Document:

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                                                                    EXHIBIT 10.1

                                16 SEPTEMBER 2003

                         HARVEST NATURAL RESOURCES, INC.

                        YUKOS OPERATIONAL HOLDING LIMITED

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                                    AGREEMENT
                          FOR THE SALE AND PURCHASE OF
                         A 34% PARTICIPATION INTEREST IN
                                 OOO "GEOILBENT"

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                     [FRESHFIELDS BRUCKHAUS DERINGER LOGO]
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                                    CONTENTS

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CLAUSE                                                                                                  PAGE
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1.       INTERPRETATION.............................................................................      1

2.       SALE OF THE SHARE AND THE HARVEST PAYABLES AND PRICE.......................................      5

3.       CONDITIONS PRECEDENT.......................................................................      6

4.       INTERIM PERIOD.............................................................................      8

5.       COMPLETION.................................................................................     11

6.       RESTRICTIONS ON VENDOR.....................................................................     13

7.       WARRANTIES.................................................................................     14

8.       LIMITATIONS ON CLAIMS......................................................................     15

9.       PURCHASER'S WARRANTIES.....................................................................     15

10.      TERMINATION................................................................................     17

11.      WITHHOLDING TAX............................................................................     17

12.      ENTIRE AGREEMENT...........................................................................     18

13.      VARIATION..................................................................................     18

14.      ASSIGNMENT.................................................................................     18

15.      ANNOUNCEMENTS, CONFIDENTIALITY AND RETURN OF INFORMATION...................................     18

16.      COSTS......................................................................................     20

17.      SEVERABILITY...............................................................................     20

18.      FURTHER ASSURANCE..........................................................................     20

19.      NOTICES....................................................................................     21

20.      WAIVERS/RIGHTS AND REMEDIES................................................................     22

21.      NO RIGHTS UNDER CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999...............................     23

22.      GOVERNING LAW AND DISPUTE RESOLUTION.......................................................     23
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23.      COUNTERPARTS...............................................................................     23

SCHEDULE 1 DETAILS OF THE COMPANY...................................................................     25

SCHEDULE 2 THE LICENCES.............................................................................     26

SCHEDULE 3 THE WARRANTIES...........................................................................     27

SCHEDULE 4 THE ESCROW AGENT'S ACKNOWLEDGEMENT.......................................................     32

SCHEDULE 5 NOTIFICATION OF THE PROPOSED SALE TO MINLAY..............................................     33

SCHEDULE 6 MINLAY'S RESPONSE........................................................................     34

SCHEDULE 7 CERTIFICATE OF NO REVOCATION BY MINLAY...................................................     35

SCHEDULE 8 NOTIFICATION OF THE PROPOSED SALE TO THE COMPANY.........................................     36

SCHEDULE 9 THE COMPANY'S EXPRESS WAIVER.............................................................     37

SCHEDULE 10 CERTIFICATE OF NO REVOCATION BY THE COMPANY.............................................     38

SCHEDULE 11 CERTIFICATE OF THE COMPANY'S IMPLIED WAIVER.............................................     39

SCHEDULE 12 TRANSFER OF OWNERSHIP NOTIFICATION TO THE COMPANY.......................................     40

SCHEDULE 13 ASSIGNMENT OF HARVEST PAYABLES..........................................................     41

SCHEDULE 14 IRREVOCABLE ESCROW RELEASE INSTRUCTION..................................................     43

SCHEDULE 15 LIMITATIONS ON THE VENDOR'S LIABILITY...................................................     45
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THIS AGREEMENT is made on 16 September 2003

BETWEEN

(1)      HARVEST NATURAL RESOURCES, INC., a corporation organised under the laws
         of Delaware, USA, whose principal place of business is at 15835 Park
         Ten Place Drive, Suite 115, Houston, Texas 77084, USA (the VENDOR); and

(2)      YUKOS OPERATIONAL HOLDING LIMITED, a company organised under the laws
         of Cyprus, whose principal place of business is at Artemidos 4, City
         House, P.C. 6030, Larnaca, Cyprus (the PURCHASER).

