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<SEC-DOCUMENT>0000950129-04-002112.txt : 20040415
<SEC-HEADER>0000950129-04-002112.hdr.sgml : 20040415
<ACCEPTANCE-DATETIME>20040415134653
ACCESSION NUMBER:		0000950129-04-002112
CONFORMED SUBMISSION TYPE:	DEF 14A
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20040518
FILED AS OF DATE:		20040415
EFFECTIVENESS DATE:		20040415

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			LTC PROPERTIES INC
		CENTRAL INDEX KEY:			0000887905
		STANDARD INDUSTRIAL CLASSIFICATION:	REAL ESTATE INVESTMENT TRUSTS [6798]
		IRS NUMBER:				710720518
		STATE OF INCORPORATION:			MD
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		DEF 14A
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-11314
		FILM NUMBER:		04735410

	BUSINESS ADDRESS:	
		STREET 1:		22917 PACIFIC COAST HWY
		STREET 2:		SUITE 350
		CITY:			MALIBU
		STATE:			CA
		ZIP:			90265
		BUSINESS PHONE:		3104556010

	MAIL ADDRESS:	
		STREET 1:		22917 PACIFIC COAST HWY
		STREET 2:		SUITE 350
		CITY:			MALIBU
		STATE:			CA
		ZIP:			90265
</SEC-HEADER>
<DOCUMENT>
<TYPE>DEF 14A
<SEQUENCE>1
<FILENAME>v97876ddef14a.htm
<DESCRIPTION>DEFINITIVE PROXY STATEMENT - MEETING: MAY 18, 2004
<TEXT>
<HTML>
<HEAD>
<TITLE>LTC PROPERTIES, INC.</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="center"><FONT size="2"><B>SCHEDULE 14A INFORMATION</B></FONT>

<P align="center"><FONT size="2"><B>PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE<BR>
SECURITIES EXCHANGE ACT OF 1934</B></FONT>

<P align="center"><FONT size="2"><B>(AMENDMENT NO.___)</B></FONT>

<P><FONT size="2">Filed by the Registrant
<FONT face="wingdings" size="3">x</FONT>
</FONT>
<P><FONT size="2">Filed by a Party other than the Registrant <FONT face="wingdings" size="3">o</FONT>
</FONT>
<P><FONT size="2">Check the appropriate box:
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
        <TD width="2%">&nbsp;</TD>
        <TD width="3%">&nbsp;</TD>
        <TD width="95%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD valign="top"><FONT face="wingdings" size="3">&#111;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
Preliminary Proxy Statement</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top"><FONT face="wingdings" size="3">&#120;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
Definitive Proxy Statement</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top"><FONT face="wingdings" size="3">o</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
Confidential, for Use of the Commission Only (as permitted by Rule&nbsp;14a-6(e)(2))</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top"><FONT face="wingdings" size="3">o</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
Definitive Additional Materials</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top"><FONT face="wingdings" size="3">o</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P>&nbsp;</P>
<P>


<P align="center"><FONT size="4"><B>LTC Properties, Inc.</B></FONT>
<HR size="1" noshade>
<DIV align="center"><FONT size="2"><B>(Name of Registrant as Specified In Its Charter)</B></FONT></DIV>

<BR CLEAR="all">
<P align="center"><FONT size="3"><B>&nbsp;</B></FONT>
<HR size="1" noshade>
<DIV align="center"><FONT size="2"><B>(Name of Person(s) Filing Proxy Statement, if other than the Registrant)</B></FONT></DIV>

<P><FONT size="2">Payment of Filing Fee (Check the appropriate box):
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
        <TD width="1%">&nbsp;</TD>
        <TD width="1%">&nbsp;</TD>
        <TD width="3%">&nbsp;</TD>
        <TD width="2%">&nbsp;</TD>
        <TD width="93%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD valign="top"><FONT face="wingdings" size="3">x</FONT></TD>
        <TD align="left" valign="top" colspan="4"><FONT size="2">&nbsp;&nbsp;Fee not required.</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top"><FONT face="wingdings" size="3">o</FONT></TD>

<TD align="left" valign="top" colspan="4"><FONT size="2">&nbsp;&nbsp;Fee computed on table below per Exchange Act Rules&nbsp;14a-6(i)(1) and 0-11.</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
(1)
</FONT></TD>
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top" colspan="2"><FONT size="2">Title of each class of securities to which transaction applies:<BR><BR>
        <HR size="1" noshade></FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
(2)
</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">Aggregate number of securities to which transaction applies:<BR><BR>
        <HR size="1" noshade></FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
(3)
</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">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):<BR><BR>
        <HR size="1" noshade></FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
(4)
</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">Proposed maximum aggregate value of transaction:<BR><BR>
        <HR size="1" noshade></FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
(5)
</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">Total fee paid:<BR><BR>
        <HR size="1" noshade></FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top"><FONT face="wingdings" size="3">o</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top" colspan="3"><FONT size="2">Fee paid previously with preliminary materials.</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top"><FONT face="wingdings" size="3">o</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top" colspan="3"><FONT size="2">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.</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
(1)
</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">Amount Previously Paid:<BR><BR>
        <HR size="1" noshade></FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
(2)
</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">Form, Schedule or Registration Statement No.:<BR><BR>
        <HR size="1" noshade></FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
(3)
</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">Filing Party:<BR><BR>
        <HR size="1" noshade></FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
(4)
</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">Date Filed:<BR><BR>
        <HR size="1" noshade></FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="center"><FONT size="2"></FONT>



<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
 <IMG src="v97876dv9787600.gif" alt="LTC PROPERTIES, INC. LOGO">
</DIV>

<P align="center">
<HR size="1" width="26%" align="center" noshade>

<P align="center">
<B>NOTICE OF ANNUAL MEETING OF STOCKHOLDERS</B>

<P align="center">
<B>To Be Held May&nbsp;18, 2004</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our 2004 annual meeting of stockholders will be
held on Tuesday, May&nbsp;18, 2004 at 10:00&nbsp;a.m., local
time, at our corporate office, 22917 Pacific Coast Highway,
Suite&nbsp;350, Malibu, California 90265.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">(1)&nbsp;To elect a board of five directors for
the ensuing year or until the election and qualification of
their respective successors;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">(2)&nbsp;To vote on the approval of an amendment
to the Charter of the Company to increase the number of
authorized shares of common stock from 35,000,000 to
45,000,000&nbsp;shares;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">(3)&nbsp;To vote on the approval of an amendment
to the Charter of the Company to increase the number of
authorized shares of preferred stock from 15,000,000 to
25,000,000&nbsp;shares;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">(4)&nbsp;To vote on the approval of The 2004
Stock Option Plan;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">(5)&nbsp;To vote on the approval of The 2004
Restricted Stock Plan;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">(6)&nbsp;To vote on the ratification of the
appointment of the Company&#146;s independent auditors for
fiscal 2004;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">(7)&nbsp;To transact such other business as may
properly come before the meeting.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Only stockholders whose names appear of record on
our books at the close of business on <B>April&nbsp;14, 2004
</B>are entitled to notice of, and to vote at, such annual
meeting or any adjournments of such annual meeting.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All stockholders are cordially invited to attend
the meeting in person. However, to assure your representation at
the meeting, you are urged to sign and return the enclosed proxy
promptly in the postage-paid envelope enclosed for that purpose.
Any stockholder attending the meeting may vote in person even if
he or she has returned a proxy.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">By Order of the Board of Directors
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">WENDY L. SIMPSON
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <I><FONT size="2">Vice Chairman and Chief Financial
    Officer</FONT></I></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">Malibu, California
</FONT>

<DIV align="left">
<FONT size="2">April&nbsp;19, 2004
</FONT>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="12%"></TD>
    <TD width="88%"></TD>
</TR>

<TR valign="top">
    <TD><B><U><FONT size="2">IMPORTANT:</FONT></U><FONT size="2">&nbsp;</FONT></B></TD>
    <TD align="left">
    <B><FONT size="2">Whether or not you plan to attend the meeting,
    please complete, date and sign the enclosed proxy and mail it
    promptly in the enclosed stamped envelope.</FONT></B></TD>
</TR>

</TABLE>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">TABLE OF CONTENTS</FONT></B>

<DIV align="left">
<!-- TOC -->
</DIV>

<DIV align="left">
<A name="tocpage"></A>
</DIV>

<CENTER>
<TABLE width="60%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="87%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#101'>PROXY STATEMENT</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#102'>Solicitation</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#103'>Voting Rights</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#104'>Voting of Proxies</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#105'>Revocability of Proxy</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#106'>CORPORATE GOVERNANCE
    PRINCIPLES AND BOARD MATTERS</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#107'>Board Independence</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#108'>Board Structure and
    Committee Composition</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#109'>Consideration of Director
    Nominees</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#110'>Director Compensation</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#111'>Communications with the
    Board</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#112'>PROPOSALS TO BE VOTED ON</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#113'>PROPOSAL&nbsp;1&nbsp;&#151;
    ELECTION OF DIRECTORS</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#114'>PROPOSAL&nbsp;2&nbsp;&#151;
    AMENDMENT TO THE CHARTER TO INCREASE THE NUMBER OF AUTHORIZED
    SHARES OF COMMON STOCK</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#115'>PROPOSAL&nbsp;3&nbsp;&#151;
    AMENDMENT TO THE CHARTER TO INCREASE THE NUMBER OF AUTHORIZED
    SHARES OF PREFERRED STOCK</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#116'>PROPOSAL&nbsp;4&nbsp;&#151;
    APPROVAL OF LTC PROPERTIES,&nbsp;INC. 2004 STOCK OPTION PLAN</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#144'>Description of the 2004
    Stock Option Plan</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#117'>PROPOSAL&nbsp;5&nbsp;&#151;
    APPROVAL OF THE LTC PROPERTIES,&nbsp;INC. 2004 RESTRICTED STOCK
    PLAN</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#145'>Description of the 2004
    Restricted Stock Plan</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#118'>PROPOSAL&nbsp;6&nbsp;&#151;
    RATIFICATION OF INDEPENDENT AUDITORS</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#119'>SECURITY OWNERSHIP OF
    CERTAIN BENEFICIAL OWNERS</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#120'>EXECUTIVE COMPENSATION</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#121'>Employment Agreements</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#122'>OPTION GRANTS DURING FISCAL
    YEAR ENDED DECEMBER&nbsp;31, 2003</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#123'>AGGREGATE OPTION EXERCISES
    IN 2003 AND OPTION VALUES AT DECEMBER&nbsp;31, 2003</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#124'>CERTAIN TRANSACTIONS</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">22</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#125'>COMPENSATION COMMITTEE
    INTERLOCKS AND INSIDER PARTICIPATION</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#126'>COMPENSATION COMMITTEE
    REPORT</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#127'>Compensation Philosophy</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#128'>Base Salaries</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#129'>Compensation of the
    Company&#146;s Chief Executive Officer</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#130'>Bonuses</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#131'>Stock Option Plans</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#132'>401(k) Savings Plan</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#133'>Policy with Respect to
    Section&nbsp;162(m)</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">27</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#134'>COMPLIANCE WITH
    SECTION&nbsp;16(a) OF THE SECURITIES EXCHANGE ACT OF 1934</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">27</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#135'>STOCK PERFORMANCE GRAPH</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">28</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#136'>INDEPENDENT PUBLIC
    ACCOUNTANTS</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">29</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#137'>REPORT OF THE AUDIT
    COMMITTEE OF THE BOARD OF DIRECTORS</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">29</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#138'>STOCKHOLDER PROPOSALS</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#139'>OTHER MATTERS</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">31</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#140'>Appendix&nbsp;A&nbsp;&#151;
    LTC PROPERTIES,&nbsp;INC. AUDIT COMMITTEE CHARTER</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="60%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="93%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#141'>Appendix&nbsp;B&nbsp;&#151;
    LTC PROPERTIES,&nbsp;INC. COMPENSATION COMMITTEE CHARTER</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">B-1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#142'>Appendix&nbsp;C&nbsp;&#151;
    LTC PROPERTIES,&nbsp;INC. NOMINATING&nbsp;&#38; CORPORATE
    GOVERNANCE COMMITTEE CHARTER</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">C-1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#143'>Appendix&nbsp;D&nbsp;&#151;
    THE 2004 STOCK OPTION PLAN LTC PROPERTIES,&nbsp;INC.&nbsp;</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">D-1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#146'>Appendix&nbsp;E&nbsp;&#151;
    THE 2004 RESTRICTED STOCK PLAN LTC
    PROPERTIES,&nbsp;INC.&nbsp;</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">E-1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left">
<!-- /TOC -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="center">
<B>LTC PROPERTIES,&nbsp;INC.</B>

<P align="left">
<A name='101'></A>

<!-- link1 "PROXY STATEMENT" -->

<DIV align="center">
<B><FONT size="2">PROXY STATEMENT</FONT></B>
</DIV>

<DIV align="left">
<A name='102'></A>
</DIV>

<!-- link1 "Solicitation" -->

<P align="left">
<B><FONT size="2">Solicitation</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This proxy statement is furnished to our
stockholders in connection with the solicitation of proxies by
our Board of Directors for use at our annual meeting of
stockholders to be held on Tuesday, May&nbsp;18, 2004, at
10:00&nbsp;a.m. local time, at our principal executive office
and at any and all adjournments of our annual meeting. The
approximate date on which this proxy statement and the form of
proxy solicited on behalf of our Board of Directors will be sent
to our stockholders is April&nbsp;19, 2004.
</FONT>

<DIV align="left">
<A name='103'></A>
</DIV>

<!-- link1 "Voting Rights" -->

<P align="left">
<B><FONT size="2">Voting Rights</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On April&nbsp;14, 2004, the record date for the
determination of stockholders entitled to notice of, and to vote
at, our annual meeting, we had 18,053,314&nbsp;shares of common
stock outstanding. Each share of common stock is entitled to one
vote on all matters properly brought before the annual meeting.
The presence, in person or by proxy, of stockholders entitled to
cast a majority of all the votes entitled to be cast constitutes
a quorum for the transaction of business at the annual meeting.
</FONT>

<DIV align="left">
<A name='104'></A>
</DIV>

<!-- link1 "Voting of Proxies" -->

<P align="left">
<B><FONT size="2">Voting of Proxies</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Unless you give other instructions on your proxy
card, the persons named as proxy holders on the proxy card will
vote in accordance with the recommendations of the Board. The
Board&#146;s recommendations are set forth together with the
description of each item in this proxy statement. In summary,
the Board recommends a vote:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <B><FONT size="2">For </FONT></B><FONT size="2">election of the
    nominated slate of directors;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <B><FONT size="2">For </FONT></B><FONT size="2">approval to
    increase the authorized shares of common stock from 35,000,000
    to 45,000,000&nbsp;shares;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <B><FONT size="2">For </FONT></B><FONT size="2">approval to
    increase the authorized shares of preferred stock from
    15,000,000 to 25,000,000&nbsp;shares;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <B><FONT size="2">For </FONT></B><FONT size="2">approval of The
    2004 Stock Option Plan;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <B><FONT size="2">For </FONT></B><FONT size="2">approval of The
    2004 Restricted Stock Plan;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <B><FONT size="2">For </FONT></B><FONT size="2">the ratification
    of the appointment of Ernst&nbsp;&#38; Young LLP as the
    Company&#146;s independent auditors for fiscal 2004.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our management and Board of Directors know of no
matters to be brought before the annual meeting other than as
set forth herein; no stockholder proposals were received by us
on or before March&nbsp;4, 2004, the deadline for inclusion of
such proposals in this Proxy Statement. Other business may
properly come before the annual meeting, and in that event, the
proxy holders will vote as recommended by the Board or, if no
recommendation is given, in their own discretion.
</FONT>

<DIV align="left">
<A name='105'></A>
</DIV>

<!-- link1 "Revocability of Proxy" -->

<P align="left">
<B><FONT size="2">Revocability of Proxy</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The giving of the enclosed proxy does not
preclude the right to vote in person should the stockholder
giving the proxy so desire. A proxy may be revoked at any time
prior to its exercise by delivering a written statement to our
Corporate Secretary that the proxy is revoked, by delivering to
us a later-dated proxy executed by the person executing the
prior proxy, or by attending the annual meeting and voting in
person.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our principal executive office is located at
22917 Pacific Coast Highway, Suite&nbsp;350, Malibu, California
90265.
</FONT>

<P align="center"><FONT size="2">1
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<A name='106'></A>
</DIV>

<!-- link1 "CORPORATE GOVERNANCE PRINCIPLES AND BOARD MATTERS" -->

<P align="center">
<B><FONT size="2">CORPORATE GOVERNANCE PRINCIPLES AND BOARD
MATTERS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">LTC Properties,&nbsp;Inc. is committed to having
sound corporate governance principles. Our Code of Business
Conduct, Ethics and Corporate Governance and our Corporate
Governance Policies are available on our website
<I>(www.ltcproperties.com)</I>.
</FONT>

<DIV align="left">
<A name='107'></A>
</DIV>

<!-- link1 "Board Independence" -->

<P align="left">
<B><FONT size="2">Board Independence</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Board has determined that each of the current
directors standing for re-election, except the Chairman of the
Board and Chief Executive Officer and the Vice Chairman of the
Board and Chief Financial Officer, is independent within the
meaning of our director independence standards, which reflect
the New&nbsp;York Stock Exchange (or NYSE) director independence
standards, as currently in effect. Furthermore, the Board has
determined that each of the committee members has no material
relationship with LTC (either directly or as a partner,
stockholder or officer of an organization that has a
relationship with LTC) and is &#147;independent&#148; within the
meaning of our independence standards.
</FONT>

<DIV align="left">
<A name='108'></A>
</DIV>

<!-- link1 "Board Structure and Committee Composition" -->

<P align="left">
<B><FONT size="2">Board Structure and Committee
Composition</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of the date of this proxy statement, our Board
has five directors and the following three committees:
(1)&nbsp;Audit; (2)&nbsp;Compensation; and (3)&nbsp;Nominating
and Corporate Governance. The membership during the last fiscal
year and the function of each of the committees are described
below. Each of the committees operates under a written charter
adopted by the Board. All of the committee charters are
available on our website <I>(www.ltcproperties.com)</I>. During
fiscal 2003, the Board held five meetings. We had 100%
attendance of Board members at all Board meetings in 2003 and at
the 2003 Annual Meeting. Our policy is to schedule the Annual
Meeting after consulting each Board member regarding their
availability to help ensure their ability to attend.
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="54%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Nominating and</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Corporate</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Audit</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Compensation</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Governance</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Director</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Committee</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Committee</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Committee</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Andre C. Dimitriadis
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Edmund C. King
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">**</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Wendy L. Simpson
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Timothy J. Triche, MD
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">**</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Sam Yellen
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">**</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="2%"></TD>
    <TD width="98%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">*&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Member, **Chairman
    </FONT></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Audit Committee</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The functions of the Audit Committee are
described on page&nbsp;28 under the heading <I>&#147;Report of
the Audit Committee of the Board of Directors.&#148; </I>The
charter of the Audit Committee is attached to this proxy
statement as Appendix&nbsp;A and is available on our website
<I>(www.ltcproperties.com)</I>. The Committee met five times
during fiscal 2003.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On March&nbsp;9, 2004, the Board selected the
members of the Audit Committee for the coming year, as shown
above. All members of the Audit Committee are independent within
the meaning of the Security and Exchange Commission&#146;s (or
SEC) regulations, the listing standards of the NYSE and our
Corporate Governance Policies. Mr.&nbsp;Yellen, the chair of the
Committee, is qualified as an audit committee financial expert
within the meaning of SEC regulations and the Board has
determined that he has accounting and related financial
management expertise within the meaning of the listing standards
of the NYSE.
</FONT>

<P align="center"><FONT size="2">2
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Compensation Committee</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The functions of the Compensation Committee are
described in the <I>&#147;Compensation Committee
Report&#148;</I> on page 24. The charter of the Compensation
Committee is attached to this proxy statement as Appendix&nbsp;B
and is available on our website <I>(www.ltcproperties.com)</I>.
In fiscal&nbsp;2003, the Compensation Committee met
two&nbsp;times. On March&nbsp;9, 2004, the Board selected the
members of the Compensation Committee for the coming year as
shown above. All of the members of the Compensation Committee
are independent within the meaning of the listing standards of
the NYSE and our Corporate Governance Policies.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Nominating and Corporate Governance
    Committee</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Nominating and Corporate Governance Committee
is responsible for (i)&nbsp;identifying, screening and reviewing
individuals qualified to serve as directors and recommending to
the Board candidates for nomination for election at the annual
meeting of stockholders or to fill Board vacancies;
(ii)&nbsp;overseeing our policies and procedures for the receipt
of stockholder suggestions regarding Board composition and
recommendations of candidates for nomination by the Board;
(iii)&nbsp;developing, recommending to the Board and overseeing
implementation of our Code of Business Conduct, Ethics and
Corporate Governance; and (iv)&nbsp;reviewing on a regular basis
our overall corporate governance policies and procedures and
recommending improvements when necessary. Specifically, the
Committee&#146;s Key Responsibilities are detailed on in
Section&nbsp;IV of Nominating and Corporate Governance Committee
Charter included herein as Appendix&nbsp;C. The Nominating and
Corporate Governance Committee Charter is also available on our
website <I>(www.ltcproperties.com)</I>.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Committee met one time in fiscal 2003 and on
March&nbsp;9, 2004, the Board selected the members of the
Committee for the coming year, as shown above. All of the
members of the Nominating and Corporate Governance Committee are
independent within the meaning of the listing standards of the
NYSE and our Corporate Governance Policies.
</FONT>

<DIV align="left">
<A name='109'></A>
</DIV>

<!-- link1 "Consideration of Director Nominees" -->

<P align="left">
<B><FONT size="2">Consideration of Director Nominees</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Board is responsible for the selection of
candidates for the nomination or appointment of all Board
members. The Nominating and Corporate Governance Committee, in
consultation with the Chief Executive Officer, recommends
candidates for election to our Board and considers
recommendations for Board candidates submitted by stockholders
using the same criteria it applies to recommendations from
Nominating and Corporate Governance Committee members, Directors
and members of management. The Nominating and Corporate
Governance Committee will also consider whether to nominate any
person nominated by a stockholder pursuant to the provisions of
our Bylaws relating to stockholder nominations as described in
<I>&#147;Stockholder Proposals,&#148; </I>below. Stockholders
may submit recommendations in writing addressed to the
Nominating and Corporate Governance Committee, LTC
Properties,&nbsp;Inc., 22917 Pacific Coast Highway,
Suite&nbsp;350, Malibu, California 90265.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Once a prospective nominee has been identified,
by either the Nominating and Corporate Governance Committee or
proposed by the stockholders, the Nominating and Corporate
Governance Committee makes an initial determination as to
whether to conduct a full evaluation of the prospective
candidate. This initial determination would include whatever
information is provided with the recommendation of the
prospective candidate, the Nominating and Corporate Governance
Committee&#146;s own knowledge of the prospective candidate and
the Nominating and Corporate Governance Committee may make
inquires of the person making the recommendation or of others
regarding the qualifications of the prospective candidate. The
preliminary determination is based primarily on the need for
additional Board members to fill vacancies or expand the size of
the Board. The Board&#146;s policy is to encourage selection of
directors who will contribute to our overall corporate goals and
to the discharge of the Board&#146;s responsibility to our
stockholders. As such, the Board would take into consideration
the prospective candidate&#146;s ability to represent the
interests of our stockholders, the prospective candidate&#146;s
standards of integrity, commitment and independence of thought
and judgment. The Nominating and Corporate Governance Committee
may, at the request of the Board from time to time, review the
appropriate skills and characteristics required of Board members
in the context of the
</FONT>

<P align="center"><FONT size="2">3
</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">current makeup of the Board. Board members are
expected to prepare for, attend and participate in meetings of
the Board and of Nominating and Corporate Governance Committees
on which they serve; therefore, a prospective candidate must
have the ability to dedicate sufficient time, energy and
attention to the diligent performance of his or her duties as a
Board member.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Nominating and Corporate Governance Committee
also considers such other relevant factors as it deems
appropriate, including the current composition of the Board, the
balance of management and independent directors, the need for
Audit Committee expertise and the evaluations of other
prospective nominees. The Nominating and Corporate Governance
Committee will conduct interviews with prospective nominees in
person or by telephone. After completing the evaluation and
interviews, the Nominating and Corporate Governance Committee
makes a recommendation to the full Board as to the persons who
should be nominated by the Board, and the Board determines the
nominees after considering the recommendation and report of the
Nominating and Corporate Governance Committee.
</FONT>

<DIV align="left">
<A name='110'></A>
</DIV>

<!-- link1 "Director Compensation" -->

<P align="left">
<B><FONT size="2">Director Compensation</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the first fiscal quarter of 2003, each
non-employee director received a fee of $2,500&nbsp;per quarter
and $500 for attendance in person or telephonically at each
meeting of the Board of Directors or of any committee meeting
held on a day on which the Board of Directors does not meet.
Beginning in the second quarter of fiscal 2003 and currently,
each non-employee director receives a fee of $6,250&nbsp;per
quarter and $750 for attendance in person or telephonically at
each meeting of the Board of Directors or of any committee
meeting held on a day on which the Board of Directors does not
meet. In addition, we reimburse the directors for travel
expenses incurred in connection with their duties as our
directors.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Directors participate in our Amended and Restated
1992 Stock Option Plan (or the 1992 Plan) and our 1998 Equity
Participation Plan (or the 1998 Plan) and would be eligible to
participate in our 2004 Stock Option Plan and our 2004
Restricted Stock Plan should these 2004 plans be approved at
this Annual Meeting. See Proposal&nbsp;4 on page&nbsp;10 and
Proposal&nbsp;5 on page&nbsp;13. Both the 1992 Plan and the 1998
Plan permit the Compensation Committee to grant nonqualified
stock options or restricted shares to directors from
time-to-time. No stock options were granted to non-employee
Board members in 2003. Should either or both of the 2004 plans
be approved by the stockholders at this Annual Meeting, the
Compensation Committee could grant nonqualified stock options or
restricted stock covered under either or both of these Plans to
directors from time-to-time. In previous years, directors were
eligible to participate in our Amended Deferred Compensation
Plan (or Deferred Plan) whereby we made contributions of up to
$10,000 for each non-employee director. This Deferred Plan was
frozen in 2002 and no contributions have been made on behalf of
any employee or Board member since 2001. All previous
contributions made by us to the deferred compensation plan trust
were invested in shares of our common stock and as dividends are
paid on these shares, additional shares of our common stock are
purchased on behalf of the participants in the Deferred Plan.
</FONT>

<DIV align="left">
<A name='111'></A>
</DIV>

<!-- link1 "Communications with the Board" -->

<P align="left">
<B><FONT size="2">Communications with the Board</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Stockholders who wish to contact members of the
Board or its committees may send written correspondence to the
Chairman of the Audit Committee of LTC Properties,&nbsp;Inc. at
P.O. Box&nbsp;1043 Woodland Hills, CA 91365-1043. Stockholders
should provide proof of share ownership with their
correspondence. It is suggested that stockholders also include
contact information.
</FONT>

<P align="center"><FONT size="2">4
</FONT>

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<DIV align="left">
<A name='112'></A>
</DIV>

