The provisions of Article&nbsp;I, insofar as it relates to
Article&nbsp;VIII and Article&nbsp;IX, Sections&nbsp;1, 2 and 3 of Article&nbsp;III; Sections&nbsp;1 through 6 of
Article&nbsp;IV, Article&nbsp;VII, Article&nbsp;VIII and Article&nbsp;IX, Article&nbsp;X, Article&nbsp;XI, and Article&nbsp;XII of
these Bylaws may only be amended or repealed by the vote or written consent of holders of a
majority of the outstanding shares entitled to vote; provided, however, that no amendment which
would change any rights with respect to any outstanding class of Securities of the Corporation,
by reducing the amount payable thereon upon liquidation of the Corporation, or by diminishing
or eliminating any voting rights pertaining thereto, may be made unless also approved by the
vote or written consent of the holders of at least sixty-six and two-thirds percent (66-2/3 %)
of the outstanding Securities of such class. Subject to the foregoing, new Bylaws may be
adopted or these Bylaws may be amended or repealed by the vote or written consent of holders of
a majority of the outstanding shares entitled to vote; provided, however, that the amendment of
any provision which contains a requirement for a greater vote for any action shall require a
vote equal to such greater vote for approval.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;2 <B>Amendment by Directors. </B>Subject to the rights of the Shareholders as provided in
Section&nbsp;1 of this Article, to adopt, amend or repeal Bylaws, and the requirements of approval
of certain matters by the Independent Directors as set forth in Section&nbsp;11 of Article&nbsp;IV,
Bylaws may be adopted, amended or repealed by the Board of Directors, provided, however, that
the Board of Directors may adopt a bylaw or amendment of a bylaw changing the authorized number
of Directors only for the purpose of fixing the exact number of Directors within the limits
which may be specified in the Articles of Incorporation or in Section&nbsp;3 of Article&nbsp;IV of these
Bylaws.</DIV>


<DIV align="justify" style="margin-left: 4%; text-indent: -4%; margin-right: 0%; font-size: 10pt; margin-top: 10pt">Section&nbsp;3 <B>Business Combinations. </B>Without the prior vote or written consent of the holders
of at least sixty-six and two- thirds percent (66-2/3%) of the outstanding shares, the
Corporation shall not enter into any business combination with a holder, or group of holders
acting in concert, holding, of record and/or beneficially, ten percent (10%) or more of the
outstanding shares (such holder or holders shall be referred to as an &#147;Interested
Shareholder&#148;).</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">For the purposes hereof, a &#147;business combination&#148; shall mean (i)&nbsp;a merger or consolidation
between or with the Corporation and the Interested Shareholder and/or its Affiliates; (ii)&nbsp;any
sale, lease, exchange, mortgage, pledge, transfer of assets to an Interested Shareholder and/or
its Affiliates having an aggregate fair market value of at least $1,000,000; (iii)&nbsp;any
reclassification or reorganization, the effect of which would be to increase the proportion of
outstanding shares of any class of the Corporation&#146;s equity Securities convertible into a class of
equity Securities owned by an Interested Shareholder and/or its Affiliates; and (iv)&nbsp;the adoption
of any plan for the liquidation or dissolution of the Corporation, proposed by or on behalf of the
Interested Shareholder and/or its Affiliates.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">The foregoing provisions requiring a sixty-six and two-thirds percent (66-2/3%) or
greater vote of the outstanding shares shall not apply, however, in any event if: (i)&nbsp;at the
time the business combination is consummated or during the prior twelve (12)&nbsp;months the
Corporation beneficially owned a majority of the outstanding equity Securities of the Interested
Shareholder; (ii)&nbsp;the business combination was approved by all of the Directors, who at the time
such approval was given were not Affiliates or nominees of the Interested Shareholder or were
Directors prior to the time the Interested Shareholder became an Interested Shareholder
(&#147;Disinterested Directors&#148;) or successors of Disinterested Directors who were not Affiliates or
nominees of the Interested Shareholder and who were recommended to succeed the Disinterested
Directors by a majority vote of the Disinterested Directors. If these requirements are satisfied
or a majority of the Disinterested Directors approve the business combination and recommend it to
the Shareholders, the approval or consent of the Shareholders holding a majority of the
outstanding shares of the Corporation&#146;s common stock will be required to approve the business
combination.
</DIV>
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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>CERTIFICATE OF ADOPTION OF BYLAWS<BR>
OF<BR>
NetREIT<BR>
A California Corporation</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">I hereby certify that I am the duly elected, qualified and acting Secretary of NetREIT, a
California Corporation, and that the above and foregoing Bylaws correctly state and set forth the
Bylaws of the Corporation, that were amended and adopted as the Bylaws of the Corporation by
Unanimous Written Consent to Action by the Corporation&#146;s Board
of Directors dated _______________, 2009
and at Corporation&#146;s Annual Shareholders Meeting dated August
&nbsp;_____, 2009.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">IN WITNESS WHEREOF, I have hereunto subscribed my name this
&nbsp;_____&nbsp;
day of August, 2009.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="45%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
Kenneth W. Elsberry<BR>
Secretary
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>



