Exhibit 10.13

                        NBR REAL ESTATE INVESTMENT TRUST

                              DECLARATION OF TRUST
                             Dated February 5, 2002

This DECLARATION OF TRUST is made as of the date set forth above by the
undersigned (the "Trustees"):


                                   Article I
                                   FORMATION

     The Trustees do hereby form a real estate  investment  trust (the  "Trust")
within the meaning of Title 8 of the Corporations  and  Associations  Article of
the  Annotated  Code of Maryland,  as amended from time to time ("Title 8"). The
Trust  shall not be deemed to be a  general  partnership,  limited  partnership,
joint  venture,  joint stock company or a corporation  (but nothing herein shall
preclude the Trust from being treated for tax purposes as an  association  under
the  Internal  Revenue  Code of 1986,  as  amended  from  time to  time,  or any
successor  statute  (the  "Code")).  For purposes of the  Declaration  of Trust,
"REIT" means a real estate  investment  trust under sections 856 through 860, or
any successor provisions, of the Code.

                                   Article II
                                      NAME

     The name of the Trust is:

          NBR Real Estate Investment Trust

     Under circumstances in which the Board of Trustees of the Trust (the "Board
of Trustees" or the "Board") determines that the use of the name of the Trust is
not practicable, the Trust may use any other designation or name for the Trust.


                                  Article III
                               PURPOSES AND POWERS

Section 1. Purposes.

     The  purposes for which the Trust is formed are to engage in any lawful act
or activity for which real estate  investment  trusts may be organized under the
general laws of the State of Maryland as now or  hereafter in force  (including,
without  limitation  or  obligation,  engaging  in  business  as a  real  estate
investment trust under the Code). Such lawful activities shall include,  but are
not limited to, investment in,  acquisition of, holding,  managing,  controlling
and disposing of property.



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Section 2. Powers.

     The Trust shall have all of the powers  granted to real  estate  investment
trusts by Title 8 and all other  powers set forth in the  Declaration  of Trust,
including, but not limited to, the power to make guarantees,  which the Board of
Trustees  deems  appropriate to promote and attain the purposes set forth in the
Declaration of Trust.

                                   Article IV
                                 RESIDENT AGENT

     The name of the resident agent of the Trust in the State of Maryland is The
Corporation  Trust,  Incorporated,  whose post office  address is 300 E. Lombard
Street,  Baltimore,  Maryland 21202.  The resident agent is a corporation of the
State of Maryland.  The Trust may have such offices or places of business within
or outside the State of Maryland as the Board of Trustees  may from time to time
determine.

                                   Article V
                                BOARD OF TRUSTEES

Section 1. Powers.

     Subject to any express  limitations  contained in this Declaration of Trust
or in the  Bylaws,  (a) the  business  and affairs of the Trust shall be managed
under the  direction of the Board of Trustees and (b) the Board shall have full,
exclusive and absolute power, control and authority over any and all property of
the Trust.  The Board may take any action as in its sole judgment and discretion
is necessary or appropriate to conduct and to carry out the business and affairs
of the Trust.  The  Declaration of Trust shall be construed with the presumption
in favor of the grant of power and authority to the Board.  Any  construction of
the  Declaration  of  Trust or  determination  made in good  faith by the  Board
concerning  its  powers  and  authority  hereunder  shall  be  conclusive.   The
enumeration and definition of particular  powers of the Trustees included in the
Declaration  of Trust or in the Bylaws shall in no way be construed or deemed by
inference or  otherwise  in any manner to exclude or limit the powers  conferred
upon the Board or the  Trustees  under the general laws of the State of Maryland
or any other applicable laws.

     The Board of Trustees, without any action by the shareholders of the Trust,
shall have and may exercise,  on behalf of the Trust,  without  limitation,  the
power to  terminate  the status of the Trust as a real estate  investment  trust
under the Code; to determine that compliance with any restriction or limitations
on  ownership  and  transfers of shares of the Trust's  beneficial  interest set
forth in Article VI of the  Declaration of Trust is no longer  required in order
for the Trust to qualify as a REIT; to adopt,  amend and repeal Bylaws; to elect
officers in the manner prescribed in the Bylaws; to solicit proxies from holders
of shares of  beneficial  interest  of the  Trust;  and to do any other acts and
deliver any other documents necessary or appropriate to the foregoing powers.

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Section 2. Number.

     The Trustees of the Board shall  initially  number three (3),  which number
may thereafter be increased,  and  subsequently  increased or decreased,  by the
Board of  Trustees  from time to time  pursuant  to the Bylaws of the Trust.  It
shall  not be  necessary  to list in the  Declaration  of Trust the names of any
Trustees hereinafter elected. No reduction in the number of Trustees shall cause
the removal of any Trustee from office prior to the expiration of his term.

     Any vacancy on the Board of Trustees occurring for any reason may be filled
only by the affirmative vote of a majority of the remaining  Trustees in office,
even if the remaining  Trustees do not constitute a quorum. A Trustee elected to
fill a vacancy  shall serve until the next annual  meeting of  shareholders  and
until his or her successor is duly elected and qualifies.

Section 3. Initial Board of Trustees.

     The names of the Trustees,  each of whom shall serve until the first annual
meeting of  shareholders  and until his or her  successor  is duly  elected  and
qualified, are:

                  Patrick W. Kilkenny
                  Dana R. Johnson
                  James E. Beckwith

Section 4. Term.

     The Trustees  shall be elected at each annual  meeting of the  shareholders
and shall  serve  until the next annual  meeting of the  shareholders  and until
their successors are duly elected and qualify.

Section 5. Resignation and Removal.

     Any  Trustee  may resign by written  notice to the  Board,  effective  upon
execution and delivery of such written  notice or upon any future date specified
in the notice.  A Trustee may be removed at any time,  with or without cause, by
the  affirmative  vote of a  majority  of all votes  entitled  to be cast by the
shareholders generally in the election of Trustees.

                                   Article VI
                          SHARES OF BENEFICIAL INTEREST

Section 1. General.

     (a)  Authorized  Shares.  The  beneficial  interest  in the Trust  shall be
divided into shares of beneficial  interest (the "Shares").  The total number of
Shares  which  the  Trust  has  authority  to  issue is Five  Thousand  (5,000),
consisting of Three Thousand (3,000) common shares of beneficial  interest,  par
value $.01 per share (the "Common  Shares"),  and Two Thousand (2,000) preferred
shares  of  beneficial  interest,  par  value  $.01 per  share  (the  "Preferred
Shares").  The aggregate par value of all authorized  Shares having par value is
Fifty Dollars ($50.00).

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     (b) Common  Shares.  Subject to the provisions of Section 3 of this Article
VI and the  rights  of  holders  of any other  class or  series  of Shares  then
outstanding, each of the Common Shares shall entitle the shareholder to one vote
per share on all  matters  upon which  shareholders  are  entitled  to vote,  to
receive  dividends  and  other  distributions  as  authorized  by the  Board  in
accordance  with the  Declaration  of Trust and Title 8, and to all  rights of a
shareholder pursuant thereto.

     (c)  Preferred  Shares.  The  Preferred  Shares shall have the  preference,
conversion  and other rights,  voting  powers,  restrictions,  limitations as to
dividends and distributions,  qualifications, terms and conditions of redemption
and other terms and conditions set forth in Section 2 of this Article VI.

     (d)  Increase  or  Decrease  in Number of  Shares.  The Board of  Trustees,
without the approval of the shareholders of the Trust, may amend the Declaration
of Trust from time to time to  increase  or  decrease  the  aggregate  number of
Shares or the  number of Shares  of any class  that the Trust has  authority  to
issue.

     (e) Classification or Reclassification of Shares. The Board of Trustees may
classify  or  reclassify  any  unissued   Shares  by  setting  or  changing  the
preferences,   conversion  or  other  rights,   voting   powers,   restrictions,
limitations as to dividends and other  distributions,  qualifications  and terms
and  conditions  redemption.  Prior to issuance of  classified  or  reclassified
Shares of any class or series,  the Board of  Trustees by  resolution  shall (i)
designate  that class or series to  distinguish  it from all other  classes  and
series of Shares;  (ii) specify the number of Shares to be included in the class
or series;  (iii) set, subject to the provisions of Section 3 of this Article VI
and subject to the express terms of any class or series of Shares outstanding at
the  time,  the  preferences,   conversion  or  other  rights,   voting  powers,
restrictions, limitations as to dividends or other distributions, qualifications
and terms and conditions of redemption for each class or series;  and (iv) cause
the  Trust  to  file  articles   supplementary  with  the  State  Department  of
Assessments and Taxation of Maryland (the "SDAT"). Any of the terms of any class
or series of Shares set  pursuant to clause  (iii) of this  Section  1(e) may be
made  dependent  upon  facts  ascertainable  outside  the  Declaration  of Trust
(including the occurrence of any event,  including a determination  or action by
the Trust or any  other  person or body)  and may vary  among  holders  thereof,
provided  that the manner in which such facts or  variations  shall operate upon
the terms of such class or series of Shares is clearly and  expressly  set forth
in the Declaration of Trust, as  supplemented  by articles  supplementary  filed
with the SDAT.

