TRANSFER AND REPURCHASE AGREEMENT

EXHIBIT 10.2
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TRANSFER AND REPURCHASE AGREEMENT



by and between



LTC Properties, Inc.



and



LTC REMIC Corporation


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Dated as of
March 1, 1996



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THIS TRANSFER AND REPURCHASE AGREEMENT, dated as of March 1, 1996, by
and between LTC Properties, Inc., a Maryland corporation ("LTC" or the
"Originator"), and LTC REMIC Corporation, a Delaware corporation (together with
its permitted assigns, the "Company").

WITNESSETH:
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WHEREAS, the Company, a corporation organized under the laws of
Delaware, is a wholly owned subsidiary of LTC; and

WHEREAS, LTC will transfer, convey and assign (the "Transfer") to the
Company all of its right, title and interest in, to and under certain mortgage
loans (the "Mortgage Loans") secured by first liens on properties that provide
health care and/or long-term nursing care, listed on the Mortgage Loan Schedule
attached as Exhibit A hereto; and

WHEREAS, LTC, in consideration for the Transfer of the Mortgage Loans
to the Company, will receive $ ; and
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WHEREAS, the Company will convey the Mortgage Loans to a trust (the
"Trust") formed pursuant to the Pooling and Servicing Agreement (as defined
below) on or about the date hereof and will retain certain interests in the
Mortgage Loans to the extent provided in the Pooling and Servicing Agreement;
and

WHEREAS, the Trust will issue pass-through certificates (the
"Certificates") which in the aggregate will represent the entire beneficial
ownership interest in the assets of the Trust, which assets will consist of the
Mortgage Loans and certain related assets; and

WHEREAS, it is a condition to the issuance of the Certificates that
LTC shall be required to repurchase the Mortgage Loans under the circumstances
and subject to the conditions set forth herein and in the Pooling and Servicing
Agreement.


NOW, THEREFORE, for and in consideration of the premises and the
mutual covenants hereinafter contained, the parties hereto covenant and agree as
follows:


ARTICLE I

DEFINITIONS

As used herein, the following terms shall have the meanings herein
specified unless the context otherwise requires. Defined terms in this
Agreement shall include in the singular number the plural and in the plural
number the singular. Capitalized terms used and not otherwise defined herein
shall have the respective meanings ascribed to such terms in the Pooling and
Servicing Agreement.

"Agreement" shall mean this Transfer and Repurchase Agreement as the
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same may from time to time hereafter be modified, supplemented or amended.

"Appraised Value" shall mean with respect to any Mortgaged Property,
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the appraised value thereof based upon the appraisal made or used by LTC in
connection with the origination of the related Mortgage Loan.

"Borrower" shall mean any obligor under a Note.
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"Business Day" shall mean any day other than a Saturday, a Sunday or a
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day on which banking institutions in the City of Chicago, Illinois (for so long
as LaSalle National Bank is Trustee) or in Philadelphia, Pennsylvania (for so
long as GMAC Commercial Mortgage Corporation is the Master Servicer) are
authorized or obligated by law, executive order or governmental decree to be
closed, or the Master Servicer, the Special Servicer or the Trustee is closed.

"Code" shall mean the Internal Revenue Code of 1986, any successor
----
statute thereto, and any temporary or final regulations of the United States
Department of the Treasury from time to time promulgated thereunder.

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"Collateral" shall mean all property (including the real property
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listed on Exhibit A hereto) and interests in property now owned or hereafter
acquired in or upon which a lien has been or is purported or intended to have
been granted to the Trust under the Transaction Documents.

"Environmental Condition" shall mean any condition or circumstance
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that (i) may pose an imminent or substantial endangerment to the public health
or welfare or the environment, (ii) may result in a release or threatened
release of any Hazardous Materials, or (iii) may give rise to any environmental
claim or demand.

"Mortgage Loan Schedule" shall mean Exhibit A to this Agreement.
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"Net Lease" shall mean with respect to any Mortgage Loan, a lease
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covering substantially all of the related Mortgaged Property pursuant to which
the related tenant is obligated to pay (i) a minimum fixed rental substantially
sufficient, as of the date of origination of such Mortgage Loan, to pay in full
each related Monthly Payment on such Mortgage Loan (other than any Balloon
Payment), and (ii) all other charges commonly associated with the operation and
maintenance of such Mortgaged Property (other than exterior maintenance of
buildings and adjacent land and improvements located thereon), including,
without limitation, real estate taxes and assessments, insurance and structural
and non-structural repairs and maintenance. In the case of any Mortgage Loan
secured by more than one Mortgaged Property, the term "Net Lease" shall refer to
each Net Lease relating to each such Mortgaged Property.

"Person" shall mean any individual, corporation, limited liability
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company, partnership, joint venture, firm, association, joint-stock company,
trust, unincorporated organization or government or any agency political
subdivision thereof.

"Pooling and Servicing Agreement" shall mean the Pooling and Servicing
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Agreement dated as of March 1, 1996 by and among the Company, as Depositor,
LaSalle National Bank, as Trustee, ABN AMRO Bank N.V., as Fiscal Agent, GMAC
Commercial Mortgage Corporation, as Master Servicer and LTC, as Special
Servicer.

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"Qualified Mortgage" A Mortgage Loan that is a "qualified mortgage"
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within the meaning of Code Section 860G(a)(3) (but without regard to the rule in
Treasury Regulation l.860G-2(f)(2) that treats a defective obligation as a
qualified mortgage, or any substantially similar successor provision) and
applicable Treasury Regulations promulgated pursuant thereto.

"Qualified Title Insurer" shall mean any title insurer specified on
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Exhibit B hereto.