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</DIV>



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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="right" style="font-size: 10pt; margin-top: 10pt"><B>ANNEX B</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 10pt"><B>RESTATED ARTICLES OF INCORPORATION FOR NETREIT</B>

</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="67%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">ENDORSED &#151; FILED</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" valign="top">In the Office of the Secretary of State</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">of the State of California</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">JAN 28 1999</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">BILL JONES, Secretary of State</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 10pt"><B>ARTICLES OF INCORPORATION</B>

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 10pt"><B>OF</B>

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 10pt"><B>NetREIT</B>

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 10pt"><B>I</B>

</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">The name of the corporation is NetREIT.
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 10pt"><B>II</B>

</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The purpose of this corporation is to engage in any lawful act or activity for which a
corporation may be organized under the General Corporation Law of California, other than the
banking business, the trust company business or the practice of a profession permitted to be
incorporated by the California Corporations Code.
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 10pt"><B>III</B>

</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">The name and address in this state of this Corporation&#146;s Agent for service of process are:
</DIV>
<DIV align="left" style="font-size: 10pt; margin-left: 12%; margin-top: 10pt">Jack K. Heilbron<BR>
NetREIT<BR>
1282 Pacific Oaks Place<BR>
Escondido, CA 92029
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 10pt"><B>IV</B>

</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">1.&nbsp;This corporation is authorized to issue two classes of shares designated &#147;Common Stock&#148;
and &#147;Preferred Stock&#148;. The total number of shares of Preferred Stock which this corporation is
authorized to issue is Ten Million (10,000,000). The total number of shares of Common Stock which
this corporation is authorized to issue is One Hundred Million One Thousand (100,001,000). This
corporation is authorized to issue Common Stock in the following series:
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">a.&nbsp;One Hundred Million (100,000,000) shares of Common Stock, Series&nbsp;A. In the event of a
liquidation of this corporation, Common Stock, Series&nbsp;A shall be entitled to all assets allocated
to holders of Common Stock. Common Stock, Series&nbsp;A shall be subject to redemption by this
corporation in accordance with Section&nbsp;2 of this Article&nbsp;IV.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">b.&nbsp;One Thousand (1,000) shares of Common Stock, Series&nbsp;B. In the event of the liquidation of
the corporation, the Common Stock, Series&nbsp;B shall be entitled to receive no portion of the
corporation&#146;s assets that shall be allocated to the holders of the Common Stock.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Except as set forth herein, the rights preferences, terms and conditions of Common Stock,
Series&nbsp;A and Common Stock, Series&nbsp;B shall be identical in all respects.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