     (f)  Authorization  by Board of Share  Issuance.  The Board of Trustees may
authorize  the  issuance  from time to time of  Shares  of any class or  series,
whether now or hereafter  authorized,  or securities or rights  convertible into
Shares of any class or series  whether  now or  hereafter  authorized,  for such
consideration (whether in cash, property,  past or future services,  obligations
for future payment or otherwise) as the Board of Trustees may deem advisable (or
without  consideration in the case of a Share split or Share dividend),  subject
to  such  restrictions  or  limitations,  if  any,  as may be set  forth  in the
Declaration of Trust or Bylaws of the Trust.



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     (g)  Dividends and  Distributions.  The Board of Trustees may, from time to
time, authorize and declare to shareholders such dividends or distributions,  in
cash,  property or other  assets of the Trust or in  securities  of the Trust or
from any other source, as the Board shall determine. The Board of Trustees shall
endeavor  to  declare  and pay  such  dividends  and  distributions  as shall be
necessary for the Trust to qualify as a real estate  investment  trust under the
Code; however,  shareholders shall have no right to any dividend or distribution
unless or until authorized and declared by the Board. The exercise of the powers
and rights of the Board  pursuant to this  Section  1(g) shall be subject to the
provisions of any class of Shares at the time outstanding.  Notwithstanding  any
other provision in the Declaration of Trust, no  determination  shall be made by
the Board of  Trustees  nor shall  the Board  cause the Trust to enter  into any
transaction  which  would cause any Shares or other  beneficial  interest in the
Trust not to constitute  "transferable shares" or "transferable  certificates of
beneficial  interest"  under Section  856(a)(2) of the Code or which would cause
any  distribution to constitute a preferential  dividend as described in Section
562(c) of the Code.

     (h)  General  Nature of  Shares.  All  Shares  shall be  personal  property
entitling the  shareholders  only to those rights provided in the Declaration of
Trust. The shareholders  shall have no interest in the property of the Trust and
shall have no right to compel any partition,  division, dividend or distribution
of the Trust or the property of the Trust. The death of a shareholder  shall not
terminate the Trust.  The Trust is entitled to treat as shareholders  only those
persons in whose  names  Shares are  registered  as holders of the Shares on the
Beneficial Interest Ledger of the Trust.

     (i) Fractional  Shares.  The Trust may,  without the consent or approval of
any shareholders,  issue fractional  Shares,  eliminate a fraction of a Share by
rounding up or down to a full Share,  arrange for the  disposition of a fraction
of a Share by the  person  entitled  to it or pay  cash for the fair  value of a
fraction of a Share.

     (j)  Declaration of Trust and Bylaws.  All persons who shall acquire Shares
in the  Trust  shall  acquire  the  same  subject  to  the  provisions  of  this
Declaration of Trust and the Bylaws.

Section 2. Preferred Shares.

     (a) Terms and Conditions.

          (i) Stated Value.  The  Preferred  Shares shall be issued by the Trust
for their Stated Value (as herein defined),  in such amounts,  at such times and
to such persons as shall be  specified  by the Board of  Trustees,  from time to
time.  For the  purposes  hereof,  the "Stated  Value" of each  Preferred  Share
(regardless  of its par value)  shall be $250.00 per share,  which  Stated Value
shall be  proportionately  increased or decreased for any consolidation or Share
split or other similar transactions,  respectively, of the outstanding Preferred
Shares.

          (ii) Rank. The Preferred Shares shall, with respect to dividend rights
and rights on liquidation, winding up and dissolution, rank senior to the Common
Shares and to any other  classes of shares which may be  authorized,  issued and
outstanding which are not expressly designated as senior or pari passu in rights
to the Preferred Shares (collectively the "Junior Shares").



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          (iii) Dividends.


               (A) Amount.  On the last  business day of each calendar year (the
"Dividend  Payment  Date"),  the holder of each  Preferred  Share  shall  become
entitled to receive  (when,  as and if declared by the Board from funds  legally
available for the payment of dividends and distributions) a dividend (the "Fixed
Dividend")  equal to eight  percent  (8%) per annum of the Stated  Value of such
Share  (pro-rated  for any  portion of the year that such share  shall have been
issued and outstanding).

               (B) Accumulation and Time of Payment. Dividends on each Preferred
Share  shall be  cumulative  and shall  accrue  from day to day,  whether or not
earned or declared,  commencing with the date of issue of such Preferred  Share.
Dividends shall be payable annually, when, as and if declared by the Board.

               (C) Payment of Dividends.  Dividends  declared by the Board shall
be paid to the  shareholders of record of outstanding  Preferred Shares as their
names shall appear on the  Beneficial  Interest  Ledger of the Trust on a record
date to be established by the Board of Trustees,  which record date shall be not
more than sixty (60) nor less than ten (10) days  preceding the date of payment,
whether or not such date is a Dividend  Payment Date. If no date is  established
by the Board, the record date shall automatically be ten (10) days preceding the
date of payment.

               (D) Priority of  Cumulative  Dividends.  So long as any Preferred
Shares are  outstanding,  the Trust shall not (i) declare,  pay or set apart for
payment  any  dividend  on, or make any  distribution  in respect of, the Junior
Shares or any warrants, rights, calls or options exercisable or convertible into
any of the  Junior  Shares,  either  directly  or  indirectly,  whether in cash,
obligations or shares of the Trust or other  property,  (ii) make any payment on
account of, or set apart for payment  money for a sinking or other  similar fund
for, the purchase, redemption,  retirement or other acquisition for value of any
of, or  redeem,  purchase,  retire or  otherwise  acquire  for value any of, the
Junior  Shares or any  warrants,  rights,  calls or options  exercisable  for or
convertible  into any of the Junior Shares,  or (iii) permit any  corporation or
other entity directly or indirectly controlled by the Trust to purchase, redeem,
retire or otherwise acquire for value any of the Junior Shares, or any warrants,
rights,  calls or options  exercisable for or convertible into any of the Junior
Shares, unless, prior to or concurrently with such declaration, payment, setting
apart  for  payment,  purchase,  redemption,  other  acquisition  for  value  or
distribution,  all accrued and unpaid dividends (including accrued dividends, if
any, not paid by reason of the terms and  conditions of Section 2(b) Article VI,
if any, on all  Preferred  Shares shall have been paid  through the  immediately
preceding Dividend Payment Date or, if such declaration,  payment, setting apart
for payment,  purchase,  other acquisition for value or distribution occurs on a
Dividend Payment Date,  through such Dividend Payment Date;  provided,  however,
that this restriction shall not apply to the repurchase of Common Shares held by
employees,  officers,  trustees, or consultants of the Trust (or their permitted
transferees)  that are subject to restrictive  share purchase  agreements  under
which the Trust has the option or obligation to repurchase  such shares upon the
occurrence of certain  events,  such as  termination  of  employment,  except as
necessary for the Trust to attempt to, or continue to, qualify as a "real estate
investment trust" under the Code.

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          (iv) Special Restrictions on Transfer of Preferred Shares.

               (A)  General.  Any  purported  sale,  transfer,   gift,  bequest,
hypothecation,  pledge,  assignment,  exchange,  or  other  disposition  of  any
interest in the Preferred Shares, whether voluntary or involuntary, by operation
of law or otherwise  (collectively,  a  "Transfer")  shall be subject to (i) the
requirements and limitations of this Section 2(a)(iv), (ii) the requirements and
limitations of Section 3, and all other provisions, of the Declaration of Trust,
and (iii) all federal and state securities laws.

