-----------------------------------

                              DECLARATION OF TRUST

                              SNH CAPITAL TRUST III

                             DATED AS OF MAY 4, 2001

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<PAGE>



                              DECLARATION OF TRUST

                                       OF

                              SNH CAPITAL TRUST III

                                   MAY 4, 2001


         DECLARATION OF TRUST  ("Declaration")  dated and effective as of May 4,
2001 by the Trustees (as defined herein),  the Sponsor (as defined herein),  and
by the  holders,  from time to time,  of undivided  beneficial  interests in the
Trust to be issued pursuant to this Declaration;

         WHEREAS,  the Trustees and the Sponsor desire to establish a trust (the
"Trust")  pursuant to the Maryland Business Trust Act for the purpose of issuing
and selling certain securities  representing  undivided  beneficial interests in
the assets of the Trust and  investing  the  proceeds  thereof  in certain  Debt
Securities of the Debt Security Issuer (as defined herein);

         NOW,  THEREFORE,  it being the intention of the parties hereto that the
Trust  constitute a business  trust under the  Business  Trust Act and that this
Declaration  constitute  the governing  instrument of such business  trust,  the
Trustees declare that all assets  contributed to the Trust will be held in trust
for the exclusive  benefit of the holders,  from time to time, of the securities
representing  undivided  beneficial  interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration.

                                   ARTICLE I
                                   DEFINITIONS

SECTION 1.1       Definitions.

         Unless the context otherwise requires:

                  (a) Capitalized terms used in this Declaration but not defined
         in the preamble above have the respective  meanings assigned to them in
         this Section 1.1;

                  (b) a term defined  anywhere in this  Declaration has the same
         meaning throughout;

                  (c) all references to "the Declaration" or "this  Declaration"
         are to this  Declaration of Trust as modified,  supplemented or amended
         from time to time;

                  (d)  all  references  in  this  Declaration  to  Articles  and
         Sections  are to  Articles  and  Sections  of this  Declaration  unless
         otherwise specified; and

                  (e) a reference to the  singular  includes the plural and vice
         versa.

         "Affiliate"  has the same  meaning as given to that term in Rule 405 of
the Securities Act.



<PAGE>

         "Business  Day"  means  any  day  other  than  a day on  which  banking
institutions in New York, New York or in Boston, Massachusetts are authorized or
required by law to close.

         "Business   Trust  Act"  means  Title  12  of  the   Corporations   and
Associations  Article of the  Annotated  Code of Maryland,  as it may be amended
from time to time, or any successor legislation.

         "Commission" means the Securities and Exchange Commission.

         "Common Securities" means securities  representing undivided beneficial
ownership interests in the assets of the Trust with such terms as may be set out
in any amendment to this Declaration.

         "Covered Person" means (a) any officer, director, shareholder, partner,
member,  representative,  employee or agent of (i) the Trust or (ii) the Trust's
Affiliates and (b) any holder of Securities.

         "Debt  Security  Issuer" means the Parent in its capacity as the issuer
of the Debt Securities under the Indenture.

         "Debt  Securities"  means the series of debt securities to be issued by
the Debt Security Issuer and acquired by the Trust.

         "Exchange  Act" means the  Securities  Exchange Act of 1934, as amended
from time to time or any successor legislation.

         "Fiduciary  Indemnified  Person"  has the  meaning set forth in Section
4.3(b).

         "Indemnified  Person" means a Parent  Indemnified Person or a Fiduciary
Indemnified Person.

         "Indenture"  means an  indenture  to be entered into between the Parent
and the Indenture  Trustee and any indenture  supplemental  thereto  pursuant to
which the Debt Securities are to be issued.

         "Indenture  Trustee"  means the  trustee  under the  Indenture  until a
successor is appointed thereunder, and thereafter means such successor trustee.

         "Parent" means Senior Housing  Properties Trust, a Maryland real estate
investment trust, the parent of the Sponsor, or any successor thereto.

         "Parent  Indemnified  Person"  means (a) any Regular  Trustee;  (b) any
Affiliate of any Regular  Trustee;  (c) any officers,  directors,  shareholders,
members, partners, employees,  representatives or agents of any Regular Trustee;
or (d) any employee or agent of the Trust or its Affiliates.