"Repurchase Price" shall mean, with respect to any Mortgage Loan to be
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purchased or repurchased pursuant to this Agreement and the Pooling and
Servicing Agreement, an amount, calculated by the Special Servicer, or the
Master Servicer on its behalf, as the case may be, equal to (without duplication
of any amount in clauses (i) through (iv) below):

(i) the unpaid principal balance of such Mortgage Loan as of the
Due Date as to which a payment of principal was last made by
the related Borrower; plus

(ii) unpaid accrued interest from the date as to which interest
was last paid by the related Borrower up to the date as of
which the purchase or repurchase is to occur at a rate equal
to the Mortgage Interest Rate applicable from time to time
on the unpaid Principal Balance of such Mortgage Loan; plus

(iii) any unreimbursed P&I Advances and Servicer Advances plus, in
each case, interest thereon at the Advance Rate with respect
to such Mortgage Loan; plus

(iv) expenses reasonably incurred or to be incurred by the Master
Servicer, the Special Servicer or the Trustee in respect of
the breach or defect giving rise to the repurchase
obligation, including any expenses arising

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out of the enforcement of the repurchase obligation.

"Transactions" shall mean the transactions contemplated by the
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Transaction Documents.

"Transaction Documents" shall mean this Agreement, the Pooling and
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Servicing Agreement and all other documents to which LTC or the Company is a
party which relate to the transfer of the Mortgage Loans to the Company or the
Trust or to the issuance of the Certificates.


ARTICLE II

ASSIGNMENT; PURCHASE PRICE

(a) LTC concurrently with the execution hereof, does hereby transfer,
assign, set over and otherwise convey to the Company all the right, title and
interest of LTC in and to the Mortgage Loans identified on Exhibit A hereto,
including all rights to payment in respect thereof under the Notes and any and
all related agreements, title insurance policies and any security interest
thereunder (whether in real or personal property or other Collateral and whether
tangible or intangible) and any guaranty or letter of credit relating thereto
without recourse and without warranty of any kind except as specifically set
forth herein. The transfer of the Mortgage Loans accomplished hereby is
absolute and is intended by the parties as a sale or other absolute transfer.
To the extent that a court shall deem the conveyance set forth above not to
constitute a sale or other absolute transfer, then LTC hereby grants to the
Company a first priority security interest in the Mortgage Loans and in the
proceeds thereof of any kind or nature whatsoever, and in the proceeds of any
related insurance policies.

(b) In consideration for the transfer of the Mortgage Loans to the Company,
LTC will receive $112,487,255.
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ARTICLE III

CORPORATE REPRESENTATIONS, WARRANTIES AND COVENANTS;
REPURCHASE OR SUBSTITUTION EVENTS

Section 3.1 Corporate Representations, Warranties and Covenants. As
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a condition to the execution and delivery of the Pooling and Servicing Agreement
and the completion of the Transactions contemplated thereby, LTC and the Company
make the following representations and warranties, which shall survive the
execution and delivery of this Agreement and all other Transaction Documents.

(a) LTC represents and warrants that, as of the Closing Date (i) it
is duly authorized to execute and deliver this Agreement, to enter into the
Transactions and to perform its obligations hereunder and has taken all
necessary action to authorize such execution, delivery and performance, (ii) the
Person signing this Agreement on its behalf is duly authorized to do so on its
behalf and this Agreement has been duly executed and delivered by it, (iii) it
has obtained all authorizations of any governmental body required in connection
with this Agreement and the Transactions and such authorizations are in full
force and effect, (iv) the execution, delivery and performance of this Agreement
and the Transactions will not violate any law, ordinance, charter, by-law or
rule applicable to it or any material agreement or order or decree by which it
is bound or by which any of its assets are affected, (v) there is no action,
suit or proceeding against, or investigation of, it pending or threatened,
before any court, administrative agency or other tribunal which, either
individually or in the aggregate, (A) asserts the invalidity of this Agreement,
(B) seeks to prevent the consummation of any of the Transactions or (C) which
would materially and adversely affect the performance by it of its obligations
under, or the validity or enforceability of, this Agreement and (vi) this
Agreement constitutes a legal, valid and binding agreement of it, enforceable
against it in accordance with its terms, subject to applicable bankruptcy,
fraudulent conveyance, insolvency, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles of
commercial

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reasonableness, good faith and fair dealing (regardless of whether enforcement
is sought in a proceeding in equity or at law).

(b) The Company has ensured and will continue to ensure that: (a) its
funds and other assets are identifiable and are not commingled with those of any
Affiliate and that it maintains bank accounts, corporate records and books of
account separate and apart from those of any Affiliate; (b) it pays from its
assets all obligations and indebtedness of any kind incurred by it; and (c) the
business and affairs of the Company are managed by or under the direction of its
Board of Directors. The assets and liabilities of the Company and its
Affiliates, including LTC, are and will continue to be readily ascertainable and
subject to segregation without requiring substantial time or expense to effect
and account for such segregated assets and liabilities.

(c) The Company conducts and will continue to conduct its business
solely in its own name so as not to mislead others as to the identity of the
company with which those others are concerned; LTC does not conduct its business
in the name of the Company or otherwise act in a manner that would lead others
to believe that they are dealing with the Company or its assets rather than LTC
and its assets. Without limiting the generality of the foregoing, all oral and
written communications including, without limitation, letters, invoices,
purchase orders, contracts, statements and applications, have been and will be
made solely in the name of the Company if they relate to the Company and solely
in the name of LTC if they relate to LTC. The Company and LTC have separate
stationery and other business forms. The Company has and will continue to
conduct its business from an office separate from that of LTC.

(d) The Company and LTC each is adequately capitalized for the
businesses in which it is engaged or in which it may become engaged. The
Company will not declare dividends to LTC if declaring dividends would result in
inadequate capitalization for the Company. Each of the Company and LTC will at
all times ensure that its capitalization is adequate in light of its business
and purpose. The Company will continue to provide for its own operating
expenses and liabilities

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from its own funds, and such expenses and liabilities will not be paid by LTC,
except that certain of the organizational expenses of the Company have been paid
by LTC. In addition, from time to time LTC may make capital contributions to
the Company to enable the Company to acquire certain securities; any such
capital contributions will be reflected as such on the books and records of both
LTC and the Company, and will be treated as capital contributions for tax,
accounting and other relevant purposes.

(e) The Company maintains, and will continue to maintain, cash
management systems separate from those of LTC. General overhead and
administrative expenses of LTC will not be charged or otherwise allocated to the
Company and such expenses of the Company will not be charged or otherwise
allocated to LTC (other than the organizational expenses referred to above).
There will be no guarantees made by the Company with respect to obligations of
LTC and there will be no guarantees made by LTC with respect to obligations of
the Company. Accordingly, the separate assets and liabilities of the Company
are and will continue to be readily ascertainable from those of LTC.