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</DIV>

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<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">2.&nbsp;The Board of Directors of this corporation shall have the power to prevent the transfer of
the Common Stock, Series&nbsp;A, or may call for redemption, in a manner approved by the Board of
Directors, of a number of the shares of Common Stock, Series&nbsp;A from any holder or holders, directly
or indirectly, of nine and eight tenths percent (9.8%) or more of the then issued and outstanding
Common Stock, Series&nbsp;A, sufficient in the opinion of the Board of Directors to maintain or bring
the direct or indirect ownership of such shares of this corporation into conformity with the
requirements for a Real Estate Investment Trust under the provisions of the Internal Revenue Code
of 1986, as amended (the &#147;Code&#148;). In the event less than all of the shares held by such persons are
called for redemption, the amount redeemed from each shall bear the same proportion to each other
as the number of shares of Common Stock, Series&nbsp;A held by each as of the redemption date. The
redemption price shall be (i)&nbsp;the last reported sales price of the shares of Common Stock, Series&nbsp;A
on the last business day prior to the redemption date on the principal national securities exchange
on which the shares of Common Stock, Series&nbsp;A are listed or admitted to trading, (ii)&nbsp;if the shares
of Common Stock, Series&nbsp;A are not so listed or admitted to trading, the average of the highest bid
and lowest asked prices on such last business day as reported by the NASDAQ, National Quotation
Bureau Incorporated or a similar organization selected by this corporation for the purpose, or
(iii)&nbsp;if no such independent quotations exist, as determined in good faith by the Board of
Directors to be the fair market value of said shares on the last business day prior to the
redemption date. The holders of any shares of Common Stock, Series&nbsp;A so called for redemption shall
be entitled to payment of such redemption price within a reasonable time of the date fixed for
redemption. From and after the date fixed for redemption by the Board of Directors, the holders of
any shares of Common Stock, Series&nbsp;A so called for redemption shall cease to be entitled to
dividends, distributions, voting rights and other benefits with respect to such shares of Common
Stock, Series&nbsp;A, excepting only the right to payment of the redemption price fixed as subscribed
above. The Board of Directors may require, whenever it is deemed by them reasonably necessary to
protect the tax status of this corporation, statements or affidavits from any holder of shares of
Common Stock, Series&nbsp;A or proposed transferee of shares of Common Stock, Series&nbsp;A, setting forth
the number of shares of Common Stock, Series&nbsp;A already owned by him and any related person
specified in the form prescribed by the Board of Directors for that purpose. If, in the opinion of
the Board of Directors, which shall be conclusive upon any proposed transferor or proposed
transferee of shares of Common Stock, Series&nbsp;A, any proposed transfer would jeopardize the status
of this corporation as a Real Estate Investment Trust under the code, the Board of Directors may
refuse to permit the transfer. Any attempted transfer as to which the Board of Directors have
refused their permission shall be void and of no effect to transfer any legal or beneficial
interest in the shares of Common Stock, Series&nbsp;A. All contracts for the sale or other transfer or
exercise of shares of Common Stock, Series&nbsp;A shall be subject to this provision.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">3.&nbsp;The Preferred Stock may be issued from time to time in one or more series. The Board of
Directors is authorized to fix the number of shares of any series of Preferred Stock and to
determine the designation of any such series. The Board of Directors is also authorized to
determine or alter the rights granted to or imposed upon any wholly unissued series or preferred
shares including the dividend rights, dividend rate, conversion rights, voting rights, rights and
terms of redemption (including sinking fund provisions), the redemption price or prices and the
liquidation preference, and, within the limits and restrictions stated in any resolution or
resolutions of the Board of Directors originally fixing the number of shares constituting any
series, to increase or decrease (but not below the number of shares then outstanding) the number
of shares of any such series subsequent to the issuance of shares of that series. In case the
number of shares of any series shall be so decreased, the shares constituting such decrease shall
resume the status which they had prior to the adoption of the resolution originally fixing the
number of shares of such series.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->2<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">4.&nbsp;This corporation is authorized to issue Thirty-five Thousand (35,000) shares of Series&nbsp;A
Preferred Stock (&#147;Series&nbsp;A Preferred Stock&#148;). The Series&nbsp;A Preferred Stock shall have the
following rights, preferences and privileges.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">a.&nbsp;In the event of any liquidation, dissolution or winding up of the affairs of the
corporation, whether voluntary or involuntary, after payment or provision for payment of the debts
and other liabilities of the corporation, the holders of shares of the Series&nbsp;A Preferred Stock
shall be entitled to receive, out of the assets of the corporation, whether such assets are
capital or surplus and whether or not any dividends as such are declared, the amount equal to nine
dollars and 10/100 ($9.10) per share plus an amount equal to all accrued and unpaid dividends
thereon to the date fixed for distribution, and no more (the &#147;Liquidation Preference&#148;), before any
distribution shall be made to the holders of the Common Stock or any other class of shares or
series thereof ranking junior and subordinate to the Series&nbsp;A Preferred Stock with respect to the
distribution of assets. For the purposes of the foregoing,
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="12%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">A merger or consolidation of the corporation
with or into any other corporation or corporations, or the merger of
any other corporation or corporations with or into the corporation, or
the sale of all or substantially all of the assets of the corporation,
or any other corporate reorganization, in which consolidation, merger,
sale of assets or reorganization the stockholders of the corporation
receive distributions in cash or securities of another corporation or
corporations as a result of such consolidation, merger, sale of assets
or reorganization, shall be treated as a liquidation, dissolution or
winding up of the corporation, unless the stockholders of the
corporation hold more than fifty percent (50%) of the voting equity
securities of the successor or surviving corporation immediately
following such consolidation, merger, sale of assets or reorganization,
in which case such consolidation, merger, sale of assets or
reorganization shall not be treated as a liquidation, dissolution, or
winding up within the meaning of this Section.</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="12%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(ii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">Written notice of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the
corporation, specifying a payment date and the place where the
distributive amounts shall be payable, shall be given by mail, postage
prepaid, not less than thirty (30)&nbsp;days prior to the payment date
elected therein, to the holders of record of the Series&nbsp;A Preferred
Stock at their respective addresses as the same shall appear on the
books of the corporation.</DIV></TD>
</TR>