         "Person" means a legal person,  including any individual,  corporation,
real  estate  investment  trust,  business  trust,  estate,  partnership,  joint
venture,  association,  joint stock


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<PAGE>

company,  limited  liability  company,  trust,  unincorporated  association,  or
government or any agency or political  subdivision  thereof, or any other entity
of whatever nature.

         "Preferred   Securities"   means  securities   representing   undivided
beneficial ownership interests in the assets of the Trust with such terms as may
be set out in any amendment to this Declaration.

         "Property Trustee" has the meaning set forth in Section 3.3.

         "Regular Trustee" means any Trustee other than the Property Trustee (as
hereinafter defined).

         "Securities" means the Common Securities and the Preferred Securities.

         "Securities Act" means the Securities Act of 1933, as amended from time
to time, or any successor legislation.

         "Sponsor" means SNH Capital Holdings, a Maryland business trust.

         "Trustee"  or  "Trustees"   means  each  Person  who  has  signed  this
Declaration  as a trustee,  so long as such Person  shall  continue in office in
accordance  with the terms  hereof,  and all other  Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with the
provisions  hereof,  and  references  herein to a Trustee or the Trustees  shall
refer to such Person or Persons solely in their capacity as trustees hereunder.

                                   ARTICLE II
                                  ORGANIZATION

SECTION 2.1       Name.

         The Trust created by this Declaration is named "SNH Capital Trust III."
The Trust's activities may be conducted under the name of the Trust or any other
name deemed advisable by the Regular Trustees.

SECTION 2.2       Office.

         The address of the principal  office of the Trust is c/o Senior Housing
Properties Trust, 400 Centre Street,  Newton,  Massachusetts 02458. At any time,
the Regular Trustees may designate another principal office.  The address of the
Maryland office of the Trust is c/o Ballard Spahr Andrews & Ingersoll,  LLP, 300
East Lombard Street, Baltimore, Maryland 21202.

SECTION 2.3       Resident Agent.

         The name of the resident agent of the Trust in the State of Maryland is
James J. Hanks,  Jr., 300 East Lombard Street,  Baltimore,  Maryland 21202.  The
resident  agent is a citizen  of and  resides in the State of  Maryland.  At any
time,  the  Regular  Trustees  may  designate  by written  notice to the Sponsor
another  resident agent who is a citizen of and resides in the State of Maryland
or which is a Maryland corporation.



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<PAGE>

SECTION 2.4       Purpose.

         It is the intention of the parties hereto that the Trust created hereby
constitute  a  business  trust  under  the  Business  Trust  Act,  and that this
Declaration  constitute the governing  instrument of the Trust. The Trustees are
hereby authorized and directed to execute and file a certificate of trust in the
office of the Maryland State  Department of Assessments and Taxation in the form
attached hereto. The Trust is hereby established by the Sponsor and the Trustees
for the purposes of (i) issuing Preferred  Securities and investing the proceeds
thereof in Debt  Securities,  (ii) issuing and selling Common  Securities to the
Sponsor in exchange for cash and  investing  the proceeds  thereof in additional
Debt  Securities and (iii)  engaging in such other  activities as are necessary,
convenient or incidental  thereto.  The Trust shall not borrow money, issue debt
or reinvest  proceeds  derived from  investments,  pledge any of its assets,  or
otherwise  undertake (or permit to be undertaken)  any activity that would cause
the Trust not to be classified  for United States federal income tax purposes as
a grantor trust.

         Concurrent with the first issuance of any Securities by the Trust,  the
Sponsor  and  the  Trustees  intend  to  enter  into  an  amended  and  restated
Declaration  of Trust or Trust  Agreement,  satisfactory  to each such party and
substantially  in  the  form  included  as an  exhibit  to  the  Securities  Act
Registration Statement referred to below at the time such registration statement
becomes  effective  under the  Securities  Act, to provide for the  contemplated
operation  of the  Trust  created  hereby  and  the  issuance  of the  Preferred
Securities and the Common Securities referred to therein. Prior to the execution
and  delivery  of such  amended  and  restated  Declaration  of  Trust  or Trust
Agreement,  the Trustees shall not have any duty or obligation hereunder or with
respect to the trust estate,  except as otherwise required by applicable law or,
in the case of the Regular  Trustees,  as may be necessary  to obtain,  prior to
such  execution and delivery,  any licenses,  consents or approvals  required by
applicable law or otherwise.

SECTION 2.5       Authority.