               (B) Voluntary  Transfers.  No shareholder may transfer or attempt
to transfer,  to any person or entity other than Trust, any Preferred Shares now
held or hereinafter  acquired by such  shareholder  without first giving written
notice (the "Transfer  Notice")  thereof to the Trust,  identifying the proposed
transferee (the  "Transferee"),  the purchase price or other  consideration,  if
any, and terms of the proposed transaction, and offering the Preferred Shares to
the Trust.  Within  thirty (30) days after receipt of the Transfer  Notice,  the
Trust may  elect to  purchase,  or  designate  a third  party to  purchase,  the
Preferred  Shares at a  purchase  price per share  equal to the  purchase  price
identified in the Transfer Notice (or the fair value  equivalent as contemplated
in the following  sentence) or in the event that the Transfer is a gift or other
transfer for no  consideration,  or an  hypothecation,  pledge or assignment for
security, at a purchase price per Share equal to its fair value as determined in
good faith by the Board of  Trustees.  If the Transfer is for assets or property
other than cash,  the Trust or its  designee may either  purchase the  Preferred
Shares for such assets or property  or  alternatively  may pay the fair value of
such assets or property as  determined in good faith by the Board of Trustees in
cash in lieu of such assets or property. If the Trust elects not to purchase, or
cause the  purchase  of, the  Preferred  Shares,  such  Preferred  Shares may be
Transferred  within fifteen (15) days after the expiration of such 30-day period
to the proposed  Transferee  upon the price and terms  specified in the Transfer
Notice.  If the  Preferred  Shares are not so  Transferred  within  such  15-day
period, then a Transfer may occur only after the shareholder again complies with
the prior notice provisions set forth in this Section 2(a)(iv)(B).

               (C) Death or Incompetency of Holder. In the event of the death or
adjudication of incompetency of any shareholder  holding Preferred  Shares,  any
executor,  administrator,  guardian, or Transferee (in the event that a Transfer
is deemed to have occurred) of his or her Preferred Shares shall,  within ninety
(90) days after the date of death or adjudication of incompetency,  give written
notice (the  "Fiduciary  Notice")  thereof to the Trust and offer the  Preferred
Shares to the Trust.  Within  thirty  (30) days after  receipt of the  Fiduciary
Notice, the Trust may elect to purchase, or designate a third party to purchase,
the  Preferred  Shares at a purchase  price per share equal to its fair value as
determined  in good faith by the Board of  Trustees  of the Trust.  If the Trust
elects not to purchase, or cause the purchase of, the Preferred Shares within 30
days after receipt of the Fiduciary Notice, the Preferred Shares may be retained
by the estate, the guardian, or such other Transferee.

               (D)   Transfers  by  Operation  of  Law.  In  the  event  that  a
shareholder  of  Preferred  Shares  (i)  files a  voluntary  petition  under any
Bankruptcy or insolvency law, or a petition for the appointment of a receiver or
makes  an  assignment  for the  benefit  of  creditors;  or  (ii)  is  subjected
involuntarily  to such a petition or  assignment  or to an  attachment  or other
legal or equitable interest with respect to his or her Preferred

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          Shares;  or (iii) is subjected  to a Transfer of his or her  Preferred
Shares by  operation  of law, the  shareholder  shall give  written  notice (the
"Legal Notice")  thereof to the Trust.  Within thirty (30) days after receipt of
the Legal Notice, the Trust may elect to purchase, or designate a third party to
purchase,  the Preferred  Shares at a purchase price per share equal to its fair
value as determined in good faith by the Board of Trustees of the Trust. Failure
of the Trust to elect to purchase,  or cause the purchase of,  Preferred  Shares
under this Section  2(a)(iv)(D)  shall not affect its right to purchase the same
units under Section 2(a)(iv)(B) in the event of a proposed Transfer by or to any
receiver, petitioner, assignee, transferee or other person obtaining an interest
in the Preferred Shares.

               (E)  Transfers in Violation  of  Restriction.  If any Transfer of
Preferred Shares is made or attempted contrary to the provisions of this Section
2(a)(iv), or if the Preferred Shares are not offered to the Trust as required by
this Section 2(a)(iv), the Trust shall nonetheless have the right to purchase or
designate a third party to purchase, the Preferred Shares from the owner thereof
or his Transferee, at any time before or after the Transfer, at a price equal to
the then current fair value of such Preferred Shares as determined in good faith
by the Board of  Trustees  of the  Trust.  In  addition  to any  other  legal or
equitable  remedies  which it may  have,  the Trust may  enforce  its  rights by
actions for specific performance and may refuse to recognize any such Transferee
as one of its shareholders  for any purpose,  including  without  limitation for
purposes of dividends and voting rights, until all applicable provisions of this
Section 2(a)(iv) have been complied with.

               (F) Limitation.  Anything herein to the contrary notwithstanding,
the  purchase  price per share which the Trust is required to pay for  Preferred
Shares  purchased  pursuant to this Section 2(a)(iv) shall not exceed the Stated
Value.

          (v)  Procedure  and  Limitations  Applicable to Purchases and Sales of
Preferred Shares.

               (A) Notices; Closing Date.

                    (i). In the event the Trust  elects to exercise its right to
purchase,  or designate a third party to purchase,  Preferred Shares pursuant to
Section 2(a)(iv), the Trust shall give written notice (the "Purchase Notice") to
the affected  shareholder (or such shareholder's  legal  representative) of such
election,  which Purchase  Notice shall fix a closing date for such purchase and
shall include an  appropriate  instrument  of transfer for the Preferred  Shares
(the "Instrument of Transfer").

                    (ii). Any closing under this Section  2(a)(v)(A) shall be on
a date (the  "Closing  Date") not later than  thirty (30) days after the date on
which the Trust gives the notice  referred to in  paragraph  (i) of this Section
2(a)(v)(A).

               (B) Certificate  Delivery;  Payment.  In the case of Transfers by
any  shareholder or his or her  representative  to the Trust pursuant to Section
2(a)(v), the shareholder will deliver the certificate representing the Preferred
Shares  being sold,  or  together  with the  Instrument  of  Transfer,  properly
endorsed  for  transfer,  to the Trust or its  designee on or before the Closing
Date.  Within five (5) business  days after receipt by the Trust or its designee
of the properly endorsed certificate or Instrument of Transfer for the

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          Preferred   Shares,   the  Trust  or  its   designee   shall  pay  the
consideration  for  such  Preferred  Shares  to  the  shareholder  or his or her
representative.

               (C) Forms of Consideration.  The form of consideration to be paid
by the Trust or its designee for Preferred  Shares purchased by it shall be U.S.
dollars  conveyed  by  check(s)  (except  for  purchases   pursuant  to  Section
2(a)(iv)(B), the payment of which are by assets or property other than cash).

          (vi) Legend - Preferred Shares.  Each certificate for Preferred Shares
shall bear substantially the following legend:

                  THE PREFERRED SHARES REPRESENTED BY THIS CERTIFICATE ARE
                  SUBJECT TO CERTAIN SPECIAL RESTRICTIONS ON TRANSFER, AND
                  CERTAIN RIGHTS OF FIRST REFUSAL ON THE PART OF THE TRUST, THE
                  TERMS AND CONDITIONS OF WHICH ARE SET FORTH IN THE TRUST'S
                  DECLARATION OF TRUST, AS THE SAME MAY BE AMENDED FROM TIME TO
                  TIME, A COPY OF WHICH, INCLUDING SUCH SPECIAL RESTRICTIONS ON
                  TRANSFER AND RIGHTS OF FIRST REFUSAL, WILL BE FURNISHED TO
                  EACH HOLDER OF PREFERRED SHARES ON REQUEST AND WITHOUT CHARGE.
                  REQUESTS FOR SUCH A COPY MUST BE DIRECTED TO THE SECRETARY OF
                  THE TRUST

          (vii)  Liquidation  Preference.  In  the  event  of any  voluntary  or
involuntary liquidation, dissolution or winding up the affairs of the Trust, the
holders of the Preferred  Shares then  outstanding  shall be entitled to be paid
out of the assets of the Trust available for  distribution to its  shareholders,
whether such assets are capital or surplus and whether or not any  dividends are
declared,  an amount equal to the Stated Value for each share  outstanding  plus
all  accrued,   but  unpaid   dividends  (the   "Preferred   Share   Liquidation
Preference").   The  liquidation   payment  with  respect  to  each  outstanding
fractional  Preferred Share shall be equal to a ratably  proportionate amount of
the liquidation  payment with respect to each  outstanding  Preferred Share. All
payments for which this Section  2(a)(vii)  provides shall be in cash,  property
(valued at its fair market value, as determined by the Board in good faith) or a
combination  thereof.  After payment of the full amount of the  Preferred  Share
Liquidation Preference to which each such shareholder is entitled,  such holders
of  Preferred  Shares will not be entitled to any further  participation  in any
distribution  of the assets of the Trust.  For the purposes of this Section 2 of
Article VI, neither the voluntary  sale,  conveyance,  exchange or transfer (for
cash, shares of beneficial  interest,  securities or other consideration) of all
or  substantially   all  of  the  property  or  assets  of  the  Trust  nor  the
consolidation  or  merger of the Trust  with or into any other  entity  shall be
deemed to be a voluntary or involuntary  liquidation,  dissolution or winding up
of the Trust.