</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->3<!-- /Folio -->
</DIV>



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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="12%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(iii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">No payment on account of such liquidation,
dissolution or winding up of the affairs of the corporation shall be
made to the holders of any class or series of stock ranking on a
parity with the Series&nbsp;A Preferred Stock in respect of the
distribution of assets, unless there shall also be paid at the same
time to the holders of the Series&nbsp;A Preferred Stock similar
proportionate distributive amounts, ratably, in proportion to the
fully distributive amounts to which they and the holders of such
parity stock are respectively entitled with respect to such
preferential distribution.</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">b.&nbsp;Holders of the Series&nbsp;A Preferred Stock shall be entitled to receive for each share of
Series&nbsp;A Preferred Stock, when, as and if declared by the Board of Directors out of funds at the
time legally available therefore, dividends at the rate equal to (i) $0.65 per annum, or (ii)
$0.162 per quarter payable quarterly in arrears on April&nbsp;1, July&nbsp;1, October 1 and January 1 of each
year until they are redeemed, except that if any such date is on a Saturday, Sunday or a legal
holiday, then such dividend shall be payable on the next day that is not a Saturday, Sunday or
legal holiday. If declared, dividends shall be paid in cash. Dividends shall accrue and be
cumulative from the date of first issuance of the Series&nbsp;A Preferred Stock and will be payable to
holders of record as they appear on the stock books of the corporation on such record dates as are
fixed by the Board of Directors. No interest shall be payable with respect to any dividend
payment on the Series&nbsp;A Preferred Stock which may be in arrears.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">c.&nbsp;The Series&nbsp;A Preferred Stock shall have priority as to dividends over the Common Stock and
any series or class of the corporation&#146;s stock hereafter issued (&#147;junior dividend stock&#148;), except
such Preferred Stock which it may issue which is senior to the Series&nbsp;A Preferred Stock (&#147;senior
dividend stock&#148;) or other Preferred Stock which is on parity with the Series&nbsp;A Preferred Stock
(parity dividend stock&#148;). No dividend (other than dividends payable solely in Common Stock or any
other series or class of the corporation&#146;s stock hereafter issued that ranks junior as to dividends
to the Series&nbsp;A Preferred Stock) shall be declared, paid or set apart for payment on, and no
purchase, redemption or other acquisition shall be made by the corporation of, any Common Stock or
junior dividend stock unless all accrued and unpaid dividends on the Series&nbsp;A Preferred Stock shall
have been declared and paid or set apart for payment. If at any time the corporation shall have
failed to declare and pay or set apart for payment, any accrued and unpaid dividends on the Series
A Preferred Stock, the corporation shall not pay any dividends on any other series of Preferred
Stock junior to or of parity with the Series&nbsp;A Preferred Stock. The corporation shall not pay
dividends on any class or series of parity dividend stock if any such stock is hereafter issued,
unless it shall have declared and paid or set aside for payment, or shall have contemporaneously
declared and paid or set apart for payment, all accrued and unpaid dividends for all prior periods
on the Series&nbsp;A Preferred Stock; and the corporation shall not pay dividends on the Series&nbsp;A
Preferred Stock unless it shall have declared and paid or set aside for payment or shall have
contemporaneously declared and paid or set apart for payment all accrued and unpaid dividends for
all prior periods on the parity dividend stock. Whenever all accrued dividends are not paid in full
on the Series&nbsp;A Preferred Stock or any parity dividend stock, all dividends declared on the Series
A Preferred Stock and such parity dividend stock shall be declared and made pro rata so that the
amount of dividends declared per share on the Series&nbsp;A Preferred Stock and such parity dividend
stock shall bear the same ratio that accrued and unpaid dividends per share on the Series&nbsp;A
Preferred Stock and such parity stock bear to each other.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 8%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->4<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">d.&nbsp;The corporation may, at any time, in its sole discretion, redeem for cash payment any or
