Annual Cash Bonus Incentive Plan OF LTC Properties, INC.

1.01 “Award” shall mean the compensation granted to a Participant by the Committee for a Performance Period pursuant to the Plan.    

1.02 “Award Payment Date” shall mean the date that an Award shall be paid to the Participant under the Plan.

1.03 “Beneficiary” shall mean the person (or persons) who are designated by the Participant to receive benefits payable upon the Participant’s death. Such designation shall be made by the Participant on a form prescribed by the Company. The Participant may at any time change or revoke such designation by written notice to the Company. If the Participant has no living designated beneficiary on the date of Participant’s death, then the benefits otherwise payable to the designated beneficiary under this Plan shall be paid to the Participant’s estate.

1.04 “Board” shall mean the Board of Directors of the Company.

1.05 “Cause”  Except if Participant is a party to any effective employment agreement or offer letter with the Company which defines or specifies “Cause” or its equivalent, “Cause”  shall mean (a) a conviction of a felony; (b) material disloyalty to the Company or a Subsidiary, as applicable, such as embezzlement, misappropriation of corporate assets or, except as permitted pursuant to a Participant’s employment agreement or offer letter with the Company or a Subsidiary, breach of such employment agreement or offer letter not to engage in business for another enterprise of the type engaged in by the Company or a Subsidiary, as applicable; or (c) the engaging in unethical or illegal behavior which is of a public nature, brings the Company or a Subsidiary, as applicable, into disrepute, and result in material damage to the Company or a Subsidiary, as applicable. Provided, however, that if the Participant is a party to any effective employment agreement or offer letter with the Company which defines or specifies “Cause” for termination, then the provisions of such employment agreement or offer letter shall supersede and control for purposes of Participant’s rights with respect to the Plan.

1.06 “Change in Control” shall mean, a change in ownership or control of the Company effected through any of the following transactions: (a) any person or related group of persons (other

1.07 “Code” shall mean the Internal Revenue Code of 1986, as amended.

1.08 “Committee” shall mean the Compensation Committee of the Board, or another committee or subcommittee of the Board.

1.09 “Company” shall mean LTC Properties, Inc., a Maryland corporation.

1.10 “Covered Employee” shall mean a Participant who is either a “Covered Employee” within the meaning of Section 162(m) of the Code or a Participant who the Committee has identified as a potential Covered Employee within the meaning of Section 162(m) of the Code.

1.11 “Director” shall mean a member of the Board

1.12 “Disability” shall mean a physical or mental disability or infirmity, which at least 26 weeks after its commencement, is determined to be total and permanent by a physician selected by the Company or its insurers and acceptable to the Participant or the Participant’s legal representative (such agreement as to acceptability not be withheld unreasonably).

1.13 “Exchange Act or Act” shall mean the Securities Exchange Act of 1934, as amended.

1.14 “Good Reason” Except if Participant is a party to any effective employment agreement or offer letter with the Company which defines or specifies “Good reason” or its equivalent, “Good Reason”  shall mean (a) a diminution in a Participant’s title, duties, or salary; (b) a material reduction in benefits; or (c) a geographic relocation of a Participant’s place of work a distance for more than seventy-five (75) miles from the offices of the Company or a Subsidiary, as applicable.  Notwithstanding the foregoing, Good Reason shall not be deemed to exist unless a  Participant gives

1.15 “Outside Directors” shall have the meaning ascribed to it in Section 162(m) of the Code (“Section 162(m)”) and the regulations proposed or adopted thereunder.

1.16 “Negative Discretion” shall mean the discretion granted to the Committee to reduce or eliminate an Award to a Covered Employee.

1.17 “Non-Performance Based Compensation Award” shall mean an Award or sub-Award that is not designated by the Committee as a Performance Based Compensation Award.  

1.18 “Participant” shall mean the employees of the Company who are identified to be executive officers and selected by the Committee to participate in the Plan.

1.19 “Performance Based Compensation Award” shall mean an Award or sub-Award designated by the Committee that is intended to qualify as “Performance-Based Compensation” under Section 162(m). 

1.20 “Performance Criteria” shall mean the following business criteria with respect to the Company or any Subsidiary: (a) net income;  (b) performance of investments;  (c) cash flow;  (d) earnings per share;  (e) return on equity;  (f) return on invested capital or assets;  (g) cost reductions or savings;  (h) funds from operations; (i) adjusted funds from operations; (j) funds available for distribution; (k) appreciation in the fair market value of the Company common stock;  (l) earnings before any one or more of the following items: interest, depreciation or amortization; (m) new investments; and (n) credit metrics.  In addition, to the degree consistent with the Code, the performance criteria may be calculated without regard to extraordinary, unusual and/or non-recurring items.

1.21 “Performance Goals” shall mean the one or more goals for the Performance Period established by the Committee.  The Committee shall establish the Performance Goals for Performance Based Compensation Awards within the first 90 days of the Performance Period (or if longer, within the maximum period allowed pursuant to Section 162(m)) based upon the Performance Criteria.

1.22 “Performance Period” shall mean the Company’s fiscal year.

1.23 “Plan” shall mean the Annual Cash Bonus Incentive Plan of LTC Properties, Inc., as set forth herein and as amended from time to time.

1.24 “Subsidiary” 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.

1.25  “Target Awards” shall mean the award established for a Performance Period by the Committee expressed as a percentage of base salary as in effect on the first day of the Performance Period. Target Awards shall serve only as a guideline in making Awards.