         Subject to the limitations  provided in this  Declaration,  the Regular
Trustees shall have  exclusive and complete  authority to carry out the purposes
of the Trust.  An action taken by the Regular  Trustees in accordance with their
powers shall  constitute the act of and serve to bind the Trust. In dealing with
the Regular  Trustees acting on behalf of the Trust, no Person shall be required
to inquire into the authority of the Regular Trustees to bind the Trust. Persons
dealing  with the  Trust  are  entitled  to rely  conclusively  on the power and
authority of the Regular Trustees as set forth in this Declaration.

SECTION 2.6       Title to Property of the Trust.

         Legal title to all assets of the Trust shall be vested in the Trust.

SECTION 2.7       Powers of the Trustees.

         The Regular  Trustees  shall have the exclusive  power and authority to
cause the Trust to engage in the following activities:

                  (a) to issue and sell the Preferred  Securities and the Common
         Securities in accordance with this Declaration; provided, however, that
         the Trust may issue no more


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<PAGE>

         than one series of Preferred  Securities and no more than one series of
         Common  Securities,  and,  provided  further,  that  there  shall be no
         interests  in the Trust other than the  Securities  and the issuance of
         the Securities shall be limited to a one-time, simultaneous issuance of
         both Preferred Securities and Common Securities;

                  (b) in  connection  with the issue  and sale of the  Preferred
         Securities, at the direction of the Sponsor, to:

                           (i)   execute   and  file  with  the   Commission   a
                  registration  statement  on Form S-3  prepared  by the Sponsor
                  (the  "Registration  Statement"),   including  any  amendments
                  thereto  in  relation  to the  registration  of the  Preferred
                  Securities under the Securities Act;

                           (ii) execute and file any  documents  prepared by the
                  Sponsor,  or take any acts as  determined by the Sponsor to be
                  necessary  in order to qualify or register  all or part of the
                  Preferred  Securities  in any State in which the  Sponsor  has
                  determined  to qualify or register such  Preferred  Securities
                  for sale;

                           (iii)  execute and file on behalf of the Trust,  with
                  the New  York  Stock  Exchange  or any  other  national  stock
                  exchange  or  the  Nasdaq   National  Market  for  listing  or
                  quotation upon notice of issuance of any Preferred  Securities
                  a listing application and all other applications,  statements,
                  certificates,  agreements  and other  instruments  as shall be
                  necessary or desirable to cause the Preferred Securities to be
                  listed on such  exchange or national  market,  as the case may
                  be;

                           (iv)   execute  and  file  with  the   Commission   a
                  registration  statement on Form 8-A,  including any amendments
                  thereto,  prepared by the Sponsor relating to the registration
                  of the  Preferred  Securities  under Section 12(b) or 12(g) of
                  the  Exchange  Act,  if the  Sponsor  in its  sole  discretion
                  determines that such a filing is necessary or appropriate; and

                           (v)  negotiate  the terms of, and  execute  and enter
                  into, on behalf of the Trust,  an  underwriting  agreement and
                  pricing  agreement  providing  for the  sale of the  Preferred
                  Securities substantially in the form included as an exhibit to
                  the  Registration  Statement at the time it becomes  effective
                  under the Securities Act;

                  (c) to employ or otherwise  engage  employees  and agents (who
         may be designated  as officers with titles) and managers,  contractors,
         advisors and  consultants and provide for reasonable  compensation  for
         such services;

                  (d) to incur  expenses  that are  necessary or  incidental  to
         carry out any of the purposes of this Declaration; and

                  (e) to execute  all  documents  or  instruments,  perform  all
         duties and powers,  and do all things for and on behalf of the Trust in
         all matters necessary or incidental to the foregoing.



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<PAGE>

SECTION 2.8       Filing of Certificate of Trust.

         On or after the date of  execution  of this  Declaration,  the Trustees
shall  cause the  filing of the  Certificate  of Trust for the Trust in the form
attached  hereto as  Exhibit  A with the State  Department  of  Assessments  and
Taxation of Maryland.

SECTION 2.9       Duration of Trust.

         The Trust,  absent  termination  pursuant to the  provisions of Section
5.2, shall have existence for forty (40) years from the date hereof.

SECTION 2.10      Responsibilities of the Sponsor.