(f) The Company maintains corporate records distinct and separately
identifiable from the corporate records of LTC and any other person or entity.
The Company maintains full and complete financial records distinct and
separately identifiable from the financial records of LTC or any Affiliates.
These statements and reports are prepared and maintained in accordance with
generally accepted accounting principles, susceptible to audit and audited, at
least annually, in connection with the audit of LTC by independent public
accountants, in accordance with generally accepted auditing standards. LTC
prepares and files consolidated federal tax returns and combined financial
statements all of which will include the Company. The Company keeps its funds
separate and apart from the funds of LTC and any Affiliates, and its other
assets are separately identifiable and distinguishable from the assets of LTC
and any Affiliates. The Company will prepare and issue to its creditors
financial statements separate from those of LTC.

(g) When necessary, the Company obtains

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proper authorization from its directors or stockholders, as appropriate, for
corporate action. The Company acts solely in its name and through its duly
authorized officers or agents in the conduct of its businesses.

(h) The Company and LTC each do not and will not: (a) hold itself out
as having agreed to pay or become liable for the debts of LTC, in the case of
the Company, or the Company, in the case of LTC; (b) fail to correct any known
misrepresentation with respect to the foregoing; (c) operate or purport to
operate as an integrated, single economic unit with LTC, in the case of the
Company, or with the Company, in the case of LTC; (d) seek or obtain credit or
incur any obligation to any third party based upon the assets of LTC, in the
case of the Company, or upon the assets of the Company, in the case of LTC; or
(e) induce any such third party to rely reasonably on the creditworthiness of
LTC, in the case of the Company, or the creditworthiness of the Company, in the
case of LTC. The Company maintains and will continue to maintain an arm's-
length relationship with LTC. The Company maintains and will continue to
maintain management over its daily business affairs independent from that of LTC
and free of any undue or excessive control exercised by LTC; LTC maintains, and
will continue to maintain, management over its daily business affairs
independent from that of the Company and free of any undue or excessive control
exercised by the Company.

(i) The Company, prior to or contemporaneously with the sale of the
Mortgage Loans, will disclose all material transactions associated with its
acquisition of the Mortgage Loans and the transfer of such Mortgage Loans to the
Trust Fund by various means, including, without limitation, the filing of UCC-1
financing statements and other communications.

(j) The annual financial statements of LTC and the Company, including
the consolidated financial statements of LTC, will disclose the effects of the
transactions in accordance with generally accepted accounting principles. The
consolidated financial statements of LTC will contain a footnote stating that
the Mortgage Loans have been sold to the Company and the assets of the Company
are not available to satisfy the obligations of LTC or its other subsidiaries.
The resolutions, agreements and other instruments underlying

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the subject transactions will be continuously maintained by LTC and the Company
as official records.

Section 3.2 Repurchase or Substitution Events. LTC agrees to cure the
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defect or to repurchase or substitute a Mortgage Loan upon the determination, as
of the Closing Date and immediately prior to the effectiveness of the transfer
effected hereby or as of such other date specifically provided herein, that one
of the following statements is not true in any respect and such misstatement has
a material adverse effect on the Certificateholders:

(i) LTC is the sole owner and holder of such Mortgage Loan;

(ii) LTC has full right and authority to sell, assign and
transfer such Mortgage Loan;

(iii) The information set forth in the Mortgage Loan Schedule is
correct in all material respects at the date or dates
respecting which such information is furnished as specified
therein (or, if no date is specified, at and as of the
Closing Date);

(iv) Such Mortgage Loan is not a participation interest in a
mortgage loan, but is a whole loan and, except as set forth
in the Mortgage Loan Schedule, such Mortgage Loan does not
contain an equity participation;

(v) Such Mortgage Loan complies, as of the date of origination,
with, or was exempt from, applicable state or federal laws,
regulations and other requirements pertaining to usury, and
the receipt of any amounts payable as interest or otherwise
from revenues derived from the operation of the related
Mortgaged Property or in respect of any equity participation
provision of such Mortgage Loan do not violate any
applicable federal,

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state or local law, regulation or other requirement
pertaining to usury; any or all other requirements of any
federal, state or local law, including, without limitation,
truth-in-lending, real estate settlement procedures, equal
credit opportunity or disclosure laws, applicable to such
Mortgage Loan were complied with as of the date of
origination of such Mortgage Loan;

(vi) The origination, servicing and collection practices used by
LTC or any prior holder of such Mortgage Loan have been in
all material respects legal, proper and prudent and have met
customary standards utilized by mortgage lenders in their
commercial mortgage loan origination and servicing business;

(vii) Such Mortgage Loan was originated by LTC or any agent
thereof, and complies with all the material terms,
conditions and requirements of the underwriting policies of
LTC in effect at the time of origination;

(viii) LTC is transferring such Mortgage Loan free and clear of any
and all liens, pledges, charges or security interests of any
nature encumbering such Mortgage Loan other than the lien
granted pursuant to Article II hereof;

(ix) The proceeds of such Mortgage Loan have been fully disbursed
and there is no requirement for future advances thereunder,
and, with the exception of Mortgage Loans #93 and #128 with
respect to which funds have been escrowed or pledged for
disbursement as improvements are made, any and all
requirements imposed by the mortgagee as to completion of
any on-site or

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off-site improvements or as to disbursements of any escrow
funds therefor have been complied with, except for the Blair
Crescent Mortgage Loan which provides for the on-going
retention of $1,119,300 in escrow, to be disbursed, from
time to time, in connection with the completion of certain
repair work, and except for the Milan/Pleasant/Triple
Mortgage Loan which provides for the on-going retention of
$250,000 in a pledged account, to be used for certain
repairs and improvements;