          (viii) Voting Rights.  The holders of Preferred  Shares shall not have
any voting rights.

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     (b)  Restrictions  on Payment of  Dividends  and  Redemption  of  Preferred
Shares. Notwithstanding anything contained herein to the contrary and subject to
any  restrictions  contained  in  the  Bylaws  of the  Trust,  no  dividends  or
distributions on Preferred Shares or other shares shall be declared by the Board
of  Trustees  or paid or set apart for  payment  by the Trust if, at the time of
such  declaration,  such  payment or setting  apart would be  prohibited  by the
Maryland  General  Corporation  Law (the  "MGCL")  if the Trust  were a Maryland
corporation,  provided,  however,  that in  determining  whether a  distribution
(other than upon voluntary or involuntary  liquidation) by dividend,  redemption
or other  acquisition  of Shares of the Trust or  otherwise  would be  permitted
under the MGCL if the Trust  were a  Maryland  corporation,  no effect  shall be
given to amounts  that would be needed if the Trust were to be  dissolved at the
time of the distribution to satisfy the preferential  rights upon dissolution of
holders of Shares of the Trust whose  preferential  rights upon  dissolution are
superior to those receiving the distribution.

Section 3.  REIT-Related  Restrictions and Limitations on Transfer and Ownership
of the Equity Shares.

     (a) Definitions.  As used in this Section 3, the following terms shall have
the indicated  meanings  (certain other terms used in this Section 3 are defined
elsewhere in this Declaration of Trust):

                           "Beneficial Ownership" means ownership of Equity
                  Shares by a Person who is or would be treated as an owner of
                  such Equity Shares either actually or constructively through
                  the application of Section 544 of the Code, as modified by
                  Section 856(h)(1)(B) of the Code. The terms "Beneficially
                  Own," "Beneficially Owned," "Beneficially Owns" and
                  "Beneficial Owner" shall have the correlative meanings.

                           "Business Day" means any day, other than a Saturday
                  or Sunday, that is neither a legal holiday nor a day on which
                  banking institutions in Los Angeles, California or New York,
                  New York are authorized or required by law, regulation or
                  executive order to close.

                           "Charitable Beneficiary" means one or more
                  beneficiaries of the Share Trust as determined pursuant to
                  Section 3(c)(vi) of this Article VI.

                           "Constructive Ownership" means ownership of Equity
                  Shares, or any other interest in an entity by a Person who is
                  or would be treated as an owner thereof either actually or
                  constructively through the application of Section 318 of the
                  Code, as modified by Section 856(d)(5) of the Code. The terms
                  "Constructively Own," "Constructively Owned," "Constructively
                  Owns" and "Constructive Owner" shall have the correlative
                  meanings.

                           "Disqualifying Trust Shares" shall mean (i) with
                  respect to any purported Transfer which would cause a
                  violation of Section 3(b)(i) of this Article VI, the smallest
                  number of Equity Shares (rounded up to the nearest whole
                  Share) purported to be transferred, which, if transferred to a
                  Share Trust as provided in Section 3(c) of this Article VI,
                  would result in compliance with the ownership restrictions set
                  forth in Section 3(b)(i) of this Article VI, and (ii) with
                  respect to any Non-Transfer Event, the smallest number of
                  Equity Shares (rounded up to the

                                       10
<PAGE>

                  nearest whole Share) held by a Prohibited Owner which, if
                  transferred to a Share Trust as provided in Section 3(c) of
                  this Article VI, would result in compliance with the ownership
                  restrictions set forth in Section 3(b)(i) of this Article VI.

                           "Equity Shares" shall mean Shares of all classes or
                  series including, without limitation, Common Shares and
                  Preferred Shares.

                           "Initial Issuance" shall mean the calendar day
                  following the initial issuance of the Common Shares and the
                  initial issuance of the Preferred Shares pursuant to this
                  Declaration of Trust.

                           "IRS" means the United States Internal Revenue
                  Service.

                           "Market Price" means the last reported sales price of
                  the Equity Shares on the trading day immediately preceding the
                  relevant date as reported on the principal exchange or
                  quotation system over which the Equity Shares may be traded,
                  or if not then traded over any exchange or quotation system,
                  then the fair market value of the Equity Shares on the
                  relevant date as determined in good faith by the Board of
                  Trustees.

                           "Non-Transfer Event" shall mean any event other than
                  a Transfer (including, but not limited to, (i) the granting of
                  any option or the entering into any agreement for the sale,
                  transfer or other disposition of Equity Shares or the right to
                  vote and receive dividends on Equity Shares, or (ii) the sale,
                  transfer, assignment or other disposition of interests in
                  other entities or of any securities or rights convertible into
                  or exchangeable for Equity Shares which results in changes in
                  Beneficial or Constructive Ownership of Equity Shares) that
                  would cause any Person to violate the prohibitions set forth
                  in Section 3(b)(i) of this Article VI.

                           "Ownership Limit" means 9.8% of the number of shares
                  or value (whichever is more restrictive) of the outstanding
                  Equity Shares. The number and value of Equity Shares of the
                  Trust shall be determined by the Board of Trustees in good
                  faith, which determination shall be conclusive for all
                  purposes hereof.

                           "Person" shall mean an individual, corporation,
                  partnership, estate, trust (including a trust qualified under
                  Sections 401(a) or 501(c)(17) of the Code), a portion of a
                  trust permanently set aside for or to be used exclusively for
                  the purposes described in Section 642(c) of the Code,
                  association, private foundation within the meaning of Section
                  509(a) of the Code, joint stock company or other entity; but
                  does not include an underwriter acting in a capacity as such
                  in a public offering of the Equity Shares provided that the
                  ownership of Equity Shares by such underwriter would not
                  result in the Trust being "closely held" within the meaning of
                  Section 856(h) of the Code, or otherwise result in the Trust
                  failing to qualify as a REIT.

                           "Prohibited Owner" shall mean with respect to any
                  purported Transfer or Non-Transfer Event, any Person who is
                  prevented from becoming or continuing to be the record holder
                  of Equity Shares under Section 3(b) of this Article VI.

                           "Restriction Termination Date" means the effective
                  date, if any, for revocation or termination of the Trust's
                  REIT election pursuant to Section 856(g)

                                       11
<PAGE>

                  of the  Code,  as  specified  in a  resolution  of the Board
                  determining  that it is no longer in the best  interests  of
                  the Trust to attempt to, or continue to,  qualify as a REIT.
                  If no such effective  date is specified in such  resolution,
                  the  Restriction  Termination  Date  shall be the date  such
                  revocation or termination otherwise becomes effective.

                           "Share Trust" means each of the trusts provided for
                  in Section 3(c) of this Article VI.

                           "Share Trustee" shall mean the Person unaffiliated
                  with the Trust and any Prohibited Owner that is appointed by
                  the Trust to serve as trustee of the Share Trust.

                           "Transfer" means any sale, transfer, gift,
                  assignment, devise or other disposition of Equity Shares or
                  the right to vote or receive dividends on Equity Shares,
                  whether voluntary or involuntary, whether of record or
                  beneficially, whether by operation of law or otherwise. The
                  terms "Transfers" or "Transferred" shall have the correlative
                  meanings.

     (b) Restriction on Ownership and Transfers.

          (i) From the date of the Initial Issuance and prior to the Restriction
Termination Date:

               (A) except as  provided  in Section  3(k) of this  Article VI, no
Person shall  Beneficially Own or Constructively  Own Equity Shares in excess of
the Ownership Limit; and

               (B) no Person shall  Beneficially  or  Constructively  Own Equity
Shares to the extent that such  Beneficial or  Constructive  Ownership of Equity
Shares  would  result in the Trust being  "closely  held"  within the meaning of
Section  856(h)  of  the  Code,  or  otherwise  failing  to  qualify  as a  REIT
(including,  but not limited to, Beneficial or Constructive ownership that would
result in the Trust owning (actually or  Constructively) an interest in a tenant
that is described in Section  856(d)(2)(B)  of the Code if the income derived by
the Trust (either directly,  or indirectly through another entity owned in whole
or in part by the  Trust)  from  such  tenant  would  cause the Trust to fail to
satisfy any of the gross income requirements of Section 856(c) of the Code).