<!-- link1 "PROPOSALS TO BE VOTED ON" -->

<P align="center">
<B><FONT size="2">PROPOSALS TO BE VOTED ON</FONT></B>

<P align="left">
<A name='113'></A>

<!-- link1 "PROPOSAL 1 ELECTION OF DIRECTORS" -->

<DIV align="center">
<B><FONT size="2">PROPOSAL&nbsp;1</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">ELECTION OF DIRECTORS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At the annual meeting, five directors will be
elected to hold office until the 2005 Annual Meeting of
Stockholders and, in each case, until their respective
successors have been duly elected and qualified.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="40%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="57%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Andre C. Dimitriadis<BR>
    </FONT></B><FONT size="2">Director since 1992<BR>
    Age&nbsp;63
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Andre C. Dimitriadis founded LTC Properties in
    1992 and has been our Chairman and Chief Executive Officer since
    inception. In 2000 Mr. Dimitriadis also assumed the position of
    President. Mr.&nbsp;Dimitriadis is a director of Assisted Living
    Concepts,&nbsp;Inc.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Edmund C. King<BR>
    </FONT></B><FONT size="2">Director since 1992<BR>
    Age&nbsp;69
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Edmund C. King is a general partner of Trouver
    Capital Partners, an investment banking firm located in Los
    Angeles, California and Provo, Utah. Previously, Mr.&nbsp;King
    was Ernst&nbsp;&#38; Young LLP&#146;s Southern California senior
    health care partner from 1973 through September&nbsp;30, 1991.
    Mr. King is Chief Financial Officer and a director of Invisa,
    Inc.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Wendy L. Simpson<BR>
    </FONT></B><FONT size="2">Director since 1995<BR>
    Age&nbsp;55
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Wendy L. Simpson has been Vice Chairman since
    April 2000 and Vice Chairman and Chief Financial Officer since
    July 2000. Prior to that she was a financial advisor to Coram
    Healthcare Corporation, a health care organization, from
    November 1999 through March&nbsp;31, 2000. Ms.&nbsp;Simpson
    joined Coram as Executive Vice President and Chief Financial
    Officer in March 1998 and resigned in November 1999. Prior to
    joining Coram, Ms.&nbsp;Simpson was Executive Vice President,
    Chief Financial Officer, Chief Operating Officer and director of
    Transitional Hospitals Corporation from December 1994 to August
    1997 and Senior Vice President and Chief Financial Officer from
    July 1994 to December 1994. Coram Healthcare commenced
    bankruptcy proceedings in August 2000.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Timothy J. Triche, MD<BR>
    </FONT></B><FONT size="2">Director since 2000<BR>
    Age&nbsp;59
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Timothy J. Triche,&nbsp;M.D. has been the
    Chairman of the Department of Pathology and Laboratory Medicine
    at Childrens Hospital Los Angeles since 1988. He has also been a
    Professor of Pathology and Pediatrics at the University of
    Southern California Keck School of Medicine in Los Angeles,
    California since 1988.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Sam Yellen<BR>
    </FONT></B><FONT size="2">Director since 1992<BR>
    Age&nbsp;73
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Sam Yellen has been self-employed as a consultant
    since his retirement in 1990 from KPMG LLP where he was a
    partner since 1968. Currently, he serves as a member of the
    Board of Directors of Pacific Premier Bank, Beverly Funding and
    Wedbush Morgan Securities.
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Unless authority to vote for the election of
directors has been specifically withheld, the persons named in
the accompanying proxy intend to vote for the election of the
nominees named above to hold office as directors until the 2005
Annual Meeting of Stockholders and until their respective
successors have been duly elected and qualified.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If any nominee becomes unavailable to serve as a
director for any reason (which event is not anticipated), the
shares of common stock represented by the enclosed proxy may
(unless such proxy contains instructions to the contrary) be
voted for such other person or persons as may be determined by
the holders of such proxies.
</FONT>

<P align="center"><FONT size="2">5
</FONT>
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<P align="left">
<B><FONT size="2">Required Vote and Recommendations</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The five nominees receiving the most votes
(providing a quorum is present) will be elected as directors.
For purposes of the vote on Proposal&nbsp;1, abstentions and
broker non-votes will not be counted as votes cast and will have
no effect on the result of the vote, although they will count
towards the presence of a quorum for Proposal&nbsp;1. Properly
executed and unrevoked proxies will be voted FOR the nominees
set forth in Proposal&nbsp;1 unless contrary instructions or an
abstention are indicated in the proxy.
</FONT>

<P align="center">
<B><FONT size="2">THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
ALL</FONT></B>

<DIV align="center">
<B><FONT size="2">THE NOMINEES SET FORTH IN
PROPOSAL&nbsp;1.</FONT></B>
</DIV>

<P align="center"><FONT size="2">6
</FONT>

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<DIV align="left">
<A name='114'></A>
</DIV>

<!-- link1 "PROPOSAL 2 AMENDMENT TO THE CHARTER TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK" -->

<P align="center">
<B><FONT size="2">PROPOSAL&nbsp;2</FONT></B>

<P align="center">
<B><FONT size="2">AMENDMENT TO THE CHARTER TO INCREASE THE
NUMBER OF</FONT></B>

<DIV align="center">
<B><FONT size="2">AUTHORIZED SHARES OF COMMON STOCK</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At the Annual Meeting, stockholders will be asked
to approve or ratify an amendment to the Charter of the Company
proposed by resolution of the Board of Directors which would be
an amendment to increase the number of authorized shares of
common stock, $0.01&nbsp;par value per share from 35,000,000 to
45,000,000&nbsp;shares. As of April&nbsp;1, 2004, the Company
had 18,018,314&nbsp;shares of Common Stock outstanding.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company also has 2,000,000&nbsp;shares of
Series&nbsp;C Cumulative Convertible Preferred Stock
outstanding, which Series&nbsp;C Cumulative Convertible
Preferred Stock is convertible into 2,000,000&nbsp;shares of
common stock and 2,200,000&nbsp;shares of Series&nbsp;E
Cumulative Convertible Preferred Stock outstanding, which
Series&nbsp;E Cumulative Convertible Preferred Stock is
convertible into 4,400,000&nbsp;shares of common stock, at the
exercise prices of $19.25 and $12.50&nbsp;per share,
respectively, as of April&nbsp;1, 2004. The Company has issued
partnership units (or Units) which are convertible, at the
Company&#146;s option, into shares of our common stock. At
April&nbsp;1, 2004, the Company had Units convertible into
152,613, 342,527 and 201,882&nbsp;shares of common stock at
prices of $13.00, $15.00 and $17.00, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At April&nbsp;1, 2004, the Company had 250,000
options granted and outstanding and 53,176 options available but
not granted for the contingent issuance of our common stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As a result, the Company has committed to the
potential issuance of an additional 7,400,198&nbsp;shares of
common stock leaving 9,581,488&nbsp;shares of common stock
available prior to the Company&#146;s request for 500,000
additional shares of common stock to be reserved for
Proposal&nbsp;4 and 100,000 additional shares of common stock
for Proposal&nbsp;5 in this Proxy. Should the Stockholders
approve Proposals&nbsp;4 and 5 and not this Proposal&nbsp;2, the
Company would have 8,981,488&nbsp;shares available for issuance.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Holders of our common stock are entitled to
receive dividends when, as and if authorized by our Board of
Directors and declared by us, out of assets legally available
therefore. Payment and declaration of dividends on the common
stock and purchases of shares thereof by us will be subject to
certain restrictions if we fail to pay dividends on our
Preferred Stock. Upon our liquidation, dissolution or winding
up, holders of common stock will be entitled to share equally
and ratably in any assets available for distribution to them,
after payment or provision for payment of our debts and other
liabilities and the preferential amounts owing with respect to
any of our outstanding Preferred Stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our common stock possesses voting rights for the
election of directors and in respect of other corporate matters,
with each share entitling the holder thereof to one vote.
Holders of common stock do not have cumulative voting rights in
the election of directors, which means that holders of more than
50% of all of the shares of our common stock voting for the
election of directors are able to elect all of the directors if
they choose to do so and, accordingly, the holders of the
remaining shares are unable to elect any directors. Holders of
shares of common stock do not have preemptive rights, which
means they have no right to acquire any additional shares of
common stock that may be issued by us at a subsequent date. Our
common stock will, when issued, be fully paid and nonassessable
and will not be subject to preemptive or similar rights.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under Maryland law and our Charter, a
distribution (whether by dividend, redemption or other
acquisition of shares) to holders of shares of our common stock
may be made only if, after giving effect to the distribution, we
are able to pay our indebtedness as it becomes due in the usual
course of business and our total assets are greater than our
total liabilities plus the amount necessary to satisfy the
preferential rights upon dissolution of stockholders whose
preferential rights on dissolution are superior to the holders
of our common stock and we can pay our debts as they become due.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The authorized and unissued shares of common
stock and the shares of common stock to be authorized pursuant
to this proposal may be issued from time to time as the Board of
Directors deems appropriate. The Board of Directors may
authorize the issuance of common stock, whether now or hereafter
authorized, or securities or rights convertible into shares of
common stock for such consideration as the Board of Directors
</FONT>

<P align="center"><FONT size="2">7
</FONT>

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<DIV align="left">
<FONT size="2">may deem advisable (or without consideration in
the case of a share split or dividend), subject to such
restrictions or limitations, if any, as may be set forth in our
Bylaws.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company believes the ability to issue common
stock provides it with a valuable financing option, including
direct issuance, as part of a convertible preferred offering,
acquisition consideration or a stock dividend among other
possible financing structures. The Company filed an S-3
Registration Statement with the Securities and Exchange
Commission on March&nbsp;23, 2004, and anticipates that it may
potentially issue additional shares of common stock for capital
raising purposes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At this time, the Company believes it has
sufficient shares authorized to complete a potential new
financing that would include the issuance or contingent issuance
of common stock but should such transaction be completed, there
could effectively be insufficient authorized and unissued shares
of common stock available for the Company to use should the
Board of Directors determine that such issuance would appear to
be the appropriate financing transaction at the time. The Board
of Directors believes that it is important to have the
flexibility to act promptly in the best interests of the
Company&#146;s stockholders.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If this proposed amendment is approved, all or
any of the authorized shares of common stock may be issued
without further action by the stockholders and without first
offering such shares to the stockholders for subscription. The
issuance of shares otherwise than on a pro-rata basis to all
current stockholders would reduce the current stockholders&#146;
proportionate interests.
</FONT>

<P align="left">
<B><FONT size="2">Required Vote and Recommendation</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The affirmative vote of two-thirds (&nbsp;2/3rds)
of the outstanding shares of common stock of the Company is
required for approval of the proposed amendment. For purposes of
the vote on Proposal&nbsp;2, abstentions and broker non-votes
will have the effect of a vote AGAINST Proposal&nbsp;2. If the
proposed amendment is adopted by the stockholders, it will
become effective upon filing and recording of articles of
amendment as required by the general laws of the State of
Maryland.
</FONT>

<P align="center">
<B><FONT size="2">THE BOARD OF DIRECTORS OF THE COMPANY
UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE
PROPOSED AMENDMENT.</FONT></B>

<P align="center"><FONT size="2">8
</FONT>
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<DIV align="left">
<A name='115'></A>
</DIV>

<!-- link1 "PROPOSAL 3 AMENDMENT TO THE CHARTER TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF PREFERRED STOCK" -->

<P align="center">
<B><FONT size="2">PROPOSAL&nbsp;3</FONT></B>

<P align="center">
<B><FONT size="2">AMENDMENT TO THE CHARTER TO INCREASE THE
NUMBER OF</FONT></B>

<DIV align="center">
<B><FONT size="2">AUTHORIZED SHARES OF PREFERRED STOCK</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At the Annual Meeting, stockholders will be asked
to approve or ratify an amendment to the Company&#146;s Amended
and Restated Articles of Incorporation proposed by resolution of
the Board of Directors which would be an amendment to increase
the number of authorized shares of preferred stock,
$0.01&nbsp;par value per share (or Preferred Stock) from
15,000,000 to 25,000,000&nbsp;shares.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On March&nbsp;19, 2004, the Company announced
that it had changed the expiration date of its Stockholder
Rights Plan (the Rights Plan) from May&nbsp;24, 2010 to
April&nbsp;1, 2004. As a result, on April&nbsp;1, 2004, the
Company filed Articles Supplementary to its Articles of
Amendment and restatement to reclassify and re-designate
40,000&nbsp;shares of its Series&nbsp;D Junior Participating
Preferred Stock (Series&nbsp;D Preferred Stock) to authorized
but unissued Preferred Stock. The Series&nbsp;D Preferred Stock
had been reserved for issuance under the Rights Plan.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On April&nbsp;1, 2004, the Company filed Articles
Supplementary to its Articles of Amendment and Restatement to
reclassify and re-designate 3,080,000&nbsp;shares and
2,000,000&nbsp;shares of its redeemed Series&nbsp;A Preferred
Stock and Series&nbsp;B Preferred Stock, respectively, as
authorized but unissued Preferred Stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Therefore, as of April&nbsp;1, 2004, the Company
had outstanding 2,000,000&nbsp;shares of Series&nbsp;C
Cumulative Convertible Preferred Stock, 2,200,000&nbsp;shares of
Series&nbsp;E Cumulative Convertible Preferred Stock (issued in
September 2003) and 4,000,000&nbsp;shares of Series&nbsp;F
Cumulative Preferred Stock (issued in February 2004) leaving
6,800,000&nbsp;shares of Preferred Stock available to issue.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The authorized and unissued shares of Preferred
Stock and the shares of Preferred Stock to be authorized
pursuant to this proposal, may be issued from time to time in
one or more series, and the Board of Directors is authorized to
fix the dividend rights, dividend rates, any conversion or
exchange rights, any voting rights, rights and terms of
redemption (including sinking fund provisions), the redemption
price or prices, the liquidation preferences and any rights,
preferences, privileges and restrictions of any new series of
Preferred Stock and the number of shares constituting such
series and the designation thereof. The authority of the Board
of Directors to determine the precise terms of each series of
Preferred Stock would give it the flexibility to tailor each
series to meet the particular requirements of the persons to
whom the shares of such series are to be issued. Funds available
for dividends on the common stock would be reduced by the amount
of any dividends paid or accrued on the Preferred Stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During the third quarter of fiscal 2003 and the
first quarter of 2004 the Company issued its Series&nbsp;E
Cumulative Convertible Preferred Stock and its Series&nbsp;F
Cumulative Preferred Stock, respectively. The Company views the
issuance of preferred stock as a form of permanent financing and
as a REIT, the Company is required to distribute a certain
portion of its income as dividends to its stockholders which
includes dividends paid to preferred stockholders. The Company
views these commitments to pay preferred dividends as a proxy
for interest on a non-maturing financing.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company filed an S-3 Registration Statement
with the Securities and Exchange Commission on March&nbsp;23,
2004, and anticipates that it may potentially issue additional
shares of Preferred Stock for capital raising purposes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At this time, the Company believes it has
sufficient shares authorized to complete a potential new
issuance of Preferred Stock but should such transaction be
completed, there would effectively not be sufficient additional
authorized and unissued shares of Preferred Stock available for
the Company to use should the Board of Directors determine that
such issuance would appear to be the appropriate financing
transaction at the time. The Board of Directors believes that it
is important to have flexibility to act promptly in the best
interests of the Company&#146;s stockholders.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The availability for issuance of additional
shares of Preferred Stock could enable the Board of Directors to
render more difficult or discourage an attempt to obtain control
of the Company. For example, by increasing the number of
outstanding shares of Preferred Stock, the interest of the party
attempting to gain control of the
</FONT>

<P align="center"><FONT size="2">9
</FONT>

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<DIV align="left">
<FONT size="2">Company could be diluted. Also, the additional
shares of Preferred Stock could be used to render more difficult
a merger or similar transaction. If the Board so authorizes, the
holders of any series of Preferred Stock may be entitled to vote
separately as a class in connection with the approval of certain
extraordinary corporate transactions in circumstances where the
general laws of the State of Maryland would not require separate
voting by class.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If the proposed amendment is approved, all or any
of the authorized shares of Preferred Stock may be issued
without further action by the stockholders and without first
offering such shares to the stockholders for subscription. The
issuance of shares otherwise than on a pro-rata basis to all
current stockholders would reduce current stockholders&#146;
proportionate interests.
</FONT>

<P align="left">
<B><FONT size="2">Required Vote and Recommendation</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The affirmative vote of two thirds (&nbsp;2/3rds)
of the outstanding shares of common stock of the Company is
required for approval of the proposed amendment. For purposes of
the vote on Proposal&nbsp;3, abstentions and broker non-votes
will have the effect of a vote AGAINST Proposal&nbsp;3. If the
proposed amendment is adopted by the stockholders, it will
become effective upon filing and recording of articles of
amendment as required by the general laws of the State of
Maryland.
</FONT>

<P align="center">
<B><FONT size="2">THE BOARD OF DIRECTORS OF THE COMPANY
UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE
PROPOSED AMENDMENT.</FONT></B>

<P align="center"><FONT size="2">10
</FONT>

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<DIV align="left">
<A name='116'></A>
</DIV>

<!-- link1 "PROPOSAL 4 APPROVAL OF LTC PROPERTIES, INC. 2004 STOCK OPTION PLAN" -->

<P align="center">
<B><FONT size="2">PROPOSAL&nbsp;4</FONT></B>

<P align="center">
<B><FONT size="2">APPROVAL OF LTC PROPERTIES,&nbsp;INC. 2004
STOCK OPTION PLAN</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On April&nbsp;1, 2004, the Board of Directors
approved, subject to shareholder approval, the 2004 Stock Option
Plan of LTC Properties,&nbsp;Inc. (the &#147;2004 Stock Option
Plan&#148;), under which 500,000&nbsp;shares of the
Company&#146;s common stock (approximately 2.7% of the
outstanding shares as of April&nbsp;1, 2004) will be reserved
for issuance. The 2004 Stock Option Plan will not become
effective until it is approved by the Company&#146;s
stockholders. The Board is asking the Company&#146;s
stockholders to approve the 2004 Stock Option Plan so that the
Company may issue stock options thereunder, thereby providing
additional incentives to those persons responsible for the
success of the Company and allowing the Company to continue its
policy of allowing those persons to share in the appreciation of
the value of the Company&#146;s stock. Even if the 2004 Stock
Option Plan is not approved, the Company intends to continue to
grant stock-based awards with respect to all shares that remain
available under The 1998 Equity Participation Plan of LTC
Properties,&nbsp;Inc.
</FONT>

<DIV align="left">
<A name='144'></A>
</DIV>

<!-- link1 "Description of the 2004 Stock Option Plan" -->

<P align="left">
<B><FONT size="2">Description of the 2004 Stock Option
Plan</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following is a description of the purpose and
certain of the provisions of the 2004 Stock Option Plan. The
summary is qualified in its entirety by reference to the
complete text of the 2004 Stock Option Plan, which is attached
hereto as Appendix&nbsp;D.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">General.</FONT></I><FONT size="2"> The 2004
Stock Option Plan permits the Company issue stock options to
directors, employees and consultants. The 2004 Stock Option Plan
does not permit the repricing of options or the granting of
discounted options.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Types of Awards.</FONT></I><FONT size="2"> The
2004 Stock Option Plan provides for the issuance of incentive
stock options to employees of the Company and nonqualified stock
options to non-employee directors, employees and consultants of
the Company.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Administration and Terms of
Options.</FONT></I><FONT size="2"> Options granted under the
2004 Stock Option Plan to non-employee directors will be granted
and administered by the Board. Options granted under the 2004
Stock Option Plan to anyone other than a non-employee director
will be granted and administered by the Compensation Committee
of the Board of Directors (the &#147;Compensation
Committee&#148;). The Compensation Committee (or the Board, in
the case of options granted to non-employee directors) has the
authority to determine the timing of options, to select the
directors, employees and consultants to receive options, and to
determine the terms of each options, including, among other
things, any modifications of options, applicable restrictions,
termination and vesting conditions. In no event, however, may
options be repriced or provide for an exercise price that is
less than fair market value of the common stock on the date of
grant. An incentive stock option may not be exercised more than
ten years after it is granted.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Compensation Committee is comprised solely of
non-employee directors of the Board.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Eligibility.</FONT></I><FONT size="2"> Options
under the 2004 Stock Option Plan may be granted to all of the
Company&#146;s directors, employees and consultants. Two types
of options may be granted under the 2004 Stock Option Plan.
Incentive stock options only may be granted to employees of the
Company. Non-qualified stock options may be granted to
directors, employees and consultants and non-employee directors
of the Company.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Number of Shares Available for
Issuance.</FONT></I><FONT size="2"> The aggregate number of such
shares which may be issued upon exercise of options under the
2004 Stock Option Plan shall not exceed Five Hundred Thousand
(500,000). If an option is cancelled, terminated or expires
before it is exercised, the shares of common stock underlying
that option will be available for future grants under the 2004
Stock Option Plan. No individual may be granted in any calendar
year options to purchase more than 100,000&nbsp;shares of common
stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Initial Grant of Options to Board
Members.</FONT></I><FONT size="2"> When an individual is first
elected to the Board as a non-employee director, he or she will
be granted options to purchase 15,000&nbsp;shares of common
stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Amendment and
Termination.</FONT></I><FONT size="2"> The 2004 Stock Option
Plan will terminate ten years after the date on which it is
initially approved by the stockholders, unless sooner terminated
by the Board or the Compensation
</FONT>

<P align="center"><FONT size="2">11
</FONT>
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<DIV align="left">
<FONT size="2">Committee. The Board or the Compensation
Committee may amend the 2004 Stock Option Plan (and the options
issued thereunder), but may not, without prior approval of the
stockholders:
</FONT>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">increase the maximum number of shares of common
    stock that may be issued under the 2004 Stock Option Plan or the
    number of shares of common stock that may be issued to any one
    optionee;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">extend the term of the 2004 Stock Option Plan or
    of options granted under the 2004 Stock Option Plan;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">grant options with an exercise price below the
    fair market value of the common stock on the date of
    grant;&nbsp;or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">take any other action that requires shareholder
    approval to comply with any tax, regulatory or stock exchange
    requirements.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Adjustments for Changes in
Capitalization.</FONT></I><FONT size="2"> If the Committee (or
the Board, in the case of options granted to non-employee
directors) determines that a dividend, recapitalization, stock
split, merger, consolidation, or other similar corporate
transaction or event, equitably requires an adjustment, then the
Committee (or the Board, as the case may be) may adjust any or
all of:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the number and kind of shares of common stock (or
    other securities or property) with respect to which options may
    be granted or awarded;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the number and kind of shares of common stock (or
    other securities or property) subject to outstanding
    options;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the grant or exercise price with respect to any
    outstanding option.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Change in Control.</FONT></I><FONT size="2">
Unless otherwise specified in an option agreement, options shall
vest immediately upon a &#147;Change in Control.&#148;
&#147;Change in Control&#148; shall mean a change in ownership
or control of the Company effected through any of the following
transactions:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">any person or related group of persons (other
    than the Company or a person that directly or indirectly
    controls, is controlled by, or is under common control with, the
    Company) is or becomes the beneficial owner (within the meaning
    of Rule&nbsp;13d-3 under the Exchange Act), directly or
    indirectly, of securities of the Company representing 30% or
    more of the combined voting power of the Company&#146;s then
    outstanding securities;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the stockholders of the Company approve a merger
    or consolidation of the Company with any other entity, other
    than a merger or consolidation which would result in the voting
    securities of the Company outstanding immediately prior thereto
    continuing to represent more than 66&nbsp;2/3% of the combined
    voting power of the voting securities of the Company or such
    surviving entity outstanding immediately after such merger or
    consolidation;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the stockholders of the Company approve a plan of
    complete liquidation of the Company or an agreement for the sale
    of disposition by the Company of all or substantially all of the
    Company&#146;s assets;&nbsp;or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">a majority of the members of the Board cease to
    be, as of any date of determination, members of the Board who
    were members of the Board as of the date the 2004 Stock Option
    Plan was approved by the stockholders of the Company or was
    nominated for election or elected to the Board with the approval
    of a majority of the members of the Board at the time of such
    nomination or election.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">U.S.&nbsp;Tax
Consequences.</FONT></I><FONT size="2"> The following brief
description, which is based on existing law, sets forth certain
of the federal income tax consequences of the grant of options
under the 2004 Stock Option Plan. This description may differ
from the actual tax consequences incurred by any individual
optionee. Moreover, existing law is subject to change by new
legislation, by new regulations, by administrative
pronouncements and by court decisions or by new or clarified
interpretations or applications of existing laws, regulations,
administrative pronouncements and court decisions. Any such
change may affect the federal income tax consequences described
below.
</FONT>

<P align="center"><FONT size="2">12
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">There is no tax incurred by the optionee (or tax
deduction for the Company) when a non-qualified stock option is
granted. At the time of exercise of a nonqualified stock option,
the difference between the exercise price and the fair market
value of common stock on the date of exercise will constitute
compensation income to the optionee. Subject to applicable
provision of the Code, the Company will be allowed a tax
deduction equal to the amount of ordinary income recognized by
the optionee.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The optionee&#146;s basis in the shares acquired
pursuant to a non-qualified stock option is equal to the sum of
the option price plus the amount includible in his or her income
as compensation upon exercise. Any gain (or loss) upon
subsequent disposition of the shares will be a long-term or
short-term gain (or loss), depending upon the holding period of
the shares.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If a non-qualified option is exercised by
tendering previously owned shares of the Company&#146;s common
stock in payment of the option price, then, instead of the
treatment described above, the following will apply: a number of
new shares equal to the number of previously owned shares
tendered will be considered to have been received in a tax-free
exchange; the optionee&#146;s basis and holding period for such
number of new shares will be equal to the basis and holding
period of the previously owned shares exchanged; the optionee
will have compensation income equal to the fair market value on
the date of exercise of the number of new shares received in
excess of such number of exchanged shares; the optionee&#146;s
basis in such excess shares will be equal to the amount of such
compensation income; and the holding period in such shares will
begin on the date of exercise.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If an optionee exercises an option by delivering
previously held shares in payment of the exercise price, the
optionee does not recognize gain or loss on the exchange of the
delivered shares, even if their then fair market value is
different from the optionee&#146;s tax basis in the shares.
However, the exercise of the option is taxed, and the Company
generally is entitled to a deduction, in the same way that it
would be if the optionee had paid the exercise price in cash.
Provided the optionee receives a separate identifiable stock
certificate therefore, his tax basis in the number of shares
received that is equal to the number of shares surrendered on
exercise will be equal to his tax basis in the shares
surrendered. His holding period for such number of shares will
include his holding period for the shares surrendered. The
optionee&#146;s tax basis and holding period for the additional
shares received upon exercise of an option in whole or in part
with shares will be the same as it would be if the optionee had
exercised solely for cash.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the case of incentive stock options, no tax is
incurred by the optionee (or tax deduction for the Company) when
the options are granted or when they are exercised. However, the
excess of the fair market value on the date of exercise over the
exercise price is an item of adjustment in determining the
alternative minimum taxable income of the optionee. If the
optionee holds the shares received on the exercise of an
incentive stock option for at least one year after the date of
exercise and for at least two years after the date of grant,
then the gain realized on disposition of the shares is taxed to
the optionee as long-term capital gain.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If the shares are disposed of during this period,
however, then the optionee will include in income, as
compensation income for the year of disposition, an amount equal
to the excess, if any, of the fair market value of the shares
over the option price (or, if less, the excess of the amount
realized upon disposition over the option price). The excess, if
any, of the sale price over the fair market value on the date of
exercise will be a short-term capital gain. In such case, the
Company will be entitled to a deduction, in the year of such
disposition, for the amount includible in the optionee&#146;s
income as compensation. The optionee&#146;s basis in the shares
acquired upon exercise of an incentive stock option is equal to
the option price paid, plus any amount includible in his or her
income as a result of a disqualifying disposition.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company shall have the right to reduce the
number of shares of common stock deliverable pursuant to the
2004 Stock Option Plan by an amount which would have a fair
market value equal to the amount of all federal, state, or local
taxes required to be withheld, or to deduct the amount of such
taxes from any cash payment to be made to the participant
pursuant to the 2004 Stock Option Plan or otherwise.
</FONT>