WHEREAS

(A) OOO "Geoilbent" (the COMPANY) is a limited liability company organised and
existing under the laws of the Russian Federation. The Vendor is the sole legal
and beneficial owner of a participation interest in the Company (which is equal
to 34% of the charter capital of the Company and has a nominal value of
RUR 21,405,639.40) and is named in the Foundation Documents (as hereinafter
defined) as the holder of such participation interest in the Company.

(B) The Vendor has agreed to sell such participation interest in the Company to
the Purchaser, and to assign to the Purchaser certain debts outstanding and
payable by the Company to the Vendor, for the consideration and upon the terms
set out in this Agreement.

IT IS AGREED as follows:

1.       INTERPRETATION

1.1      Words and expressions used in this Agreement shall, unless the context
requires otherwise, have the following meanings:

ACCOUNTS means the audited balance sheet of the Company as at the Accounts Date
and the audited profit and loss account of the Company in respect of the
financial year ended on the Accounts Date, together with any notes, reports,
statements or documents included in or annexed to them, prepared in accordance
with GAAP (as hereinafter defined);

ACCOUNTS DATE means 30 September 2002;

BUSINESS DAY means a day (excluding Saturdays and Sundays) on which banks
generally are open in all three of London, Moscow and New York for the
transaction of normal banking business;

CHARTER means the Amended and Restated Charter of the Limited Liability Company
"Geoilbent" approved by the general meeting of the Company's participants on 9
January 2002 and registered with the State Registration Chamber on 1 March 2002

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(as the same may be subsequently amended in accordance with the laws of the
Russian Federation);

CLAIM means any claim for breach of a Warranty (as hereinafter defined);

COMPLETION means completion of the sale and purchase of the Share and the
Harvest Payables (each as hereinafter defined) under this Agreement in
accordance with clause 5;

COMPLETION DATE means the date on which Completion shall occur;

CONDITIONS means the conditions set out in clause 3.1;

DATA means all agreements, documents, logs, tapes, maps, books, records, files
and other data relating to the business of the Company and the Licences which is
in the possession of or held on behalf of the Company;

DISCLOSURE LETTER means the letter dated the date of this Agreement from the
Vendor to the Purchaser, as such letter may be amended by the Vendor at the
Completion Date;

DUE DILIGENCE means the investigation, inquiry and review by the Purchaser's
Group (as hereinafter defined), and their advisers of the Vendor, the Share and
the Company's financial, legal and business affairs including, without
limitation, the condition of the Company's assets and operations as well as its
business prospects based on geological and other analyses;

EBRD means the European Bank for Reconstruction and Development;

EBRD CREDIT AGREEMENT means the Credit Agreement dated 21 November 1996 between
the Company and EBRD, as amended and restated by an Agreement dated 23 September
2002;

EBRD PLEDGE AGREEMENT means the Agreement for Pledge of Shares in Limited
Liability Company "Geoilbent" dated 23 June 1997 among the Vendor, EBRD and ZAO
International Moscow Bank, as amended and restated by an Amendment Agreement
dated 30 September 2002;

EBRD RETENTION AGREEMENT means the Performance, Subordination and Share
Retention Agreement dated 9 April 1997 among the Company, EBRD, ZAO
International Moscow Bank, the Vendor and others (which was novated to make
Minlay (as hereinafter defined) a party thereto on 7 February 2002), as amended
by an Amendment Agreement dated 30 September 2002;

ESCROW ACCOUNT means the interest-bearing account established as of the date of
this Agreement pursuant to the Escrow Agreement (as hereinafter defined);

ESCROW AGENT means Citibank, N.A., London branch;