2.01 In General. The Plan shall be administered by the Committee, which may delegate its duties and powers in whole or in part to any subcommittee thereof; it is expected that such subcommittee shall consist solely of at least two individuals who are intended to qualify as “Non-Employee Directors” within the meaning of Rule 16b-3 under the Act (or any successor rule thereto) and “outside directors” within the meaning of Section 162(m) (or any successor section thereto); provided, however, that the failure of the subcommittee to be so constituted shall not impair the validity of any Award made by such subcommittee. Subject to the provisions of the Plan, the Committee shall have exclusive power to select the Participants, to determine the Target Award and the amount of, or method of determining, the Awards and, designate whether an Award is a Performance Based Compensation Award.  The Committee is authorized to interpret the Plan, to establish, amend or rescind any rules and regulations relating to the Plan and to make any other determinations that it deems necessary or desirable for the administration of the Plan. The Committee may correct any defect or supply any omission or reconcile any inconsistency in the Plan in the manner and to the extent the Committee deems necessary or desirable. Any decision of the Committee in the interpretation and administration of the Plan, as described herein, shall lie within its sole and absolute discretion and shall be final, conclusive and binding on all parties concerned (including, but not limited to, Participants and their beneficiaries or successors). The Committee shall have the full power and authority, consistent with the provisions of the Plan, to establish the terms and conditions of any Award and to waive any such terms or conditions at any time (including, without limitation, accelerating or waiving any vesting conditions).

2.02 Adjustment to Performance Goals. The Committee is specifically authorized at any time during the first 90 days of the Performance Period, or at any time thereafter in its sole and absolute discretion, to adjust or modify the calculation of a Performance Goal for such Performance Period to prevent the dilution or enlargement of the rights of Participants (a) in the event of, or in anticipation of, any unusual or extraordinary corporate item, transaction, event or development; (b) in recognition of, or in anticipation of, any other unusual or nonrecurring events affecting the Company, or the financial statements of the Company, or in response to, or in anticipation of changes in applicable law, regulations, accounting principles, or business conditions; and (c) in view of the Committee’s assessment of the business strategy of the Company, performance of comparable organizations, economic and business conditions, and any other circumstances deemed relevant.  However, to the extent the exercise of such authority after the first 90 days of the Performance Period would cause the

2.03 Section 162(m) of the Code.  For all Covered Employees, to the extent that an Award is designated as a Performance Based Compensation Award, then the Plan and such Award shall for all purposes be interpreted and construed in accordance with Section 162(m). 

4.01 Certification.  As soon as practical following the availability of performance results for the completed Performance Period, the Committee shall determine whether, and to what extent, the Performance Goals  have been satisfied.

4.02 Attainment of Performance Goal.  If the Committee certifies that the Performance Goals for a Performance Period were satisfied, the Awards shall be paid out pursuant to Section 5. To the extent that an Award is designated as a Performance Based Compensation Award, if the Committee certifies that the Performance Goals for a Covered Employee for a Performance Period have not been satisfied then the Covered Employee shall not receive an the Performance Based Compensation Award for the Performance Period. 

4.03 Committee Determinations. The Committee shall, in its sole and absolute discretion, determine for each Participant the amount of the Award for the Performance Period. To the extent that an Award is designated as a Performance Based Compensation Award, the Committee shall have no discretion to increase the amount of any Award to a Covered Employee, but may through its Negative Discretion reduce the amount of or totally eliminate an Award to a Covered Employee if it determines, in its sole and absolute discretion, that such a reduction or elimination is appropriate.

5.01 Payment. Except as provided below, Awards will be distributed in a lump sum cash payment as soon as practicable following the Committee’s determination described in Section 4,  but not later than December 31st of the year following the applicable Performance Period. 

6.01 Termination of Employment Other Than from Death or Disability. A Participant who terminates employment with the Company or any Subsidiary during the Performance Period (or after the completed Performance Period but prior to the payment of the Award) for reasons other than death or Disability shall not be eligible to receive an Award for the Performance Period which includes the Participant’s date of termination of employment.

6.02 Termination of Employment for Good Reason or without Cause.   A Participant who terminates employment with the Company or any Subsidiary due to Good Reason or is terminated without Cause by the Company or a  Subsidiary, as applicable, during a Performance Period (or after the completed Performance Period but prior to the payment of the Award) shall be eligible to receive an Award equal to the Award which would have been earned by such Participant, pro-rated for that portion of the Performance Period during which the Participant was employed by the Company or Subsidiary.

6.03 Termination Due to Death or Disability. A Participant who terminates employment with the Company or any Subsidiary during a Performance Period (or after the completed Performance Period but prior to the payment of the Award) due to death or Disability shall be eligible to receive an Award equal to the Award which would have been earned by such Participant, pro-rated for that portion of the Performance Period during which the Participant was employed by the Company or Subsidiary.

8.01 General Requirements.    Performance Based Compensation Awards must be (a) granted by the Committee;  (b)  earned based on the achievement of the Performance Goals established by the Committee no later than 90 days after the commencement of the Performance Period and not after 25% of the Performance Period has elapsed; and (c) paid only after the Committee has certified, after the completion of the Performance Period, that the Performance Goals  have been met.  

8.02 Performance Goals.   Performance Based Compensation Awards shall be stated as specific amounts of, or specific changes in, one or more of the Performance Criteria.  The Performance Goals  need not be the same for different Performance Periods and for any Performance Period may be stated: (a) on an absolute basis or relative to the performance of other companies or of a specified index or indices, or be based on any combination of the foregoing and (b) separately for one or more of the Participants, collectively for the entire group of Participants, or in any combination of the two.

8.03 Committee Requirements.    Determinations by the Committee as to the establishment of Performance Goals, the amount potentially payable in respect of, the level of actual achievement of