<P align="center"><FONT size="2">13
</FONT>

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<P align="left">
<B><FONT size="2">Required Vote and Recommendation</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Stockholder approval of the 2004 Stock Option
Plan is required (i)&nbsp;under the rules of the New&nbsp;York
Stock Exchange for listing the shares of common stock reserved
under the 2004 Stock Option Plan and (ii)&nbsp;under the
Internal Revenue Code of 1986, as amended, in order for options
granted under the 2004 Stock Option Plan to be considered
&#147;incentive stock options.&#148; The affirmative vote of a
majority of all the votes cast at a meeting at which a quorum is
present is required to approve the 2004 Stock Option Plan as set
forth in this Proposal&nbsp;4. For purposes of the vote on
Proposal&nbsp;4, abstentions and broker non-votes will not be
counted as votes cast and thus will have no effect on the result
of the vote although they will count towards the presence of a
quorum for Proposal&nbsp;4. Properly executed, unrevoked proxies
will be voted FOR Proposal&nbsp;4 unless a vote against
Proposal&nbsp;4 or abstention is specifically indicated in the
proxy.
</FONT>

<P align="center">
<B><FONT size="2">THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
APPROVAL OF</FONT></B>

<DIV align="center">
<B><FONT size="2">THE COMPANY&#146;S 2004 STOCK OPTION
PLAN</FONT></B>
</DIV>

<P align="center"><FONT size="2">14
</FONT>

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<DIV align="left">
<A name='117'></A>
</DIV>

<!-- link1 "PROPOSAL 5 APPROVAL OF THE LTC PROPERTIES, INC. 2004 RESTRICTED STOCK PLAN" -->

<P align="center">
<B><FONT size="2">PROPOSAL&nbsp;5</FONT></B>

<P align="center">
<B><FONT size="2">APPROVAL OF THE LTC PROPERTIES,&nbsp;INC. 2004
RESTRICTED STOCK PLAN</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On April&nbsp;1, 2004, the Board of Directors
approved, subject to shareholder approval, the 2004 Restricted
Stock Plan of LTC Properties,&nbsp;Inc. (the &#147;2004
Restricted Stock Plan&#148;), under which 100,000&nbsp;shares of
the Company&#146;s common stock (approximately .6% of the
outstanding shares as of April&nbsp;1, 2004) will be reserved
for issuance. The 2004 Restricted Stock Plan will not become
effective until it is approved by the Company&#146;s
stockholders. The Board is asking the Company&#146;s
stockholders to approve the 2004 Restricted Stock Plan so that
the Company may issue stock options thereunder, thereby
providing additional incentives to those persons responsible for
the success of the Company and allowing the Company to continue
its policy of allowing those persons to share in the
appreciation of the value of the Company&#146;s stock. Even if
the 2004 Stock Option Plan is not approved, the Company intends
to continue to grant stock-based awards with respect to all
shares that remain available under The 1998 Equity Participation
Plan of LTC Properties,&nbsp;Inc.
</FONT>

<DIV align="left">
<A name='145'></A>
</DIV>

<!-- link1 "Description of the 2004 Stock Restricted Plan" -->

<P align="left">
<B><FONT size="2">Description of the 2004 Stock Restricted
Plan</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following is a description of the purpose and
certain of the provisions of the 2004 Restricted Stock Plan. The
summary is qualified in its entirety by reference to the
complete text of the 2004 Restricted Stock Plan, which is
attached hereto as Appendix&nbsp;E.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">General.</FONT></I><FONT size="2"> The 2004
Restricted Stock Plan permits the Company to issue common stock
to directors, employees and consultants.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Administration and Terms of Restricted
Stock.</FONT></I><FONT size="2"> Stock granted under the 2004
Restricted Stock Plan to non-employee directors will be granted
and administered by the Board. Stock granted under the 2004
Restricted Stock Plan to anyone other than a non-employee
director will be granted and administered by the Compensation
Committee of the Board of Directors (the &#147;Compensation
Committee&#148;). The Compensation Committee (or the Board, in
the case of stock granted to non-employee directors) has the
authority to determine the timing of grants of stock, to select
the directors, employees and consultants to receive stock, and
to determine the terms of each stock grant, including, among
other things, any applicable restrictions, modifications of
restrictions, termination and vesting conditions.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Compensation Committee is comprised solely of
non-employee directors of the Board.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Eligibility.</FONT></I><FONT size="2"> Stock
granted under the 2004 Restricted Stock Plan may be granted to
all of the Company&#146;s directors, employees and consultants.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Number of Shares Available for
Issuance.</FONT></I><FONT size="2"> The aggregate number of
shares of stock which may be issued under the 2004 Restricted
Stock Plan shall not exceed One Hundred Thousand (100,000). If
any stock granted under the 2004 Restricted Stock Plan is
forfeited, the shares will be available for future grants under
the 2004 Restricted Stock Plan. No individual may be granted in
any calendar year more than 20,000&nbsp;shares of stock under
the 2004 Restricted Stock Plan.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Amendment and
Termination.</FONT></I><FONT size="2"> The 2004 Restricted Stock
Plan will terminate ten years after the date on which it is
initially approved by the stockholders, unless sooner terminated
by the Board or the Compensation Committee. The Board or the
Compensation Committee may amend the 2004 Restricted Stock Plan
(and the terms of the stock issued thereunder), but may not,
without prior approval of the stockholders:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">increase the maximum number of shares of common
    stock that may be issued under the 2004 Restricted Stock Plan or
    the number of shares of common stock that may be issued to any
    one individual;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">extend the term of the 2004 Restricted Stock
    Plan;&nbsp;or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">take any other action that requires shareholder
    approval to comply with any tax, regulatory or stock exchange
    requirements.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">15
</FONT>
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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Adjustments for Changes in
Capitalization.</FONT></I><FONT size="2"> If the Committee (or
the Board, in the case of stock granted to non-employee
directors) determines that a dividend, recapitalization, stock
split, merger, consolidation, or other similar corporate
transaction or event, equitably requires an adjustment, then the
Committee (or the Board, as the case may be) may adjust any or
all of:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the number and kind of shares of common stock (or
    other securities or property) that may be granted or
    awarded;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the number and kind of shares of common stock (or
    other securities or property) subject to outstanding.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Change in Control.</FONT></I><FONT size="2">
Unless otherwise specified in a restricted stock agreement,
stock issued under the 2004 Restricted Stock Plan shall vest
immediately upon a &#147;Change in Control.&#148; &#147;Change
in Control&#148; shall mean a change in ownership or control of
the Company effected through any of the following transactions:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">any person or related group of persons (other
    than the Company or a person that directly or indirectly
    controls, is controlled by, or is under common control with, the
    Company) is or becomes the beneficial owner (within the meaning
    of Rule&nbsp;13d-3 under the Exchange Act), directly or
    indirectly, of securities of the Company representing 30% or
    more of the combined voting power of the Company&#146;s then
    outstanding securities;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the stockholders of the Company approve a merger
    or consolidation of the Company with any other entity, other
    than a merger or consolidation which would result in the voting
    securities of the Company outstanding immediately prior thereto
    continuing to represent more than 66&nbsp;2/3% of the combined
    voting power of the voting securities of the Company or such
    surviving entity outstanding immediately after such merger or
    consolidation;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the stockholders of the Company approve a plan of
    complete liquidation of the Company or an agreement for the sale
    of disposition by the Company of all or substantially all of the
    Company&#146;s assets;&nbsp;or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">a majority of the members of the Board cease to
    be, as of any date of determination, members of the Board who
    were members of the Board as of the date the 2004 Stock Option
    Plan was approved by the stockholders of the Company or was
    nominated for election or elected to the Board with the approval
    of a majority of the members of the Board at the time of such
    nomination or election.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">U.S.&nbsp;Tax
Consequences.</FONT></I><FONT size="2"> No income will be
recognized by the recipient at the time of grant of stock under
the 2004 Restricted Stock Plan if such stock is subject to a
substantial risk of forfeiture. Generally, at the time the
substantial risk of forfeiture terminates with respect to the
stock, the then fair market value of the stock will constitute
ordinary income to the recipient. Subject to the applicable
provisions of the Code, a deduction for federal income tax
purposes will be allowable to the Company in an amount equal to
the compensation recognized by the employee.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company shall have the right to reduce the
number of shares of common stock deliverable pursuant to the
2004 Restricted Stock Plan by an amount which would have a fair
market value equal to the amount of all federal, state, or local
taxes required to be withheld.
</FONT>

<P align="left">
<B><FONT size="2">Required Vote and Recommendation</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Stockholder approval of the 2004 Restricted Stock
Plan is required under the rules of the New&nbsp;York Stock
Exchange for listing the shares of common stock reserved under
the 2004 Restricted Stock Plan. The affirmative vote of a
majority of all the votes cast at a meeting at which a quorum is
present is required to approve the 2004 Restricted Stock Plan as
set forth in this Proposal&nbsp;5. For purposes of the vote on
Proposal&nbsp;5, abstentions and broker non-votes will not be
counted as votes cast and thus will have no effect on the result
of the vote although they will count towards the presence of a
quorum for Proposal&nbsp;5. Properly executed, unrevoked proxies
will be voted FOR Proposal&nbsp;5 unless a vote against
Proposal&nbsp;5 or abstention is specifically indicated in the
proxy.
</FONT>

<P align="center"><FONT size="2">16
</FONT>

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<P align="center">
<B><FONT size="2">THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
APPROVAL OF</FONT></B>

<DIV align="center">
<B><FONT size="2">THE COMPANY&#146;S 2004 RESTRICTED STOCK
PLAN</FONT></B>
</DIV>

<DIV align="left">
<A name='118'></A>
</DIV>

<!-- link1 "PROPOSAL 6 RATIFICATION OF INDEPENDENT AUDITORS" -->

<P align="center">
<B><FONT size="2">PROPOSAL&nbsp;6</FONT></B>

<P align="center">
<B><FONT size="2">RATIFICATION OF INDEPENDENT AUDITORS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Audit Committee of the Board has appointed
Ernst&nbsp;&#38; Young LLP as independent auditors to audit LTC
Properties,&nbsp;Inc.&#146;s consolidated financial statements
for the year ended December&nbsp;31, 2004. During 2003,
Ernst&nbsp;&#38; Young served as the Company&#146;s independent
auditors and also provided certain tax and other audit related
services. See <I>&#147;Independent Public Accountants&#148;</I>
on page&nbsp;27. A representative of Ernst&nbsp;&#38; Young is
expected to attend the meeting and will have an opportunity to
make a statement if he desires to do so, and such representative
is expected to be available to respond to appropriate questions.
</FONT>

<P align="left">
<B><FONT size="2">Required Vote and Recommendation</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Ratification of the appointment of
Ernst&nbsp;&#38; Young LLP as the Company&#146;s independent
auditors for the year ending December&nbsp;31, 2004, requires
the affirmative vote of a majority of all the votes cast at a
meeting at which a quorum is present. For purposes of the vote
on Proposal&nbsp;6, abstentions and broker non-votes will not be
counted as votes cast and this will have no effect on the result
of the vote although they will count towards the presence of a
quorum for Proposal&nbsp;6. Properly executed, unrevoked proxies
will be voted FOR Proposal&nbsp;6 unless a vote against
Proposal&nbsp;6 or abstention is specifically indicated in the
proxy.
</FONT>

<P align="center">
<B><FONT size="2">THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
THE RATIFICATION OF THE</FONT></B>

<DIV align="center">
<B><FONT size="2">APPOINTMENT OF ERNST&nbsp;&#38; YOUNG LLP AS
LTC PROPERTIES,&nbsp;INC.&#146;S</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">INDEPENDENT AUDITORS FOR THE YEAR ENDING
DECEMBER&nbsp;31, 2004</FONT></B>
</DIV>

<P align="center"><FONT size="2">17
</FONT>
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<DIV align="left">
<A name='119'></A>
</DIV>

<!-- link1 "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS" -->

<P align="center">
<B><FONT size="2">SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This table shows information as of April&nbsp;1,
2004 with respect to the beneficial ownership of our common
stock by (1)&nbsp;each person who is known by us to own
beneficially more than 5% of our common shares based on copies
received by us of the most recent Schedule&nbsp;13D or 13G
filings with the Securities and Exchange Commission pursuant to
rules and regulations promulgated under the Securities Exchange
Act of 1934, as amended (2)&nbsp;each director, (3)&nbsp;each
executive officer and (4)&nbsp;the directors and executive
officers as a group.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="46%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Amount and</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Percent of</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Nature of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Outstanding</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Beneficial</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Shares in</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Name and Address of Beneficial Owner</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Title of Class</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Ownership(1)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Class(2)</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Idanta Partners LTD.&nbsp;</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Common Stock</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,552,400</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(3)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">9255 Towne Centre Drive
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Suite&nbsp;925
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">San&nbsp;Diego, CA 92121
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">National Health
    Investors,&nbsp;Inc.&nbsp;</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Common Stock</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,774,800</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(4)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13.3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">100 Vine Street
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Suite&nbsp;1200
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Murfreesboro, TN 37130
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Andre C. Dimitriadis</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Common Stock</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,297,476</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(5)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Christopher T. Ishikawa</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Common Stock</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">251,139</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(5)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Wendy L. Simpson</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Common Stock</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">226,362</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(5)(6)(7)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Alex J. Chavez</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Common Stock</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">64,206</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(5)(6)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Edmund C. King</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Common Stock</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">61,812</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(5)(6)(8)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Timothy J. Triche,&nbsp;M.D.&nbsp;</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Common Stock</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">28,424</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(5)(6)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Sam Yellen</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Common Stock</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">40,753</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(5)(6)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">All directors and executive officers as a group
    (7&nbsp;persons)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Common Stock</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,970,172</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(5)(9)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10.8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="4%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">*</FONT></TD>
    <TD align="left">
    <FONT size="2">Less than 1%
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Except as otherwise noted below, all shares are
    owned beneficially by the individual or entity listed with sole
    voting and/or investment power.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">For purposes of computing the percentages, the
    number of shares outstanding includes shares purchasable by such
    individual or entity within 60&nbsp;days after April&nbsp;1,
    2004, upon exercise of vested options.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(3)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Based upon information contained in a
    Schedule&nbsp;13G provided to us,&nbsp;Idanta Partners LTD.,
    (IPL)&nbsp;owned beneficially 1,293,500&nbsp;shares and had sole
    voting and sole dispositive power over these shares. On
    March&nbsp;26, 2004, David J. Dunn, Trustee of IPL filed a
    Form&nbsp;4 with the Securities and Exchange Commission
    reporting that IPL had sold 50,000 of these shares. Per the
    Schedule&nbsp;13G, the Dunn Family Trust (DFT)&nbsp;directly
    owned 1,122,300&nbsp;shares with the sole power to vote or
    direct voting and the sole power to dispose of or direct
    disposition of these shares. The Trustee&#146;s Form&nbsp;4
    filed on March&nbsp;26, 2004, reported that DFT had sold 50,000
    of these shares. Because of DFT&#146;s position as general
    partner of IPL, DFT is deemed to be beneficial owner of the
    combined IPL and DFT owned shares. The Trustee of DFT owns
    50,000&nbsp;shares jointly with his spouse. Additionally, the
    Trustee of DFT is also a limited partner in the Steven Dunn
    Family Partners Limited Partnership, which owns
    68,600&nbsp;shares and is a trustee of and participant in the
    Idanta Partners Ltd. Retirement Plan, which owns
    118,000&nbsp;shares. The Trustee may be deemed to share the
    power to vote or direct the vote and to dispose or to direct the
    disposition of these 50,000&nbsp;shares, 68,600&nbsp;shares and
    118,000&nbsp;shares.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(4)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Based upon information contained in a
    Schedule&nbsp;13G filed by National Health Investors,&nbsp;Inc.
    (&#147;NHI&#148;), NHI directly owns 774,800&nbsp;shares and had
    sole voting and dispositive power over these shares.
    Additionally, NHI owns the Company&#146;s Series&nbsp;C
    Cumulative Convertible Preferred Stock, which has an option to
    convert at a price of $19.25&nbsp;per share into
    2,000,000&nbsp;shares of common stock. For the purpose of
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">18
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD align="left">
    <FONT size="2">computing this percentage, the number of shares
    subject to conversion is deemed to be outstanding only for the
    calculation of NHI&#146;s percent of class calculation.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(5)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes 20,000, 8,000, 24,000, 24,800, 12,000,
    5,000 and 12,000&nbsp;shares that may be purchased upon the
    exercise of options by Messrs.&nbsp;Dimitriadis and Ishikawa,
    Ms.&nbsp;Simpson and Messrs.&nbsp;Chavez, King, Triche and
    Yellen, respectively.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(6)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes 20,017, 14,606, 11,153, 4,424 and
    11,153&nbsp;shares held in the deferred compensation trust for
    Ms.&nbsp;Simpson, Messrs.&nbsp;Chavez, King, Triche and Yellen,
    respectively.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(7)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes 5,315&nbsp;shares of common stock held
    by spouse in an individual retirement account.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(8)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes 1,685&nbsp;shares held by spouse in an
    individual retirement account.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(9)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes 105,800&nbsp;shares that may be
    purchased upon the exercise of options.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left">
<A name='120'></A>
</DIV>

<!-- link1 "EXECUTIVE COMPENSATION" -->

<P align="center">
<B><FONT size="2">EXECUTIVE COMPENSATION</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This table shows the compensation paid for the
last three fiscal years to the Chief Executive Officer and the
other four most highly paid executive officers in 2003.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="30%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Long Term Compensation</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Annual Compensation</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Restricted</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Securities</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Stock</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Underlying</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">All Other</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Name&nbsp;&#38; Principal Position</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Year</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Salary</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Bonus</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Awards(1)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Options</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Compensation(6)</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Andre C. Dimitriadis
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">400,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">400,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">88,861</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Chairman, Chief Executive
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">400,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">269,095</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Officer and President
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">400,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,679,840</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(2)</FONT></TD>
</TR>

<TR>
    <TD colspan="26"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Wendy L. Simpson
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">300,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">210,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,622</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Vice Chairman&nbsp;&#38;
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">300,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">201,821</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Chief Financial Officer
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">300,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">250,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">96,598</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(3)</FONT></TD>
</TR>

<TR>
    <TD colspan="26"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Christopher T. Ishikawa
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">250,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">175,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">34,423</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Executive Vice President&nbsp;&#38;
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">250,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">168,184</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Chief Investment Officer
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">225,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">225,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">72,155</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(4)</FONT></TD>
</TR>

<TR>
    <TD colspan="26"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Julia L. Kopta
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">312,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">77,400</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,471</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(7)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Executive Vice President,
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">250,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">168,184</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">General Counsel&nbsp;&#38; Secretary
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">225,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">225,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(5)</FONT></TD>
</TR>

<TR>
    <TD colspan="26"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Alex Chavez
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">150,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">120,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14,752</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Senior Vice President&nbsp;&#38;
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">150,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100,911</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Treasurer
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">135,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">150,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(5)</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Restricted stock awards are valued at their fair
    market value based on the per share closing price of the
    Company&#146;s common stock on the New&nbsp;York Stock Exchange
    on the date of vesting. Restricted stock holdings as of
    December&nbsp;31, 2003 and their fair market value based on the
    per share closing price of $14.74 on December&nbsp;31, 2003 were
    as follows:
    </FONT></TD>
</TR>

</TABLE>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="69%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Unvested</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Value on</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Restricted</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Name</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Shares</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Andre C. Dimitriadis
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">77,904</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,148,305</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Alex Chavez
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,960</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">191,030</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Christopher T. Ishikawa
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30,240</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">445,738</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Wendy L. Simpson
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,088</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">163,437</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Dividends are payable on the restricted shares to
    the extent and on the same date as dividends are paid on our
    common stock. Messrs.&nbsp;Dimitriadis, Chavez,&nbsp;Ishikawa
    and Ms.&nbsp;Simpson vested in 12,984, 2,160, 5,040 and
    1,848&nbsp;shares, respectively in January 2003. As of
    April&nbsp;1, 2003, Ms.&nbsp;Kopta&#146;s restricted shares
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">19
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD align="left">
    <FONT size="2">vested in full (see (7)&nbsp;below). The
    remaining restricted shares vest at the rate of 10% of the
    original unvested amount per year provided that the
    Company&#146;s funds from operations per share for the year then
    ended increased over funds from operations of the previous year.
    The National Association of Real Estate Investment Trusts
    (&#147;NAREIT&#148;) has defined funds from operations as net
    income applicable to common stockholders (computed in accordance
    with GAAP) excluding gains (or losses) from debt restructuring,
    sales of property and impairment charges, plus depreciation of
    real property and after adjustments for unconsolidated entities
    in which a REIT holds an interest.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">There were no restricted stock options granted
    during the year ended December&nbsp;31, 2003.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Represents a $62,400 contribution to
    Mr.&nbsp;Dimitriadis&#146; deferred compensation account and
    $1,617,440 in adjustment to Employee and Director Stock Option
    Loans.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(3)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Represents a $30,000 contribution to
    Ms.&nbsp;Simpson&#146;s deferred compensation account and
    $66,598 in adjustment to Employee and Director Stock Option
    Loans.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(4)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Represents a $26,000 contribution to
    Mr.&nbsp;Ishikawa&#146;s deferred compensation account and
    $46,155 in adjustment to Employee and Director Stock Option
    Loans.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(5)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Represents the contribution to the named
    individual&#146;s deferred compensation account.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(6)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The Company made no contribution to deferred
    compensation for any employee or Director for fiscal 2002 or
    2003.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(7)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">On April&nbsp;1, 2003, we entered into an
    Agreement with Ms.&nbsp;Kopta whereby it was mutually agreed to
    terminate her employment agreement with the Company. The
    Agreement provided that Ms.&nbsp;Kopta would receive in a
    lump-sum payment one year&#146;s salary of $250,000, the Company
    would pay for Ms.&nbsp;Kopta&#146;s COBRA insurance premium for
    18&nbsp;months, approximately $22,800, all Ms.&nbsp;Kopta&#146;s
    unvested stock options and restricted stock vested and should a
    Change in Control (as defined in her Employment Agreement) occur
    before October&nbsp;1, 2004, Ms.&nbsp;Kopta would receive an
    additional lump-sum payment of $250,000. In addition, the
    Company and Ms.&nbsp;Kopta entered into a Consulting Agreement
    whereby Ms.&nbsp;Kopta provided consulting services until
    September&nbsp;30, 2003, from time to time as we reasonably
    request, for a fee of $20,833&nbsp;per month plus any reasonable
    expenses.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left">
<A name='121'></A>
</DIV>

<!-- link1 "Employment Agreements" -->

<P align="left">
<B><FONT size="2">Employment Agreements</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On March&nbsp;26, 1999, we entered into
employment agreements with Messrs.&nbsp;Dimitriadis and
Ishikawa. The employment agreements dated March&nbsp;26, 1999
amend and restate employment agreements dated June&nbsp;30, 1998
between LTC Properties and Messrs.&nbsp;Dimitriadis and
Ishikawa. These March&nbsp;26, 1999, employment agreements were
amended effective June&nbsp;30, 2000. Mr.&nbsp;Dimitriadis, as
Chairman, Chief Executive Officer and President, has been
provided with a four-year &#147;ever-green&#148; employment
contract. Mr.&nbsp;Dimitriadis&#146; current annual base salary
is $400,000. Mr.&nbsp;Ishikawa, as Executive Vice President and
Chief Investment Officer, has been provided with a two-year
&#147;ever-green&#148; employment contract.
Mr.&nbsp;Ishikawa&#146;s current annual base salary is $250,000.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On April&nbsp;10, 2000, we entered into an
employment agreement with Ms.&nbsp;Simpson. Ms.&nbsp;Simpson, as
Vice Chairman and Chief Financial Officer was provided with a
one-year &#147;ever-green&#148; employment contract. This
April&nbsp;10, 2000 agreement was amended effective
June&nbsp;30, 2000. Ms.&nbsp;Simpson&#146;s current base salary
is $300,000. On March&nbsp;9, 2004, we entered into a new
employment agreement with Ms.&nbsp;Simpson. This new agreement
provides Ms.&nbsp;Simpson with a two-year &#147;ever-green&#148;
employment contract and otherwise, has identical terms and
conditions as the previous amended agreement except for
severance payments that would result from a change of control as
disclosed below.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On September&nbsp;4, 2001, we entered into an
employment agreement with Mr.&nbsp;Chavez. Mr.&nbsp;Chavez, as
Senior Vice President and Treasurer has been provided with a
one-year &#147;ever-green&#148; employment contract.
Mr.&nbsp;Chavez&#146;s current base salary is $150,000. On
March&nbsp;9, 2004, we entered into a new employment agreement
with Mr.&nbsp;Chavez. This new agreement has identical terms and
conditions as the previous agreement except for severance
payments that would result from a change of control as disclosed
below.
</FONT>

<P align="center"><FONT size="2">20
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The employment agreements provide that the base
salaries may be increased at the discretion of our Board of
Directors. Any increase in base salary will automatically amend
each executive&#146;s respective employment agreement to provide
that thereafter the executive&#146;s annual base salary will not
be less than the increased base salary approved by our Board of
Directors.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If the executive officer&#146;s employment is
terminated for any reason, except for a termination for cause or
a voluntary resignation without a good reason or a change in
control of our company, then we will pay the executive officer a
lump sum severance payment equal to four times base salary for
Mr.&nbsp;Dimitriadis and two times base salary for
Mr.&nbsp;Ishikawa, Ms.&nbsp;Simpson and Mr.&nbsp;Chavez. Upon a
change in control of our company whether or not the executive
officer&#146;s employment is terminated, we will pay the
executive officer a severance payment in cash equal to
$5,000,000 for Mr.&nbsp;Dimitriadis, $1,000,000 each for
Mr.&nbsp;Ishikawa and Ms.&nbsp;Simpson and $500,000 for
Mr.&nbsp;Chavez. Prior to the new employment agreements entered
into with Ms.&nbsp;Simpson and Mr.&nbsp;Chavez on March&nbsp;9,
2004, these executives would have received severance payments
upon a change of control, equal to two times their base salary.
In addition, if any payment or benefit received by
Mr.&nbsp;Dimitriadis or Mr.&nbsp;Ishikawa or Ms.&nbsp;Simpson
from us subjects the executive officer to excise taxes under the
&#147;golden parachute&#148; rules on payments and benefits, the
executive officer will be entitled to receive an additional
amount (a &#147;gross-up payment&#148; to make the executive
officer whole for these excise taxes (and for all taxes on the
gross-up payment). Notwithstanding the foregoing, we will have
no liability if a executive officer&#146;s employment is
terminated for cause or by voluntary resignation without a good
reason. During the term of his employment by us, each executive
officer will devote the time necessary to provide the services
reasonably required by our Board of Directors and will not,
without the express approval of our Board of Directors, engage
for his own account or for the account of any other person or
entity, in a business which competes with us.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On April&nbsp;1, 2003, we entered into an
Agreement with Ms.&nbsp;Kopta whereby it was mutually agreed to
terminate her employment agreement with the Company. The
Agreement provided that Ms.&nbsp;Kopta would receive in a
lump-sum payment one year&#146;s salary of $250,000, the Company
would pay for Ms.&nbsp;Kopta&#146;s COBRA insurance premium for
18&nbsp;months, approximately $22,800, all Ms.&nbsp;Kopta&#146;s
unvested stock options and restricted stock vested and should a
Change in Control (as defined in her Employment Agreement) occur
before October&nbsp;1, 2004, Ms.&nbsp;Kopta would receive an
additional lump-sum payment of $250,000. In addition, the
Company and Ms, Kopta entered into a Consulting Agreement
whereby Ms.&nbsp;Kopta provided consulting services until
September&nbsp;30, 2003, from time to time as we reasonably
request, for a fee of $20,833&nbsp;per month plus any reasonable
expenses.
</FONT>

<DIV align="left">
<A name='122'></A>
</DIV>

<!-- link1 "OPTION GRANTS DURING FISCAL YEAR ENDED DECEMBER 31, 2003" -->

<P align="center">
<B><FONT size="2">OPTION GRANTS DURING FISCAL YEAR ENDED
DECEMBER&nbsp;31, 2003</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">No stock options were granted during the period
ended December&nbsp;31, 2003 to any of our executive officers.
</FONT>