(x) Each of the related Notes, related Mortgages and other
agreements providing security, credit support or other
assurances in connection therewith is a legal, valid and
binding obligation of the maker thereof (subject to any
nonrecourse provisions therein and any laws applicable
thereto of similar effect, such as antideficiency or one-
form-of-action rules), enforceable in accordance with its
terms, except as such enforcement may be limited by
(A) bankruptcy, insolvency, reorganization, fraudulent
conveyance or other similar laws affecting the enforcement
of creditors' rights generally, (B) general principles of
equity (regardless of whether such enforcement is considered
in a proceeding in equity or at law), including without
limitation concepts of materiality, reasonableness, good
faith and fair dealing and the possible unavailability of
specific performance or injunctive relief, and (C) in the
case of certain personal guarantees executed in connection
with certain Mortgage Loans, the community property laws of
the states in which the persons executing such

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guarantees are domiciled, and there is no valid offset,
defense, counterclaim or right to rescission with respect to
such Note, Mortgage or other agreements;

(xi) The related Assignment of Mortgage constitutes a legal,
valid and binding assignment of such Mortgage to the
Company, and the related reassignment of Assignment of
leases, rents and Profits, if any, constitutes a legal,
valid and binding assignment thereof to the Company, subject
to applicable bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium and other similar laws
affecting the enforcement of creditors' rights and remedies
generally, and subject, as to enforceability, to general
principles of equity (regardless of whether such enforcement
is considered in a proceeding in equity or at law) including
principles of commercial reasonableness, good faith and fair
dealing;

(xii) The related Mortgage (including any related security
agreement included in the definition of such term) is a
valid and enforceable first lien on the related Mortgaged
Property, (except for the Mortgage on the Southern Oaks
Mortgaged Property which is a valid and enforceable first
lien securing the related Mortgage Loan and a valid and
enforceable second lien securing the Horizon Health Care
Mortgage Loan, and the Mortgage on the Horizon Health Care
Mortgaged Property, which is a valid and enforceable first
lien securing the related Mortgage Loan and a valid and
enforceable second lien securing the Southern Oaks

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Mortgage Loan), which Mortgaged Property is free and clear
of all encumbrances and liens having priority over, or equal
to, the lien of the Mortgage, except as such enforcement may
be limited by (A) bankruptcy, insolvency, reorganization,
fraudulent conveyance or other similar laws affecting the
enforcement of creditors' rights and remedies generally,
(B) general principles of equity (regardless of whether such
enforcement is considered in a proceeding in equity or at
law), including without limitation concepts of materiality,
reasonableness, good faith and fair dealing and the possible
unavailability of specific performance or injunctive relief,
and subject only to (i) liens for real estate taxes and
special assessments not yet due and payable, (ii) covenants,
conditions and restrictions, rights of way, easements and
other matters of public record as of the date of recording
of such Mortgage, such exceptions appearing of record being
acceptable to mortgage lending institutions generally or
specifically reflected in the appraisal made in connection
with the origination of the related Mortgage Loan, none of
which materially impairs the value of the property or
materially interferes with the benefits of the security
intended to be provided by such Mortgage, (iii) exceptions
and exclusions specifically referred to in the lender's
title insurance policy described in clause (xxiii) below,
none of which materially impairs the value of the Mortgaged
Property or interferes with the use and operation of the
premises as currently contemplated or the ability of the
Borrower to make payments of

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principal and interest on the related Mortgage Loan when
due, (iv) a lien on the property to ensure the reimbursement
of remedial or response costs incurred by a State or the
United States as a result of an Environmental Condition, or
(v) other matters to which like properties are commonly
subject none of which, individually or in the aggregate,
materially impairs the value of the property or materially
interferes with the use and operation of the premises as
currently contemplated or the ability of the Borrower to
make payments of principal and interest on the related
Mortgage Loan when due; provided, however, that the Borrower
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may grant security interests in specific items of personal
property located on the related Mortgaged Property (or all
of the Mortgaged Properties in the case of Mortgage Loans
secured by more than one Mortgaged property) to the lessors
of or purchase-money lenders for said personal property, so
long as such encumbrances secure obligations of the Borrower
in an aggregate amount not in excess of eight thousand
dollars ($8,000) per month;

(xiii) The related Mortgage has not been waived, modified, altered,
satisfied, cancelled or subordinated in any respect or
rescinded, or the related Mortgaged Property has not been
released from the lien or other encumbrance of, and the
related Borrower has not been released from its obligations
under, such Mortgage or the related Mortgage Note, in whole
or in any part, in a manner which materially interferes with
the benefits of the security intended to be provided by such
Mortgage or the use, enjoyment, value or marketabili-

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ty of the related Mortgaged Property for the purposes
specified in such Mortgage; no guarantor has been released,
in whole or in part, under the related guaranty (if any);
and no instrument has been executed that would effect any
such cancellation, subordination, rescission or release,
with the exception of the written instruments which are part
of the related Mortgage File;

(xiv) All taxes, governmental assessments or water, sewer and
municipal charges that prior to the Cut-Off Date became due
and owing in respect of, and affect, the related Mortgaged
Property, and that by filing of a notice or other
appropriate instrument by a government agency could become a
lien on such Mortgaged Property, have been paid prior to
becoming delinquent, or a collateral pledge account with an
amount sufficient to cover such payments has been
established;

(xv) Neither the Originator nor any of its agents or Affiliates
has, directly or indirectly, advanced funds, or received any
advance of funds by a party other than the related Borrower,
for the payment of any amount required by the related Note
or the related Mortgage, except for interest accruing from
the date of the Note or date of disbursement of the proceeds
of such Mortgage Loan, whichever is later, to the date which
preceded by 30 days the first Due Date under the related
Note;

(xvi) The proceeds of such Mortgage Loan to the related Borrower
at origination did not exceed the principal amount of such
Mortgage Loan and, taking into account any lien on the
related Mortgaged Property which is senior to