         In connection with the issue and sale of the Preferred Securities,  the
Sponsor  shall  have the  exclusive  right and  responsibility  to engage in the
following activities:

                  (a) to prepare for filing by the Trust with the  Commission  a
         registration  statement  on  Form  S-3 in  relation  to  the  Preferred
         Securities, including any amendments thereto;

                  (b) to  determine  the  States  in which  to take  appropriate
         action to qualify  or  register  for sale all or part of the  Preferred
         Securities  and to do any and all such acts,  other than actions  which
         must be taken by the  Trust,  and  advise  the Trust of actions it must
         take,  and  prepare for  execution  and filing of any  documents  to be
         executed  and filed by the Trust,  as the Sponsor  deems  necessary  or
         advisable  in order to  comply  with  the  applicable  laws of any such
         States;

                  (c) at the sole  discretion  of the  Sponsor,  to prepare  for
         filing by the Trust of an application to the New York Stock Exchange or
         any other  national stock  exchange or the Nasdaq  National  Market for
         listing  or  quotation   upon  notice  of  issuance  of  any  Preferred
         Securities;

                  (d) to prepare for filing by the Trust with the  Commission  a
         registration  statement on Form 8-A relating to the registration of the
         class  of  Preferred  Securities  under  Section  12(b) or 12(g) of the
         Exchange Act, including any amendments  thereto,  if the Sponsor in its
         sole  discretion   determines  that  such  a  filing  is  necessary  or
         appropriate; and

                  (e) to negotiate  the terms of an  underwriting  agreement and
         pricing agreement providing for the sale of the Preferred Securities.

SECTION 2.11      Declaration Binding on Securities Holders.

         Every  Person by virtue of having  become a holder of a Security or any
interest  therein in  accordance  with the terms of this  Declaration,  shall be
deemed to have expressly assented and agreed to the terms of, and shall be bound
by, this Declaration.



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                                  ARTICLE III
                                    TRUSTEES

SECTION 3.1       Trustees.

         The number of Trustees  initially  shall be two (2), and thereafter the
number of Trustees shall be such number as shall be fixed from time to time by a
written instrument signed by the Sponsor.  The Sponsor is entitled to appoint or
remove without cause any Trustee at any time; provided,  however that the number
of Trustees shall in no event be less than two (2);  provided further that there
shall be at least one trustee who is an employee or officer of, or is affiliated
with the Parent (a "Regular Trustee").

SECTION 3.2       Regular Trustees.

                  (a) The initial Regular Trustees shall be:

                                Gerard M. Martin
                                Barry M. Portnoy

                  (b) Except as  expressly  set forth in this  Declaration,  any
         power of the Regular  Trustees may be exercised by, or with the consent
         of, any one such Regular Trustee.

                  (c) Unless otherwise  determined by the Regular Trustees,  and
         except as  otherwise  required by the  Business  Trust Act, any Regular
         Trustee is  authorized  to execute on behalf of the Trust any documents
         that the Regular  Trustees  have the power and  authority  to cause the
         Trust to execute pursuant to Section 2.6; and a Regular Trustee may, by
         power of attorney consistent with applicable law, delegate to any other
         natural  person over the age of 21 his or her power for the purposes of
         signing  any  documents  that  the  Regular  Trustees  have  power  and
         authority to cause the Trust to execute pursuant to Section 2.6.

SECTION 3.3       Property Trustee.

         Prior to the  issuance of the  Securities,  the Sponsor  shall  appoint
another trustee (the "Property Trustee") meeting the requirements of an eligible
trustee of the Trust  Indenture Act of 1939, as amended,  by the execution of an
amendment to this Declaration executed by the Regular Trustees,  the Sponsor and
the Property Trustee.

         Notwithstanding  any other provision of this Declaration,  the Property
Trustee  shall not be  entitled to  exercise  any of the  powers,  nor shall the
Property  Trustee  have any of the duties and  responsibilities  of the Trustees
described in this Declaration.  Notwithstanding anything herein to the contrary,
the Property Trustee shall not be liable for the acts or omissions to act of the
Trust or of the Regular  Trustees  except such acts as the  Property  Trustee is
expressly obligated or authorized to undertake under this Declaration and except
for the negligence or willful  misconduct of the Property Trustee.  The Property
Trustee  may  resign as a Trustee  of the Trust by giving  not less than 30 days
written notice of resignation to any Regular Trustee;  provided, however that no
such  resignation of the Property  Trustee shall be effective  until a successor
Property  Trustee  has been  appointed  and has  accepted  such  appointment  by
instrument  executed


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<PAGE>

by such successor  Property  Trustee and delivered to the Trust, the Sponsor and
the resigning Property Trustee.