<DIV align="left">
<A name='123'></A>
</DIV>

<!-- link1 "AGGREGATE OPTION EXERCISES IN 2003 AND OPTION VALUES AT DECEMBER 31, 2003" -->

<P align="center">
<B><FONT size="2">AGGREGATE OPTION EXERCISES IN 2003 AND OPTION
VALUES AT DECEMBER&nbsp;31, 2003</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During 2003, 194,800 options were exercised by
our executive officers. This table shows the number of stock
options held by each of our executive officers as of
December&nbsp;31, 2003 and the value of their unexercised
options based on our closing price of $14.74 on
December&nbsp;31, 2003.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="28%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Securities Underlying</FONT></B></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Unexercised Options at</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Value of</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Shares</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">December&nbsp;31, 2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Unexercised Options</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Acquired</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Value</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Name</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">on Exercise</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Realized</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercisable</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Unexercisable</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercisable</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Unexercisable</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Andre C. Dimitriadis
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">60,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">55,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">40,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">374,600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Wendy L. Simpson
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">64,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">90,542</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">56,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">490,468</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Christopher T. Ishikawa
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26,800</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25,068</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24,400</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">230,228</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Julia L. Kopta
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">44,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">89,706</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Alex J. Chavez
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">182,790</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">169,260</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Subsequent to December&nbsp;31, 2003,
Mr.&nbsp;Dimitriadis, Ms.&nbsp;Simpson, Mr.&nbsp;Ishikawa and
Mr.&nbsp;Chavez exercised 10,000, 7,000, 8,000 and
3,200&nbsp;exercisable options, respectively.
</FONT>

<P align="center"><FONT size="2">21
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<A name='124'></A>
</DIV>

<!-- link1 "CERTAIN TRANSACTIONS" -->

<P align="center">
<B><FONT size="2">CERTAIN TRANSACTIONS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 2002 LTC Healthcare,&nbsp;Inc. changed its
name to CLC Healthcare,&nbsp;Inc. (or CLC).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During 1998, we completed the spin-off of all CLC
voting common stock through a taxable dividend distribution to
the holders of our common stock, Cumulative Convertible
Series&nbsp;C Preferred Stock and Convertible Subordinated
Debentures. Upon completion of the distribution, CLC began
operating as a separate public company. Beginning in September
1999, CLC began leasing skilled nursing properties owned or
financed by us and from that date assumed certain leases of
additional properties and closed certain properties owned by us.
These properties were previously financed or leased to lessees
and borrowers who experienced financial difficulties to such
extent that the lessees and borrowers were not able to comply
with lease provisions or debt provisions underlying the
properties. As such, CLC assumed the leases of troubled
facilities and was not able to pay, nor did we record as income,
rent under CLC leases with us since 2000.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On October&nbsp;6, 2003, CLC announced that it
had signed an Agreement and Plan of Merger (or Agreement) with
Center Healthcare,&nbsp;Inc. (or Center Healthcare) and Center
Healthcare&#146;s wholly owned subsidiary, CHMS,&nbsp;Inc. The
Agreement provided that in the merger, holders of each
outstanding share of CLC&#146;s common stock would receive in
cash $1.00&nbsp;per share of common stock. CLC held a special
meeting of its stockholders on November&nbsp;12, 2003, and the
merger was approved by the required sixty-six and two thirds
percent of CLC common stockholders. After the merger, CLC became
a wholly owned subsidiary of Center Healthcare and ceased to be
a publicly traded company. Center Healthcare is owned by an
individual who was operating (under the management agreement
discussed below) 19 skilled nursing properties owned by us and
under lease to CLC. During 2003, we entered into a 30&nbsp;year,
triple-net master lease with Center Healthcare for these 19
properties and one property formerly operated by Sun. This new
lease provides for rental payments of approximately $4,567,000
in the first year with a 3% escalation each year for the next
10&nbsp;years, 2% each year for the following 10&nbsp;years and
1% each year for the remaining 9&nbsp;years. In 2003, we
advanced Center Healthcare $2,300,000 for capital improvements
to the 19 facilities to be expended within a 36&nbsp;month
period.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our Chairman, President and Chief Executive
Officer, Chief Financial Officer and Chief Investment Officer
were Board members of CLC through the effective date of the
merger at which time they were no longer CLC board members.
Additionally, we have an indemnification agreement covering
these officers who served as Board members of CLC and one former
independent director of CLC.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 2002, we sold a wholly owned subsidiary,
LTC-Fort&nbsp;Tucum,&nbsp;Inc. to CLC for a $500,000 note (or
Fort&nbsp;Tucum Note) bearing no interest for one year and
thereafter interest at 8% annually for two years.
LTC-Fort&nbsp;Tucum, then acquired two skilled nursing
facilities in New Mexico subject to a mortgage loan payable to a
REMIC pool originated by us. During 2003, we acquired these two
facilities for $1,215,000 in cash and forgave the $500,000 note,
which we had previously fully reserved. CLC used the $1,215,000
to repay the outstanding loan balance that was due to a REMIC
pool originated by us. We leased these facilities, along with
two other facilities in New Mexico previously operated by Sun,
to a third party operator under a triple-net master lease
beginning July&nbsp;1, 2003. This master lease provided for
rents of $763,000 in the initial year with 2.0% increases
annually for 15&nbsp;years. We also entered into a triple-net
master lease beginning July&nbsp;1, 2003, with a third party
operator for four skilled nursing properties in Georgia, all of
which subsequently have been sold. These Georgia properties were
formerly operated by CLC.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 2003, we purchased from CLC all the furniture,
fixtures and equipment in 19 properties for $1,843,000.
Additionally, we purchased all the furniture, fixtures and
equipment at CLC&#146;s corporate office for $967,000. We have
included the furniture, fixtures and equipment at the 19
properties and the corporate office in the master lease with
Center Healthcare.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During 2003 and 2002 we did not recognize any
rental income from CLC. During 2003 CLC did not owe us any rent
due to a forbearance agreement effective March&nbsp;1, 2003.
During 2002 CLC owed us $3,000,000 in rent that they were unable
to pay. However in 2003, Center Healthcare paid us rent of
$1,465,000 after they began operating the 19 properties in
September 2003.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Effective October&nbsp;19, 2003, we amended the
secured line of credit with CLC waiving the change of control
provisions in this line of credit and in the Promissory Note
discussed below, to allow CLC to satisfy
</FONT>

<P align="center"><FONT size="2">22
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">certain conditions of the Agreement and Plan of
Merger dated October&nbsp;6, 2003 (discussed above). The
amendment also changed the nature of the loan from a secured
revolving line of credit to a secured term loan and extended the
maturity date to October&nbsp;1, 2008. The initial principal
amount of the note is $8,867,000 which represented the balance
due on the secured line of credit including unpaid interest, and
rents due and unpaid through April&nbsp;30, 2003. Additionally,
the amendment reduced the interest rate to 8.0% compounded
monthly and accruing to the principal balance from
October&nbsp;1, 2003 through September&nbsp;30, 2004, and 8.0%
compounded monthly payable in cash quarterly in arrears
beginning October 2004. The book value of the note was
$4,046,000 at December&nbsp;31, 2003. At December&nbsp;31, 2002
there was $4,741,000 outstanding under the line of credit.
During 2003 we did not record any accrued interest on this note.
During 2002, CLC paid, and we recorded as income, interest on
its line of credit with us totaling $540,000. In 2001, we did
not receive or record as income interest on this line of credit.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Additionally, we hold a Promissory Note (or Note)
issued by Healthcare Holdings,&nbsp;Inc. (or HHI), a
wholly-owned subsidiary of CLC, in the face amount of
$9,150,000. The original Note was received in December 2001 in
exchange for our right to receive 1,238,076&nbsp;shares of
Assisted Living Concepts,&nbsp;Inc. (or ALC) common stock
distributed concurrently with ALC&#146;s emergence from
bankruptcy on December&nbsp;31, 2001. The Note is for a term of
five years and bears interest at 5.0%, compounded annually and
accruing to the principal balance plus interest at 2.0% on the
principal payable in cash annually. The Note is a full recourse
obligation of HHI and is secured by all of the assets owned now
or in the future by HHI and contains a provision for
acceleration should there be a change of control of HHI or CLC.
We agreed to waive this provision to allow CLC to enter into the
Agreement and Plan of Merger (discussed above). During 2003, we
purchased from HHI $1,177,000 face value of ALC Senior Notes for
$1,177,000 plus accrued interest and $566,000 face value of ALC
Junior Notes for $566,000. At December&nbsp;31, 2003, HHI owned
1,452,794&nbsp;shares of ALC common stock with a fair market
value based on the closing price of ALC stock at
December&nbsp;31, 2003 of $11,259,000 and a market value of
$11,622,000 based upon a third party Security and Exchange
Commissions Form&nbsp;4 filing reporting a bulk purchase of
557,209&nbsp;shares at $8.00&nbsp;per share. At
December&nbsp;31, 2003, the book value of the $9,150,000 Note
was $5,245,000 which represented the fair market value of the
1,238,076&nbsp;shares acquired by HHI on December&nbsp;31, 2001
including a $2,150,000 increase in the Note during 2003 which we
allowed HHI to upstream to CLC. CLC returned $1,200,000 to us
which was applied as a reduction in the line of credit with CLC.
In January 2003, we received, in accordance with the terms of
the Note, $140,000 from CLC representing the 2.0% interest on
the then outstanding principal balance which is payable in cash
in arrears. During 2003 we did not accrue any interest income on
the Note. In March 2004, we received $196,000 from CLC
representing the 2.0% interest on the outstanding principal
balance at December&nbsp;31, 2003 in accordance with the terms
of the Note.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All of the aforementioned transactions between
and CLC and us were approved by the respective disinterested
and/or independent members of the Board of Directors of each
company. All interested and/or non-independent Board members
abstained from any such vote.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Employee and Director Stock Option
Loans</FONT></I><FONT size="2">&nbsp;&#151; In 1997, the Board
of Directors adopted a loan program designed to encourage
executives, key employees, consultants and directors to acquire
common stock through the exercise of options. Under the program,
we made full recourse, secured loans to participants equal to
the exercise price of vested options plus up to 50% of the
taxable income resulting from the exercise of options. Such
loans bear interest at the then current Applicable Federal Rate
(&#147;AFR&#148;). In January 2000, the Board of Directors
approved a new loan agreement for current executives and
directors in the amounts of the remaining principal balance of
the original loans.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The new loan agreements provide that the interest
rate is 6.07% (AFR for an equivalent 3 to 9&nbsp;year
instrument) and interest payments are to be paid from the
dividends received on the shares pledged as security for the
notes during the quarter in which the interest is due. If the
dividend does not fully pay the interest due or if no dividend
is paid during the quarter, the unpaid interest is added to the
principal balance. In addition, the notes also require the
borrower to reduce principal by one-half of the most recent
dividend received on the pledged shares less the interest paid
on the loans from that dividend.
</FONT>

<P align="center"><FONT size="2">23
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During 2001, our company granted a stock price
adjustment of the loans to officers and Board Members with such
loans. The loans were adjusted to the sum of the shares
collateralizing the notes times the net book value
(&#147;NBV&#148;) of a share of common stock as of
September&nbsp;30, 2001. The NBV per share at that date was
$8.60 and the closing price as reported by the NYSE was $5.13.
This total adjustment amounted to a non-cash charge of
$2,453,000.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Section&nbsp;402 of The Sarbanes-Oxley Act of
2002 prohibits companies from making this type of loan after
July&nbsp;30, 2003 and prohibits us from materially modifying or
renewing the existing loans. We no longer make loans under this
program and we have not made a loan since 1998. Subsequent to
February&nbsp;23, 2004, the Company had no loans outstanding to
officers or directors. The maximum amount outstanding during
2003 and the outstanding principal and the number of shares of
common stock and the market value (at $14.74&nbsp;per share) of
the common stock securing these loans at December&nbsp;31, 2003
was:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="40%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Maximum</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Shares Securing the Loans</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Amount</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Outstanding</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Outstanding</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Principal at</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Market</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Name</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">in 2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">December&nbsp;31, 2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">of Shares</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Value</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Andre C. Dimitriadis
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,605,852</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(1)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Edmund C. King
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">409,305</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">408,613</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(3)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">46,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">678,040</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Wendy L. Simpson
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">88,630</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(2)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Sam Yellen
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">409,305</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">408,613</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(3)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">46,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">678,040</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Paid in full on December&nbsp;31, 2003.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Paid in full on January&nbsp;2, 2003.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(3)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Paid in full on February&nbsp;23, 2004
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left">
<A name='125'></A>
</DIV>

<!-- link1 "COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION" -->

<P align="center">
<B><FONT size="2">COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">There are no &#147;interlocks&#148; (as defined
by the rules of the Securities and Exchange Commission) with
respect to any member of the Compensation Committee of the Board
of Directors, and this Committee consists entirely of
independent, non-employee directors.
</FONT>

<DIV align="left">
<A name='126'></A>
</DIV>

<!-- link1 "COMPENSATION COMMITTEE REPORT" -->

<P align="center">
<B><FONT size="2">COMPENSATION COMMITTEE REPORT</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Compensation Committee Report shall not be
deemed incorporated by reference by any general statement
incorporating by reference this Proxy Statement into any filing
under the Securities Act of 1933 or the Securities and Exchange
Act of 1934, except to the extent that we specifically
incorporate this information by reference, and shall not
otherwise be deemed filed under such Acts.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During 2003, the Compensation Committee was
comprised of Mr.&nbsp;King, Chair and Dr.&nbsp;Triche and
Mr.&nbsp;Yellen each of whom is a &#147;non-employee
director&#148; within the meaning of Rule&nbsp;16b-3 issued by
the SEC and an &#147;outside director&#148; within the meaning
of Section&nbsp;162(m) of the Internal Revenue Code, as amended.
Each appointed Committee member will be subject to annual
reconfirmation and may be removed by the Board at any time. The
Compensation Committee reviews and approves the compensation of
our executive officers and determines our general compensation
policy. The Compensation Committee is also responsible for the
administration of our 1992 Plan and 1998 Plan. The Compensation
Committee will be responsible for the Company&#146;s 2004 Stock
Option Plan (or 2004 Option Plan) and 2004 Restricted Stock Plan
(or 2004 Restricted Stock Plan) should both or either plan be
approved by the stockholders at this annual meeting. The
Compensation Committee is authorized to determine the options
and restricted stock awards to be granted under such plans and
the terms and provisions of such options and restricted stock
awards. We have four executive officers, one of which is our
Chief Executive Officer.
</FONT>

<P align="center"><FONT size="2">24
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<A name='127'></A>
</DIV>

<!-- link1 "Compensation Philosophy" -->

<P align="left">
<B><FONT size="2">Compensation Philosophy</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Compensation Committee endeavors to ensure
that the compensation programs for our executive officers are
effective in attracting and retaining key executives responsible
for our company&#146;s success and are administered in
appropriate fashion in the long-term interests of our company
and our stockholders. The Compensation Committee seeks to align
total compensation for executive management with our overall
performance as well as the individual performance of each
executive officer. Our compensation package, which currently is
comprised of base salary, bonuses, stock options and restricted
stock, is intended to reinforce management&#146;s commitment to
enhancing profitability and stockholder value.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The policies of the Compensation Committee may be
summarized as follows:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(1)&nbsp;LTC Properties&#146; compensation
    programs are designed to attract, motivate and retain qualified
    key executives;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(2)&nbsp;An executive&#146;s salary, bonuses and
    incentive compensation and other benefit programs should reflect
    both the Company&#146;s performance as a whole and the
    executive&#146;s individual performance and effort;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(3)&nbsp;LTC Properties&#146; compensation
    programs should enable the executive to have a financial
    interest in the Company that parallels the financial interests
    of the Company&#146;s stockholders.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In determining the level and composition of
compensation for the executive officers, the Compensation
Committee considers various corporate performance measures, both
in absolute terms and in relation to similar companies, and
individual performance measures. Although the Compensation
Committee considers funds from operations per share as an
important measure of our performance, the Compensation Committee
does not apply any specific quantitative formula in making
compensation decisions. The Compensation Committee also may
evaluate the following factors in establishing executive
compensation: (a)&nbsp;periodically, the comparative
compensation surveys and other material concerning compensation
levels and stock grants at similar companies; (b)&nbsp;our
historical compensation levels and stock awards;
(c)&nbsp;overall competitive environment for executives and the
level of compensation necessary to attract and retain executive
talent; (d)&nbsp;financial performance of other real estate
investment trusts and its peer group relative to market
condition; and (e)&nbsp;from time to time, the Compensation
Committee may seek the advice of an independent compensation
consultant in assessing its overall compensation philosophy. The
Compensation Committee assigns no specific weight to any of the
factors discussed above in establishing executive compensation.
</FONT>

<DIV align="left">
<A name='128'></A>
</DIV>

<!-- link1 "Base Salaries" -->

<P align="left">
<B><FONT size="2">Base Salaries</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Base salaries are reviewed and adjusted by the
Compensation Committee on an annual basis. The Compensation
Committee seeks to ensure that the base salaries are established
at levels considered appropriate in light of responsibilities
and duties of the executive officers as well as at levels
competitive to amounts paid to executive officers of its peer
group. In determining an individual executive&#146;s actual base
salary, the Compensation Committee also considers other factors,
which may include the executive&#146;s past performance and
contributions to our success. Base compensation for
Mr.&nbsp;Dimitriadis, Ms.&nbsp;Simpson, Mr.&nbsp;Ishikawa and
Mr.&nbsp;Chavez in 2003 and as of January&nbsp;1, 2004, was
$400,000; $300,000; $250,000 and $150,000 respectively.
</FONT>

<DIV align="left">
<A name='129'></A>
</DIV>

<!-- link1 "Compensation of the Company&#146;s Chief Executive Officer" -->

<P align="left">
<B><FONT size="2">Compensation of the Company&#146;s Chief
Executive Officer</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Mr.&nbsp;Dimitriadis is compensated pursuant to
an employment agreement entered into on June&nbsp;30, 1998 and
amended March&nbsp;26, 1999 and June&nbsp;30, 2000. The
agreement is described under &#147;Employment Agreements&#148;
on page&nbsp;18, and extends every March&nbsp;26th for four
years, subject to earlier termination under certain
circumstances. Mr.&nbsp;Dimitriadis&#146; employment agreement
provides for an annual base salary of $400,000; bonuses, if any,
are determined by the Compensation Committee.
</FONT>

<P align="center"><FONT size="2">25
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<A name='130'></A>
</DIV>

<!-- link1 "Bonuses" -->

<P align="left">
<B><FONT size="2">Bonuses</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Bonuses are awarded based on our overall
performance and individual performance of each executive
officer. The amounts awarded may vary from year to year and may
be awarded to executive officers in other forms such as stock
awards in lieu of cash payments.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Compensation Committee recommended that
bonuses be paid to executives in part as recognition of the
increase in the Company&#146;s common stock price from $6.72 at
December&nbsp;31, 2002 to $14.74 at December&nbsp;31, 2003, the
successful issuance of the Series&nbsp;E Cumulative Convertible
Preferred Stock and the benefits of additional liquidity from
the Company&#146;s new Unsecured Line of Credit. Bonuses were
awarded to Mr.&nbsp;Dimitriadis, Ms.&nbsp;Simpson,
Mr.&nbsp;Ishikawa, and Mr.&nbsp;Chavez in the amounts of
$400,000, $210,000, $175,000 and $120,000, respectively for
fiscal 2003.
</FONT>

<DIV align="left">
<A name='131'></A>
</DIV>

<!-- link1 "Stock Option Plans" -->

<P align="left">
<B><FONT size="2">Stock Option Plans</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Securities authorized for issuance under equity
compensation plans as of December&nbsp;31, 2003 is as follows:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="26%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="10%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="13%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="12%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="14"></TD>
</TR>

<TR>
    <TD colspan="14" align="center" nowrap><B><FONT size="1">Equity Compensation Plan Information</FONT></B></TD>
</TR>

<TR>
    <TD colspan="14" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(a)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(b)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(c)</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number of Securities Remaining</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number of Securities to</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Weighted-Average</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Available for Future Issuance</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">be Issued Upon Exercise</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercise Price of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Under Equity Compensation</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">of Outstanding Options</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Outstanding Options,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Plans (Excluding Securities</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Plan Category</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Warrants and Rights</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Warrants and Rights</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Reflected in Column (a))</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Equity compensation plans approved by security
    holders
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">285,871</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.63</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">53,176</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Equity compensation plans not approved by
    security holders
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">285,871</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.63</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">53,176</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At this Annual Meeting the stockholders are being
asked to approve The 2004 Stock Option Plan for
500,000&nbsp;shares of common stock and The 2004 Restricted
Stock Plan for 100,000&nbsp;shares of common stock. We have
adopted the Restated 1992 Stock Option Plan and the 1998 Equity
Participation Plan under which awards may be granted including
stock options (incentive or non-qualified), stock appreciation
rights, restricted stock, deferred stock and dividend
equivalents. We reserved 1,400,000&nbsp;shares of common stock
for issuance under the 1992 Plan and 500,000&nbsp;shares for
issuance under the 1998 Plan. Both existing plans are
administered by the Compensation Committee which sets the terms
and provisions of the awards granted under the plans. The
Compensation Committee would also administer either or both of
the 2004 plans should either or both be approved. Incentive
stock options, stock appreciation rights, restricted stock,
deferred stock and dividend equivalents may only be awarded
officers and other full-time employees to promote our long-term
performance and specifically, to retain and motivate senior
management to achieve a sustained increase in stockholder value.
Non-qualified stock options, stock appreciation rights,
restricted stock, deferred stock and dividend equivalents may be
awarded to non-employee directors, officers, other employees,
consultants and other key persons who provide services to us.
Currently, the plans have no pre-set formula or criteria for
determining the number of options that may be granted. The
Compensation Committee reviews and evaluates the overall
compensation package of the executive officers and determines
the awards based on our overall performance and the individual
performance of the executive officers.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">No options were granted in fiscal 2003.
</FONT>

<DIV align="left">
<A name='132'></A>
</DIV>

<!-- link1 "401(k) Savings Plan" -->

<P align="left">
<B><FONT size="2">401(k) Savings Plan</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In January 2002 we implemented a 401(k) Savings
Plan which is a defined contribution plan covering all of our
employees. Each year participants may contribute up to 15% of
pre-tax annual compensation. In 2003 the contributions may not
exceed $12,000, or $13,000 if the employee is 50&nbsp;years or
older. Our company will match up to 3% of salaries for our two
vice-presidents and contribute 3% of the individual&#146;s
salary for staff that open an account. We will not contribute
any amount, nor match contributions for our four senior officers.
</FONT>

<P align="center"><FONT size="2">26
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<A name='133'></A>
</DIV>

<!-- link1 "Policy with Respect to Section 162(m)" -->

<P align="left">
<B><FONT size="2">Policy with Respect to
Section&nbsp;162(m)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Section&nbsp;162(m) of the Code denies deduction
for Federal income tax purposes for certain compensation in
excess of $1,000,000 paid to certain executive officers, unless
certain performance, disclosure, stockholder approval and other
requirements are met. The Compensation Committee will continue
to review the effects of its compensation programs with regard
to Code Section&nbsp;162(m). A substantial portion of the
compensation program will be exempted from the $1,000,000
deduction limitation. The Company will continue to evaluate
alternatives to ensure executive compensation is reasonable,
performance-based, and consistent with the Company&#146;s
overall compensation objectives. The Compensation Committee
reserves the right to design programs that recognize a full
range of performance criteria important to the Company&#146;s
success, even where the compensation paid under such programs
may not be deductible.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Interpretations of and changes in the tax laws
and other factors beyond the Compensation Committee&#146;s
control may affect the deductibility of certain compensation
payments. The Compensation Committee will consider various
alternatives to preserve the deductibility of compensation
payments and benefits to the extent reasonably practicable and
to the extent consistent with its other compensation objectives.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Compensation Committee
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Edmund C. King, <I>Chair</I>
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Sam Yellen and Timothy J. Triche,&nbsp;M.D.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left">
<A name='134'></A>
</DIV>

<!-- link1 "COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934" -->

<P align="center">
<B><FONT size="2">COMPLIANCE WITH SECTION&nbsp;16(a) OF THE
SECURITIES EXCHANGE ACT OF 1934</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Section&nbsp;16(a) of the Exchange Act requires
our directors and executive officers, and persons who own more
than ten percent of a registered class of our equity securities
to file with the Securities and Exchange Commission and the
New&nbsp;York Stock Exchange initial reports of ownership and
reports of changes in ownership of common stock and other equity
securities of our company. Officers, directors and greater than
ten percent stockholders are required by Securities and Exchange
Commission regulations to furnish us with copies of all
Section&nbsp;16(a) forms they file.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">To our knowledge, based solely on review of the
copies of such reports furnished to us and written
representations that no other reports were required, during the
fiscal year ended December&nbsp;31, 2003, all directors,
executive officers and persons who beneficially own more than
10% of our common stock have complied with the reporting
requirements of Section&nbsp;16(a).
</FONT>

<P align="center"><FONT size="2">27
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2"> <A name='135'></A>
</FONT>
</DIV>

<!-- link1 "STOCK PERFORMANCE GRAPH" -->

<P align="center">
<B><FONT size="2">STOCK PERFORMANCE GRAPH</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This graph compares the cumulative total
stockholder return on our common stock from December&nbsp;31,
1998 to December&nbsp;31, 2003 with the cumulative stockholder
total return of (1)&nbsp;the Standard&nbsp;&#38; Poor&#146;s 500
Stock Index and (2)&nbsp;the NAREIT Hybrid REIT Index. The
comparison assumes $100 was invested on December&nbsp;31, 1998
in our common stock and in each of the foregoing indices and
assumes the reinvestment of dividends.
</FONT>

<P align="center">
<B><FONT size="2">Total Return Stock Performance</FONT></B>

<P align="center">
<IMG src="v97876dv9787601.gif" alt="STOCK PERFORMANCE LINE CHART">

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The stock performance depicted in the above graph
is not necessarily indicative of future performance. The stock
performance graph and compensation committee report shall not be
deemed incorporated by reference into any filing by us under the
Securities Act or the Exchange Act except to the extent that we
specifically incorporate such information by reference, and
shall not otherwise be deemed filed under such Acts.
</FONT>

<P align="center"><FONT size="2">28
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<A name='136'></A>
</DIV>

<!-- link1 "INDEPENDENT PUBLIC ACCOUNTANTS" -->

<P align="center">
<B><FONT size="2">INDEPENDENT PUBLIC ACCOUNTANTS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Ernst&nbsp;&#38; Young LLP audited our financial
statements for the years ended December&nbsp;31, 2003 and 2002
and have been our auditors since our organization in May 1992.
Fees for the years ended December&nbsp;31, 2003 and 2002 were:
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="75%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Audit Fees
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">219,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">199,334</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Audit-Related Fees
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">89,280</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">60,650</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Tax Fees
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">70,927</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">87,512</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">All Other Fees
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Audit Fees</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">These fees represent aggregate fees billed for
professional services rendered for the audit of the
Company&#146;s annual financial statements and the review of the
financial statements included in the Company&#146;s Quarterly
Reports on Forms 10-Q for the years ended December&nbsp;31, 2003
and 2002.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Audit-Related Fees</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">These fees represent aggregate fees billed for
assurance and related services regarding the Company&#146;s
Registrations Statements filed in 2003 and consulting on various
technical issues in 2003 and 2002. These services are reasonably
related to the performance of the audit of the Company&#146;s
annual financial statements for fiscal 2003 and 2002.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Tax Fees</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">These fees represent aggregate fees billed for
services rendered for tax compliance and consultation, including
REIT qualification matters during fiscal 2003 and 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In accordance with
Section&nbsp;III,&nbsp;Item&nbsp;6 of the Audit Committee
Charter (Appendix&nbsp;A attached), the Audit Committee reviewed
the effectiveness of Ernst&nbsp;&#38; Young LLP&#146;s audit
effort, including approval of the scope of, and fees charged in
connection with, the annual audit, quarterly reviews and any
non-audit services provided. The Audit Committee concluded that
the provision of the non-audit services by Ernst&nbsp;&#38;
Young LLP was compatible with the maintenance of that
firm&#146;s independence in the conduct of its auditing
functions.
</FONT>