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or of equal seniority as such Mortgage Loan, either (A) such
Mortgage Loan is secured by an interest in real property
having a fair market value (i) at least equal to 80% of the
principal balance of such Mortgage Loan at the later of the
date such Mortgage Loan was originated (or, with respect to
those Mortgage Loans between the Originator and its
subsidiaries, at the time the Mortgage Loan will be
transferred to the Trust) or the date upon which a
significant modification (as defined in Treasury Regulation
Section 1.860G-2(b) of the Code) occurred or (ii) at least
equal to 80% of the principal balance of such Mortgage Loan
at the Closing Date; or (B) substantially all the proceeds
of such Mortgage Loan were used to acquire, improve or
protect the real property that served as the only security
for such Mortgage Loan (other than a recourse feature or
other third party credit enhancement within the meaning of
Treasury Regulation Section l.860G-2(a)(1)(ii) and no
significant modification, as defined in Treasury Regulation
Section 1.860G-2(b), has been made to such Mortgage Loan);
provided, however, that the fair market value of the
-------- -------
interest in real property securing such Mortgage Loan shall
be determined in accordance with Section 1.856-3(a) of the
Treasury Regulations; provided, further, with respect to any
-------- -------
Mortgage Loan which provides for a partial release of the
Mortgage Property upon a partial payment of the Mortgage
Loan, the Allocable Loan Amount with respect to each
property independently would meet the 80% test described in
clause (i) of this subparagraph (xvi);

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(xvii) There is no proceeding pending for the total or partial
condemnation of the related Mortgaged Property, and such
Mortgaged Property is in good repair and free and clear of
any damage that would affect materially and adversely the
value of such Mortgaged Property as security for such
Mortgage Loan or the use for which the premises were
intended;

(xviii) The related Mortgaged Property is free and clear of any
mechanics' and materialmen's liens, or liens in the nature
thereof, and no rights are outstanding that under law could
give rise to any such liens, any of which liens are or may
be senior to, or of equal priority with, the lien of the
related Mortgage, except those which are insured against by
the lender's title insurance policy referred to in clause
(xxiii) below;

(xix) None of the improvements which were included for the purpose
of determining the Appraised Value of the related Mortgaged
Property in connection with the origination of such Mortgage
Loan lies outside the boundaries and building restriction
lines of such property, no improvements on adjoining
properties materially encroach upon such Mortgaged Property,
and all improvements located on or forming a part of such
Mortgaged Property complied with applicable zoning laws
and/or set-back ordinances in force when such improvements
were placed on such Mortgaged Property except where (i) non-
compliance could not have a foreseeable material adverse
effect on such Mortgaged Property, (ii) the Mortgaged
Property has a variance or special use permit allowing the
non-compliance, or (iii) the improvements on the Mortgaged
Property were made

18

prior to the effective date of the applicable zoning
ordinance and are therefore grandfathered;

(xx) At the time of origination of such Mortgage Loan, the
related Borrower, lessee and/or operator was in possession
of all material licenses, permits and other authorizations
then necessary and required by applicable law for the use of
the related Mortgaged Property and all such licenses,
permits and authorizations were valid and in full force and
effect;

(xxi) If the related Mortgaged Property is subject to a lease, the
related Borrower is the owner and holder of the landlord's
interest under any lease for use and occupancy of all or any
portion of the related Mortgaged Property; the related
Mortgage and related Assignment of Leases, Rents and Profits
provides for the appointment of a receiver for rents, or
provides for rents to be paid directly to the mortgagee in
the event of default, or allows the mortgagee to enter into
possession to collect the rents; no assignments have been
made of the landlord's interest in any such lease or any
portion of the rents, additional rents, charges, issues or
profits due and payable or to become due and payable under
any such lease, which assignments are presently outstanding
and have priority over the related Mortgage or any related
Assignment of Leases, Rents and Profits given in connection
with the origination of the related Mortgage, other than as
may be disclosed in the related lender's title insurance
policy referred to in clause (xxiii) below; and the related
Borrower is the beneficial owner of the related Mortgaged
Property;

19

(xxii) Both the Originator and the Depositor were authorized to the
extent required under applicable law to transact and do
business in the jurisdiction in which the related Mortgaged
Property is located at all times when it held such Mortgage
Loan, or any failure to be so qualified has not impaired the
validity of such Mortgage Loan;

(xxiii) The related Mortgage is covered by a lender's title
insurance policy, issued by a Qualified Title Insurer,
insuring that the related Mortgage is a valid first lien
(except for the Mortgage on the Southern Oaks Mortgaged
Property, which is a valid and enforceable first lien
securing the related Mortgage Loan, and a valid and
enforceable second lien securing the Horizon Health Care
Mortgage Loan, and the Mortgage on the Horizon Health Care
Mortgaged Property which is a valid and enforceable first
lien securing the related Mortgage Loan and a valid and
enforceable second lien securing the Southern Oaks Mortgage
Loan) on such Mortgaged Property; such title insurance
policy is in full force and effect, is freely assignable
(subject to obtaining the required assignment endorsement
upon payment of premium therefor if necessary) and (subject
to any required recordation of the appropriate Assignment of
Mortgage, the obtaining of the required assignment
endorsement, if any, and the payment of the required premium
therefor) will inure to the benefit of the Trustee as
mortgagee of record; other than the lender's title insurance
policy covering the Roswell Mortgage Loan (Loan #118) which
contains an exception for the second-lien mortgage in favor
of a third party not affiliated with the

20

Originator, such policy is not subject to exceptions which
are not acceptable to mortgage lending institutions
generally and which are not specifically referenced in such
title insurance policy, which impairs the value of the
property or materially interferes with the use and operation
of the premises as currently contemplated or the ability of
the Borrower to make payments of principal and interest on
the related Mortgage Loan when due; and neither the
Originator nor any prior mortgagee has done, by act or
omission, anything which would materially impair the value
of the property or materially impair the use and operation
of the premises as currently contemplated or the ability of
the related Borrower to make payments of principal and
interest on the related Mortgage Loan when due;

(xxiv) There is no material default, breach, violation or event of
acceleration existing under the related Mortgage or the
related Note or an event (other than payments due but not
yet delinquent) which, with the passage of time or with
notice and the expiration of any grace or cure period, would
constitute a material default, breach, violation or event of
acceleration; there has been no knowing waiver of any
default, breach, violation or event of acceleration of any
of the foregoing, and no Person other than the holder of
such Note may declare an event of default or accelerate the
related indebtedness under any such Mortgage Loan, Mortgage
or Note;

(xxv) As of the Cut-Off Date, no Mortgage Loan is 30 days or more
delinquent in payment beyond its related Due Date and no
Mortgage Loan has been more