SECTION 3.4       Not Responsible for Recitals or Sufficiency of Declaration.

         The  recitals  contained  in this  Declaration  shall  be  taken as the
statements of the Sponsor, and the Trustees do not assume any responsibility for
their  correctness.  The  Trustees  make no  representations  as to the value or
condition of the property of the Trust or any part thereof. The Trustees make no
representations as to the validity or sufficiency of this Declaration.

                                   ARTICLE IV
                           LIMITATION OF LIABILITY OF
                    HOLDERS OF SECURITIES, TRUSTEES OR OTHERS

SECTION 4.1       Exculpation.

                  (a) (i) To the maximum extent that Maryland law in effect from
                  time to time permits  limitation  of the liability of trustees
                  and  officers  of a  business  trust,  no  Regular  Trustee or
                  Property  Trustee of  officer of the Trust  shall be liable to
                  the Trust or its beneficial owners for money damages.  Neither
                  the  amendment  nor  repeal of this  Section  4.1(a),  nor the
                  adoption   of  any  other   provision   of  this   Declaration
                  inconsistent  with  this  Section  4.1(a),  shall  apply to or
                  affect  in any  respect  the  applicability  of  the  receding
                  sentence  with  respect  to any act or  failure  to act  which
                  occurred prior to such amendment, repeal or adoption.

                           (ii)   Subject   to   Section   4.1(a)(i)   of   this
                  Declaration,   no   Indemnified   Person   shall  be   liable,
                  responsible  or  accountable  in damages or  otherwise  to the
                  Trust or any  Covered  Person  for any  loss,  damage or claim
                  incurred by reason of any act or omission performed or omitted
                  by such  Indemnified  Person  in good  faith on  behalf of the
                  Trust  and in a  manner  such  Indemnified  Person  reasonably
                  believed to be within the scope of the authority  conferred on
                  such Indemnified  Person by this Declaration or by law, except
                  that an Indemnified  Person shall be liable for any such loss,
                  damage  or  claim  incurred  by  reason  of  such  Indemnified
                  Person's negligence or willful misconduct with respect to such
                  acts or omissions; and

                  (b) an Indemnified  Person shall be fully protected in relying
         in good faith upon the records of the Trust and upon such  information,
         opinions, reports or statements presented to the Trust by any Person as
         to matters the Indemnified  Person reasonably  believes are within such
         other  Person's  professional  or  expert  competence  and who has been
         selected with reasonable  care by or on behalf of the Trust,  including
         information, opinions, reports or statements as to the value and amount
         of  the  assets,  liabilities,  profits,  losses,  or any  other  facts
         pertinent   to  the   existence   and  amount  of  assets   from  which
         distributions to holders of Securities might properly be paid.



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<PAGE>

SECTION 4.2       Fiduciary Duty.

                  (a) To the extent that,  at law or in equity,  an  Indemnified
         Person has duties (including fiduciary duties) and liabilities relating
         thereto to the Trust or to any other  Covered  Person,  an  Indemnified
         Person acting under this  Declaration  shall not be liable to the Trust
         or to any other  Covered  Person  for its good  faith  reliance  on the
         provisions of this Declaration.  The provisions of this Declaration, to
         the  extent  that  they  restrict  the  duties  and  liabilities  of an
         Indemnified  Person otherwise  existing at law or in equity, are agreed
         by the parties  hereto to replace such other duties and  liabilities of
         such Indemnified Person;

                  (b) unless otherwise expressly provided herein:

                           (i) whenever a conflict of interest  exists or arises
                  between Covered Persons; or

                           (ii) whenever this Declaration or any other agreement
                  contemplated  herein or therein  provides that an  Indemnified
                  Person  shall act in a manner that is, or provides  terms that
                  are,  fair  and  reasonable  to the  Trust  or any  holder  of
                  Securities, the Indemnified Person shall resolve such conflict
                  of   interest,   take  such  action  or  provide  such  terms,
                  considering  in each case the relative  interest of each party
                  (including  its own  interest)  to such  conflict,  agreement,
                  transaction or situation and the benefits and burdens relating
                  to  such  interests,   any  customary  or  accepted   industry
                  practices,  and any applicable  generally accepted  accounting
                  practices  or  principles.  In the absence of bad faith by the
                  Indemnified  Person,  the resolution,  action or term so made,
                  taken  or  provided  by  the  Indemnified   Person  shall  not
                  constitute a breach of this Declaration or any other agreement
                  contemplated  herein  or of  any  duty  or  obligation  of the
                  Indemnified Person at law or in equity or otherwise; and