<DIV align="left">
<A name='137'></A>
</DIV>

<!-- link1 "REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS" -->

<P align="center">
<B><FONT size="2">REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF
DIRECTORS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Audit Committee Report shall not be deemed
incorporated by reference by any general statement incorporating
by reference this Proxy Statement into any filing under the
Securities Act of 1933 or the Securities and Exchange Act of
1934, except to the extent that we specifically incorporate this
information by reference, and shall not otherwise be deemed
filed under such Acts.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Audit Committee of the Board of Directors is
comprised of three independent directors as determined by the
Board within the meaning of the New&nbsp;York Stock Exchange
listing standards and operates under a written charter adopted
by the Board. The Charter was amended and approved by the Board
on March&nbsp;9, 2004. The amended Charter is attached to this
proxy as Appendix&nbsp;A.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Audit Committee has direct oversight of all
compliance matters having to do with financial matters,
Securities and Exchange Commission reporting and auditing.
Additionally, it is the Audit Committee&#146;s duty to review
annually the Audit Committee Charter and the Company&#146;s Code
of Business Conduct, Ethics and Corporate Governance for
adequacy and recommend any changes to the Board.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Audit Committee is appointed by the Board to
assist the Board in its oversight function by monitoring, among
other things, the integrity of the Company&#146;s financial
statements, the Company&#146;s financial
</FONT>

<P align="center"><FONT size="2">29
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">reporting process and the independence and
performance of the independent auditors. It is the
responsibility of executive management of the Company to prepare
financial statements in accordance with generally accepted
accounting principles and of the Company&#146;s independent
auditors to audit those financial statements. The Audit
Committee has the sole authority and responsibility to select,
appoint, evaluate, compensate and retain, approve significant
non-audit services, confirm the independence of the independent
public accountants and, where appropriate, replace the
independent auditors.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In this context, the Audit Committee has met and
held discussions with management and the independent auditors.
Management represented to the Audit Committee that the
Company&#146;s consolidated financial statements were prepared
in accordance with generally accepted accounting principles, and
the Audit Committee has reviewed and discussed the audited
consolidated financial statements with management and the
independent auditors. The Audit Committee discussed with the
independent auditors matters required to be discussed by
Statement on Auditing Standards No.&nbsp;61 (Communication with
Audit Committees), as amended.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, the Audit Committee has received the
written disclosures and the letter required by the Independence
Standards Board Standard No.&nbsp;1 (Independence Discussions
With Audit Committees), as amended, from the independent
auditors and has discussed with the independent auditors the
independent auditor&#146;s independence from the Company and its
management. Further, the Audit Committee has considered whether
the non-audit services provided by the independent auditors are
compatible with maintaining the auditor&#146;s independence.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Further, the Audit Committee periodically meets
with the independent auditors, without management present, to
discuss the results of their examinations, the evaluations of
the Company&#146;s internal controls and the overall quality of
the Company&#146;s financial reporting.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During the past year, the Audit Committee met
with the independent auditors five times in total and without
management present four times.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Based on the reviews and discussions referred to
above, and subject to the limitations on the role and
responsibilities of the Audit Committee referred to above and
set forth in the Charter, the Audit Committee recommended to the
Board that the audited financial statements be included in the
Company&#146;s 2003 Form&nbsp;10-K for filing with the
Securities and Exchange Commission.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Audit Committee
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Sam Yellen, <I>Chair</I>
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Edmund C. King and Timothy J. Triche,&nbsp;M.D.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left">
<A name='138'></A>
</DIV>

<!-- link1 "STOCKHOLDER PROPOSALS" -->

<P align="center">
<B><FONT size="2">STOCKHOLDER PROPOSALS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Stockholder proposals intended to be presented at
the 2005 Annual Meeting must be received by the Company for
inclusion in its proxy statement by December&nbsp;22, 2004. To
assure that a stockholder&#146;s proposal is included in the
proxy statement, it will be necessary for the stockholder to
comply with the regulations of the SEC governing inclusion of
such proposals.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Stockholders may directly nominate persons for
director only by complying with the procedure set forth in the
Company&#146;s Bylaws. The Bylaws require that the stockholder
submit the names of such persons in writing to the Secretary of
the Company not less than 60&nbsp;days nor more than
150&nbsp;days prior to the first anniversary of the date of the
preceding year&#146;s annual meeting. The nominations must set
forth (i)&nbsp;as to each person whom the stockholder proposes
to nominate for election or reelection as a director and as to
the stockholder giving the notice (a)&nbsp;the name, age,
business address and residence address of such person,
</FONT>

<P align="center"><FONT size="2">30
</FONT>

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<DIV align="left">
<FONT size="2">(b)&nbsp;the principal occupation or employment
of such person, (c)&nbsp;the class and number of shares of the
Company&#146;s capital stock which are beneficially owned by
such person on the date of such stockholder notice,
(d)&nbsp;such nominee&#146;s consent to serve as a director if
elected and (ii)&nbsp;as to the stockholder giving the notice
(a)&nbsp;the name and address, as they appear on the
Company&#146;s books, of such stockholder to be supporting such
nominees and (b)&nbsp;the class and number of shares of the
Company&#146;s capital stock which are beneficially owned by
such stockholder on the date of such stockholder notice and by
any other stockholders known by such stockholder to be
supporting such nominees on the date of such stockholder notice.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Matters may be brought before the meeting by
stockholders only if notice is delivered to the principal
executive offices of the Company not less than 60&nbsp;days nor
more than 150&nbsp;days prior to the anniversary of the last
annual meeting of stockholders. Each such stockholder notice
shall set forth (i)&nbsp;as to each matter the stockholder
proposes to bring before the annual meeting, (a)&nbsp;a brief
description of the matter desired to be brought before the
annual meeting and the reasons for bringing such matter before
the annual meeting and (b)&nbsp;any material interest of the
stockholder in such matter; and (ii)&nbsp;as to the stockholder
giving the notice (a)&nbsp;the name and address, as they appear
on the Company&#146;s books, of such stockholder and any other
stockholders known by such stockholder to be supporting the
bringing of such matter before the annual meeting as of the date
of such stockholder notice and (b)&nbsp;the class and number of
shares of the Company&#146;s capital stock which are
beneficially owned by such stockholder on the date of such
stockholder notice and by any other stockholder known by such
stockholder to be supporting the bringing of such matter before
the annual meeting as of the date of such stockholder notice.
</FONT>

<DIV align="left">
<A name='139'></A>
</DIV>

<!-- link1 "OTHER MATTERS" -->

<P align="center">
<B><FONT size="2">OTHER MATTERS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The cost of the solicitation of proxies will be
borne by us. In addition to solicitation by mail, our directors
and officers, without receiving any additional compensation, may
solicit proxies personally, by telephone, by facsimile or
electronically. We will request brokerage houses, banks, and
other custodians or nominees holding stock in their names for
others to forward proxy materials to their customers or
principals who are the beneficial owners of common shares and
will reimburse them for their expenses in doing so. We have
retained the services of Georgeson Shareholder,&nbsp;Inc. for a
fee of $6,500 plus out-of-pocket expenses, to assist in the
solicitation of proxies.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">WE WILL PROVIDE WITHOUT CHARGE TO ANY PERSON
SOLICITED HEREBY, UPON THE WRITTEN REQUEST OF ANY SUCH PERSON, A
COPY OF OUR ANNUAL REPORT AND/OR OUR FORM&nbsp;10-K (WITHOUT
APPENDICES) FOR THE YEAR ENDED DECEMBER&nbsp;31, 2003 FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION. SUCH REQUESTS SHOULD BE
DIRECTED TO OUR CORPORATE SECRETARY, AT 22917&nbsp;PACIFIC COAST
HIGHWAY, SUITE&nbsp;350, MALIBU, CALIFORNIA 90265.
</FONT>

<P align="left">
<B><FONT size="2">ALL STOCKHOLDERS ARE URGED TO COMPLETE, SIGN
AND RETURN THE ACCOMPANYING PROXY CARD IN THE ENCLOSED
ENVELOPE.</FONT></B>

<P align="center"><FONT size="2">31
</FONT>
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<DIV align="left">
<A name='140'></A>
</DIV>

<!-- link1 "Appendix A" -->

<DIV align="right">
<B><FONT size="2">Appendix&nbsp;A</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">LTC PROPERTIES,&nbsp;INC.</FONT></B>

<P align="center">
<B><FONT size="2">AUDIT COMMITTEE CHARTER</FONT></B>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">I.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Purpose</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The purpose of the Audit Committee is to assist
the Board of Directors in fulfilling its oversight
responsibilities by reviewing the financial information which
will be provided to the shareholders and others, the systems of
internal controls which management and the Board of Directors
have established, the performance and selection of independent
accountants, and the Company&#146;s audit and financial
reporting process.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Audit Committee will fulfill these
responsibilities by carrying out the activities enumerated in
Section&nbsp;3 of the Charter. The Committee shall be given full
and direct access to the Company&#146;s Chairman of the Board,
Company executives and independent accountants as necessary to
carry out these responsibilities. However, the Committee&#146;s
function is one of oversight only and shall not relieve the
Company&#146;s management of its responsibilities for preparing
financial statements which accurately and fairly present the
Company&#146;s financial results and conditions, or the
responsibilities of the independent accountants relating to the
audit or review of financial statements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The independent accountants&#146; ultimate
responsibility is to the Board of Directors and the Audit
Committee, as representatives of the shareholders. These
representatives have the ultimate authority to select, evaluate,
and where appropriate, replace the independent accountants.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">II.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Composition of the Audit Committee</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Audit Committee shall be comprised of not
less than three directors, each of whom will be independent as
required by Section&nbsp;10A(m) of the Securities Exchange Act
of 1934, as amended (the &#147;Exchange Act&#148;) and rules of
the New&nbsp;York Stock Exchange (&#147;NYSE&#148;). Each
appointed Committee member shall be subject to annual
reconfirmation and may be removed by the Board at any time.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All members of the Committee shall be able to
read and understand fundamental financial statements, including
a balance sheet, income statement and cash flow statement. At
least one member of the Committee shall have past employment
experience in finance or accounting, requisite professional
certification in accounting, or any other comparable experience
or background, which results in the individual&#146;s financial
sophistication.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">III.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Responsibilities and Duties</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">To fulfill its responsibilities and duties, the
Audit Committee shall:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&nbsp; 1.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Review annually the Audit Committee Charter and
    the Code of Business Conduct, Ethics and Corporate Governance
    for adequacy and recommend any changes to the Board.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&nbsp; 2.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Review the significant accounting principles,
    policies and practices followed by the Company in accounting for
    and reporting its financial results of operations in accordance
    with generally accepted accounting principles (&#147;GAAP&#148;).
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&nbsp; 3.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Review the financial, investment and risk
    management policies followed by the Company in operating its
    business activities.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&nbsp; 4.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Review the Company&#146;s annual audited
    financial statements, related disclosures, including the
    MD&#38;A portion of the Company&#146;s filings, and discuss with
    the independent accountants the matters required to be discussed
    by Auditing Standard No.&nbsp;61, including (a)&nbsp;the quality
    as well as acceptability of the accounting principles applied in
    the financial statements, and (b)&nbsp;new or changed
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">A-1
</FONT>
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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD></TD>
    <TD align="left">
    <FONT size="2">accounting policies; significant estimates,
    judgments, uncertainties or unusual transactions; and accounting
    policies relating to significant financial statement items.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&nbsp; 5.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Review any management letters or internal control
    reports prepared by the independent accountants and responses to
    prior management letters, and review with the independent
    accountants the Company&#146;s internal financial controls.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&nbsp; 6.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Review the effectiveness of the independent audit
    effort, including approval of the scope of, and fees charged in
    connection with, the annual audit, quarterly reviews and any
    non-audit services being provided.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&nbsp; 7.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Be responsible for the appointment, determination
    of the funding for and oversight of the work of the independent
    accountant employed to conduct the audit (including resolution
    of disagreements between the independent accountants and
    management regarding financial reporting). The independent
    accountants shall report directly to the Audit Committee.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&nbsp; 8.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Approve all services that may be provided to the
    Company by the independent accountants whether or not related to
    the audit, and review the hiring policies for any employees or
    former employees of the independent accountants.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&nbsp; 9.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Obtain on an annual basis a formal written
    statement from the independent accountants delineating all
    relationships between the accountants and the Company consistent
    with Independent Standards Board Standard No.&nbsp;1, and review
    and discuss with the accountants all significant relationships
    the accountants have with the Company, which may affect the
    accountants&#146; independence.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="3%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">10.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">For each of the first three fiscal quarters and
    at year end, at a Committee meeting, review with management the
    financial results, the proposed earnings press release and
    formal guidance which the Company may plan to offer and review
    with the independent accountants the results of their review of
    the interim financial information and audit of the annual
    financial statements.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">11.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Review management&#146;s analysis of any
    significant accounting issues, changes, estimates, judgments or
    unusual items relating to the financial statements and the
    selection, application and effects of critical accounting
    policies applied by the Company (including an analysis of the
    effect of alternative GAAP methods) and review with the
    independent accountants the reports on such subjects delivered
    pursuant to Section&nbsp;10A(k) of the Exchange Act.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">12.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Following completion of the annual audit, review
    separately with the independent accountants and management any
    significant difficulties encountered during the course of the
    audit.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">13.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Engage and determine funding for such independent
    professional advisors and counsel as the Committee determines
    are appropriate to carry out its functions hereunder.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">14.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Report to the Board on a regular basis on the
    major events covered by the Audit Committee and make
    recommendations to the Board and management concerning these
    matters.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">15.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Perform any other activities consistent with this
    charter, the Company&#146;s Bylaws and governing law as the
    Committee or the Board deems necessary or appropriate, including
    but not limited to the Company&#146;s legal and regulatory
    compliance.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">16.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Approve all transactions between the Company and
    Related Party, as defined by applicable NYSE Rules.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">17.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Establish procedures for (a)&nbsp;the receipt,
    retention, and treatment of complaints received by the Company
    regarding accounting, internal accounting controls, or auditing
    matters, and (b)&nbsp;the confidential, anonymous submission by
    employees of concerns regarding questionable accounting or
    auditing matters.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">A-2
</FONT>

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<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">IV.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Audit Committee Meetings</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Committee will meet on a regular basis at
least 4 times each year, and will hold special meetings as
circumstances require. The timing of the meetings shall be
determined by the Audit Committee. However, the Committee will
meet at any time that the independent accountants believe
communication to the Committee is required. At each regular
meeting the Committee will meet separately with representatives
of the independent accountants.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At all Audit Committee meetings a majority of the
total number of members shall constitute a quorum. A majority of
the members of the Committee shall be empowered to act on behalf
of the Committee. Minutes shall be kept of each meeting of the
Committee.
</FONT>

<P align="left">
<I><FONT size="2">Adopted as amended, March&nbsp;9,
2004</FONT></I>

<P align="center"><FONT size="2">A-3
</FONT>

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<DIV align="left">
<A name='141'></A>
</DIV>

<!-- link1 "Appendix B" -->

<DIV align="right">
<B><FONT size="2">Appendix&nbsp;B</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">LTC PROPERTIES,&nbsp;INC.</FONT></B>

<P align="center">
<B><FONT size="2">COMPENSATION COMMITTEE CHARTER</FONT></B>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">I.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Purpose</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Compensation Committee&#146;s (the
&#147;Committee&#148;) basic responsibility is to review the
performance and development of Company management in achieving
corporate goals and objectives and to assure that senior
executives of the Company are compensated effectively in a
manner consistent with the strategy of the Company, competitive
practice, and the requirements of the appropriate regulatory
bodies. Toward that end, the Committee will oversee, review and
administer all compensation, equity and employee benefit plans
and programs.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">II.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Composition of the Compensation
    Committee</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Committee will consist of not less than 3
independent directors, each of whom will be both a
&#147;non-employee director&#148; within the meaning of
Rule&nbsp;6(b)3 issued by the Securities and Exchange Commission
(&#147;SEC&#148;) and an &#147;outside director&#148; within the
meaning of Section&nbsp;162(m) of the Internal Revenue Code, as
amended. Each appointed Committee member will be subject to
annual reconfirmation and may be removed by the Board of
Directors (the &#147;Board&#148;) at any time.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">III.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Responsibilities and Duties</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In carrying out its purpose, the Committee will
have the following responsibilities and duties:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&nbsp; 1.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Review annually and approve the Company&#146;s
    compensation strategy to ensure that employees of the Company
    are rewarded appropriately for their contributions to the
    company&#146;s performance.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&nbsp; 2.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Review annually and approve corporate goals and
    objectives relevant to executive compensation and evaluate
    performance in light of those goals.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&nbsp; 3.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Review annually and determine the individual
    elements of total compensation for the Chief Executive Officer
    and all other corporate officers, and communicate in the annual
    Board Compensation Committee Report to shareholders the factors
    and criteria on which the Chief Executive Officer and all other
    corporate officers&#146; compensation for the last year was
    based.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&nbsp; 4.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Approve all special perquisites, special cash
    payments and other special compensation and benefit arrangements
    for the Company&#146;s executive officers.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&nbsp; 5.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Review and approve compensation for non-employee
    members of the Board of Directors, including but not limited to
    the following elements: retainer, meeting fees, committee fees,
    committee chair fees, equity or stock compensation, benefits and
    perquisites.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&nbsp; 6.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">With sole and exclusive authority, approve stock
    option grants and other discretionary awards under the
    Company&#146;s stock option or other equity incentive plans to
    all persons who are Board members or executive officers within
    the meaning of Rule&nbsp;16(b)3 issued by the SEC.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&nbsp; 7.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Grant stock options and other discretionary
    awards under the Company&#146;s stock option or other equity
    incentive plans to all other eligible individuals in the
    Company&#146;s service. The Committee may delegate to one or
    more officers designated by the Committee the authority to make
    grants to eligible individuals (other than any such officer) who
    are not executive officers, provided that the Committee shall
    have fixed the price (or a formula for determining the price)
    and the vesting schedule for such grants, approved the form of
    documentation evidencing such grants, and determined the
    appropriate number of shares or the basis for determining such
    number of shares by position, compensation level or category of
    personnel. Any officer(s) to whom such authority is delegated
    shall regularly report to
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">B-1
</FONT>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="3%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD></TD>
    <TD align="left">
    <FONT size="2">the Committee the grants so made. Any such
    delegation may be revoked at any time by the Committee.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&nbsp; 8.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Amend the provisions of the Company&#146;s stock
    option or other equity incentive plans, to the extent authorized
    by the Board, and make recommendations to the Board with respect
    to incentive compensation and equity-based plans.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&nbsp; 9.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Approve for submission to the shareholders stock
    option or other equity incentive plans or amendments thereto.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="3%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">10.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Oversee and periodically review the operation of
    all the Company&#146;s employee benefit plans, including but not
    limited to the Section&nbsp;401(k) Plan. Responsibility for
    day-to-day administration, including the preparation and filing
    of all government reports and the preparation and delivery of
    all required employee materials and communications, will be
    performed by company personnel.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">11.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Review the annual incentive compensation plan to
    determine if it is administered in a manner consistent with the
    Company&#146;s compensation strategy and does not exceed amounts
    under IRS Code Section&nbsp;162(m)
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">12.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Review matters related to management performance,
    compensation and succession planning and executive development
    for executive staff.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">13.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Approve separation packages and severance
    benefits for executive officers to the extent that the packages
    are outside the ordinary plan limits.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">14.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Exercise, as necessary and appropriate, all of
    the authority of the Board of Directors with respect to the
    election of officers of the Company during the periods between
    the regular meetings of the Board.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">15.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Have full access to the Company&#146;s executives
    and personnel as necessary to carry out its responsibilities.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">16.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Obtain such data or other resources as it deems
    necessary to perform its duties, including but not limited to
    obtaining external consultant reports or published salary
    surveys, and engaging independent compensation consultants and
    other professionals to assist in the design, formulation,
    analysis and implementation of compensation programs for the
    Company&#146;s executive officers and other key employees.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">17.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Have responsibility for the review and approval
    of all reports and summaries of compensation policies and
    decisions as may be appropriate for operational purposes or as
    may be required under applicable law.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">18.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Perform any other activities consistent with the
    Charter, the Company&#146;s Bylaws and governing law as the
    Committee or the Board deems necessary or appropriate.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">19.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Review the Committee Charter from time to time
    and recommend any changes to the Board.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">20.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Report to the Board of Directors on the major
    items covered at each meeting.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Notwithstanding the foregoing, any action of the
Committee, other than the grant of stock options or other
discretionary awards under the Company&#146;s stock option or
other equity incentive plans, may be subject to Board review and
may be revised, modified or rescinded by the Board.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">IV.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Committee Meetings</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Committee will meet as often as necessary to
carry out its responsibilities. Meetings may be called by the
Chairman of the Committee and/or by the management of the
Company. Minutes of each meeting will be duly filed in the
Company records. Reports of meetings of the Committee will be
made to the Board of Directors at its next regularly scheduled
meeting following the Committee meeting accompanied by any
recommendations to the Board of Directors approved by the
Committee.
</FONT>

<P align="center"><FONT size="2">B-2
</FONT>
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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Committee will also meet as and when
necessary to act upon any other matters within its jurisdiction
under this Charter. A majority of the total number of members of
the Committee will constitute a quorum at all committee
meetings. A majority of the members of the Committee acting will
be empowered to act on behalf of the Committee. Minutes will be
kept of each meeting of the Committee.
</FONT>

<P align="left">
<I><FONT size="2">Adopted as amended, March&nbsp;9,
2004.</FONT></I>

<P align="center"><FONT size="2">B-3
</FONT>

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<DIV align="left">
<A name='142'></A>
</DIV>

<!-- link1 "Appendix C" -->

<DIV align="right">
<B><FONT size="2">Appendix&nbsp;C</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">LTC PROPERTIES,&nbsp;INC.</FONT></B>

<P align="center">
<B><FONT size="2">NOMINATING AND CORPORATE GOVERNANCE COMMITTEE
CHARTER</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This Amended Nominating and Corporate Governance
Committee Charter was adopted by the Board of Directors (the
&#147;Board&#148;) of LTC Properties,&nbsp;Inc. (the
&#147;Company&#148;) on March&nbsp;9, 2004.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This Charter is intended as a component of the
flexible governance framework within which the Board, assisted
by its committees, directs the affairs of the Company. While it
should be interpreted in the context of all applicable laws,
regulations and listing requirements, as well as in the context
of the Articles of Incorporation and By Laws, it is not intended
to establish by its own force any legally binding obligations.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">I.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Purposes</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Nominating and Corporate Governance Committee
(the &#147;Committee&#148;) shall assist the Board in:
(i)&nbsp;identifying, screening and reviewing individuals
qualified to serve as directors and recommending to the Board
candidates for nomination for election at the annual meeting of
shareholders or to fill Board vacancies; (ii)&nbsp;overseeing
the Company&#146;s policies and procedures for the receipt of
shareholder suggestions regarding Board composition and
recommendations of candidates for nomination by the Board;
(iii)&nbsp;developing, recommending to the Board and overseeing
implementation of the Company&#146;s Code of Business Conduct,
Ethics and Corporate Governance; and (iv)&nbsp;reviewing on a
regular basis the overall corporate governance of the Company
and recommending improvements when necessary.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In discharging its role, the Committee is
empowered to inquire into any matter it considers appropriate to
carry out its responsibilities, with access to all books,
records, facilities and personnel of the Company. The Committee
has the power to retain outside counsel, director search and
recruitment consultants or other advisors to assist it in
carrying out its activities. The Company shall provide adequate
resources to support the Committee&#146;s activities, including
compensation of the Committee&#146;s counsel, consultants and
other advisors. The Committee shall have the sole authority to
retain, compensate, direct, oversee and terminate its counsel,
director search and recruitment consultants, and other advisors
hired to assist the Committee, who shall be accountable
ultimately to the Committee.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">II.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Committee Membership</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Committee shall consist of two or more
members of the Board, each of whom the Board has selected and
determined to be &#147;independent&#148; in accordance with
applicable rules of the New&nbsp;York Stock Exchange.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Members shall continue to be members until their
successors are elected and qualified or until their earlier
resignation or removal. Any member may be removed by the Board,
with or without cause, at any time. The Chairman of the
Committee shall be appointed from among the Committee members
by, and serve at the pleasure of, the Committee to convene and
chair meetings of the Committee, set agendas for meetings, and
determine the Committee&#146;s information needs. In the absence
of the Chairman at a duly convened meeting, the Committee shall
select a temporary substitute from among its members.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">III.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Committee Meetings</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Committee shall meet on a regularly-scheduled
basis at least two times per year, or more frequently as
circumstances dictate.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Committee shall establish its own schedule
and rules of procedure. Meetings of the Committee may be held
telephonically. A majority of the members of the Committee shall
constitute a quorum sufficient for the taking of any action by
the Committee.
</FONT>

<P align="center"><FONT size="2">C-1
</FONT>

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<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">IV.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Key Responsibilities</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following responsibilities are set forth as a
guide for fulfilling the Committee&#146;s purposes, with the
understanding that the Committee&#146;s activities may diverge
as appropriate given the circumstances. The Committee is
authorized to carry out these activities and other actions
reasonably related to the Committee&#146;s purposes or assigned
by the Board from time to time.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Committee may form, and delegate any of its
responsibilities to, a subcommittee so long as such subcommittee
is solely comprised of one or more members of the Committee.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">To fulfill its purposes, the Committee shall:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&nbsp; 1.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">recommend to the Board for approval, oversee the
    implementation and effectiveness of, recommend modifications as
    appropriate to, and review Company disclosures concerning the
    Company&#146;s policies and procedures for identifying and
    reviewing Board nominee candidates, including: (i)&nbsp;the
    qualifications or criteria for Board nomination to shareholders
    for election as a director; and (ii)&nbsp;policies and
    procedures relating to consideration of Board nominee candidates
    recommended by shareholders;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&nbsp; 2.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">identify, screen and review individuals qualified
    to serve as directors, consistent with qualifications or
    criteria approved by the Board (including review of incumbent
    directors for potential re-nomination); and recommend to the
    Board candidates for: (i)&nbsp;nomination for election or
    re-election by the shareholders; and (ii)&nbsp;any Board
    vacancies that are to be filled by the Board subject to any
    rights regarding the selection of directors by holders of
    preferred shares and any other contractual or other commitments
    of the Company;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&nbsp; 3.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">review annually with the Board the composition of
    the Board as a whole, including whether the Board reflects the
    appropriate balance of independence, sound judgment, business
    specialization, technical skills, diversity and other desired
    qualities;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&nbsp; 4.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">review periodically the size of the Board and
    recommend to the Board any appropriate changes;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&nbsp; 5.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">coordinate and oversee the annual self-evaluation
    of the role and performance of the Board, its committees, and
    management in the governance of the Company;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&nbsp; 6.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">develop and recommend to the Board, oversee the
    implementation and effectiveness of, and recommend modifications
    as appropriate to the Company&#146;s Code of Business Conduct,
    Ethics and Corporate Governance;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&nbsp; 7.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">consider corporate governance issues that arise
    from time to time, and develop appropriate recommendations for
    the Board regarding such matters;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&nbsp; 8.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">review and address conflicts of interest of
    Directors and executive officers, and the manner in which any
    such conflicts are to be monitored;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&nbsp; 9.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">review and recommend to the Board for approval
    any changes in the compensation of directors;
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="3%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">10.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">conduct an annual self-evaluation of the
    performance of the Committee, including its effectiveness and
    compliance with this charter;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">11.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">review and reassess the adequacy of this Charter
    annually, and recommend to the Board amendments as the Committee
    deems appropriate;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">12.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">report regularly to the Board on Committee
    findings, recommendations and any other matters the Committee
    deems appropriate or the Board requests, and maintain minutes or
    other records of Committee meetings and activities.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<I><FONT size="2">Adopted as amended, March&nbsp;9,
2004.</FONT></I>