21

than 30 days delinquent in payment more than once during the
12 months prior to the Cut-Off Date without giving effect to
any grace period permitted by the related Mortgage or Note;

(xxvi) The related Note or the related Mortgage contains customary
and enforceable provisions such as to render the rights and
remedies of the holder thereof adequate for the realization
against the related Mortgaged Property of the benefits of
the security (except as may be limited as described in
clause (x) above), including realization by judicial or, if
applicable, nonjudicial foreclosure, and there is no
exemption available to the Borrower which would interfere
with such right to foreclosure other than as described in
clauses (xi) and (xii) above;

(xxvii) The facility located on the related Mortgaged Property and
the operator with respect to such facility has all
certificates, licenses, permits or other authorization
required by applicable law for the operation of such
facility, and, to the extent such facility participates in
Medicaid, Medicare or other similar programs, such facility
and operator holds a valid certification for such
participation, appropriate for the level of care provided at
such facility;

(xxviii) The related Mortgaged Property is insured by a fire and
extended perils insurance policy issued by a Qualified
Insurer (as defined in the Pooling and Servicing Agreement),
providing coverage against loss or damage sustained by
reason of fire, lightning, windstorm, hail, explosion,

22

aircraft, vehicles and smoke, and, to the extent required as
of the date of origination by LTC consistent with its normal
commercial mortgage lending practices, against other risks
insured against by Persons operating like properties in the
locality of such Mortgaged Property including flood
insurance in the event that the related Mortgaged Property
is located within the 100-year flood zone, in an amount
which is at least equal to the lesser of the current
principal balance of such Mortgage Loan or the replacement
cost of the improvements which are a part of such Mortgaged
Property; all premium installments then due on such
insurance policy have been paid; such insurance policy
requires prior notice to the insured of termination or
cancellation, and no such notice has been received; the
related Mortgage or related Mortgage Loan documents obligate
the related Borrower to maintain all such insurance and
authorizes the mortgagee, upon such Borrower's failure to do
so, to maintain such insurance at the Borrower's cost or
expense and to seek reimbursement therefor from such
Borrower;

(xxix) The related Borrower owns the related Mortgaged Property in
fee simple, except as title may be qualified in the related
lender's title insurance policy referred to in clause
(xxiii) above; there are no Mortgaged Properties with
respect to which the related Borrower's interest is a
leasehold interest;

(xxx) If the related Mortgage is a deed of trust, a trustee, duly
qualified under applicable law to serve as such, has been
properly designated and currently so serves and is named in
the

23

deed of trust or has been substituted in accordance with
applicable law, and no fees or expenses are or will become
payable to the trustee under the deed of trust, except in
connection with a trustee's sale after default by the
related Borrower or in connection with the release of the
related Mortgaged Property or related security for such
Mortgage Loan following the payment of such Mortgage Loan in
full;

(xxxi) The related Note is not secured by any collateral except the
lien of the related Mortgage, any related Assignment of
Leases, Rents and Profits and any related security
agreement, guaranties, debt service reserves or other such
instruments of collateral; and with the exception of the
Roswell Mortgage Loan (Loan #118) on which there is a
second-lien mortgage which is not included in the Trust
Fund, the related Mortgaged Property and the other
collateral for such Mortgage Loan do not secure any mortgage
loan that is not included in the Trust Fund on the Closing
Date;

(xxxii) No Mortgage Loan, Note or Mortgage requires the mortgagee to
release any portion of the Mortgaged Property from the lien
of the Mortgage except upon payment in full of such Mortgage
Loan at maturity or in connection with a Permitted
Prepayment of the Mortgage Loan (or in the case of Mortgage
Loans secured by more than one Mortgaged Property, payment
of a release price in connection with the sale of one or
more (but not all) of the Mortgaged Properties);

(xxxiii) To LTC's knowledge, there was no existing circumstance or
condition with respect to the related Mortgage,

24

Mortgaged Property, Borrower, tenant or operator of the
Mortgaged Property relating to such Mortgage Loan (giving
effect to any non-recourse provisions therein) that in LTC's
reasonable determination would cause such Mortgage Loan to
be subject to imminent default except such circumstances and
conditions which have been cured prior to the date hereof;

(xxxiv) Each related Mortgaged Property is on a separate tax parcel,
assessed for real estate tax purposes separate and apart
from any other property owned by the related Borrower or any
other Person;

(xxxv) The related Assignment of Leases, Rents and Profits creates
a valid first priority assignment of, or security interest
in, the right to receive all payments due under the related
Net Lease, if any, which right may be exercised by the
mortgagee upon the occurrence of an event of default by the
related Borrower under the terms of the related Mortgage;

(xxxvi) The related Note does not provide for a grace period that
exceeds ten business days during which remittance by the
related Borrower of any scheduled Monthly Payment may be
deferred without the payment of any default interest or late
charge therefor, and there is no difference for any period
between the amount of interest accrued on such Mortgage Loan
and the amount of interest payable thereon;

(xxxvii) In the event of a foreclosure under the related Mortgage,
any related Net Lease, if any, will either (i) be
extinguished by reason of being subordinate to the related
Mortgage, without any non-disturbance or at-

25

tornment obligations; or (ii) continue in full force and
effect, either because such Net Lease is superior in time
and has not been subordinated, or because non-disturbance
and attornment obligations have been given;

(xxxviii) There is no action pending or, to LTC's knowledge,
threatened, to terminate the related facility's
participation in the Medicaid or Medicare program, and the
execution of any Transaction Documents will not adversely
affect the facility's participation in such programs;

(xxxix) The related Mortgage or the related Note contains no
provision limiting or restricting the right or ability of
LTC to assign, transfer or convey such Mortgage or Note to
any other person or entity;

(xl) Interest with respect to 23 of the Mortgage Loans is accrued
on the basis of a 360-day year consisting of twelve 30-day
months and interest with respect to the remaining 11
Mortgage Loans is accrued on the basis of a 365-day year;

(xli) With the exception of loan #118, no Mortgage Loan or Note
permits the related Borrower to incur or maintain a second
lien on the related Mortgaged Property without the prior
consent of the related mortgagee;

(xlii) As to each Nursing Facility;