          (ii) If,  during  the  period  commencing  on the date of the  Initial
Issuance  and  prior  to the  Restriction  Termination  Date,  any  Transfer  or
Non-Transfer  Event  occurs  that,  if  effective,  would  result in any  Person
Beneficially  or  Constructively  Owning  Equity  Shares in violation of Section
3(b)(i) of this Article VI, then (1) the applicable  Disqualifying  Shares shall
be  automatically  transferred  to a Share Trust for the benefit of a Charitable
Beneficiary, as described in Section 3(c), effective as of the close of business
on the Business Day prior to the date of such  Transfer or  Non-Transfer  Event,
and such Prohibited Owner shall thereafter have no rights in such  Disqualifying
Shares, or (2) if, for any reason,  the transfer to the Share Trust described in
clause (1) of this sentence is not  automatically  effective as provided therein
to prevent any Person from Beneficially or  Constructively  Owning Equity Shares
in  violation of Section  3(b)(i) of this Article VI, then the Transfer  (or, in
the  event  of a  Non-Transfer  Event,  the  event  giving  rise  to the  record
ownership) of that number of Equity Shares that otherwise would

                                       12
<PAGE>

cause any Person to violate  Section  3(b)(i)  shall be void ab initio,  and the
Prohibited Owner shall have no rights in such Equity Shares.

          (iii)  Notwithstanding any other provisions  contained herein,  during
the  period  commencing  on the date of the  Initial  Issuance  and prior to the
Restriction  Termination  Date any Transfer of Equity Shares that, if effective,
would  result in the shares of the Trust being  beneficially  owned by less than
100 Persons  (determined without reference to any rules of attribution) shall be
void ab initio,  and the  intended  transferee  shall  acquire no rights in such
Equity Shares.

     (c) Transfers of Equity Shares in Trust.

          (i) Upon any purported  Transfer or  Non-Transfer  Event  described in
Section 3(b)(ii) of this Article VI, the applicable  Disqualifying  Shares shall
be deemed to have been  transferred  to the Share  Trustee  in his  capacity  as
trustee of a Share  Trust for the  exclusive  benefit of one or more  Charitable
Beneficiaries.  Such  Transfer  to the  Share  Trustee  shall  be  deemed  to be
effective as of the close of business on the Business Day prior to the purported
Transfer  or  Non-Transfer  Event that  results in a Transfer to the Share Trust
pursuant to Section  3(b)(ii) of this  Article  VI. The Share  Trustee  shall be
appointed by the Trust and shall be a Person unaffiliated with the Trust and any
Prohibited Owner.  Each Charitable  Beneficiary shall be designated by the Trust
as provided in Section 3(c)(vi) of this Article VI.

          (ii)  Equity  Shares  held by the Share  Trustee  shall be issued  and
outstanding  Equity  Shares of the Trust.  The  Prohibited  Owner  shall have no
rights in the shares held by the Share Trustee.  The Prohibited  Owner shall not
benefit  economically  from  ownership  of any shares held in trust by the Share
Trustee,  shall have no rights to dividends  and shall not possess any rights to
vote or other rights attributable to the shares held in the Share Trust.

          (iii) The Share  Trustee  shall have all  voting  rights and rights to
dividends  with respect to Equity  Shares held in the Share Trust,  which rights
shall be exercised for the exclusive benefit of the Charitable Beneficiary.  Any
dividend  or  distribution  paid  prior to the  discovery  by the Trust that the
Equity  Shares have been  transferred  to the Share Trustee shall be paid to the
Share Trustee upon demand, and any dividend or distribution  declared but unpaid
shall be paid when due to the Share Trustee with respect to such Equity  Shares.
Any dividends or  distributions  so paid over to the Share Trustee shall be held
in trust for the Charitable Beneficiary.

          (iv) As soon as reasonably  practical  because after receiving  notice
from the Trust that Equity Shares have been  transferred to the Share Trust (but
in an orderly  fashion so as to maximize  the  consideration  to be obtained for
such shares), the Share Trustee shall sell the shares held in the Share Trust to
a Person,  designated by the Share Trustee,  whose  ownership of the shares will
not  violate  the  ownership  limitations  set forth in Section  3(b)(i) of this
Article VI. Upon such sale,  the interest of the  Charitable  Beneficiary in the
shares sold shall  terminate  and the Share  Trustee  shall  distribute  the net
proceeds of the sale to the Prohibited  Owner and to the Charitable  Beneficiary
as the  lesser of (1) the price paid by the  Prohibited  Owner for the shares in
the  transaction  that  resulted in such transfer to the Share Trust (or, if the
event  which  resulted  in the  transfer  to the Share  Trust did not  involve a
purchase of such shares at Market Price (e.g., a gift or a  Non-Transfer  Event)
the Market  Price of such shares on the day of the event  which  resulted in the
transfer of the shares of the Share Trust) and (2) the price per Share  received
by the Share Trustee (net of any  commissions  and other  expenses of sale) from
the sale or other

                                       13
<PAGE>

disposition  of the shares held in the Share  Trust.  Any net sales  proceeds in
excess of the amount payable to the Prohibited  Owner shall be immediately  paid
to the Charitable Beneficiary together with any dividends or other distributions
thereon.  If, prior to the  discovery by the Trust that such Equity  Shares have
been  transferred  to the Share  Trustee,  such shares are sold by a  Prohibited
Owner  then (i) such  shares  shall be deemed to have been sold on behalf of the
Share Trust and (ii) to the extent that the Prohibited  Owner received an amount
for such shares that exceeds the amount that such Prohibited  Owner was entitled
to receive pursuant to this Section  3(c)(iv),  such excess shall be paid to the
Share Trustee upon demand.

          (v) Equity Shares  transferred to the Share Trustee shall be deemed to
have been offered for sale to the Trust,  or its designee,  at a price per share
equal to the lesser of (i) the price paid by the Prohibited Owner for the shares
in the transaction that resulted in such transfer to the Share Trust (or, if the
event  which  resulted  in the  transfer  to the Share  Trust did not  involve a
purchase of such shares at Market Price (e.g., a gift or a  Non-Transfer  Event)
the Market  Price of such shares on the day of the event  which  resulted in the
transfer of the shares of the Share Trust) and (ii) the Market Price on the date
the Trust,  or its  designee,  accepts such offer.  The Trust,  or its designee,
shall have the right to accept such offer  until the Share  Trustee has sold the
shares held in the Share Trust pursuant of Section 3(c)(iv). Upon such a sale to
the Trust or its designee,  the interest of the  Charitable  Beneficiary  in the
shares sold shall  terminate  and the Share  Trustee  shall  distribute  the net
proceeds  of the  sale to the  Prohibited  Owner  and  any  dividends  or  other
distributions held by the Share Trustee with respect to such Equity Shares shall
thereupon be paid to the Charitable Beneficiary.

          (vi) By written notice to the Share Trustee, the Trust shall designate
one or more  non-profit  organizations  to be the Charitable  Beneficiary of the
interest  in the Share  Trust such that (i) the Equity  Shares held in the Share
Trust  would not violate the  restrictions  set forth in Section  3(b)(i) in the
hands of such Charitable  Beneficiary and (ii) each Charitable Beneficiary is an
organization described in Sections 170(b)(1)(A),  170(c)(2) and 501(c)(3) of the
Code.

     (d) Remedies For Breach. If the Board of Trustees or its designees shall at
any time determine in good faith that a Transfer or Non-Transfer Event has taken
place in violation  of Section 3(b) of this Article VI or that a Person  intends
to  acquire,  has  attempted  to acquire  or may  acquire  Beneficial  Ownership
(determined  without  reference  to any rules of  attribution)  or  Constructive
Ownership of any Equity Shares of the Trust in Violation of Section 3(b) of this
Article  VI,  the Board or its  designees  shall  take  such  action as it deems
necessary or  advisable to refuse to give effect or to prevent such  Transfer or
Non-Transfer Event,  including,  but not limited to, causing the Trust to redeem
shares,  refusing to give  effect to such  Transfer on the books of the Trust or
instituting  proceedings to enjoin such Transfer;  provided,  however,  that any
Transfers (or, in the case of  Non-Transfer  Events,  Constructive  Ownership or
Beneficial  Ownership) in violation of Section 3(b)(i) of this Article VI, shall
automatically result in the transfer to a Trust as described in Section 3(b)(ii)
of this Article VI, and any  Transfer in violation of Section  3(b)(iii) of this
Article VI shall  automatically be void ab initio irrespective of any action (or
non-action) by the Board.