<P align="center"><FONT size="2">C-2
</FONT>

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<DIV align="left">
<A name='143'></A>
</DIV>

<!-- link1 "Appendix D" -->

<DIV align="right">
<B><FONT size="2">Appendix&nbsp;D</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">LTC PROPERTIES,&nbsp;INC.</FONT></B>

<P align="center">
<B><FONT size="2">THE 2004 STOCK OPTION PLAN</FONT></B>

<P align="center">
<B><FONT size="2">OF</FONT></B>

<P align="center">
<B><FONT size="2">LTC PROPERTIES,&nbsp;INC.</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">LTC Properties,&nbsp;Inc., a Maryland
corporation, has adopted The 2004 Stock Option Plan of LTC
Properties,&nbsp;Inc. (the &#147;Plan&#148;),
effective &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
2004 (the &#147;Effective Date&#148;), for the benefit of its
eligible employees, consultants and directors.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The purposes of the Plan are as follows:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(1)&nbsp;To provide an additional incentive for
    directors, Employees (as such term is defined below) and
    consultants to further the growth, development and financial
    success of the Company by personally benefiting through the
    ownership of Company stock which recognize such growth,
    development and financial success.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(2)&nbsp;To enable the Company to obtain and
    retain the services of directors, Employees and consultants
    considered essential to the long range success of the Company by
    offering them an opportunity to own stock in the Company which
    will reflect the growth, development and financial success of
    the Company.
    </FONT></TD>
</TR>

</TABLE>

<P align="center">
<B><FONT size="2">ARTICLE&nbsp;I.</FONT></B>

<P align="center">
<B><FONT size="2">DEFINITIONS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Wherever the following terms are used in the Plan
they shall have the meanings specified below, unless the context
clearly indicates otherwise.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Administrator&#148;
</FONT></I><FONT size="2">shall mean the entity that conducts
the general administration of the Plan as provided in
Article&nbsp;VII. With reference to the administration of the
Plan with respect to Options granted to Independent Directors,
the term &#147;Administrator&#148; shall refer to the Board.
With reference to the administration of the Plan with respect to
any other Options, the term &#147;Administrator&#148; shall
refer to the Committee unless the Board has assumed the
authority for administration of the Plan generally as provided
in Section&nbsp;7.2.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Board&#148;
</FONT></I><FONT size="2">shall mean the Board of Directors of
the Company.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Change in Control&#148;
</FONT></I><FONT size="2">shall mean a change in ownership or
control of the Company effected through any of the following
transactions:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;any person or related group of persons
    (other than the Company or a person that directly or indirectly
    controls, is controlled by, or is under common control with, the
    Company) is or becomes the beneficial owner (within the meaning
    of Rule&nbsp;13d-3 under the Exchange Act), directly or
    indirectly, of securities of the Company representing 30% or
    more of the combined voting power of the Company&#146;s then
    outstanding securities;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;the stockholders of the Company approve
    a merger or consolidation of the Company with any other
    corporation (or other entity), other than a merger or
    consolidation which would result in the voting securities of the
    Company outstanding immediately prior thereto continuing to
    represent (either by remaining outstanding or by being convened
    into voting securities of the surviving entity) more than
    66&nbsp;2/3% of the combined voting power of the voting
    securities of the Company or such surviving entity outstanding
    immediately after such merger or consolidation; <I>provided,
    however, </I>that a merger or consolidation effected to
    implement a recapitalization of the Company (or similar
    transaction) in which
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">D-1
</FONT>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">no person acquires 30% or more of the combined
    voting power of the Company&#146;s then outstanding securities
    shall not constitute a Change in Control;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(c)&nbsp;the stockholders of the Company approve
    a plan of complete liquidation of the Company or an agreement
    for the sale of disposition by the Company of all or
    substantially all of the Company&#146;s assets;&nbsp;or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(d)&nbsp;a majority of the members of the Board
    cease to be, as of any date of determination, members of the
    Board who were members of the Board as of the date the Plan was
    approved by the stockholders of the Company or was nominated for
    election or elected to the Board with the approval of a majority
    of the members of the Board at the time of such nomination or
    election.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Code&#148;
</FONT></I><FONT size="2">shall mean the Internal Revenue Code
of 1986, as amended.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Committee&#148;
</FONT></I><FONT size="2">shall mean the Compensation Committee
of the Board.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Common Stock&#148;
</FONT></I><FONT size="2">shall mean the common stock of the
Company, par value $.01&nbsp;per share.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Company&#148;
</FONT></I><FONT size="2">shall mean LTC Properties,&nbsp;Inc.,
a Maryland corporation.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Corporate Transaction&#148;
</FONT></I><FONT size="2">shall mean any of the following
stockholder-approved transactions to which the Company is a
party:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;a merger or consolidation in which the
    Company is not the surviving entity, except for a transaction
    the principal purpose of which is to change the State in which
    the Company is incorporated, form a holding company or effect a
    similar reorganization as to form whereupon the Plan and all
    Options are assumed by the successor entity;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;the sale, transfer, exchange or other
    disposition of all or substantially all of the assets of the
    Company, in complete liquidation or dissolution of the Company
    in a transaction not covered by the exceptions to
    clause&nbsp;(a), above;&nbsp;or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(c)&nbsp;any reverse merger in which the Company
    is the surviving entity but in which securities possessing more
    than 30% of the total combined voting power of the
    Company&#146;s outstanding securities are transferred or issued
    to a person or persons different from those who held such
    securities immediately prior to such merger.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Director&#148;
</FONT></I><FONT size="2">shall mean a member of the Board.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Effective Date&#148;
</FONT></I><FONT size="2">shall mean the date on which the Plan
is approved by the Company&#146;s stockholders.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Employee&#148;
</FONT></I><FONT size="2">shall mean any officer or other
employee (as defined in accordance with Section&nbsp;3401(c) of
the Code) of the Company, or of any Subsidiary.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Exchange Act&#148;
</FONT></I><FONT size="2">shall mean the Securities Exchange Act
of 1934, as amended.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Fair Market Value&#148;
</FONT></I><FONT size="2">of a share of Common Stock as of a
given date shall be (i)&nbsp;the closing price of a share of
Common Stock on the principal exchange on which shares of Common
Stock are then trading, if any (or as reported on any composite
index which includes such principal exchange), on the trading
day previous to such date, or if shares were not traded on the
trading day previous to such date, then on the next preceding
date on which a trade occurred, or (ii)&nbsp;if Common Stock is
not traded on an exchange but is quoted on NASDAQ or a successor
quotation system, the mean between the closing representative
bid and asked prices for the Common Stock on the trading day
previous to such date as reported by NASDAQ or such successor
quotation system; or (iii)&nbsp;if Common Stock is not publicly
traded on an exchange and not quoted on NASDAQ or a successor
quotation system, the fair market value of a share of Common
Stock as established by the Administrator acting in good faith.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Incentive Stock Option&#148;
</FONT></I><FONT size="2">shall mean an option which conforms to
the applicable provisions of Section&nbsp;422 of the Code and
which is designated as an Incentive Stock Option by the
Committee.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Independent Director&#148;
</FONT></I><FONT size="2">shall mean a member of the Board who
is deemed independent pursuant to Rule&nbsp;16b-3 and the
New&nbsp;York Stock Exchange rules.
</FONT>

<P align="center"><FONT size="2">D-2
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Non-Qualified Stock Option&#148;
</FONT></I><FONT size="2">shall mean an Option which is not
designated as an Incentive Stock Option by the Committee.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Option&#148;
</FONT></I><FONT size="2">shall mean a stock option granted
under Article&nbsp;IV of the Plan. An Option granted under the
Plan shall, as determined by the Administrator, be either a
Non-Qualified Stock Option or an Incentive Stock Option;
<I>provided, however, </I>that Options granted to Independent
Directors and consultants shall be Non-Qualified Stock Options.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Option Agreement&#148;
</FONT></I><FONT size="2">shall mean a written agreement
executed by an authorized officer of the Company and the
Optionee which shall contain such terms and conditions with
respect to an Option as the Administrator shall determine,
consistent with the Plan.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Option Limit&#148;
</FONT></I><FONT size="2">shall mean Options for one hundred
thousand (100,000) shares of Common Stock, as adjusted pursuant
to Section&nbsp;8.3 of the Plan.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Optionee&#148;
</FONT></I><FONT size="2">shall mean an Employee, consultant or
Independent Director granted an Option under the Plan.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Plan&#148;
</FONT></I><FONT size="2">shall mean The 2004 Stock Option Plan
of LTC Properties,&nbsp;Inc., as set forth herein and as amended
from time to time.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Rule&nbsp;16b-3&#148;
</FONT></I><FONT size="2">shall mean Rule&nbsp;16b-3 under the
Exchange Act, as such Rule may be amended from time to time.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Securities Act&#148;
</FONT></I><FONT size="2">shall mean the Securities Act of 1933,
as amended.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Subsidiary&#148;
</FONT></I><FONT size="2">shall mean any corporation in an
unbroken chain of corporations beginning with the Company if
each of the corporations other than the last corporation in the
unbroken chain then owns stock possessing fifty percent (50%) or
more of the total combined voting power of all classes of stock
in one of the other corporations in such chain.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Termination of Consultancy&#148;
</FONT></I><FONT size="2">shall mean the time when the
engagement of an Optionee as a consultant to the Company or a
Subsidiary is terminated for any reason, with or without cause
and with or without notice, including, but not by way of
limitation, by resignation, discharge, death or retirement; but
excluding terminations where there is a simultaneous
commencement of employment with the Company or any Subsidiary.
The Committee, in its absolute discretion, shall determine the
effect of all matters and questions relating to Termination of
Consultancy, including, but not by way of limitation, the
question of whether a Termination of Consultancy resulted from a
discharge for good cause, and all questions of whether a
particular leave of absence constitutes a Termination of
Consultancy. Notwithstanding any other provision of the Plan,
the Company or any Subsidiary has an absolute and unrestricted
right to terminate a consultant&#146;s service at any time for
any reason whatsoever, with or without cause and with or without
notice, except to the extent expressly provided otherwise in
writing.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Termination of Directorship&#148;
</FONT></I><FONT size="2">shall mean the time when an Optionee
who is an Independent Director ceases to be a Director for any
reason, including, but not by way of limitation, a termination
by resignation, failure to be elected, death or retirement. The
Board, in its sole and absolute discretion, shall determine the
effect of all matters and questions relating to Termination of
Directorship with respect to Independent Directors.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Termination of Employment&#148;
</FONT></I><FONT size="2">shall mean the time when the
employee-employer relationship between an Optionee and the
Company or any Subsidiary is terminated for any reason, with or
without cause and with or without notice, including, but not by
way of limitation, a termination by resignation, discharge,
death, disability or retirement; but excluding
(i)&nbsp;terminations where there is a simultaneous reemployment
or continuing employment of an Optionee by the Company or any
Subsidiary, (ii)&nbsp;at the discretion of the Committee,
terminations which result in a temporary severance of the
employee-employer relationship, and (iii)&nbsp;at the discretion
of the Committee, terminations which are followed by the
simultaneous establishment of a consulting relationship by the
Company or a Subsidiary with the former employee. The Committee,
in its absolute discretion, shall determine the effect of all
matters and questions relating to Termination of
</FONT>

<P align="center"><FONT size="2">D-3
</FONT>

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<DIV align="left">
<FONT size="2">Employment, including, but not by way of
limitation, the question of whether a Termination of Employment
resulted from a discharge for good cause, and all questions of
whether a particular leave of absence constitutes a Termination
of Employment; <I>provided, however, </I>that, with respect to
Incentive Stock Options, unless otherwise determined by the
Committee in its discretion, a leave of absence, change in
status from an employee to an independent contractor or other
change in the employee-employer relationship shall constitute a
Termination of Employment if, and to the extent that, such leave
of absence, change in status or other change interrupts
employment for the purposes of Section&nbsp;422(a)(2) of the
Code and the then applicable regulations and revenue rulings
under said Section. Notwithstanding any other provision of the
Plan, the Company or any Subsidiary has an absolute and
unrestricted right to terminate an Employee&#146;s employment at
any time for any reason whatsoever, with or without cause and
with or without notice, except to the extent expressly provided
otherwise in writing.
</FONT>
</DIV>

<P align="center">
<B><FONT size="2">ARTICLE&nbsp;II.</FONT></B>

<P align="center">
<B><FONT size="2">SHARES SUBJECT TO PLAN</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">2.1.&nbsp;<I>Shares Subject to Plan.</I>
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;The shares of stock subject to Options
    shall be Common Stock. The aggregate number of such shares which
    may be issued upon exercise of such Options under the Plan shall
    not exceed Five Hundred Thousand (500,000). The shares of Common
    Stock issuable upon exercise of such Options include previously
    authorized but unissued shares.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;The maximum number of shares which may
    be subject to Options, granted under the Plan to any individual
    in any calendar year shall not exceed the Options Limit.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">2.2.&nbsp;<I>Add-back of Options and Other
Rights.</I> If any Option expires or is cancelled without having
been fully exercised, or is exercised in whole or in part for
cash as permitted by the Plan, the number of shares subject to
such Option but as to which such Option was not exercised prior
to its expiration, cancellation or exercise may again be
optioned, granted or awarded hereunder, subject to the
limitations of Section&nbsp;2.1. Furthermore, any shares subject
to Options which are adjusted pursuant to Section&nbsp;8.3 and
become exercisable with respect to shares of stock of another
corporation shall be considered cancelled and may again be
optioned, granted or awarded hereunder, subject to the
limitations of Section&nbsp;2.1. Shares of Common Stock which
are delivered by the Option or withheld by the Company upon the
exercise of any Options under the Plan, in payment of the
exercise price thereof or tax withholding thereon, may again be
optioned, granted or awarded hereunder, subject to the
limitations of Section&nbsp;2.1. Notwithstanding the provisions
of this Section&nbsp;2.2, no shares of Common Stock may again be
optioned, granted or awarded if such action would cause an
Incentive Stock Option to fail to qualify as an incentive stock
option under Section&nbsp;422 of the Code.
</FONT>

<P align="center">
<B><FONT size="2">ARTICLE&nbsp;III.</FONT></B>

<P align="center">
<B><FONT size="2">GRANTING OF OPTIONS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">3.1.&nbsp;<I>Option Agreement.</I> Each Option
shall be evidenced by an Option Agreement. Option Agreements
evidencing Incentive Stock Options shall contain such terms and
conditions as may be necessary to meet the applicable provisions
of Section&nbsp;422 of the Code.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">3.2.&nbsp;<I>Consideration.</I> In consideration
of the granting of an Option under the Plan, the Optionee shall
agree, in the Option Agreement, to remain in the employ of (or
to consult for or to serve as an Independent Director of, as
applicable) the Company or any Subsidiary for a period of at
least one year (or such shorter period as may be fixed in the
Option Agreement or by action of the Administrator following
grant of the Option) after the Option is granted (or, in the
case of an Independent Director, until the next annual meeting
of stockholders of the Company).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">3.3.&nbsp;<I>At-Will Employment.</I> Nothing in
the Plan or in any Option Agreement hereunder shall confer upon
any Optionee any right to continue in the employ of, or as a
consultant for, the Company or any
</FONT>

<P align="center"><FONT size="2">D-4
</FONT>

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<DIV align="left">
<FONT size="2">Subsidiary, or as a director of the Company, or
shall interfere with or restrict in any way the rights of the
Company and any Subsidiary, which are hereby expressly reserved,
to discharge any Optionee at any time for any reason whatsoever,
with or without cause and with or without notice, except to the
extent expressly provided otherwise in a written employment
agreement between the Optionee and the Company and any
Subsidiary.
</FONT>
</DIV>

<P align="center">
<B><FONT size="2">ARTICLE&nbsp;IV.</FONT></B>

<P align="center">
<B><FONT size="2">GRANTING OF OPTIONS TO EMPLOYEES,</FONT></B>

<DIV align="center">
<B><FONT size="2">CONSULTANTS AND INDEPENDENT
DIRECTORS</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.1.&nbsp;<I>Eligibility.</I> Any Employee or
consultant selected by the Committee pursuant to
Section&nbsp;4.4(a)(i) shall be eligible to be granted an
Option. Each Independent Director of the Company shall be
eligible to be granted Options at the times and in the manner
set forth in Sections&nbsp;4.5 and 4.6.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.2.&nbsp;<I>Disqualification for Stock
Ownership.</I> No person may be granted an Incentive Stock
Option under the Plan if such person, at the time the Incentive
Stock Option is granted, owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes
of stock of the Company or any then existing Subsidiary or
parent corporation (within the meaning of Section&nbsp;422 of
the Code) unless such Incentive Stock Option conforms to the
applicable provisions of Section&nbsp;422 of the Code.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.3.&nbsp;<I>Qualification of Incentive Stock
Options.</I> No Incentive Stock Option shall be granted to any
person who is not an Employee.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.4.&nbsp;<I>Granting of Options to Employees and
Consultants.</I>
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;The Committee shall from time to time,
    in its absolute discretion, and subject to applicable
    limitations of the Plan:
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(i)&nbsp;Select from among the Employees or
    consultants (including Employees or consultants who have
    previously received Options under the Plan) such of them as in
    its opinion should be granted Options;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(ii)&nbsp;Subject to the Options Limit, determine
    the number of shares to be subject to such Options granted to
    the selected Employees or consultants;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(iii)&nbsp;Subject to Section&nbsp;4.3, determine
    whether such Options are to be Incentive Stock Options or
    Non-Qualified Stock Options; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(iv)&nbsp;Determine the terms and conditions of
    such Options, consistent with the Plan.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;Upon the selection of an Employee or
    consultant to be granted an Option, the Committee shall instruct
    the Secretary of the Company to issue the Option and may impose
    such conditions on the grant of the Option as it deems
    appropriate.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(c)&nbsp;Any Incentive Stock Option granted under
    the Plan may be modified by the Committee, with the consent of
    the Optionee, to disqualify such Option from treatment as an
    &#147;incentive stock option&#148; under Section&nbsp;422 of the
    Code.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.5.&nbsp;<I>Granting of Options to Independent
Directors.</I>
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;During the term of the Plan, a person
    who is initially elected to the Board and who is an Independent
    Director at the time of such initial election automatically
    shall be granted a Non-Qualified Option to purchase Fifteen
    Thousand (15,000) shares of Common Stock (subject to adjustment
    as provided in Section&nbsp;8.3). Members of the Board who are
    Employees who subsequently have a Termination of Employment and
    remain on the Board will not receive an initial Option grant
    pursuant to the preceding sentence.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;In addition to the Options granted under
    Subsection&nbsp;(a), the Board shall from time to time, in its
    absolute discretion, and subject to applicable limitations of
    the Plan determine (i)&nbsp;which Independent
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">D-5
</FONT>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Directors, if any, should, in its opinion, be
    granted Non-Qualified Stock Options, (ii)&nbsp;subject to the
    Options Limit, determine the number of number of shares to be
    subject to such Options, and (iii)&nbsp;the terms and conditions
    of such Options, consistent with the Plan.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.6.&nbsp;<I>Options in Lieu of Cash
Compensation.</I> Options may be granted under the Plan to
Employees and consultants in lieu of cash bonuses which would
otherwise be payable to such Employees and consultants and to
Independent Directors in lieu of directors&#146; fees which
would otherwise be payable to such Independent Directors,
pursuant to such policies which may be adopted by the
Administrator from time to time.
</FONT>

<P align="center">
<B><FONT size="2">ARTICLE&nbsp;V.</FONT></B>

<P align="center">
<B><FONT size="2">TERMS OF OPTIONS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">5.1.&nbsp;<I>Option Price.</I> The price per
share of the shares subject to each Option granted to Employees
and consultants shall be set by the Committee; <I>provided,
however, </I>that such price shall be no less than the par value
of a share of Common Stock, unless otherwise permitted by
applicable state law, and not be less than 100% of the Fair
Market Value of a share of Common Stock on the date the Option
is granted (or the date the Option is modified, extended or
renewed for purposes of Section&nbsp;424(h) of the Code); and
provided further that in the case of Incentive Stock Options
granted to an individual then owning (within the meaning of
Section&nbsp;424(d) of the Code) more than 10% of the total
combined voting power of all classes of stock of the Company or
any Subsidiary or parent corporation thereof (within the meaning
of Section&nbsp;422 of the Code), such price shall not be less
than 110% of the Fair Market Value of a share of Common Stock on
the date the Option is granted (or the date the Option is
modified, extended or renewed for purposes of
Section&nbsp;424(h) of the Code).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">5.2.&nbsp;<I>Option Term.</I> The term of an
Option granted to an Employee or consultant shall be set by the
Committee in its discretion; <I>provided, however, </I>that, in
the case of Incentive Stock Options, the term shall not be more
than ten (10)&nbsp;years from the date the Incentive Stock
Option is granted, or five (5)&nbsp;years from such date if the
Incentive Stock Option is granted to an individual then owning
(within the meaning of Section&nbsp;424(d) of the Code) more
than 10% of the total combined voting power of all classes of
stock of the Company or any Subsidiary or parent corporation
thereof (within the meaning of Section&nbsp;422 of the Code).
Except as limited by requirements of Section&nbsp;422 of the
Code and regulations and rulings thereunder applicable to
Incentive Stock Options, the Committee may extend the term of
any outstanding Option in connection with any Termination of
Employment or Termination of Consultancy of the Optionee, or
amend any other term or condition of such Option relating to
such a termination.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">5.3.&nbsp;<I>Option Vesting.</I>
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;The period during which the right to
    exercise, in whole or in part, an Option granted to an Employee
    or a consultant vests in the Optionee shall be set by the
    Committee in its sole and absolute discretion and the Committee
    may determine that an Option may not be exercised in whole or in
    part for a specified period after it is granted; <I>provided,
    however, </I>that, unless the Committee otherwise provides in
    the terms of the Option Agreement or otherwise, no Option shall
    be exercisable by any Optionee who is then subject to
    Section&nbsp;16 of the Exchange Act within the period ending six
    months and one day after the date the Option is granted. At any
    time after grant of an Option, the Committee may, in its sole
    and absolute discretion and subject to whatever terms and
    conditions it selects, accelerate the period during which an
    Option granted to an Employee or consultant vests.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;No portion of an Option granted to an
    Employee or consultant which is unexercisable at Termination of
    Employment or Termination of Consultancy, as applicable, shall
    thereafter become exercisable, except as may be otherwise
    provided by the Committee either in the Option Agreement or by
    action of the Committee following the grant of the Option.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(c)&nbsp;To the extent that the aggregate Fair
    Market Value of stock with respect to which &#147;incentive
    stock options&#148; (within the meaning of Section&nbsp;422 of
    the Code, but without regard to Section&nbsp;422(d) of the Code)
    are exercisable for the first time by an Optionee during any
    calendar year (under the Plan and
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">D-6
</FONT>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">all other incentive stock option plans of the
    Company and any parent or subsidiary corporation (within the
    meaning of Section&nbsp;422 of the Code) of the Company) exceeds
    $100,000, such Options shall be treated as Non-Qualified Options
    to the extent required by Section&nbsp;422 of the Code. The rule
    set forth in the preceding sentence shall be applied by taking
    Options into account in the order in which they were granted.
    For purposes of this Section&nbsp;5.3(c), the Fair Market Value
    of stock shall be determined as of the time the Option with
    respect to such stock is granted.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(d)&nbsp;Notwithstanding the foregoing, unless
    otherwise provided in the terms of an Option Agreement, all
    Options shall immediately vest in full upon a Change in Control.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">5.4.&nbsp;<I>Terms of Options Granted to
Independent Directors.</I> The price per share of the shares
subject to each Option granted to an Independent Director shall
equal 100% of the Fair Market Value of a share of Common Stock
on the date the Option is granted. Unless otherwise provided in
the Option Agreement, subject to Section&nbsp;6.6, each Option
granted to an Independent Director pursuant to Section&nbsp;4.5
shall become exercisable in cumulative annual installments of
33&nbsp;1/3% on each of the first, second and third
anniversaries of the date of grant and shall expire on the
earlier of the seventh anniversary of the date of vesting or one
year following an Independent Director&#146;s Termination of
Directorship for any reason; <I>provided </I>that no Option
shall vest more than one year following an Independent
Director&#146;s Termination of Directorship.
</FONT>

<P align="center">
<B><FONT size="2">ARTICLE&nbsp;VI.</FONT></B>

<P align="center">
<B><FONT size="2">EXERCISE OF OPTIONS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">6.1.&nbsp;<I>Partial Exercise.</I> An exercisable
Option may be exercised in whole or in part. However, an Option
shall not be exercisable with respect to fractional shares and
the Administrator may require that, by the terms of the Option,
a partial exercise be with respect to a minimum number of shares.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">6.2.&nbsp;<I>Manner of Exercise.</I> All or a
portion of an exercisable Option shall be deemed exercised upon
delivery of all of the following to the Secretary of the Company
or his/her office (unless otherwise provided in the Option
Agreement):
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;A written notice complying with the
    applicable rules established by the Administrator stating that
    the Option, or a portion thereof, is exercised. The notice shall
    be signed by the Optionee or other person then entitled to
    exercise the Option or such portion of the Option;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;Such representations and documents as
    the Administrator, in its absolute discretion, deems necessary
    or advisable to effect compliance with all applicable provisions
    of the Securities Act and any other federal or state securities
    laws or regulations. The Administrator may, in its absolute
    discretion, also take whatever additional actions it deems
    appropriate to effect such compliance including, without
    limitation, placing legends on share certificates and issuing
    stop-transfer notices to agents and registrars;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(c)&nbsp;In the event that the Option shall be
    exercised pursuant to Section&nbsp;8.1 by any person or persons
    other than the Optionee, appropriate proof of the right of such
    person or persons to exercise the Option;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(d)&nbsp;Full cash payment to the Secretary of
    the Company for the shares with respect to which the Option, or
    portion thereof, is exercised. However, the Administrator, may
    in its discretion (i)&nbsp;allow payment, in whole or in part,
    through the delivery of shares of Common Stock owned by the
    Optionee, duly endorsed for transfer to the Company with a Fair
    Market Value on the date of delivery equal to the aggregate
    exercise price of the Option or exercised portion thereof;
    (ii)&nbsp;allow payment, in whole or in part, through the
    surrender of shares of Common Stock then issuable upon exercise
    of the Option having a Fair Market Value on the date of Option
    exercise equal to the aggregate exercise price of the Option or
    exercised portion thereof; (iii)&nbsp;allow payment, in whole or
    in part, through the delivery of a notice that the Optionee has
    placed a market sell order with a broker with respect to shares
    of Common Stock then issuable upon exercise of the Option, and
    that the broker has been directed to pay a sufficient portion of
    the net proceeds of the sale to the Company in satisfaction of
    the Option exercise price; or (iv)&nbsp;allow
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">D-7
</FONT>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">payment through any combination of the
    consideration provided in the foregoing clauses&nbsp;(i), (ii),
    and&nbsp;(iii).
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">6.3.&nbsp;<I>Conditions to Issuance of Stock
Certificates.</I> The Company shall not be required to issue or
deliver any certificate or certificates for shares of stock
purchased upon the exercise of any Option or portion thereof
prior to fulfillment of all of the following conditions:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;The admission of such shares to listing
    on all stock exchanges on which such class of stock is then
    listed;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;The completion of any registration or
    other qualification of such shares under any state or federal
    law, or under the rulings or regulations of the Securities and
    Exchange Commission or any other governmental regulatory body
    which the Administrator shall, in its absolute discretion, deem
    necessary or advisable;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(c)&nbsp;The obtaining of any approval or other
    clearance from any state or federal governmental agency which
    the Administrator shall, in its absolute discretion, determine
    to be necessary or advisable;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(d)&nbsp;The lapse of such reasonable period of
    time following the exercise of the Option as the Committee (or
    Board, in the case of Options granted to Independent Directors)
    may establish from time to time for reasons of administrative
    convenience;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(e)&nbsp;The receipt by the Company of full
    payment for such shares, including payment of any applicable
    withholding tax, which in the discretion of the Committee or the
    Board may be in the form of consideration used by the Optionee
    to pay for such shares under Section&nbsp;6.2(d).
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">6.4.&nbsp;<I>Rights as Stockholders.</I>
Optionees shall not be, nor have any of the rights or privileges
of, stockholders of the Company in respect of any shares
purchasable upon the exercise of any part of an Option unless
and until certificates representing such shares have been issued
by the Company to such Optionees.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">6.5.&nbsp;<I>Ownership and Transfer
Restrictions.</I> The Administrator, in its absolute discretion,
may impose such restrictions on the ownership and
transferability of the shares purchasable upon the exercise of
an Option as it deems appropriate. Any such restriction shall be
set forth in the respective Option Agreement and may be referred
to on the certificates evidencing such shares. The Committee may
require the Employee to give the Company prompt notice of any
disposition of shares of Common Stock acquired by exercise of an
Incentive Stock Option within (i)&nbsp;two years from the date
of granting (including the date the Option is modified, extended
or renewed for purposes of Section&nbsp;424(h) of the Code) such
Option to such Employee or (ii)&nbsp;one year after the transfer
of such shares to such Employee. The Committee may direct that
the certificates evidencing shares acquired by exercise of any
such Option refer to such requirement to give prompt notice of
disposition.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">6.6.&nbsp;<I>Additional Limitations on Exercise
of Options.</I> Optionees may be required to comply with any
timing or other restrictions with respect to the settlement or
exercise of an Option, including a window-period limitation, as
may be imposed in the discretion of the Administrator.
</FONT>