(a) To the best of LTC's knowledge, each Nursing Facility
and each Nursing Facility operator complies with all
laws, regulations, quality and safety standards, and
requirements of the applicable state Department of

26

Health (each a "DOH") and all other state or federal
governmental authorities;

(b) To the best of LTC's knowledge, all governmental
licenses, permits, regulatory agreements or other
approvals or agreements required for the operation of
each Nursing Facility are held by the applicable
Borrower in the name of the Borrower and are in full
force and effect, including without limitation, a
valid certificate of need ("CON") or similar
certificate, license, or approval issued by the DOH
for the requisite number of beds, and approved
provider status in any approved provider payment
program (collectively, the "Licenses");

(c) The Licenses, including without limitation, the CON:

(1) may not, under the terms of the related loan
documents, be, and to the best of LTC's
knowledge, have not been, transferred to any
location other than the Nursing Facility; and

(2) to the best of LTC's knowledge, have not been
pledged as collateral security for any other loan
or indebtedness as of the origination date for
such Mortgage Loan;

(d) So long as the Certificates remain outstanding, the
Originator will not consent to allow any Borrower to:

27

(1) amend or otherwise reduce a Nursing Facility's
authorized bed capacity and/or the number of beds
approved by the DOH; or

(2) replace or transfer all or any material portion
of any Nursing Facility's beds to another site or
location;

(e) to the best of LTC's knowledge, each Nursing Facility
is not the subject of any pending action by any state
or federal regulatory agency which might result in the
revocation or loss of the Licenses;

(f) To the best of LTC's knowledge, each Nursing Facility
is in compliance with all requirements for
participation in Medicare and Medicaid, including
without limitation, the Medicare and Medicaid Patient
Protection Act of 1987;

(g) To the best of LTC's knowledge, no notice of any
violation has been received from a government agency
that would, directly or indirectly, or with the
passage of time:

(1) have a material adverse impact on any Borrower's
ability to accept and/or retain patients;

(2) modify, limit or annul any Borrower's Licenses;
or

28

(3) affect any Borrower's continued participation in
the Medicaid or Medicare programs, or any
successor programs thereto;

(h) To the best of LTC's knowledge, no material physical
plant waivers of licensure standards exist at any of
the Nursing Facilities;

(i) To the best of LTC's knowledge, no Nursing Facility
had a Level [A] violation which was not resolved prior
to the origination of the Mortgage Loan; and

(j) To the best of LTC's knowledge, there are no current
or pending Medicaid or Medicare recoupment efforts at
any of the Nursing Facilities;

(xliii) There is no condition or circumstance existing as a result
of, or arising from, the presence of Hazardous Materials on
a Mortgaged Property such that the Mortgage Loan secured by
the affected Mortgaged Property would be ineligible, solely
by reason of such condition, for purchase by FNMA under the
terms of Section 501.04 of the Guide (assuming such Mortgage
Loan were secured by multifamily residential property),
including a condition or circumstance that would constitute,
solely by reason of such condition or circumstance, a
material violation of applicable federal, state or local law
in effect as of the Closing Date; and

29

(xliv) Each Mortgage Loan is a "qualified mortgage" within the
meaning of Section 860(G) of the code (without regard to
Section 1.860G-2(f)(2) of the Treasury Regulations); and

(xlv) Each Prepayment Premium in each Mortgage Loan is reasonable
and customary for similar commercial mortgage loans.


ARTICLE IV

MORTGAGE LOAN REPURCHASES OR SUBSTITUTIONS

Section 4.1 Mortgage Loan Repurchases or Substitutions. (a) If (i)
------------------------------------------
(x) upon the existence of any violation of any representation or warranty
described in Section 3.2 hereof with respect to any Mortgage Loan except for
subsection 3.2(xliii) (referred to herein as an "event") which event materially
and adversely affects the interests of the Certificateholders or (y) any
documentation described in Section 2.1 of the Pooling and Servicing Agreement
relating to any Mortgage Loan shall be missing or defective, as identified in
the Trustee's Exception Report pursuant to the Pooling and Servicing Agreement,
and such absence or defect materially and adversely affects the interests of the
Certificateholders; and (ii) LTC shall not have cured in all material respects
such event, omission or defect within ninety (90) days of discovery of such
event, omission or defect, then (iii) LTC shall, at its option, either
repurchase such Mortgage Loan or substitute a new mortgage loan meeting and
subject to the requirements of Section 2.2(b) of the Pooling and Servicing
Agreement (a "Substitute Mortgage Loan") for the Mortgage Loan to which such
event, omission or defect relates, and in either case, as provided in clause (c)
below, within such ninety (90) day period.

The repurchase or substitution obligation described in this paragraph
will constitute the sole remedy of the Certificateholders or the Trustee, on
behalf of the Certificateholders, with respect to the conditions described in
this paragraph (a).

30

(b) If, as of the Closing Date of a Mortgage Loan, the representation
and warranty contained in Section 3.2(xliii) was not true and correct as to the
related Mortgaged Property LTC shall, within 90 days of receipt from the Master
Servicer, the Special Servicer or the Trustee of a written request and of the
certifications described in (iii) below, at LTC's option, either (x) cure such
Disqualifying Condition or (y) repurchase the affected Mortgage Loan or Mortgage
Loans on a whole loan servicing-released basis at the Repurchase Price in the
manner provided in Section 2.2(b) of the Pooling and Servicing Agreement,
provided that each of the following conditions is satisfied:

(i) Such Mortgage Loan is at least 60 days delinquent and no
action has been taken to initiate foreclosure proceedings or
to accept a deed in lieu of foreclosure and the Special
Servicer has not taken possession of, or taken over the
operation of, the related Mortgaged Property, and the
Special Servicer shall have delivered to LTC a certification
as to the foregoing;

(ii) The Special Servicer shall have delivered to LTC and the
Trustee, at the expense of the Trust Fund, an Environmental
Assessment indicating the presence of a Disqualifying
Condition; and

(iii) The Master Servicer and the Special Servicer shall each
provide a written certification to LTC that the Special
Servicer has acted in compliance with the servicing standard
set forth in Section 3.1 of the Pooling and Servicing
Agreement and has not, by any action, created, caused or
contributed to a Disqualifying Condition.