all of the Series&nbsp;A Preferred Shares; provided, the corporation must redeem all Series&nbsp;A Preferred
Stock on or before December&nbsp;31, 2003. Such redemption shall be at a price of $9.10 per share plus
accrued but unpaid dividends thereon. The Redemption Price shall be paid in cash. If fewer than all
of the outstanding shares of Series&nbsp;A Preferred Stock are to be redeemed, the corporation shall
select those to be redeemed pro rata or by law or in such other manner as the Board of Directors
may determine. In the event that the corporation shall have failed to pay accrued dividends on the
Series&nbsp;A Preferred Stock, it shall not redeem any of the then-outstanding Series&nbsp;A Preferred Stock
until all such accrued and unpaid dividends and the then current annual dividends, pro rated until
the redemption date, shall have been paid in full, or provided for, on all shares of Series&nbsp;A
Preferred Stock. Notice of redemption shall be mailed at least thirty (30)&nbsp;days but not more than
sixty (60)&nbsp;days prior to the redemption date to each holder of record of the Series&nbsp;A Preferred
Stock to be redeemed at the holder&#146;s address shown on the stock transfer books of the corporation.
After the redemption date, unless there shall have been a default in payment of the redemption
price, dividends will cease to accrue on the shares of the Series&nbsp;A Preferred Stock called for
redemption, and all rights of the holders of the Series&nbsp;A Preferred Stock will terminate.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">e.&nbsp;Except as provided herein, the holders of the Series&nbsp;A Preferred Stock shall have no voting
rights except as required by law. However, in the event that the equivalent of three (3)&nbsp;quarterly
dividends payable on the Series&nbsp;A Preferred Stock shall not be declared and paid, the holders of
the Series&nbsp;A Preferred Stock shall have four (4)&nbsp;votes for each share, and shall vote with the
Common Shareholders, only to elect or remove directors of the corporation at any duly called
special or annual meeting of the Common Shareholders called for the purpose of voting on the
election or removal of directors. This right shall continue until all dividends in arrears and
dividends in full for the current quarterly period have been paid or have been declared and set
aside for payment.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">f.&nbsp;So long as any Series&nbsp;A Preferred Stock is outstanding, the corporation shall not, without
the affirmative vote of the holders of record of at least two-thirds of the shares of the Series&nbsp;A
Preferred Stock then-outstanding, voting separately as a class, (1)&nbsp;amend, alter or repeal any
provision of the Articles of Incorporation or the Bylaws of the corporation so as to affect
adversely the relative rights, preferences, qualifications, limitations or restrictions of the
Series&nbsp;A Preferred Stock, (2)&nbsp;authorize or issue, or increase the authorized amount of, any
additional class or series of stock or any security convertible into stock of such class or series,
ranking senior to or on parity with the Series&nbsp;A Preferred Stock as to dividends or as to
distributions upon liquidation, dissolution or the winding up of the corporation, or (3)&nbsp;affect any
reclassification of the Series&nbsp;A Preferred Stock.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 8%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->5<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>V</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">1.&nbsp;The liability of the directors of this corporation for monetary damages shall be eliminated
to the fullest extent permissible under California law.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">2.&nbsp;This corporation is authorized to provide indemnification of its agents (as defined in
Section&nbsp;317 of the California General Corporation Law) for breach of their duty to this corporation
and its shareholders through bylaw provisions or through agreements, with the agents, or both, in
excess of the indemnification otherwise permitted by such Section&nbsp;317, subject to the limits on
such excess indemnification set forth in Section&nbsp;204 of the California General Corporation Law.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">3.&nbsp;Any amendment, repeal or modification of the foregoing provision of this Article&nbsp;VI shall
not adversely affect any right of indemnification or limitation of liability of an agent of this
corporation relating to acts or omissions occurring prior to such repeal or modification.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">DATED: January&nbsp;15, 1999
</DIV>