     (e)  Enforcement.  The Trust is authorized  specifically  to seek equitable
relief,  including  injunctive relief, to enforce the provisions of this Article
VI.

     (f) Notice of Restricted  Transfer.  Any Person who acquires or attempts to
acquire  shares in  violation  of Section 3(b) of this Article VI, or any Person
who is a  Prohibited

                                       14
<PAGE>

Owner such that an automatic  transfer to a Share Trust  results  under  Section
3(b)(ii) of this Article VI, shall  immediately give written notice to the Trust
of such event and shall provide to the Trust such other information as the Trust
may  request in order to  determine  the  effect,  if any,  of such  Transfer or
Non-Transfer  Event or attempted  Transfer or Non-Transfer  Event on the Trust's
status as a REIT.

     (g) Owners  Required to Provide  Information.  From the Date of the Initial
Issuance and prior to the Restriction Termination Date:

          (i) every owner of more than five percent (or such lower percentage as
required by the Code or the Treasury Regulations  promulgated thereunder) of the
outstanding  Equity  Shares,  within 30 days after the end of each taxable year,
shall,  upon request by the Trust,  give written notice to the Trust stating the
name and address of such owner, the number of Equity Shares  Beneficially  Owned
and a description  of the manner in which such shares are held.  Each such owner
shall provide to the Trust such additional  information as the Trust may request
in order to determine the effect,  if any, of such  Beneficial  Ownership on the
Trust's status as a REIT and to ensure compliance with the Ownership Limit.

          (ii) each Person who is a Beneficial  Owner or  Constructive  Owner of
Equity  Shares and each  Person  (including  the  shareholder  of record) who is
holding Equity Shares for a Beneficial Owner or Constructive Owner shall provide
to the Corporation such  information  that the Corporation may request,  in good
faith, in order to determine the Trust's status as a REIT.

     (h) Remedies Not Limited.  Nothing contained in this Article VI shall limit
the  authority  of the Board of Trustees  to take such other  action as it deems
necessary  or  advisable  to  protect  the  Trust  and  the   interests  of  its
shareholders by preservation of the Trust's status as a REIT.

          (i)  Non-Waiver.  No delay or  failure on the part of the Trust or the
Board of Trustees in exercising any right hereunder shall operate as a waiver of
any rights of the Trust or the Board,  as the case may be,  except to the extent
specifically waived in writing.

     (j) Ambiguity. In the case of an ambiguity in the application of any of the
provisions of Section 3 of this Article VI,  including any definition  contained
in Section  3(a),  the Board of Trustees  shall have the power to determine  the
application  of the  provisions  of this Section 3 with respect to any situation
based on the facts  known to it, and any such  determination  shall be final and
binding on all  interested  parties,  including the  shareholders.  In the event
Section  3 of  this  Article  VI  requires  an  action  by the  Board,  and  the
Declaration  of Trust fails to provide  specific  guidance  with respect to such
action,  the Board shall have the power to  determine  the action to be taken so
long as such action is not contrary to the  provisions of this Section 3. Absent
a decision to the contrary by the Board of Trustees (which the Board may make in
its sole and absolute discretion),  if a Person would have (but for the remedies
set forth in Section  3(b))  acquired  Beneficial or  Constructive  Ownership of
Equity Shares in violation of Section  3(b)(i),  such  remedies (as  applicable)
shall apply first to the shares which,  but for such  remedies,  would have been
actually  owned  by such  Person,  and  second  to  shares  which,  but for such
remedies,  would have been Beneficially  Owned or Constructively  Owned (but not
actually owned) by such Person, pro rata among the Persons who actually own such
shares based upon the relative number of shares held by each such Person.

                                       15
<PAGE>

     (k) Exceptions.

          (i) Subject to Section 3(b)(i)(B),  the Board of Trustees, in its sole
discretion,  may exempt a Person from the  limitation  on a Person  Beneficially
Owning Equity  Shares in excess of the Ownership  Limit if such Person is not an
individual or treated as an owner of shares for purposes of Section 542(a)(2) of
the Code (as modified by Section  856(h) of the Code) and the Board obtains such
representations and undertakings from such Person as are reasonably necessary to
ascertain that no individual's  Beneficial  Ownership of such Equity Shares will
violate  the   Ownership   Limit,   and  agrees  that  any   violation  of  such
representations  or  undertaking  (or  other  action  which is  contrary  to the
restrictions  contained  in  Section  3(b)  of  this  Article  VI) or  attempted
violation  will result in such Equity Shares being  transferred to a Share Trust
in accordance with Section 3(b)(ii) of this Article VI.

          (ii) Prior to granting any  exception  pursuant to Section  3(k)(i) of
this  Article VI, the Board of Trustees  may require a ruling from the  Internal
Revenue Service,  or an opinion of counsel, in either case in form and substance
satisfactory  to the Board in its sole  discretion,  as it may deem necessary or
advisable in order to determine or ensure the Trust's status as a REIT.

          (iii)  Anything  in  Section  3 of  Article  VI or  elsewhere  in  the
Declaration  of  Trust to the  contrary  notwithstanding,  National  Bank of the
Redwoods and Redwood  Empire  Bancorp shall be exempt from the Ownership  Limit,
and may  Beneficially Own or  Constructively  Own Equity Shares in excess of the
Ownership Limit.

Section 4. RESERVED.

Section 5. Legends.  Each certificate for Equity Shares will bear  substantially
the following legend:

                           The shares represented by this certificate are
                  subject to restrictions on Beneficial and Constructive
                  Ownership and Transfer for the purpose of the Trust's
                  maintenance of its status as a real estate investment trust
                  under the Internal Revenue Code of 1986, as amended (the
                  "Code"). Subject to certain further restrictions and except as
                  expressly provided in the Declaration of Trust of the Trust,
                  (i) no Person, with the exception of National Bank of the
                  redwoods AND redwood empire bancorp, may Beneficially Own or
                  Constructively Own Equity Shares in excess of 9.8% (by value
                  or by number of Equity Shares, whichever is more restrictive)
                  of the outstanding Equity Shares of the Trust; (ii) no Person
                  may Beneficially or Constructively Own Equity Shares that
                  would result in the Trust being "closely held" under Section
                  856(h) of the Code or otherwise cause the Trust to fail to
                  qualify as a REIT; and (iii) no Person may Transfer Equity
                  Shares if such Transfer would result in the Equity Shares of
                  the Trust being owned by fewer than 100 Persons. Any Person
                  who

                                       16
<PAGE>

                  Beneficially or Constructively Owns or attempts to
                  Beneficially or Constructively Own Equity Shares which causes
                  or will cause a Person to Beneficially or Constructively Own
                  Equity Shares in violation of the above limitations must
                  immediately notify the secretary of the Trust. If any of the
                  restrictions on transfer or ownership are violated, some or
                  all of the Equity Shares represented hereby will be
                  automatically transferred to a Share Trustee of a Share Trust
                  for the benefit of one or more Charitable Beneficiaries.
                  Furthermore, upon the occurrence of certain events, attempted
                  Transfers (or record ownership of Equity Shares, in the case
                  of a Non-Transfer event) in violation of the restrictions
                  described above may be void ab initio. All capitalized terms
                  in this legend may have the meanings defined (with respect to
                  Equity Shares) in the Declaration of Trust, as the same may be
                  amended from time to time, a copy of which, including the
                  restrictions on transfer and ownership, will be furnished to
                  each holder of Equity Shares on request and without charge.
                  Requests for such a copy must be directed to the Secretary of
                  the Trust."

Section 6. General Provisions.

     (a) Interpretation and Ambiguities.  In addition to the powers set forth in
Sections  3(d),  3(e),  3(h),  3(j) and 3(k) of this  Article VI, as well as any
other powers set forth in this Article VI, the Board of Trustees  shall have the
power to interpret and to construct  the  provisions of this Article VI, and any
such  interpretation  and  construction  shall  be  final  and  binding  on  all
interested  parties,  including the shareholders;  provided,  however,  any such
interpretation  shall not  adversely  affect the  Trustees  without  their prior
written consent.