ESCROW AGREEMENT means the Escrow Agreement, dated as of the date of this
Agreement, among the Purchaser, the Vendor and the Escrow Agent;

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FINANCING AGREEMENTS has the meaning given to it in the EBRD Credit Agreement;

FOUNDATION AGREEMENT means the Amended and Restated Agreement on Foundation and
Activity of the Limited Liability Company "Geoilbent" approved by the general
meeting of the Company's participants on 9 January 2002 and registered with the
State Registration Chamber on 1 March 2002 (as the same may be subsequently
amended in accordance with the laws of the Russian Federation);

FOUNDATION DOCUMENTS means the Charter and the Foundation Agreement;

GAAP means generally accepted accounting principles in the United States of
America;

HARVEST PAYABLES means all debts outstanding and payable by the Company to the
Vendor (including principal, interest and all other amounts payable as of 30
June 2003) under and pursuant to (a) the Subordinated Shareholder Loan (as
hereinafter defined), (b) the Services Agreement (as hereinafter defined), and
(c) all other additional agreements entered into between the Vendor and the
Company in furtherance of the transactions contemplated by the Services
Agreement;

INTERIM PERIOD means the period between the date hereof and the Completion Date;

LICENCES means (a) the licences listed in Schedule 2, (b) any licensing
agreements or other documents attached to or otherwise forming part of such
licences, (c) any extensions, amendments, variations and renewals of or
substitutions in respect of the whole or any part of such licences, licensing
agreements or other documents, and (d) the interests of the Company in and under
(a), (b) and (c);

LLC LAW means the Russian Federal Law No. 14-FZ of 8 February 1998 on Limited
Liability Companies;

MAP means the Ministry for Antimonopoly Policy and Support for Entrepreneurship
of the Russian Federation;

MINLAY means OAO Minlay, an open stock company organised and existing under the
laws of the Russian Federation, which as at the date of this Agreement owns a
participation interest in the Company (which is equal to 66% of the charter
capital of the Company with a nominal value of RUR 41,552,123.60) and is named
in the Charter as the holder of such participation interest in the Company;

NOTARY means a person licensed as a notary public under the laws of the Russian
Federation who shall be jointly selected by the Purchaser and the Vendor for the
purposes of clauses 5.2 and 5.3;

PARTY or PARTIES means a party or the parties to this Agreement;

PETROLEUM includes any mineral oil or relative hydrocarbon, natural gas existing
in its natural condition in strata, as well as natural gas condensate, to which
the Company has a right under the Licences;

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PROJECT AGREEMENTS has the meaning given to it in the EBRD Credit Agreement;

PURCHASER'S GROUP means the Purchaser, any controlling entity of the Purchaser
and the direct and indirect subsidiaries of such controlling entity from time to
time (including the Company on or after Completion), all of them and each of
them as the context admits, and MEMBER OF THE PURCHASER'S GROUP shall be
construed accordingly;

ROUBLE or RUR means the lawful currency of the Russian Federation;

SECURITY INTEREST means any security interest of any nature whatsoever
including, without limitation, any mortgage, charge, pledge, lien, assignment by
way of security or other encumbrance;

SERVICES AGREEMENT has the meaning given to it in the EBRD Credit Agreement;

SHARE means a participation interest in the Company which is equal to 34% of the
charter capital of the Company, has a nominal value of RUR 21,405,639.40 and as
at the date of this Agreement is legally and beneficially owned by the Vendor;

SUBORDINATED SHAREHOLDER LOAN means the Subordinated Loan Agreement between the
Vendor and the Company dated 14 June 2002;

US DOLLAR or USD means the lawful currency of the United States of America;

VENDOR'S GROUP means the Vendor and the direct and indirect subsidiaries of the
Vendor from time to time, (including the Company before Completion), all of them
and each of them as the context admits, and MEMBER OF VENDOR'S GROUP shall be
construed accordingly; and

WARRANTIES means the warranties set out in Schedule 3.