<P align="center">
<B><FONT size="2">ARTICLE&nbsp;VII.</FONT></B>

<P align="center">
<B><FONT size="2">ADMINISTRATION</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">7.1.&nbsp;<I>Duties and Powers of Committee.</I>
It shall be the duty of the Committee to conduct the general
administration of the Plan in accordance with its provisions.
The Committee shall have the power to interpret the Plan and the
agreements pursuant to which Options are granted or awarded, and
to adopt such rules for the administration, interpretation, and
application of the Plan as are consistent therewith and to
interpret, amend or revoke any such rules. Notwithstanding the
foregoing, the full Board, acting by a majority of its members
in office, shall conduct the general administration of the Plan
with respect to Options granted to Independent Directors. Any
such grant or award under the Plan need not be the same with
respect to each Optionee. Any such interpretations and rules
with respect to Incentive Stock Options shall be consistent with
the provisions of Section&nbsp;422 of the Code. In its absolute
discretion, the Board may at any time and from time
</FONT>

<P align="center"><FONT size="2">D-8
</FONT>

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<DIV align="left">
<FONT size="2">to time exercise any and all rights and duties of
the Committee under the Plan except with respect to matters
which under Rule&nbsp;16b-3 or other applicable law (including
stock exchange rules), are required to be determined in the sole
discretion of the Committee.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">7.2.&nbsp;<I>Majority Rule; Unanimous Written
Consent.</I> The Committee shall act by a majority of its
members in attendance at a meeting at which a quorum is present
or by a memorandum or other written instrument signed by all
members of the Committee.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">7.3.&nbsp;<I>Compensation; Professional
Assistance; Good Faith Actions.</I> All expenses and liabilities
which members of the Committee incur in connection with the
administration of the Plan shall be borne by the Company. All
actions taken and all interpretations and determinations made by
the Committee or the Board in good faith shall be final and
binding upon all Optionees, the Company and all other interested
persons. No members of the Committee or Board shall be
personally liable for any action, determination or
interpretation made in good faith with respect to the Plan or
Options, and all members of the Committee and the Board shall be
fully protected by the Company in respect of any such action,
determination or interpretation.
</FONT>

<P align="center">
<B><FONT size="2">ARTICLE&nbsp;VIII.</FONT></B>

<P align="center">
<B><FONT size="2">MISCELLANEOUS PROVISIONS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">8.1.&nbsp;<I>Not Transferable.</I> No Option may
be sold, pledged, assigned or transferred in any manner other
than by will or the laws of descent and distribution, unless and
until such Option has been exercised, or the shares underlying
such Option have been issued, and all restrictions applicable to
such shares have lapsed. No Option or interest or right therein
shall be liable for the debts, contracts or engagements of the
Optionee or his/her successors in interest or shall be subject
to disposition by transfer, alienation, anticipation, pledge,
encumbrance, assignment or any other means whether such
disposition be voluntary or involuntary or by operation of law
by judgment, levy, attachment, garnishment or any other legal or
equitable proceedings (including bankruptcy), and any attempted
disposition thereof shall be null and void and of no effect,
except to the extent that such disposition is permitted by the
preceding sentence.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During the lifetime of the Option, only he/she
may exercise an Option. After the death of the Optionee, any
exercisable portion of an Option may, prior to the time when
such portion becomes unexercisable under the Plan or the
applicable Option Agreement, be exercised by his/her personal
representative or by any person empowered to do so under the
deceased Optionee&#146;s will or under the then applicable laws
of descent and distribution.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">8.2.&nbsp;<I>Term of the Plan; Amendment,
Suspension or Termination of the Plan.</I> The Plan shall be
effective upon its approval by the Company&#146;s stockholders.
Unless sooner terminated, the Plan shall terminate ten years
after the Effective Date and no Option may be granted
thereafter. Except as otherwise provided in this
Section&nbsp;8.2 and applicable law (including stock exchange
rules), the Plan may be wholly or partially amended or otherwise
modified, suspended or terminated at any time or from time to
time by the Board or the Committee. However, without prior
approval of the Company&#146;s stockholders, no action of the
Board or the Committee may, except as provided in
Section&nbsp;8.3, increase the limits imposed in
Section&nbsp;2.1 on the maximum number of shares which may be
issued under the Plan, extend the term of the Plan or of Options
granted under the Plan, or directly or indirectly permit an
exercise price per share with respect to any Option that is less
than 100% of the Fair Market Value of a share of Common Stock on
the date the Option is granted. No amendment, suspension or
termination of the Plan shall, without the consent of the
Optionee alter or impair any rights or obligations under any
Option theretofore granted or awarded, unless the Option itself
otherwise expressly so provides. No Options may be granted or
awarded during any period of suspension or after termination of
the Plan.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">8.3.&nbsp;<I>Changes in Common Stock or Assets of
the Company, Acquisition or Liquidation of the Company, Change
in Control and Other Corporate Events.</I>
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;Subject to Section&nbsp;8.3(d), in the
    event that the Administrator determines that any dividend or
    other distribution (whether in the form of cash, Common Stock,
    other securities, or other property),
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">D-9
</FONT>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">recapitalization, reclassification, stock split,
    reverse stock split, reorganization, merger, consolidation,
    split-up, spin-off, combination, repurchase, liquidation,
    dissolution, or sale, transfer, exchange or other disposition of
    all or substantially all of the assets of the Company
    (including, but not limited to, a Corporate Transaction), or
    exchange of Common Stock or other securities of the Company,
    issuance of warrants or other rights to purchase Common Stock or
    other securities of the Company, or other similar corporate
    transaction or event, in the Administrator&#146;s opinion,
    affects the Common Stock such that an adjustment is determined
    by the Administrator to be appropriate in order to prevent
    dilution or enlargement of the benefits or potential benefits
    intended to be made available under the Plan or with respect to
    an Options, then the Administrator shall, in such manner as it
    may deem equitable, adjust any or all of:
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(i)&nbsp;the number and kind of shares of Common
    Stock (or other securities or property) with respect to which
    Options may be granted or awarded (including, but not limited
    to, adjustments of the limitations in Section&nbsp;2.1 on the
    maximum number and kind of shares which may be issued and
    adjustments of the Options Limit);
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(ii)&nbsp;the number and kind of shares of Common
    Stock (or other securities or property) subject to outstanding
    Options;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(iii)&nbsp;the grant or exercise price with
    respect to any Option.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;Subject to Section&nbsp;8.3(d), in the
    event of any Corporate Transaction or other transaction or event
    described in Section&nbsp;8.3(a) or any unusual or nonrecurring
    transactions or events affecting the Company, any affiliate of
    the Company, or the financial statements of the Company or any
    affiliate, or of changes in applicable laws, regulations, or
    accounting principles, the Administrator, in its sole and
    absolute discretion, and on such terms and conditions as it
    deems appropriate, either by the terms of the Options or by
    action taken prior to the occurrence of such transaction or
    event and either automatically or upon the Optionee&#146;s
    request, is hereby authorized to take any one or more of the
    following actions whenever the Administrator determines that
    such action is appropriate in order to prevent dilution or
    enlargement of the benefits or potential benefits intended to be
    made available under the Plan or with respect to any Options
    under the Plan, to facilitate such transactions or events or to
    give effect to such changes in laws, regulations or principles:
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(i)&nbsp;To provide for either the purchase of
    any such Option for an amount of cash equal to the amount that
    could have been attained upon the exercise of such Option or
    realization of the Optionee&#146;s rights had such Option been
    currently exercisable or payable or fully vested or the
    replacement of such Option with other rights or property
    selected by the Administrator in its sole discretion;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(ii)&nbsp;To provide that the Option cannot vest,
    be exercised or become payable after such event;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(iii)&nbsp;To provide that such Option shall be
    exercisable as to all shares covered thereby, notwithstanding
    anything to the contrary in (i)&nbsp;Section&nbsp;5.3 or 5.4 or
    (ii)&nbsp;the provisions of such Option;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(iv)&nbsp;To provide that such Option be assumed
    by the successor or survivor corporation, or a parent or
    subsidiary thereof, or shall be substituted for by similar
    options, rights or awards covering the stock of the successor or
    survivor corporation, or a parent or subsidiary thereof, with
    appropriate adjustments as to the number and kind of shares and
    prices;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(v)&nbsp;To make adjustments in the number and
    type of shares of Common Stock (or other securities or property)
    subject to outstanding Options, and/or in the terms and
    conditions of (including the grant or exercise price), and the
    criteria included in, outstanding options and awards, and
    options and awards which may be granted in the future;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(vi)&nbsp;None of the foregoing discretionary
    actions taken under this Section&nbsp;8.3(b) shall be permitted
    with respect to Options granted under Section&nbsp;4.5 to
    Independent Directors to the extent that such discretion would
    be inconsistent with the applicable exemptive conditions of
    Rule&nbsp;16b-3.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">D-10
</FONT>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">In the event of a Change in Control or a
    Corporate Transaction, to the extent that the Board does not
    have the ability under Rule&nbsp;16b-3 to take or to refrain
    from taking the discretionary actions set forth in
    Section&nbsp;8.3(b)(iii) above, each Option granted to an
    Independent Director shall be exercisable as to all shares
    covered thereby upon such Change in Control or during the five
    days immediately preceding the consummation of such Corporate
    Transaction and subject to such consummation, notwithstanding
    anything to the contrary in Section&nbsp;5.4 or the vesting
    schedule of such Options. In the event of a Corporate
    Transaction, to the extent that the Board does not have the
    ability under Rule&nbsp;16b-3 to take or to refrain from taking
    the discretionary actions set forth in Section&nbsp;8.3(b)(ii)
    above, no Option granted to an Independent Director may be
    exercised following such Corporate Transaction unless such
    Option is, in connection with such Corporate Transaction, either
    assumed by the successor or survivor corporation (or parent or
    subsidiary thereof) or replaced with a comparable right with
    respect to shares of the capital stock of the successor or
    survivor corporation (or parent or subsidiary thereof).
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(c)&nbsp;Subject to Sections&nbsp;8.3(d) and 8.7,
    the Administrator may, in its discretion, include such further
    provisions and limitations in any Options, agreement or
    certificate, as it may deem equitable and in the best interests
    of the Company.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(d)&nbsp;No adjustment or action described in
    this Section&nbsp;8.3 or in any other provision of the Plan
    shall be authorized to the extent that such adjustment or action
    would cause the Plan to violate Section&nbsp;422(b)(1) of the
    Code. Furthermore, no such adjustment or action shall be
    authorized to the extent such adjustment or action would result
    in short-swing profits liability under Section&nbsp;16 or
    violate the exemptive conditions of Rule&nbsp;16b-3 unless the
    Administrator determines that the Option is not to comply with
    such exemptive conditions. The number of shares of Common Stock
    subject to any Option shall always be rounded to the next whole
    number.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">8.4.&nbsp;<I>Tax Withholding.</I> The Company
shall be entitled to require payment in cash or deduction from
other compensation payable to each Option of any sums required
by federal, state or local tax law to be withheld with respect
to the issuance, vesting, exercise or payment of any Options.
The Administrator may in its discretion and in satisfaction of
the foregoing requirement allow such Option to elect to have the
Company withhold shares of Common Stock otherwise issuable under
such Options (or allow the return of shares of Common Stock)
having a Fair Market Value equal to the sums required to be
withheld.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">8.5.&nbsp;<I>Forfeiture Provisions.</I> Pursuant
to its general authority to determine the terms and conditions
applicable to Options under the Plan, the Administrator shall
have the right (to the extent consistent with the applicable
exemptive conditions of Rule&nbsp;16b-3) to provide, in the
terms of Options made under the Plan, or to require an Optionee
to agree by separate written instrument, that (i)&nbsp;any
proceeds, gains or other economic benefit actually or
constructively received by the Optionee upon any receipt or
exercise of the Options, or upon the receipt or resale of any
Common Stock underlying the Options, must be paid to the
Company, and (ii)&nbsp;the Options shall terminate and any
unexercised portion of the Options (whether or not vested) shall
be forfeited, if (a)&nbsp;a Termination of Employment,
Termination of Consultancy or Termination of Directorship occurs
prior to a specified date, or within a specified time period
following receipt or exercise of the Options, or (b)&nbsp;the
Optionee at any time, or during a specified time period, engages
in any activity in competition with the Company, or which is
inimical, contrary or harmful to the interests of the Company,
as further defined by the Committee (or the Board, as
applicable) or the Optionee incurs a Termination of Employment,
Termination of Consultancy or Termination of Directorship for
cause.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">8.6.&nbsp;<I>Limitations Applicable to
Section&nbsp;16 Persons.</I> Notwithstanding any other provision
of the Plan, the Plan, and any Options granted or awarded to any
individual who is then subject to Section&nbsp;16 of the
Exchange Act, shall be subject to any additional limitations set
forth in any applicable exemptive rule under Section&nbsp;16 of
the Exchange Act (including any amendment to Rule&nbsp;16b-3 of
the Exchange Act) that are requirements for the application of
such exemptive rule. To the extent permitted by applicable law,
the Plan and Options granted or awarded hereunder shall be
deemed amended to the extent necessary to conform to such
applicable exemptive rule.
</FONT>

<P align="center"><FONT size="2">D-11
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">8.7.&nbsp;<I>Effect of Plan Upon Options and
Compensation Plans.</I> The adoption of the Plan shall not
affect any other compensation or incentive plans in effect for
the Company or any Subsidiary. Nothing in the Plan shall be
construed to limit the right of the Company (i)&nbsp;to
establish any other forms of incentives or compensation for
Employees, Independent Directors or consultants of the Company
or any Subsidiary or (ii)&nbsp;to grant or assume options or
other rights or awards otherwise than under the Plan in
connection with any proper corporate purpose including but not
by way of limitation, the grant or assumption of options in
connection with the acquisition by purchase, lease, merger,
consolidation or otherwise, of the business, stock or assets of
any corporation, partnership, limited liability company, firm or
association.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">8.8.&nbsp;<I>Compliance with Laws.</I> The Plan,
the granting and vesting of Options under the Plan and the
issuance and delivery of shares of Common Stock and the payment
of money under the Plan or under Options granted or awarded
hereunder are subject to compliance with all applicable federal
and state laws, rules and regulations (including but not limited
to state and federal securities law and federal margin
requirements) and to such approvals by any listing, regulatory
or governmental authority as may, in the opinion of counsel for
the Company, be necessary or advisable in connection therewith.
Any securities delivered under the Plan shall be subject to such
restrictions, and the person acquiring such securities shall, if
requested by the Company, provide such assurances and
representations to the Company as the Company may deem necessary
or desirable to assure compliance with all applicable legal
requirements. To the extent permitted by applicable law, the
Plan and Options granted or awarded hereunder shall be deemed
amended to the extent necessary to conform to such laws, rules
and regulations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">8.9.&nbsp;<I>Headings.</I> Headings are provided
herein for convenience only and are not to serve as a basis for
interpretation or construction of the Plan.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">8.10.&nbsp;<I>Governing Law.</I> The Plan and any
agreements hereunder shall be administered, interpreted and
enforced under the internal laws of the State of Maryland
without regard to conflicts of laws thereof.
</FONT>

<P align="center"><FONT size="2">D-12
</FONT>

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<DIV align="left">
<A name='146'></A>
</DIV>

<!-- link1 "Appendix E" -->

<DIV align="right">
<B><FONT size="2">Appendix&nbsp;E</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">LTC PROPERTIES,&nbsp;INC.</FONT></B>

<P align="center">
<B><FONT size="2">THE 2004 RESTRICTED STOCK PLAN</FONT></B>

<P align="center">
<B><FONT size="2">OF</FONT></B>

<P align="center">
<B><FONT size="2">LTC PROPERTIES,&nbsp;INC.</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">LTC Properties,&nbsp;Inc., a Maryland
corporation, has adopted The 2004 Restricted Stock Plan of LTC
Properties,&nbsp;Inc. (the &#147;Plan&#148;),
effective &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
2004 (the &#147;Effective Date&#148;), for the benefit of its
eligible employees, consultants and directors.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The purposes of the Plan are as follows:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(1)&nbsp;To provide an additional incentive for
    directors, Employees (as such term is defined below) and
    consultants to further the growth, development and financial
    success of the Company by personally benefiting through the
    ownership of Company stock which recognize such growth,
    development and financial success.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(2)&nbsp;To enable the Company to obtain and
    retain the services of directors, Employees and consultants
    considered essential to the long range success of the Company by
    offering them an opportunity to own stock in the Company which
    will reflect the growth, development and financial success of
    the Company.
    </FONT></TD>
</TR>

</TABLE>

<P align="center">
<B><FONT size="2">ARTICLE&nbsp;I.</FONT></B>

<P align="center">
<B><FONT size="2">DEFINITIONS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Wherever the following terms are used in the Plan
they shall have the meanings specified below, unless the context
clearly indicates otherwise.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Administrator&#148;
</FONT></I><FONT size="2">shall mean the entity that conducts
the general administration of the Plan as provided in
Article&nbsp;V. With reference to the administration of the Plan
with respect to Options granted to Independent Directors, the
term &#147;Administrator&#148; shall refer to the Board. With
reference to the administration of the Plan with respect to any
other Award, the term &#147;Administrator&#148; shall refer to
the Committee unless the Board has assumed the authority for
administration of the Plan generally as provided in
Section&nbsp;5.2.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Board&#148;
</FONT></I><FONT size="2">shall mean the Board of Directors of
the Company.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Change in Control&#148;
</FONT></I><FONT size="2">shall mean a change in ownership or
control of the Company effected through any of the following
transactions:
</FONT>
<P>

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<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;any person or related group of persons
    (other than the Company or a person that directly or indirectly
    controls, is controlled by, or is under common control with, the
    Company) is or becomes the beneficial owner (within the meaning
    of Rule&nbsp;13d-3 under the Exchange Act), directly or
    indirectly, of securities of the Company representing 30% or
    more of the combined voting power of the Company&#146;s then
    outstanding securities;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;the stockholders of the Company approve
    a merger or consolidation of the Company with any other
    corporation (or other entity), other than a merger or
    consolidation which would result in the voting securities of the
    Company outstanding immediately prior thereto continuing to
    represent (either by remaining outstanding or by being convened
    into voting securities of the surviving entity) more than
    66&nbsp;2/3% of the combined voting power of the voting
    securities of the Company or such surviving entity outstanding
    immediately after such merger or consolidation; <I>provided,
    however, </I>that a merger or consolidation effected to
    implement a recapitalization of the Company (or similar
    transaction) in which
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">E-1
</FONT>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">no person acquires 30% or more of the combined
    voting power of the Company&#146;s then outstanding securities
    shall not constitute a Change in Control;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(c)&nbsp;the stockholders of the Company approve
    a plan of complete liquidation of the Company or an agreement
    for the sale of disposition by the Company of all or
    substantially all of the Company&#146;s assets;&nbsp;or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(d)&nbsp;a majority of the members of the Board
    cease to be, as of any date of determination, members of the
    Board who were members of the Board as of the date the Plan was
    approved by the stockholders of the Company or was nominated for
    election or elected to the Board with the approval of a majority
    of the members of the Board at the time of such nomination or
    election.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Code&#148;
</FONT></I><FONT size="2">shall mean the Internal Revenue Code
of 1986, as amended.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Committee&#148;
</FONT></I><FONT size="2">shall mean the Compensation Committee
of the Board.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Common Stock&#148;
</FONT></I><FONT size="2">shall mean the common stock of the
Company, par value $.01&nbsp;per share.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Company&#148;
</FONT></I><FONT size="2">shall mean LTC Properties,&nbsp;Inc.,
a Maryland corporation.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Corporate Transaction&#148;
</FONT></I><FONT size="2">shall mean any of the following
stockholder-approved transactions to which the Company is a
party:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;a merger or consolidation in which the
    Company is not the surviving entity, except for a transaction
    the principal purpose of which is to change the State in which
    the Company is incorporated, form a holding company or effect a
    similar reorganization as to form whereupon the Plan and all
    Options are assumed by the successor entity;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;the sale, transfer, exchange or other
    disposition of all or substantially all of the assets of the
    Company, in complete liquidation or dissolution of the Company
    in a transaction not covered by the exceptions to
    clause&nbsp;(a), above;&nbsp;or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(c)&nbsp;any reverse merger in which the Company
    is the surviving entity but in which securities possessing more
    than 30% of the total combined voting power of the
    Company&#146;s outstanding securities are transferred or issued
    to a person or persons different from those who held such
    securities immediately prior to such merger.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Director&#148;
</FONT></I><FONT size="2">shall mean a member of the Board.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Effective Date&#148;
</FONT></I><FONT size="2">shall mean the date on which the Plan
is approved by the Company&#146;s stockholders.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Employee&#148;
</FONT></I><FONT size="2">shall mean any officer or other
employee (as defined in accordance with Section&nbsp;3401(c) of
the Code) of the Company, or of any corporation which is a
Subsidiary.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Exchange Act&#148;
</FONT></I><FONT size="2">shall mean the Securities Exchange Act
of 1934, as amended.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Fair Market Value&#148;
</FONT></I><FONT size="2">of a share of Common Stock as of a
given date shall be (i)&nbsp;the closing price of a share of
Common Stock on the principal exchange on which shares of Common
Stock are then trading, if any (or as reported on any composite
index which includes such principal exchange), on the trading
day previous to such date, or if shares were not traded on the
trading day previous to such date, then on the next preceding
date on which a trade occurred, or (ii)&nbsp;if Common Stock is
not traded on an exchange but is quoted on NASDAQ or a successor
quotation system, the mean between the closing representative
bid and asked prices for the Common Stock on the trading day
previous to such date as reported by NASDAQ or such successor
quotation system; or (iii)&nbsp;if Common Stock is not publicly
traded on an exchange and not quoted on NASDAQ or a successor
quotation system, the fair market value of a share of Common
Stock as established by the Administrator acting in good faith.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Holder&#148;
</FONT></I><FONT size="2">shall mean a person who has been
granted or awarded a Restricted Stock Award.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Independent Director&#148;
</FONT></I><FONT size="2">shall mean a member of the Board who
is deemed independent pursuant to Rule&nbsp;16b-3 and the
New&nbsp;York Stock Exchange rules.
</FONT>

<P align="center"><FONT size="2">E-2
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Plan&#148;
</FONT></I><FONT size="2">shall mean The 2004 Restricted Stock
Plan of LTC Properties,&nbsp;Inc., as set forth herein and as
amended from time to time.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;QDRO&#148;
</FONT></I><FONT size="2">shall mean a qualified domestic
relations order as defined by the Code or Title&nbsp;I of the
Employee Retirement Income Security Act of 1974, as amended, or
the rules thereunder.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Restricted Stock Agreement&#148;
</FONT></I><FONT size="2">shall mean a written agreement
executed by an authorized officer of the Company and the Holder
which shall contain such terms and conditions with respect to a
Restricted Stock Award as the Administrator shall determine,
consistent with the Plan.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Restricted Stock Award&#148;
</FONT></I><FONT size="2">shall mean an award granted under
Article&nbsp;IV.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Restricted Stock Award Limit&#148;
</FONT></I><FONT size="2">shall mean twenty thousand (20,000)
shares of Common Stock, as adjusted pursuant to Section&nbsp;6.3
of the Plan.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Restricted Stockholder&#148;
</FONT></I><FONT size="2">shall mean an
Employee,&nbsp;Independent Director or consultant granted an
award of Restricted Stock under Article&nbsp;IV of the Plan who
holds shares of Common Stock that are subject to restrictions
set forth in the Restricted Stock Award Agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Restricted Stock&#148;
</FONT></I><FONT size="2">shall mean Common Stock awarded under
Article&nbsp;IV of the Plan.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Rule&nbsp;16b-3&#148;
</FONT></I><FONT size="2">shall mean that certain
Rule&nbsp;16b-3 under the Exchange Act, as such Rule may be
amended from time to time.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Securities Act&#148;
</FONT></I><FONT size="2">shall mean the Securities Act of 1933,
as amended.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Subsidiary&#148;
</FONT></I><FONT size="2">shall mean any corporation in an
unbroken chain of corporations beginning with the Company if
each of the corporations other than the last corporation in the
unbroken chain then owns stock possessing fifty percent (50%) or
more of the total combined voting power of all classes of stock
in one of the other corporations in such chain.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Termination of Consultancy&#148;
</FONT></I><FONT size="2">shall mean the time when the
engagement of a Holder as a consultant to the Company or a
Subsidiary is terminated for any reason, with or without cause
and with or without notice, including, but not by way of
limitation, by resignation, discharge, death or retirement; but
excluding terminations where there is a simultaneous
commencement of employment with the Company or any Subsidiary.
The Committee, in its absolute discretion, shall determine the
effect of all matters and questions relating to Termination of
Consultancy, including, but not by way of limitation, the
question of whether a Termination of Consultancy resulted from a
discharge for good cause, and all questions of whether a
particular leave of absence constitutes a Termination of
Consultancy. Notwithstanding any other provision of the Plan,
the Company or any Subsidiary has an absolute and unrestricted
right to terminate a consultant&#146;s service at any time for
any reason whatsoever, with or without cause and with or without
notice, except to the extent expressly provided otherwise in
writing.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Termination of Directorship&#148;
</FONT></I><FONT size="2">shall mean the time when a Holder who
is an Independent Director ceases to be a Director for any
reason, including, but not by way of limitation, a termination
by resignation, failure to be elected, death or retirement. The
Board, in its sole and absolute discretion, shall determine the
effect of all matters and questions relating to Termination of
Directorship with respect to Independent Directors.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Termination of Employment&#148;
</FONT></I><FONT size="2">shall mean the time when the
employee-employer relationship between a Holder and the Company
or any Subsidiary is terminated for any reason, with or without
cause and with or without notice, including, but not by way of
limitation, a termination by resignation, discharge, death,
disability or retirement; but excluding (i)&nbsp;terminations
where there is a simultaneous reemployment or continuing
employment of a Holder by the Company or any Subsidiary,
(ii)&nbsp;at the discretion of the Committee, terminations which
result in a temporary severance of the employee-employer
relationship, and (iii)&nbsp;at the discretion of the Committee,
terminations which are followed by the simultaneous
establishment of a consulting relationship by the Company or a
Subsidiary with the former employee. The Committee, in its
absolute discretion, shall determine the effect of all matters
and questions relating to Termination of Employment, including,
but not by way of limitation, the question of whether a
Termination of Employment resulted from a discharge for good
cause, and all questions of whether a particular leave of
absence constitutes
</FONT>