                  (c)  whenever in this  Declaration  an  Indemnified  Person is
         permitted or required to make a decision:

                           (i) in its  "discretion"  or under a grant of similar
                  authority,   the  Indemnified  Person  shall  be  entitled  to
                  consider such  interests and factors as it desires,  including
                  its own  interests,  and shall have no duty or  obligation  to
                  give any consideration to any interest of or factors affecting
                  the Trust or any other Person; or

                           (ii) in its  "good  faith" or under  another  express
                  standard,  the Indemnified Person shall act under such express
                  standard  and shall not be subject  to any other or  different
                  standard imposed by this Declaration or by applicable law.

SECTION 4.3       Indemnification.

                  (a) (i) The Sponsor shall, to the maximum extent  permitted by
                  Maryland  law,  indemnify,  and  pay or  reimburse  reasonable
                  expenses in advance of final


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<PAGE>

                  disposition of a proceeding to, any Parent  Indemnified Person
                  from all  claims  and  liabilities  to which  such  person may
                  become subject or which such person may incur by reason of his
                  status of a present or former Parent Indemnified Person.

                           (ii) Expenses (including attorneys' fees) incurred by
                  a Parent Indemnified Person in defending a proceeding referred
                  to in paragraph  (i) of this  Section  4.3(a) shall be paid by
                  the  Sponsor  in  advance  of the  final  disposition  of such
                  proceeding  upon receipt of an  undertaking by or on behalf of
                  such  Parent  Indemnified  Person to repay  such  amount if it
                  shall  ultimately be determined  that he is not entitled to be
                  indemnified  by the  Sponsor  as  authorized  in this  Section
                  4.3(a).  Notwithstanding  the  foregoing,  no advance shall be
                  made by the  Sponsor  if a  determination  is  reasonably  and
                  promptly  made (i) by the Regular  Trustees by a majority vote
                  of a quorum of disinterested Regular Trustees,  (ii) if such a
                  quorum is not obtainable,  or, even if obtainable, if a quorum
                  of disinterested  Regular Trustees so directs,  by independent
                  legal  counsel in a written  opinion or (iii) the holder(s) of
                  the Common Securities of the Trust, that, based upon the facts
                  known to the Regular  Trustees,  independent  legal counsel or
                  the  holder(s)  of the Common  Securities  of the Trust at the
                  time  such  determination  is made,  such  Parent  Indemnified
                  Person  acted in bad faith or in a manner that such Person did
                  not believe to be in or not opposed to the best  interests  of
                  the Trust, or, with respect to any criminal  proceeding,  that
                  such Parent  Indemnified  Person  believed  or had  reasonable
                  cause to believe his conduct was  unlawful.  In no event shall
                  any advance be made in instances  where the Regular  Trustees,
                  independent  legal  counsel  or the  holder(s)  of the  Common
                  Securities of the Trust reasonably  determine that such Person
                  deliberately  breached  his  duty  to  the  Trust  or  to  the
                  holder(s) of its Common Securities or Preferred Securities.

                           (iii) The indemnification and advancement of expenses
                  provided by, or granted  pursuant to, the other  paragraphs of
                  this Section 4.3(a) shall not be deemed exclusive of any other
                  rights to which those seeking  indemnification and advancement
                  of  expenses  may be  entitled  under any  agreement,  vote of
                  shareholders or  disinterested  directors of the Sponsor or of
                  the  holder(s)  of the  Preferred  Securities  of the Trust or
                  otherwise,  both as to action in his official  capacity and as
                  to action in another  capacity while holding such office.  All
                  rights to  indemnification  under this Section 4.3(a) shall be
                  deemed to be  provided  by a contract  between the Sponsor and
                  each Parent  Indemnified Person who serves in such capacity at
                  any time while this Section 4.3(a) is in effect. Any repeal or
                  modification  of this  Section  4.3(a)  shall not  affect  any
                  rights or obligations then existing.