     (b) Severability. If any provision of this Article VI or any application of
any such  provision is determined to be void,  invalid or  unenforceable  by any
court having jurisdiction over the issue, the validity and enforceability of the
remaining  provisions  shall  not be  affected  and other  applications  of such
provision  shall be  affected  only to the extent  necessary  to comply with the
determination of such court.

     (c)  Stock  Exchanges.  Nothing  in this  Article  VI  shall  preclude  the
settlement  of any  transaction  entered into through the  facilities of the New
York Stock Exchange or any other national  securities exchange or market system.
The fact that the settlement of any transaction is so permitted shall not negate
the effect of any other  provision of this Article VI and any transferee in such
a transaction  shall be subject to all of the  provisions  and  limitations  set
forth in this Article VI.

                                  Article VII
                                  SHAREHOLDERS

Section 1. Meetings.

                                       17
<PAGE>

     There  shall be an annual  meeting  of the  shareholders,  to be held after
delivery of the annual report and on proper notice to the shareholders,  at such
time and place as shall be  determined  by or in the  manner  prescribed  in the
Bylaws, for the election of the Trustees,  if required,  and for the transaction
of any other  business  within  the  powers of the  Trust.  Except as  otherwise
provided in the Declaration of Trust,  special  meetings of shareholders  may be
called in the manner  provided  in the  Bylaws.  If there are no  Trustees,  the
officers of the Trust shall promptly call a special meeting of the  shareholders
entitled to vote for the  election  of  successor  Trustees.  Any meeting may be
adjourned and  reconvened as the Board of Trustees  determines or as provided in
the Bylaws.

Section 2. Voting Rights.

     Subject to the  provisions of the Preferred  Shares,  and the provisions of
any other classes or series of shares  outstanding,  the  shareholders  shall be
entitled  to vote only on the  following  matters:  (a)  election of Trustees as
provided  in Section 4 of Article V and the  removal of  Trustees as provided in
Section 5 of Article V; (b) amendment of the Declaration of Trust as provided in
Section 3 of Article IX; (c)  termination  or  dissolution  of the Trust  (which
shall be approved by the  shareholders  in the same manner as  amendments to the
Declaration  of Trust as provided in Section 3 of Article IX); (d) merger of the
Trust or the sale or transfer of all or substantially  all of its assets and (e)
such other  matters  with  respect to which the Board of Trustees  has adopted a
resolution  declaring that a proposed action is advisable and directing that the
matter be submitted to the  shareholders  for approval or  ratification.  Except
with respect to the foregoing  matters,  no action taken by the  shareholders at
any meeting shall in any way bind the Board of Trustees.


Section 3. Preemptive and Appraisal Rights.

     No holder of Shares shall, as such holder (a) have any preemptive  right to
purchase  or  subscribe  for any  additional  Shares of the Trust,  or any other
security  of the Trust,  which it may issue or sell or (b)  except as  expressly
required  by Title 8, have any right to require the Trust to pay such holder the
fair value of his Shares in an appraisal or similar proceeding.

Section 4. Action by Shareholders Without a Meeting.

     The Bylaws of the Trust may provide  that any action  required or permitted
to be taken by the  shareholders  may be taken  without a meeting by the written
consent of the  shareholders  entitled to cast a  sufficient  number of votes to
approve  the matter as  required by  statute,  the  Declaration  of Trust or the
Bylaws of the Trust, as the case may be.

Section 5. Board Approval.

     The submission of any action to the  shareholders  for their  consideration
shall first be approved by the Board of Trustees.

Section 6. Extraordinary Actions.

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     Notwithstanding  any provision of law permitting or requiring any action to
be taken or authorized by the shareholders by a greater  proportion of the votes
entitled to be cast,  any such action shall be  effective  and valid if taken or
approved by the affirmative  vote of a majority of all the votes entitled by the
shareholders to be cast by the shareholders on the matter.



                                  Article VIII
                     LIABILITY LIMITATION, INDEMNIFICATION,
                         AND TRANSACTIONS WITH THE TRUST

Section 1. Limitation of Shareholder Liability.

     No shareholder  shall be liable for any debt,  claim,  demand,  judgment or
obligation of any kind of, against or with respect to the Trust by reason of his
or her being a shareholder, nor shall any shareholder be subject to any personal
liability  whatsoever,  in  tort,  contract  or  otherwise,  to  any  Person  in
connection  with the  property  or  affairs of the Trust by reason of his or her
being a shareholder.

Section 2. Limitation of Trustee and Officer Liability.

     To the maximum extent that Maryland law in effect from time to time permits
limitation of the liability of trustees and officers of a real estate investment
trust, no Trustee or officer of the Trust shall be liable to the Trust or to any
shareholder for money damages. Neither the amendment nor repeal of this Section,
nor the  adoption or amendment of any other  provision  of this  Declaration  of
Trust  inconsistent  with this Section,  shall apply to or affect in any respect
the  applicability of the preceding  sentence with respect to any act or failure
to act  which  occurred  prior to such  amendment,  repeal or  adoption.  In the
absence of any Maryland  statute limiting the liability of trustees and officers
of a Maryland real estate  investment trust for money damages in a suit by or on
behalf of the Trust or by any  shareholder,  no  Trustee or officer of the Trust
shall be liable to the Trust or to any  shareholder  for money damages except to
the extent that (a) the Trustee or officer actually received an improper benefit
or profit in money,  property  or  services,  for the  amount of the  benefit or
profit in money,  property or services actually  received;  or (b) a judgment or
other  final  adjudication  adverse  to the  Trustee  or officer is entered in a
proceeding  based on a finding in the proceeding that the Trustee's or officer's
action or failure to act was the result of active and deliberate  dishonesty and
was material to the cause of action adjudicated in the proceeding.

Section 3. Express Exculpatory Clauses in Instruments.

     Neither the shareholders nor the Trustees, officers, employees or agents of
the Trust shall be liable under any written instrument creating an obligation of
the Trust,  and all persons  shall look solely to the  property of the Trust for
the payment of any claim under or for the  performance of that  instrument.  The
omission of the foregoing  exculpatory  language from any  instrument  shall not
affect the validity or  enforceability  of such  instrument and shall not

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<PAGE>

render any shareholder, Trustee, officer, employee or agent liable thereunder to
any third party, nor shall any officer, employee or agent of the Trust be liable
to anyone for such omission.

Section 4. Indemnification.

     The Trust shall have the power, to the maximum extent permitted by Maryland
law in effect from time to time, to obligate itself to indemnify,  and to pay or
reimburse  reasonable  expenses in advance of final  disposition of a proceeding
to,  (a) any  individual  who is a present  or former  shareholder,  Trustee  or
officer of the Trust or (b) any individual who, while a Trustee of the Trust and
at the  request  of the  Trust,  serves or has  served as a  director,  officer,
partner,  trustee,  employee or agent of another real estate  investment  trust,
corporation,  partnership,  joint venture,  trust,  employee benefit plan or any
other  enterprise  from and against any claim or  liability to which such person
may become  subject or which such  person may incur by reason of his status as a
present or former shareholder,  Trustee or officer of the Trust. The Trust shall
have the power,  with the  approval of its Board of  Trustees,  to provide  such
indemnification and advancement of expenses to a person who served a predecessor
of the Trust in any of the  capacities  described in (a) or (b) above and to any
employee or agent of the Trust or a predecessor of the Trust.

Section 5. Transactions Between the Trust and its Trustees,  Officers, Employees
and Agents.

     Subject to any express restrictions in this Declaration of Trust or adopted
by the  Trustees  in the Bylaws or by  resolution,  the Trust may enter into any
contract or  transaction of any kind  (including,  without  limitation,  for the
purchase  or sale of property or for any type of  services,  including  those in
connection  with  underwriting  or the offer or sale of securities of the Trust)
with any person, including any Trustee,  officer, employee or agent of the Trust
or any person  affiliated  with a  Trustee,  officer,  employee  or agent of the
Trust, whether or not any of them has a financial interest in such transaction.








                                       20
<PAGE>

                                   Article IX
                                    AMENDMENT

Section 1. General.

     This  Declaration  of Trust may not be amended  except as  provided in this
Article IX. The Trust reserves the right from time to time to make any amendment
to its Declaration of Trust, now or hereafter  authorized by law,  including any
amendment  altering the terms or contract rights, as expressly set forth in this
Declaration  of Trust,  of any Shares.  All rights and powers  conferred  by the
Declaration of Trust on shareholders,  Trustees and officers are granted subject
to this  reservation.  All references to the  Declaration of Trust shall include
all amendments thereto.