<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" style="border-bottom: 1px solid #000000" align="left">/s/ BRUCE J. RUSHALL
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">BRUCE J. RUSHALL, Incorporator&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
</TABLE>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->6<!-- /Folio -->
</DIV>



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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif; margin-left: .25in; width: 7.20in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>PROXY CARD</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt">THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt">NetREIT
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Annual
Meeting of Shareholders &#150; August&nbsp;28, 2009</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The undersigned shareholder of NETREIT, a California corporation, hereby acknowledges receipt
of the Notice of Annual Meeting of Shareholders and Proxy Statement for the Annual Meeting of
Shareholders to be held on Friday, August&nbsp;28, 2009 at 9:30 a.m.
Pacific Time, at 1282 Pacific Oaks
Place, Escondido California, 92029, telephone (760)&nbsp;471-8536, and hereby appoints Jack K. Heilbron
and Kenneth W. Elsberry, and each of them, proxies and attorneys-in-fact, with full power to each
of substitution, on behalf and in the name of the undersigned, to represent the undersigned at said
Annual Meeting and at any adjournment or adjournments thereof, and to vote all shares of Common
Stock which the undersigned would be entitled to vote if then and there personally present, on the
matters set forth on the reverse side.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>Either of such attorneys or their substitutes has and may exercise all of the powers of said
attorneys-in-fact hereunder.</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>&#091;SEE REVERSE SIDE&#093;</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><DIV align="center"><DIV style="font-size: 6pt; margin-top: 20pt; width: 46%; border-top: 1px dashed #000000">&nbsp;</DIV></DIV>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>CONTINUED AND TO BE SIGNED ON THIS SIDE</B><BR>
<B>[&nbsp;x&nbsp;]</B> <B>Please mark votes as in this example.</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">This Proxy will be voted as directed or, if no direction is indicated, will be voted FOR proposals
1 and 2A-2G, inclusive, below, and as said proxies deem advisable on such other matters as may properly
come before the meeting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>PROPOSAL 1:&nbsp;ELECTION OF DIRECTORS </B>- Nominees:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Larry G. Dubose
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Jack K. Heilbron
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Sumner J. Rollings</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Thomas E. Schwartz
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Bruce Staller
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">David Bruen</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Kenneth W. Elsberry
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">William Allen</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="30%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">[&nbsp;&nbsp;&nbsp;] VOTE FOR
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">[&nbsp;&nbsp;&nbsp;] WITHHELD VOTE
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">[&nbsp;&nbsp;&nbsp;] VOTE FOR</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">ALL NOMINEES
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">FROM ALL NOMINEES
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" NOWRAP>NOMINEES NOT LINED
OUT</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio --><!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif; margin-left: .25in; width: 7.20in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">(Instruction: You may withhold authority to vote for any individual nominee by striking a line
through the nominee&#146;s name above.)
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>PROPOSAL 2A: TO RATIFY THE AMENDMENT TO COMPANY&#146;S BYLAWS AND PROVIDE FOR CHANGE IN SHAREHOLDER
MEETING DATE.</B>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&#091;&nbsp;&nbsp;&nbsp;&#093; FOR