The repurchase obligation described in this paragraph will constitute
the sole remedy of the Certificateholders or the Trustee, on behalf of the
Certificateholders, with respect to a Disqualifying Condition. LTC

31

shall not be responsible for any Disqualifying Condition which may arise on a
Mortgaged Property after the Closing Date.

(c) If LTC elects to repurchase a Mortgage Loan in accordance with
the terms and conditions set forth herein and in the Pooling and Servicing
Agreement, the repurchase shall be for an amount equal to the Repurchase Price
as of the date of repurchase. If LTC elects to substitute a Substitute Mortgage
Loan hereunder, such substitution shall be effected under the terms and
conditions, and subject to the limitations, provided in Section 2.2(b) of the
Pooling and Servicing Agreement, including (i) the requirement that LTC deliver
to the Company or the Trustee, as the case may be, for each such Mortgage Loan
each of the documents set forth in Section 2.1 of the Pooling and Servicing
Agreement and such documents as are requested by the Company or the Trustee and
(ii) the receipt by the Trustee of the prior written consent from the Rating
Agencies that such substitution of a Mortgage Loan will not result in the
downgrade or withdrawal of a rating then assigned to any class of Certificates.

(d) In the case of a Substitute Mortgage Loan, LTC will provide the
Rating Agencies with substantially the same environmental information which LTC
provided with respect to the Mortgaged Properties securing the Mortgage Loans
originally deposited into the Trust Fund on the Closing Date. In addition, any
substitution of a Mortgage is subject to the receipt by the Trustee of written
confirmation by each Rating Agency that such substitution will not result in a
reduction or withdrawal of the rating of any Class of Certificates then
outstanding.

The Substitute Mortgage Loan shall have characteristics such that the
events set forth in Section 3.2 herein (other than Section 3.2(xxxiv)) do not
exist as of the date of substitution and would not have existed had such
Substitute Mortgage Loan originally been a Mortgage Loan and shall be subject to
the remedies set forth in this Section 4.1.


ARTICLE V

32

MISCELLANEOUS

Section 5.1 Notices. Except as otherwise expressly provided herein,
-------
all notices, requests and demands to or upon the respective parties hereto to be
effective shall be in writing and shall be deemed to have been duly given or
made upon receipt at the addresses specified below, or to such other addresses
as may be designated by any party in a written notice to the other parties
hereto.

If to LTC, as follows:

LTC Properties, Inc.
300 Esplanade Drive,
Suite 1860
Oxnard, CA 93030
Attention: Andre C. Dimitriadis

with copies thereof to:

Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: Warren T. Buhle

If to the Company, as follows:

LTC REMIC Corporation
300 Esplanade Drive, Suite 1860
Oxnard, CA 93030
Attention: James J. Pieczynski

with copies thereof to:

Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: Warren T. Buhle

Section 5.2 Successors and Assigns; Assignments. This Agreement
-----------------------------------
shall be binding upon and inure to the benefit of LTC, the Company and their
respective successors and assigns, except that LTC shall not assign or transfer
(by operation of law or otherwise) any of its rights or obligations under this
Agreement without the prior written consent of the Company and the Trustee and

33

any assignment hereof by LTC without such prior written consent shall be null
and void for all purposes; provided, however, no such consent shall be required
-------- -------
if such assignment or transfer would not result in the downgrading or withdrawal
of the rating or ratings then assigned by any Rating Agency to the then-rated
Classes of Certificates, as evidenced in writing by the Rating Agencies. LTC
hereby acknowledges and agrees that the Company is assigning to the Trustee all
of its right, title and interest in and to this Agreement for the benefit of the
Certificateholders pursuant to the Pooling and Servicing Agreement. The rights
of the Company hereunder are hereby assigned to the Trustee which shall be
assigned to a third party beneficiary hereof.

Section 5.3 Amendments and Waivers. Neither this Agreement nor any
----------------------
terms hereof or thereof may be amended, supplemented, modified or waived except
by means of written instrument executed by each of the parties hereto and the
Trustee.

Section 5.4 Governing Law. THIS AGREEMENT AND THE RIGHTS AND
-------------
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND
BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE
PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW).

Section 5.5 Effectiveness. This Agreement shall become effective
-------------
upon the execution and delivery of this Agreement by LTC on the Closing Date.

Section 5.6 Headings Descriptive. The headings of the several
--------------------
sections and subsections of this Agreement are inserted for convenience only and
shall not in any way affect the meaning or construction of any provision of this
Agreement.

Section 5.7 Marshalling; Recapture. The Company shall not be under
----------------------
any obligation to marshal any assets in favor of LTC or any other party. To the
extent the Company receives any payment by or on behalf of LTC, which payment or
any part thereof is subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to LTC or its estate, trustee,
receiver, custodian or any other party under any bankruptcy law, state or
federal law, common law or equitable cause, then to the extent of such payment
or

34

repayment, the obligation or part thereof which has been paid, reduced or
satisfied by the amount so repaid shall be reinstated by the amount so repaid
and shall be included within the liabilities of LTC to the Company as of the
date such initial payment, reduction or satisfaction occurred.

Section 5.8 Severability. In case any provision or obligation under
------------
this Agreement or the other Transaction Documents shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining provisions or obligations, or of such provision or obligation in
any other jurisdiction, shall not in any way be affected or impaired thereby.

Section 5.9 Capitalization. Capitalized terms used in this Agreement
--------------
that are not defined herein shall have their respective meanings set forth in
the Pooling and Servicing Agreement.

35

IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized representatives to execute and deliver this Agreement as of the date
first above written.


LTC PROPERTIES, INC.



By: /s/ James J. Pieczynski
----------------------------
Name: James J. Pieczynski
Title: Senior Vice President &
Chief Financial Officer



LTC REMIC CORPORATION



By: /s/ Chris Ishikawa
----------------------------
Name: Chris Ishikawa
Title: Treasurer


Accepted by:

GMAC COMMERCIAL MORTGAGE CORPORATION



By: /s/ Barry A. Moore
----------------------------
Name: Barry A. Moore
Title: Executive Vice President

36