                           (iv)  The  Sponsor  or the  Trust  may  purchase  and
                  maintain  insurance  on behalf of any  Person  who is or was a
                  Parent  Indemnified  Person  against  any  liability  asserted
                  against  him and  incurred  by him in any  such  capacity,  or
                  arising out of his status as such,  whether or not the Sponsor
                  would have the power to indemnify  him against such  liability
                  under the provisions of this Section 4.3(a).



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<PAGE>

                           (v) For purposes of this Section  4.3(a),  references
                  to "the Trust" shall include,  in addition to the resulting or
                  surviving  entity,   any  constituent  entity  (including  any
                  constituent of a constituent)  absorbed in a consolidation  or
                  merger, so that any Person who is or was a director,  trustee,
                  officer or employee of such constituent  entity,  or is or was
                  serving  at  the  request  of  such  constituent  entity  as a
                  director,  trustee,  officer,  employee  or agent  of  another
                  entity,  shall stand in the same position under the provisions
                  of this  Section  4.3(a)  with  respect  to the  resulting  or
                  surviving  entity  as he  would  have  with  respect  to  such
                  constituent entity if its separate existence had continued.

                           (vi) The  indemnification and advancement of expenses
                  provided  by, or granted  pursuant  to,  this  Section  4.3(a)
                  shall,  unless otherwise provided when authorized or ratified,
                  continue  as  to a  Person  who  has  ceased  to  be a  Parent
                  Indemnified  Person  and  shall  inure to the  benefit  of the
                  heirs, executors and administrators of such a Person.

                  (b) The Sponsor agrees to indemnify (i) the Property  Trustee,
         (ii) any  Affiliate of the Property  Trustee,  and (iii) any  officers,
         directors, stockholders, members, partners, employees, representatives,
         nominees,  custodians  or agents of the Property  Trustee  (each of the
         Persons  in  (i)  through  (iii)  being  referred  to  as a  "Fiduciary
         Indemnified Person") for, and to hold each Fiduciary Indemnified Person
         harmless  against,  any loss,  liability  or expense  incurred  without
         negligence  or bad faith on its part,  arising out of or in  connection
         with the acceptance or administration of the trust or trusts hereunder,
         including the costs and expenses  (including  reasonable legal fees and
         expenses) of defending itself against,  or investigating,  any claim or
         liability in connection  with the exercise or performance of any of its
         powers or duties hereunder. The provisions of this Section 4.3(b) shall
         survive the  termination  of this  Declaration  or the  resignation  or
         removal of the Property Trustee.

SECTION 4.4       Outside Businesses.

         Any Covered Person,  the Sponsor and the Property Trustee may engage in
or possess an interest in other business  ventures of any nature or description,
independently  or with  others,  similar or  dissimilar  to the  business of the
Trust,  and the Trust and the  holders  of  Securities  shall  have no rights by
virtue of this Declaration in and to such independent  ventures or the income or
profits  derived  therefrom  and  the  pursuit  of any  such  venture,  even  if
competitive  with the  business  of the Trust,  shall not be deemed  wrongful or
improper.  None of any Covered Person, the Sponsor or the Property Trustee shall
be obligated to present any  particular  investment or other  opportunity to the
Trust even if such  opportunity  is of a character  that,  if  presented  to the
Trust,  could be taken by the Trust, and any Covered Person, the Sponsor and the
Property Trustee shall have the right to take for its own account  (individually
or as a partner or  fiduciary)  or to  recommend  to others any such  particular
investment or other opportunity. Any Covered Person and the Property Trustee may
engage or be interested in any financial or other  transaction  with the Sponsor
or any Affiliate of the Sponsor, or may act as depositary, trustee or agent for,
or may  act on any  committee  or  body  of  holders  of,  securities  or  other
obligations of the Sponsor or its Affiliates.



                                      -11-
<PAGE>

                                   ARTICLE V
                     AMENDMENTS, TERMINATION, MISCELLANEOUS

SECTION 5.1       Amendments.

         At any time before the issue of any Securities, this Declaration may be
amended  by, and only by, a written  instrument  executed  by all of the Regular
Trustees and the Sponsor;  provided,  however,  that if the Property Trustee has
been appointed and the amendment affects the rights, powers, duties, obligations
or immunities of the Property  Trustee,  the amendment shall also be approved in
writing by the Property Trustee.

SECTION 5.2       Termination of Trust.