Section 2. The Trustees.

     The Board of Trustees may amend the Declaration of Trust from time to time,
in the manner  provided by Title 8, without any action by the  shareholders,  to
qualify as a real estate investment trust under the Code or under Title 8, or as
otherwise  provided in the  Declaration  of Trust.  A majority of the  Trustees,
without  action by the  shareholders,  may amend  this  Declaration  of Trust to
change the name of the Trust or to change the name or other  designation  or the
par value of any class or series of Shares  and the  aggregate  par value of the
Shares,  in accordance with Section 2-605 of the MGCL. The Board of Trustees may
amend the  Declaration  of Trust,  without  action by the  shareholders,  in any
manner  permitted in which Title 8 permits a declaration  of trust of a Maryland
real estate  investment  trust to be amended  without the approval of or vote by
the shareholders.

Section 3. By Shareholders.

     Except as  provided in Section 2 of this  Article IX and where  approval of
the  shareholders is not required by the Title 8 or would not be required if the
Trust were a Maryland corporation, this Declaration of Trust may be amended only
by the  affirmative  vote of a majority of all votes  entitled to be cast by the
shareholders on the matter.



                                   Article X
                        DURATION AND TERMINATION OF TRUST

Section 1. Duration.

     The Trust shall  continue  perpetually  unless  terminated  pursuant to any
applicable provision of Title 8.

Section 2. Termination.

     (a) Upon the termination of the Trust:

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<PAGE>

          (i) The Trust  shall  carry on no  business  except for the purpose of
winding up its affairs.

          (ii) The  Trustees  shall  proceed to wind up the affairs of the Trust
and all of the  powers of the  Trustees  under the  Declaration  of Trust  shall
continue,  including the powers to fulfill or discharge  the Trust's  contracts,
collect  its assets,  sell,  convey,  assign,  exchange,  transfer or  otherwise
dispose of all or any part of the remaining property of the Trust to one or more
persons at public or private sale for  consideration  which may consist in whole
or in part of cash,  securities or other property of any kind,  discharge or pay
its liabilities and do all other acts appropriate to liquidate its business.

          (iii)  After  paying or  adequately  providing  for the payment of all
liabilities,  and upon receipt of such releases,  indemnities  and agreements as
they deem necessary for their protection, the Trust may distribute the remaining
property of the Trust among the  shareholders  so that after  payment in full or
the setting apart for payment of such preferential amounts, if any, to which the
holders of any Shares at the time outstanding  shall be entitled,  the remaining
property of the Trust shall,  subject to any  participating or similar rights of
Shares at the time  outstanding,  be  distributed  ratably  among the holders of
Common Shares at the time outstanding.

     (b) After termination of the Trust, the liquidation of its business and the
distribution to the shareholders as herein provided,  a majority of the Trustees
shall execute and file with the Trust's  records a document  certifying that the
Trust has been duly  terminated,  and the Trustees shall be discharged  from all
liabilities  and  duties  hereunder,   and  the  rights  and  interests  of  all
shareholders shall cease.



                                   Article XI
                                  MISCELLANEOUS

Section 1. Governing Law.

     The  Declaration  of Trust is  executed  by the  undersigned  Trustees  and
delivered in the State of Maryland with  reference to the laws thereof,  and the
rights  of all  parties  and the  validity,  construction  and  effect  of every
provision hereof shall be subject to and construed  according to the laws of the
State of Maryland without regard to conflicts of laws provisions thereof.

Section 2. Reliance by Third Parties.

     Any certificate shall be final and conclusive as to any person dealing with
the Trust if executed by the Secretary or an Assistant Secretary of the Trust or
a  Trustee,  and if  certifying  to:  (a) the number or  identity  of  Trustees,
officers  of the  Trust  or  shareholders;  (b)  the  due  authorization  of the
execution of any document;  (c) the action or vote taken, and the existence of a
quorum, at a meeting of the Board of Trustees or shareholders; (d) a copy of the
Declaration  of Trust or of the  Bylaws as a true and  complete  copy as then in
force;  (e) an amendment to the Declaration of Trust; (f) the termination of the
Trust; or (g) the existence of any fact relating to the affairs of the Trust. No
purchaser,  lender,  transfer  agent or other  person

                                       22
<PAGE>

shall be bound to make any inquiry  concerning  the validity of any  transaction
purporting to be made by the Trust on its behalf or by any officer,  employee or
agent of the Trust.

Section 3. Severability.

     (a) The provisions of the  Declaration  of Trust are severable,  and if the
Board of Trustees shall determine,  with the advice of counsel,  that any one or
more such provisions  (the  "Conflicting  Provisions")  are in conflict with the
Code,  Title 8 or other  applicable  federal  or  state  laws,  the  Conflicting
Provisions,  to the  extent  of the  conflict,  shall  be  deemed  never to have
constituted a part of the  Declaration  of Trust,  even without any amendment of
the  Declaration  of Trust  pursuant  to Article  IX and  without  affecting  or
impairing  any of the  remaining  provisions  of the  Declaration  of  Trust  or
rendering  invalid  or  improper  any  action  taken  or  omitted  prior to such
determination.  No Trustee  shall be liable for making or failing to make such a
determination.  In the event of any such determination by the Board of Trustees,
the  Trustees  shall amend the  Declaration  of Trust in the manner  provided in
Section 2 of Article IX.

     (b) If any provision of the  Declaration  of Trust shall be held invalid or
unenforceable in any  jurisdiction,  such holding shall apply only to the extent
of any such invalidity or  unenforceability  and shall not in any manner affect,
impair  or  render  invalid  or  unenforceable   such  provision  in  any  other
jurisdiction  or  any  other  provision  of  the  Declaration  of  Trust  in any
jurisdiction.

Section 4. Construction.

     In the Declaration of Trust, unless the context otherwise  requires,  words
used in the  singular or in the plural  include both the plural and singular and
words  denoting  any gender  include  all  genders.  The title and  headings  of
different  parts are inserted for  convenience and shall not affect the meaning,
construction  or effect of the Declaration of Trust. In defining or interpreting
the powers and duties of the Trust and its Trustees and officers,  reference may
be  made  by the  Trustees  or  officers,  to the  extent  appropriate  and  not
inconsistent with the Code or Title 8, to the MGCL.

Section 5. Recordation.

     The Declaration of Trust and any amendment hereto shall be filed for record
with the State  Department of Assessments  and Taxation of Maryland and may also
be filed or recorded in such other places as the Trustees deem appropriate,  but
failure to file for record the  Declaration of Trust or any amendment  hereto in
any office  other than in the State of  Maryland  shall not affect or impair the
validity or effectiveness of the Declaration of Trust or any amendment hereto.

                                       23
<PAGE>

                                  Article XII
                 MERGER, CONSOLIDATION OR SALE OF TRUST PROPERTY

     Subject  to the  provisions  of any  class or  series of Shares at the time
outstanding,  the  Trust  may (a)  merge the  Trust  into  another  entity,  (b)
consolidate  the Trust with one or more other  entities into a new entity or (c)
sell,  lease,  exchange or otherwise  transfer all or  substantially  all of the
Trust's Property. Any such action must be approved by the Board of Trustees and,
after  notice  to all  shareholders  entitled  to  vote  on the  matter,  by the
affirmative  vote of a  majority  of all the  votes  entitled  to be cast on the
matter except where approval of the  shareholders  is not required by Title 8 or
would not be required if the Trust were a Maryland corporation.

     IN WITNESS  WHEREOF,  this Declaration of Trust has been executed as of the
5th day of February, 2002 by the undersigned Trustees, each of whom acknowledges
that this document is his act, that to the best of his  knowledge,  information,
and  belief,  the matters  and facts set forth  herein are true in all  material
respects and that this statement is made under the penalties for perjury.









                  [Signatures contained on the following page]












                                       24
<PAGE>





                                    NBR  REAL ESTATE  INVESTMENT TRUST,
                                    a Maryland real estate investment trust




                                    Signature:     ____________________________
                                    Name:           Patrick W. Kilkenny
                                    Title:          Trustee




                                    Signature:     ____________________________
                                    Name:          Dana R. Johnson
                                    Title:         Trustee



                                    Signature:     ____________________________
                                    Name:          James E. Beckwith
                                    Title:         Trustee





                    [Signature page of Declaration of Trust]









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