<P align="center"><FONT size="2">E-3
</FONT>

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<DIV align="left">
<FONT size="2">a Termination of Employment. Notwithstanding any
other provision of the Plan, the Company or any Subsidiary has
an absolute and unrestricted right to terminate an
Employee&#146;s employment at any time for any reason
whatsoever, with or without cause and with or without notice,
except to the extent expressly provided otherwise in writing.
</FONT>
</DIV>

<P align="center">
<B><FONT size="2">ARTICLE&nbsp;II.</FONT></B>

<P align="center">
<B><FONT size="2">SHARES SUBJECT TO PLAN</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">2.1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Shares
Subject to Plan.</I>
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;The shares of stock subject to
    Restricted Stock Awards shall be Common Stock. The aggregate
    number of such shares which may be issued under the Plan shall
    not exceed One Hundred Thousand (100,000). The shares of Common
    Stock issuable in connection with any such awards include
    previously authorized but unissued shares.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;The maximum number of Restricted Stock
    Awards which may be granted under the Plan to any individual in
    any calendar year shall not exceed the Restricted Stock Award
    Limit.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">2.2.&nbsp;<I>Add-back of Restricted Stock.</I> If
any share of Restricted Stock is forfeited by the Holder or
repurchased by the Company pursuant to Section&nbsp;4.5 hereof,
such share may again be optioned, granted or awarded hereunder,
subject to the limitations of Section&nbsp;2.1.
</FONT>

<P align="center">
<B><FONT size="2">ARTICLE&nbsp;III.</FONT></B>

<P align="center">
<B><FONT size="2">GRANTING OF RESTRICTED STOCK AWARDS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">3.1.&nbsp;<I>Award Agreement.</I> Each Restricted
Stock Award shall be evidenced by a Restricted Stock Award
Agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">3.2.&nbsp;<I>Consideration.</I> In consideration
of the granting of an Award under the Plan, the Holder shall
agree, in the Restricted Stock Award Agreement, to remain in the
employ of (or to consult for or to serve as an Independent
Director of, as applicable) the Company or any Subsidiary for a
period of at least one year (or such shorter period as may be
fixed in the Restricted Stock Award Agreement or by action of
the Administrator following grant of the Restricted Stock Award)
after the Restricted Stock Award is granted (or, in the case of
an Independent Director, until the next annual meeting of
stockholders of the Company).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">3.3.&nbsp;<I>At-Will Employment.</I> Nothing in
the Plan or in any Restricted Stock Award Agreement hereunder
shall confer upon any Holder any right to continue in the employ
of, or as a consultant for, the Company or any Subsidiary, or as
a director of the Company, or shall interfere with or restrict
in any way the rights of the Company and any Subsidiary, which
are hereby expressly reserved, to discharge any Holder at any
time for any reason whatsoever, with or without cause and with
or without notice, except to the extent expressly provided
otherwise in a written employment agreement between the Holder
and the Company and any Subsidiary.
</FONT>

<P align="center">
<B><FONT size="2">ARTICLE&nbsp;IV.</FONT></B>

<P align="center">
<B><FONT size="2">AWARD OF RESTRICTED STOCK</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.1.&nbsp;<I>Eligibility.</I> Subject to the
Restricted Stock Award Limit, Restricted Stock may be awarded to
any Employee or consultant who the Committee determines should
receive such a Restricted Stock Award or any Independent
Director who the Board determines should receive a Restricted
Stock Award.
</FONT>

<P align="center"><FONT size="2">E-4
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.2.&nbsp;<I>Award of Restricted Stock.</I>
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;The Committee (or the Board, with
    respect to Independent Directors) may from time to time, in its
    absolute discretion:
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(i)&nbsp;Select from among the
    Employees,&nbsp;Independent Directors or consultants (including
    Employees,&nbsp;Independent Directors or consultants who have
    previously received other Restricted Stock Awards under the
    Plan) such of them as in its opinion should be awarded
    Restricted Stock;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(ii)&nbsp;Determine the purchase price, if any,
    and other terms and conditions applicable to such Restricted
    Stock, consistent with the Plan.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;The Committee (or the Board, with
    respect to Independent Directors) shall establish the purchase
    price, if any, and form of payment, if any, for Restricted Stock.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(c)&nbsp;Upon the selection of an Employee,
    Independent Director or consultant to be awarded Restricted
    Stock, the Committee (or the Board, with respect to Independent
    Directors) shall instruct the Secretary of the Company to issue
    such Restricted Stock and may impose such conditions on the
    issuance of such Restricted Stock as it deems appropriate.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.3.&nbsp;<I>Rights as Stockholders.</I> Subject
to Section&nbsp;4.4, upon delivery of the shares of Restricted
Stock to the escrow holder pursuant to Section&nbsp;4.6, the
Restricted Stockholder shall have, unless otherwise provided by
the Committee (or the Board, with respect to Independent
Directors), all the rights of a stockholder with respect to said
shares, subject to the restrictions in his/her Restricted Stock
Award Agreement, including the right to receive all dividends
and other distributions paid or made with respect to the shares;
<I>provided, however, </I>that in the discretion of the
Committee (or the Board, with respect to Independent Directors),
any extraordinary distributions with respect to the Common Stock
shall be subject to the restrictions set forth in
Section&nbsp;4.4.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.4.&nbsp;<I>Restriction.</I> All shares of
Restricted Stock issued under the Plan (including any shares
received by holders thereof with respect to shares of Restricted
Stock as a result of stock dividends, stock splits or any other
form of recapitalization) shall, in the terms of each individual
Restricted Stock Award Agreement, be subject to such
restrictions as the Committee (or the Board, with respect to
Independent Directors) shall provide, which restrictions may
include, without limitation, restrictions concerning voting
rights and transferability and restrictions based on duration of
employment with the Company, Company performance and individual
performance; <I>provided, however, </I>that, by action taken
after the Restricted Stock is issued, the Committee may, on such
terms and conditions as it may determine to be appropriate,
remove any or all of the restrictions imposed by the terms of
the Restricted Stock Award Agreement. Restricted Stock may not
be sold or encumbered until all restrictions are terminated or
expire. If no consideration was paid by the Restricted
Stockholder upon issuance, a Restricted Stockholder&#146;s
rights in unvested Restricted Stock shall lapse upon Termination
of Employment or, if applicable, upon Termination of Consultancy
or Termination of Directorship with the Company; <I>provided,
however, </I>that unless otherwise provided by the Committee in
the Restricted Stock Award Agreement, such rights shall not
lapse in the event of a Termination of Employment following a
&#147;change in control&#148; or because of the Restricted
Stockholder&#146;s death or disability.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.5.&nbsp;<I>Repurchase of Restricted Stock.</I>
The Committee (or the Board, with respect to Independent
Directors) shall provide in the terms of each individual
Restricted Stock Award Agreement that the Company shall have the
right to repurchase from the Restricted Stockholder the
Restricted Stock then subject to restrictions under the
Restricted Stock Award Agreement immediately upon a Termination
of Employment or, if applicable, upon a Termination of
Consultancy between the Restricted Stockholder and the Company,
at a cash price per share equal to the price paid by the
Restricted Stockholder for such Restricted Stock; <I>provided,
however, </I>that the Committee in its sole and absolute
discretion may provide that no such right of repurchase shall
exist in the event of a Termination of Employment or a
Termination of Consultancy, without cause or following any
Change in Control of the Company or because of the Restricted
Stockholder&#146;s retirement, or otherwise.
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.6.&nbsp;<I>Escrow.</I> Unless otherwise
determined by the Committee, the Secretary of the Company or
such other escrow holder as the Committee (or the Board, with
respect to Independent Directors) may appoint shall retain
physical custody of each certificate representing Restricted
Stock until all of the restrictions imposed under the Restricted
Stock Award Agreement with respect to the shares evidenced by
such certificate expire or shall have been removed.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.7.&nbsp;<I>Legend.</I> In order to enforce the
restrictions imposed upon shares of Restricted Stock hereunder,
the Committee (or the Board, with respect to Independent
Directors) shall cause a legend or legends to be placed on
certificates representing all shares of Restricted Stock that
are still subject to restrictions under (or the Board, with
respect to Independent Directors) Restricted Stock Award
Agreements, which legend or legends shall make appropriate
reference to the conditions imposed thereby.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.8.&nbsp;<I>Section&nbsp;83(b) Election.</I> If
a Restricted Stockholder makes an election under
Section&nbsp;83(b) of the Code, or any successor section
thereto, to be taxed with respect to the Restricted Stock as of
the date of transfer of the Restricted Stock rather than as of
the date or dates upon which the Restricted Stockholder would
otherwise be taxable under Section&nbsp;83(a) of the Code, the
Restricted Stockholder shall deliver a copy of such election to
the Company immediately after filing such election with the
Internal Revenue Service.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.9.&nbsp;<I>Restricted Stock in Lieu of Cash
Compensation.</I> Restricted Stock may be awarded under the Plan
to Employees and consultants in lieu of cash bonuses which would
otherwise be payable to such Employees and consultants and to
Independent Directors in lieu of directors&#146; fees which
would otherwise be payable to such Independent Directors,
pursuant to such policies which may be adopted by the
Administrator from time to time.
</FONT>

<P align="center">
<B><FONT size="2">ARTICLE&nbsp;V.</FONT></B>

<P align="center">
<B><FONT size="2">ADMINISTRATION</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">5.1.&nbsp;<I>Duties and Powers of Committee.</I>
It shall be the duty of the Committee to conduct the general
administration of the Plan in accordance with its provisions.
The Committee shall have the power to interpret the Plan and the
agreements pursuant to which Restricted Stock Awards are granted
or awarded, and to adopt such rules for the administration,
interpretation, and application of the Plan as are consistent
therewith and to interpret, amend or revoke any such rules.
Notwithstanding the foregoing, the full Board, acting by a
majority of its members in office, shall conduct the general
administration of the Plan with respect to awards of Restricted
Stock granted to Independent Directors. In its absolute
discretion, the Board may at any time and from time to time
exercise any and all rights and duties of the Committee under
the Plan except with respect to matters which under
Rule&nbsp;16b-3, or other applicable law (including stock
exchange rules), are required to be determined in the sole
discretion of the Committee.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">5.2.&nbsp;<I>Majority Rule; Unanimous Written
Consent.</I> The Committee shall act by a majority of its
members in attendance at a meeting at which a quorum is present
or by a memorandum or other written instrument signed by all
members of the Committee.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">5.3.&nbsp;<I>Compensation; Professional
Assistance; Good Faith Actions.</I> All expenses and liabilities
which members of the Committee incur in connection with the
administration of the Plan shall be borne by the Company. All
actions taken and all interpretations and determinations made by
the Committee or the Board in good faith shall be final and
binding upon all Holders, the Company and all other interested
persons. No members of the Committee or Board shall be
personally liable for any action, determination or
interpretation made in good faith with respect to the Plan or
Restricted Stock Awards, and all members of the Committee and
the Board shall be fully protected by the Company in respect of
any such action, determination or interpretation.
</FONT>

<P align="center"><FONT size="2">E-6
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<P align="center">
<B><FONT size="2">ARTICLE&nbsp;VI.</FONT></B>

<P align="center">
<B><FONT size="2">MISCELLANEOUS PROVISIONS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">6.1.&nbsp;<I>Not Transferable.</I> No Restricted
Stock Award under the Plan may be sold, pledged, assigned or
transferred in any manner other than by will or the laws of
descent and distribution, unless and until such Award has been
exercised, or the shares underlying such Award have been issued,
and all restrictions applicable to such shares have lapsed. No
Restricted Stock Award, or interest or right therein shall be
liable for the debts, contracts or engagements of the Holder or
his/her successors in interest or shall be subject to
disposition by transfer, alienation, anticipation, pledge,
encumbrance, assignment or any other means whether such
disposition be voluntary or involuntary or by operation of law
by judgment, levy, attachment, garnishment or any other legal or
equitable proceedings (including bankruptcy), and any attempted
disposition thereof shall be null and void and of no effect,
except to the extent that such disposition is permitted by the
preceding sentence.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">6.2.&nbsp;<I>Term of the Plan; Amendment,
Suspension or Termination of the Plan.</I> The Plan shall be
effective upon its approval by the Company&#146;s stockholders.
Unless sooner terminated, the Plan shall terminate ten years
after the Effective Date and no Restricted Stock Awards may be
granted thereafter. Except as otherwise provided in this
Section&nbsp;6.2 and applicable law (including stock exchange
rules), the Plan may be wholly or partially amended or otherwise
modified, suspended or terminated at any time or from time to
time by the Board or the Committee. However, without prior
approval of the Company&#146;s stockholders, no action of the
Board or the Committee may, except as provided in
Section&nbsp;6.3, increase the limits imposed in
Section&nbsp;2.1 on the maximum number of shares which may be
issued under the Plan. No amendment, suspension or termination
of the Plan shall, without the consent of the Holder, alter or
impair any rights or obligations under any Award granted or
awarded before such amendment, suspension or termination, unless
the Award itself otherwise expressly so provides. No Awards may
be granted or awarded during any period of suspension or after
termination of the Plan.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">6.3.&nbsp;<I>Changes in Common Stock or Assets of
the Company, Acquisition or Liquidation of the Company, Change
in Control and Other Corporate Events.</I>
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;Subject to Section&nbsp;6.3(d), in the
    event that the Administrator determines that any dividend or
    other distribution (whether in the form of cash, Common Stock,
    other securities, or other property), recapitalization,
    reclassification, stock split, reverse stock split,
    reorganization, merger, consolidation, split-up, spin-off,
    combination, repurchase, liquidation, dissolution, or sale,
    transfer, exchange or other disposition of all or substantially
    all of the assets of the Company (including, but not limited to,
    a Corporate Transaction), or exchange of Common Stock or other
    securities of the Company, issuance of warrants or other rights
    to purchase Common Stock or other securities of the Company, or
    other similar corporate transaction or event, in the
    Administrator&#146;s opinion, affects the Common Stock such that
    an adjustment is determined by the Administrator to be
    appropriate in order to prevent dilution or enlargement of the
    benefits or potential benefits intended to be made available
    under the Plan or with respect to a Restricted Stock Award, then
    the Administrator shall, in such manner as it may deem
    equitable, adjust any or all of:
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(i)&nbsp;the number and kind of shares of Common
    Stock (or other securities or property) with respect to which
    Restricted Stock Awards may be granted or awarded (including,
    but not limited to, adjustments of the limitations in
    Section&nbsp;2.1 on the maximum number and kind of shares which
    may be issued and adjustments of the Restricted Stock Award
    Limit);&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(ii)&nbsp;the number and kind of shares of
    outstanding Restricted Stock.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;Subject to Section&nbsp;6.3(d), in the
    event of any Corporate Transaction or other transaction or event
    described in Section&nbsp;6.3(a) or any unusual or nonrecurring
    transactions or events affecting the Company, any affiliate of
    the Company, or the financial statements of the Company or any
    affiliate, or of changes in applicable laws, regulations, or
    accounting principles, the Administrator, in its sole and
    absolute discretion, and on such terms and conditions as it
    deems appropriate, either by the terms of the Restricted Stock
    Award or by action taken prior to the occurrence of such
    transaction or event and either
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">E-7
</FONT>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">automatically or upon the Holder&#146;s request,
    is hereby authorized to take any one or more of the following
    actions whenever the Administrator determines that such action
    is appropriate in order to prevent dilution or enlargement of
    the benefits or potential benefits intended to be made available
    under the Plan or with respect to any Restricted Stock Award
    under the Plan, to facilitate such transactions or events or to
    give effect to such changes in laws, regulations or principles:
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(i)&nbsp;To provide for either the purchase of
    any Restricted Stock for an amount of cash equal to the amount
    that could have been attained upon the Restricted Stock
    realization of the Holder&#146;s rights had such Restricted
    Stock been currently exercisable or payable or fully vested or
    the replacement of such Restricted Stock with other rights or
    property selected by the Administrator in its sole discretion;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(ii)&nbsp;To provide that the Restricted Stock
    cannot vest, be exercised or become payable after such event;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(iii)&nbsp;To make adjustments in the number and
    kind of outstanding Restricted Stock and/or in the terms and
    conditions of, and the criteria included in, outstanding awards
    and awards which may be granted in the future;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(iv)&nbsp;To provide that, for a specified period
    of time prior to such event, the restrictions imposed under an
    Award Agreement upon some or all shares of Restricted Stock may
    be terminated, and some or all shares of such Restricted Stock
    may cease to be subject to repurchase under Section&nbsp;4.5 or
    forfeiture under Section&nbsp;4.4 after such event.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(c)&nbsp;Subject to Sections&nbsp;6.3(d) and 6.7,
    the Administrator may, in its discretion, include such further
    provisions and limitations in any Restricted Stock Award
    Agreement or certificate, as it may deem equitable and in the
    best interests of the Company.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(d)&nbsp;No such adjustment or action shall be
    authorized to the extent such adjustment or action would result
    in short-swing profits liability under Section&nbsp;16 of the
    Exchange Act or violate the exemptive conditions of
    Rule&nbsp;16b-3 unless the Administrator determines that the
    Restricted Stock Award is not to comply with such exemptive
    conditions. The number of shares of Common Stock subject to any
    Award shall always be rounded to the next whole number.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">6.4.&nbsp;<I>Tax Withholding.</I> The Company
shall be entitled to require payment in cash or deduction from
other compensation payable to each Holder of any sums required
by federal, state or local tax law to be withheld with respect
to the issuance or vesting of any Restricted Stock Award. The
Administrator may in its discretion and in satisfaction of the
foregoing requirement allow such Holder to elect to have the
Company withhold shares of Common Stock otherwise issuable under
such Restricted Stock Award (or allow the return of shares of
Common Stock) having a Fair Market Value equal to the sums
required to be withheld.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">6.5.&nbsp;<I>Forfeiture Provisions.</I> Pursuant
to its general authority to determine the terms and conditions
applicable to Restricted Stock Awards under the Plan, the
Administrator shall have the right (to the extent consistent
with the applicable exemptive conditions of Rule&nbsp;16b-3) to
provide, in the terms of Restricted Stock Awards made under the
Plan, or to require a Holder to agree by separate written
instrument, that (i)&nbsp;any proceeds, gains or other economic
benefit actually or constructively received by the Holder upon
any receipt of a Restricted Stock Award, or upon the receipt or
resale of any Common Stock underlying the Award, must be paid to
the Company, and (ii)&nbsp;the Restricted Stock shall be
forfeited, if (a)&nbsp;a Termination of Employment, Termination
of Consultancy or Termination of Directorship occurs prior to a
specified date, or within a specified time period following
receipt or exercise of the Restricted Stock Award, or
(b)&nbsp;the Holder at any time, or during a specified time
period, engages in any activity in competition with the Company,
or which is inimical, contrary or harmful to the interests of
the Company, as further defined by the Committee (or the Board,
as applicable) or the Holder incurs a Termination of Employment,
Termination of Consultancy or Termination of Directorship for
cause.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">6.6.&nbsp;<I>Limitations Applicable to
Section&nbsp;16 Persons.</I> Notwithstanding any other provision
of the Plan, the Plan, and any Award granted or Awarded to any
individual who is then subject to Section&nbsp;16 of the Exchange
</FONT>

<P align="center"><FONT size="2">E-8
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">Act, shall be subject to any additional
limitations set forth in any applicable exemptive rule under
Section&nbsp;16 of the Exchange Act (including any amendment to
Rule&nbsp;16b-3 of the Exchange Act) that are requirements for
the application of such exemptive rule. To the extent permitted
by applicable law, the Plan and Restricted Stock Awards granted
or Awarded hereunder shall be deemed amended to the extent
necessary to conform to such applicable exemptive rule.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">6.7.&nbsp;<I>Effect of Plan Upon Compensation
Plans.</I> The adoption of the Plan shall not affect any other
compensation or incentive plans in effect for the Company or any
Subsidiary. Nothing in the Plan shall be construed to limit the
right of the Company (i)&nbsp;to establish any other forms of
incentives or compensation for Employees,&nbsp;Independent
Directors or consultants of the Company or any Subsidiary or
(ii)&nbsp;to grant or assume Restricted Stock Awards otherwise
than under the Plan in connection with any proper corporate
purpose including but not by way of limitation, the grant or
assumption of options in connection with the acquisition by
purchase, lease, merger, consolidation or otherwise, of the
business, stock or assets of any corporation, partnership,
limited liability company, firm or association.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">6.8.&nbsp;<I>Compliance with Laws.</I> The Plan,
the granting and vesting of Restricted Stock Awards under the
Plan and the issuance and delivery of shares of Common Stock and
the payment of money under the Plan or under Restricted Stock
Awards granted or Awarded hereunder are subject to compliance
with all applicable federal and state laws, rules and
regulations (including but not limited to state and federal
securities law and federal margin requirements) and to such
approvals by any listing, regulatory or governmental authority
as may, in the opinion of counsel for the Company, be necessary
or advisable in connection therewith. Any securities delivered
under the Plan shall be subject to such restrictions, and the
person acquiring such securities shall, if requested by the
Company, provide such assurances and representations to the
Company as the Company may deem necessary or desirable to assure
compliance with all applicable legal requirements. To the extent
permitted by applicable law, the Plan and Restricted Stock
Awards granted or Awarded hereunder shall be deemed amended to
the extent necessary to conform to such laws, rules and
regulations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">6.9.&nbsp;<I>Headings.</I> Headings are provided
herein for convenience only and are not to serve as a basis for
interpretation or construction of the Plan.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">6.10.&nbsp;<I>Governing Law.</I> The Plan and any
agreements hereunder shall be administered, interpreted and
enforced under the internal laws of the State of Maryland
without regard to conflicts of laws thereof.
</FONT>

<P align="center"><FONT size="2">E-9
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">


<P align="left" style="font-size: 10pt">Click and insert logo here

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="25%">&nbsp;</TD>
    <TD width="25%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="46%">&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"><FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Mark this box with an X if you have made
changes to your name or address details above.</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>



<P align="left" style="font-size: 10pt"><HR align="center" size="1" noshade width="100%">



<DIV align="left" style="font-size: 10pt"><B>Annual Meeting Proxy Card</B></DIV>



<DIV align="left" style="font-size: 10pt"><HR align="center" size="1" noshade width="100%"></DIV>



<DIV align="center" style="font-size: 10pt"><B>The Board of Directors of the Company unanimously recommend that you vote &#147;FOR&#148; all of the following:</B></DIV>


<P><DIV style="position: relative; float: left; margin-right: 1%; width: 40%">

<P align="left" style="font-size: 10pt"><B>A Election of Directors</B>



<P>
<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="right">1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Five directors will be elected to hold office until the 2005 Annual Meeting
of Stockholders and, in each case, until their respective successors
have been duly elected and qualified.</TD>
</TR>

</TABLE>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="90%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="78%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>For Withhold</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">01 &#151; Andre C. Dimitriadis
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="Wingdings">&#111;</FONT></TD>
</TR>

<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">02 &#151; Edmund C. King
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="Wingdings">&#111;</FONT></TD>
</TR>

<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">03 &#151; Wendy L. Simpson
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="Wingdings">&#111;</FONT></TD>
</TR>

<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">04 &#151; Timothy J. Triche, M.D.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="Wingdings">&#111;</FONT></TD>
</TR>

<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">05 &#151; Sam Yellen
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="Wingdings">&#111;</FONT></TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>


<P align="left" style="font-size: 10pt">In accordance with the judgments of the Proxies, upon any other matter that may
properly come before the Annual Meeting of Stockholders or any
adjournment thereof.


<P align="left" style="font-size: 10pt">This Proxy will be voted as directed. If no contrary direction is made, this
Proxy will be voted in accordance with the Directors&#146; recommendations.


</DIV>
<DIV style="position: relative; float: right; margin-left: 1%; width: 55%">

<P align="left" style="font-size: 10pt"><B>B Issues</B>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="62%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">2.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Approval of an Amendment to the Charter of the Company
to increase the number of authorized shares
of Common Stock from 35,000,000 to 45,000,000 shares.
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">For<BR>
<FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Against<BR>
<FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Abstain<BR>
<FONT face="Wingdings">&#111;</FONT></TD>
</TR>

<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">3.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Approval of an Amendment to the Charter of the Company to
increase the number of authorized shares of Preferred Stock
from 15,000,000 to 25,000,000 shares.
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">For<BR>
<FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Against<BR>
<FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Abstain<BR>
<FONT face="Wingdings">&#111;</FONT></TD>
</TR>

<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Approval of the Company&#146;s 2004 Stock Option Plan.
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">For<BR>
<FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Against<BR>
<FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Abstain<BR>
<FONT face="Wingdings">&#111;</FONT></TD>
</TR>

<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">5.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Approval of the Company&#146;s 2004 Restricted Stock Plan.
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">For<BR>
<FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Against<BR>
<FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Abstain<BR>
<FONT face="Wingdings">&#111;</FONT></TD>
</TR>

<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">6.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Ratification of the Company&#146;s Independent Auditors.
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">For<BR>
<FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Against<BR>
<FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Abstain<BR>
<FONT face="Wingdings">&#111;</FONT></TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>


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

<P align="left" style="font-size: 10pt"><B>C Authorized Signatures &#151; Sign Here &#151; This section must be completed for your
instructions to be executed.</B>


<P align="left" style="font-size: 10pt">NOTE: Please sign your name(s) EXACTLY as your name(s) appear(s) on this proxy.
All joint holders must sign. When signing as attorney, trustee, executor,
administrator, guardian or corporate officer, please provide your FULL title.


<DIV align="center">
<TABLE style="font-size: 9pt" 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="37%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="17%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Signature 1 &#151; Please keep signature within the box
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Signature 2 &#151; Please keep signature within the box
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Date (mm/dd/yyyy)</TD>
</TR>

<TR><TD>&nbsp;</TD></TR>
<TR style="font-size: 1px">
    <TD valign="top"><HR size="1" noshade><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><HR size="1" noshade>&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><HR size="1" noshade>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



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

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<P align="left" style="font-size: 10pt"><HR align="center" size="1" noshade width="100%">
<B>Proxy &#151; LTC Properties, Inc.</B>



<DIV align="left" style="font-size: 10pt"><HR align="center" size="1" noshade width="100%"></DIV>


<P>
<DIV align="left" style="font-size: 10pt"><B>This Proxy is Solicited by the Board of Directors<BR>
for the Annual Meeting of Stockholders&#150;May&nbsp;18, 2004</B></DIV>


<P align="left" style="font-size: 10pt">The undersigned hereby appoints: Andre C. Dimitriadis and Wendy L. Simpson, or
either of them, each with the power of substitution, as Proxies, and hereby
authorizes each of them to represent and vote, as designated below, the shares
held of record by the undersigned at the annual meeting of stockholders of LTC
Properties, Inc. to be held at the Company&#146;s Corporate Offices in Malibu,
California, on Tuesday, May&nbsp;18, 2004 at 10:00&nbsp;a.m., or any adjournments or
postponements thereof, as designated below, and in their discretion, the
proxies are authorized to vote upon such other business as may properly come
before the meeting.



<P align="center" style="font-size: 10pt"><B>PLEASE MARK, SIGN, DATE AND MAIL THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.</B>



<P align="center" style="font-size: 10pt"><B>YOUR VOTE IS IMPORTANT!</B>




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


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