1.2      In this Agreement, unless the context otherwise requires:

(a)      references to clauses are references to clauses of this Agreement;

(b)      the HEADINGS are inserted for convenience only and shall not affect the
         construction of this Agreement;

(c)      references to one GENDER include all genders, references to the
         singular number include the plural number, and vice versa, and
         references to PERSONS include individuals, bodies corporate (wherever
         incorporated), unincorporated associations and partnerships;

(d)      any reference to an ENACTMENT or statutory provision is a reference to
         it as it may have been, or may from time to time be, amended, modified,
         consolidated or re-enacted;

(e)      any statement qualified by the expression TO THE BEST KNOWLEDGE OF THE
         VENDOR or SO FAR AS THE VENDOR IS AWARE or any similar expression shall
         be deemed to include an additional statement that it has been made
         after reasonable enquiry

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         by Peter Hill, the President and Chief Executive Officer of the Vendor,
         of Avgeny Grebenshikov, the General Director of the Company, within
         three Business Days prior to the date of this Agreement and again
         within three Business Days prior to the Completion Date and shall be
         deemed to refer only to the actual knowledge of Peter Hill, Stephen
         Tholen and Kerry Brittain, the President and Chief Executive Officer,
         Senior Vice President and Chief Financial Officer and Senior Vice
         President, General Counsel and Corporate Secretary of the Vendor,
         respectively; and

(f)      references to any English legal term for any action, remedy, method of
         judicial proceeding, legal document, legal status, court, official or
         any other legal concept shall, in respect of any jurisdiction other
         than England, be deemed to include the legal concept which most nearly
         approximates in that jurisdiction to the English legal term.

1.3      The Schedules comprise schedules to this Agreement and form part of
this Agreement.

2.       SALE OF THE SHARE AND THE HARVEST PAYABLES AND PRICE

2.1      Subject to the terms of this Agreement:

(a)      the Vendor shall sell, and the Purchaser shall purchase, the legal and
         beneficial ownership of the Share with effect from the Completion Date
         free and clear from all Security Interests (except the Security
         Interest and other related rights granted to EBRD pursuant to the EBRD
         Pledge Agreement), options, equities, claims or other third party
         rights (including the rights of pre-emption of Minlay and the Company)
         of any nature whatsoever, together with all rights attaching to it;

(b)      the Vendor shall sell all of its rights, title and interest to the
         Harvest Payables to the Purchaser, and the Purchaser shall purchase
         such rights, title and interest to the Harvest Payables, free from all
         liens, charges and encumbrances of any nature whatsoever.

2.2      The total price payable by the Purchaser to the Vendor for the Share
and the Harvest Payables shall be the sum of USD 75,000,000 of which the
purchase price payable for the Share shall be the sum of USD 69,500,000 and the
purchase price payable for the Harvest Payables shall be the sum of USD
5,500,000.

2.3      The Purchaser has already paid to the Vendor on 15 May 2003 the sum of
USD 2,000,000 as earnest money deposit (the EARNEST MONEY DEPOSIT), the receipt
whereof the Vendor hereby acknowledges. The Earnest Money Deposit shall upon
Completion be credited towards the total price payable for the Share and the
Harvest Payables as provided in clause 5.3(b), and shall otherwise not be
refundable by the Vendor to the Purchaser under any circumstances.

2.4      The Purchaser acknowledges that, in order to meet the Vendor's
requirement that the Purchaser secure its obligation to pay USD 73,000,000 to
the Vendor in accordance with the terms of this Agreement by making an advance
payment of such