                  (a) The Trust  shall  dissolve  and be of no further  force or
         effect:

                           (i) upon the bankruptcy of the Sponsor;

                           (ii) upon the filing of a certificate  of dissolution
                  or  its  equivalent   with  respect  to  the  Sponsor  or  the
                  revocation  of  the  Sponsor's   charter  or  of  the  Trust's
                  certificate of trust;

                           (iii)  upon  the  entry  of  a  decree  of   judicial
                  dissolution of the Sponsor, or the Trust; and

                           (iv)  before  the issue of any  Securities,  with the
                  consent of all of the Regular Trustees and the Sponsor; and

                  (b) As soon as is practicable after the occurrence of an event
         referred  to  in  Section  5.2(a),   the  Trustees  shall  file,  after
         satisfaction  of  all  liabilities  of the  Trust  in  accordance  with
         applicable law, a certificate of cancellation with the State Department
         of Assessments and Taxation of Maryland and the Trust shall terminate.

SECTION 5.3       Governing Law.

         This  Declaration  and the  rights of the  parties  hereunder  shall be
governed by and interpreted in accordance with the laws of the State of Maryland
and all rights and  remedies  shall be governed by such laws  without  regard to
principles of conflict of laws.

SECTION 5.4       Headings.

         Headings  contained in this Declaration are inserted for convenience of
reference only and do not affect the  interpretation  of this Declaration or any
provision hereof.

SECTION 5.5       Successors and Assigns.

         Whenever  in this  Declaration  any of the  parties  hereto is named or
referred  to, the  successors  and  assigns of such party  shall be deemed to be
included,  and all covenants and


                                      -12-
<PAGE>

agreements in this  Declaration  by the Sponsor and the Trustees  shall bind and
inure to the benefit of their respective successors and assigns,  whether or not
so expressed.

SECTION 5.5       Partial Enforceability.

         If any  provision  of  this  Declaration,  or the  application  of such
provision to any Person or circumstance, shall be held invalid, the remainder of
this   Declaration,   or  the  application  of  such  provision  to  Persons  or
circumstances  other  than  those  to  which it is held  invalid,  shall  not be
affected thereby.

SECTION 5.6       Counterparts.

         This Declaration may contain more than one counterpart of the signature
page and this  Declaration  may be executed by the affixing of the  signature of
each of the Trustees to one of such  counterpart  signature  pages.  All of such
counterpart signature pages shall be read as though one, and they shall have the
same force and effect as though all of the signers had signed a single signature
page.

         IN WITNESS  WHEREOF,  the undersigned  have caused these presents to be
executed as of the day and year first above written.


                                          /s/ Gerard M. Martin
                                          --------------------------------------
                                          Gerard M. Martin
                                          Regular Trustee


                                          /s/ Barry M. Portnoy
                                          --------------------------------------
                                          Barry M. Portnoy
                                          Regular Trustee


                                          SNH CAPITAL TRUST HOLDINGS,
                                              as Sponsor


                                          By: /s/ David J. Hegarty
                                              ----------------------------------
                                              David J. Hegarty
                                              President


                                      -13-
<PAGE>


                                                                       EXHIBIT A
                              SNH CAPITAL TRUST III

                          FORM OF CERTIFICATE OF TRUST


         THIS IS TO CERTIFY THAT:

         FIRST:  The undersigned  trustees hereby form a business trust pursuant
to the laws of the State of Maryland.

         SECOND: The name of the business trust (the "Trust") is:

                              SNH Capital Trust III

         THIRD:  The  address of the  Trust's  principal  office in the State of
Maryland is c/o Ballard Spahr Andrews & Ingersoll, LLP, 300 East Lombard Street,
Baltimore, Maryland 21202, Attention: James J. Hanks, Jr.

         FOURTH: The name and business address of the Trust's resident agent are
James J. Hanks,  Jr.,  c/o Ballard  Spahr  Andrews &  Ingersoll,  LLP,  300 East
Lombard Street, Baltimore, Maryland 21202.

         The  undersigned,  being all of the trustees of the Trust,  acknowledge
under the penalties of perjury,  that to the best of their knowledge and belief,
the facts stated herein are true.

         IN WITNESS WHEREOF,  each of the undersigned  trustees have signed this
Certificate of Trust this ____ day of May, 2001.


                                              __________________________________
                                              Gerard M. Martin


                                              __________________________________
                                              Barry M. Portnoy