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#091;&nbsp;&nbsp;&nbsp;&#093; AGAINST
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#091;&nbsp;&nbsp;&nbsp;&#093; ABSTAIN</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>PROPOSAL 2B: TO RATIFY THE AMENDMENT TO THE COMPANY&#146;S BYLAWS AND ARTICLES OF INCORPORATION TO
CORRECT INCONSISTENCY FOR NUMBER OF DIRECTORS</B>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&#091;&nbsp;&nbsp;&nbsp;&#093; FOR
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#091;&nbsp;&nbsp;&nbsp;&#093; AGAINST
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#091;&nbsp;&nbsp;&nbsp;&#093; ABSTAIN</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>PROPOSAL 2C: TO RATIFY THE AMENDMENT TO THE COMPANY&#146;S BYLAWS TO REQUIRE A 66 2/3 MAJORITY FOR
REDUCTION OF DIRECTORS TO LESS THAN FIVE (5).</B>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&#091;&nbsp;&nbsp;&nbsp;&#093; FOR
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#091;&nbsp;&nbsp;&nbsp;&#093; AGAINST
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#091;&nbsp;&nbsp;&nbsp;&#093; ABSTAIN</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>PROPOSAL 2D: TO RATIFY THE AMENDMENT TO THE COMPANY&#146;S BYLAWS TO ALLOW CERTAIN INVESTMENTS FOR
HEDGING PURPOSES ONLY AND NOT SPECULATION.</B>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&#091;&nbsp;&nbsp;&nbsp;&#093; FOR
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#091;&nbsp;&nbsp;&nbsp;&#093; AGAINST
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#091;&nbsp;&nbsp;&nbsp;&#093; ABSTAIN</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>PROPOSAL 2E: TO RATIFY THE AMENDMENT TO THE COMPANY&#146;S BYLAWS TO ALLOW ADDITIONAL COMPANY STRUCTURES
THAT MAY BE USED FOR INVESTMENT IN REAL PROPERTY OWNERSHIP.</B>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&#091;&nbsp;&nbsp;&nbsp;&#093; FOR
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#091;&nbsp;&nbsp;&nbsp;&#093; AGAINST
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#091;&nbsp;&nbsp;&nbsp;&#093; ABSTAIN</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>PROPOSAL 2F: TO RATIFY THE AMENDMENT TO THE COMPANY&#146;S BYLAWS TO ALLOW FOR ISSUANCE OF REDEEMABLE,
VOTING EQUITY PREFERRED STOCK.</B>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&#091;&nbsp;&nbsp;&nbsp;&#093; FOR
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#091;&nbsp;&nbsp;&nbsp;&#093; AGAINST
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#091;&nbsp;&nbsp;&nbsp;&#093; ABSTAIN</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>PROPOSAL 2G: TO RATIFY THE AMENDMENT TO THE COMPANY&#146;S BYLAWS TO REMOVE ALL REFERENCES TO ADVISOR
AND ADVISORY CONTRACTS.</B>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&#091;&nbsp;&nbsp;&nbsp;&#093; FOR
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#091;&nbsp;&nbsp;&nbsp;&#093; AGAINST
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#091;&nbsp;&nbsp;&nbsp;&#093; ABSTAIN</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="25%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="25%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">I PLAN TO ATTEND THE MEETING.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Yes [&nbsp;&nbsp;&nbsp;]
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">No [&nbsp;&nbsp;&nbsp;]</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">(This Proxy should be marked, dated, signed by the shareholder(s) exactly as his or her name
appears and returned promptly in the enclosed envelope. Persons signing in a fiduciary capacity
should so indicate. If shares are held by joint tenants or as community property, both should
sign.)
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Signature:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Date:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Signature:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Date:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">(Joint owners must each sign. Please sign exactly as your name(s) appear(s) on this Proxy. When
signing as an attorney, trustee, executor, administrator or guardian, please give your full title.
If signer is a corporation, please sign the full corporation name and full title of signing
officer.)
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio --><!-- /Folio -->
</DIV>



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