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amount to the Vendor upon signing of this Agreement or by opening an irrevocable
letter of credit, confirmed by a first class western bank acceptable to the
Vendor, in favour of the Vendor for such amount upon signing of this Agreement
or by paying such amount into an escrow account upon signing of this Agreement,
the Purchaser agreed to pay such amount into an escrow account. Accordingly, the
Purchaser has paid into the Escrow Account upon signing of this Agreement the
sum of USD 73,000,000 (the ESCROW AMOUNT), the receipt whereof the Escrow Agent
has acknowledged in accordance with the terms of the Escrow Agreement by the
facsimile message attached as Schedule 4. The Escrow Amount, being the balance
amount of the total price payable for the Share and the Harvest Payables after
the Earnest Money Deposit is credited towards such total price, shall upon
Completion be transferred to the Vendor as provided in clause 5.3, or shall,
subject to clause 5.5, be returned to the Purchaser in the event the Parties are
unable to complete the sale and purchase of the Share and the Harvest Payables
and this Agreement is terminated accordingly.

2.5      If any payment is made by the Vendor to the Purchaser under or in
respect of any breach of this Agreement (including, without limitation, any
Claim), the payment shall so far as legally possible be treated as a reduction
in the price paid for the Share and the Harvest Payables.

3.       CONDITIONS PRECEDENT

3.1      Completion of the sale and purchase of the Share and the Harvest
Payables shall be conditional upon the following conditions having been
fulfilled:

(a)      the Warranties shall be true and correct in all material respects on
         and as of the Completion Date by reference to the facts and
         circumstances then existing with the same force and effect as though
         made by the Vendor on and as of such date;

(b)      all of the covenants, undertakings, obligations and agreements required
         by this Agreement to be performed and complied with by the Vendor on or
         prior to the Completion Date shall have been duly performed and
         complied with;

(c)      no provision of any applicable law or regulation shall be in force and
         no judgment, injunction, order or decree shall have been issued:

                  (i)      prohibiting the consummation of the transactions
                           contemplated by this Agreement, or

                  (ii)     restraining or prohibiting the operation of the
                           Company's business in whole or in part;

(d)      EBRD shall have granted its written consent pursuant to (or have
         granted a written waiver of the application of (as the case may be))
         such provisions of the Financing Agreements and the Project Agreements
         as EBRD may deem fit in order to permit the consummation of the
         transactions contemplated by this Agreement, and all conditions to
         which the grant of such consent and waiver

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         shall be subject and which shall be required by EBRD to be fulfilled
         prior to Completion shall have been fulfilled;

(e)      the Vendor shall have delivered to Minlay (simultaneously with
         notifying the Company as provided in clause 3.1(f)), in accordance with
         Article 21 of the Foundation Agreement, a notification in the form
         attached as Schedule 5 (accompanied by a copy of this Agreement),
         informing Minlay of the Vendor's intention to sell the Share to the
         Purchaser as contemplated by this Agreement, 30 calendar days shall
         have passed since the delivery of such notification (accompanied by a
         copy of this Agreement), and the Purchaser shall have received from the
         Vendor:

                  (i)      during such 30 calendar day period, Minlay's original
                           response to such notification substantially in the
                           form attached as Schedule 6, and signed on behalf of
                           Minlay by its general director or a person authorised
                           pursuant to a power of attorney issued by such
                           general director, whereunder Minlay shall have (A)
                           granted its consent to the sale of the Share in
                           accordance with Article 10.1 of the Charter and
                           Article 12.1 of the Foundation Agreement, and (B)
                           expressly waived the exercise of its right of
                           pre-emption in respect of the Share, and

                  (ii)     upon expiration of such 30 calendar day period, a
                           certificate in the form attached as Schedule 7 and
                           duly signed on behalf of the Vendor confirming that
                           the Vendor has received no written communication from
                           Minlay during such 30 calendar day period that would
                           constitute a revocation of the waiver specified in
                           clause 3.1(e)(i)(B) through an express exercise by
                           Minlay of its right of pre-emption in respect of the
                           Share,

         provided that the Condition set out in this clause 3.1(e) shall be also
         deemed fulfilled if at any time during such 30 calendar day period (X)
         Minlay or the successor in title to Minlay's 66% participation
         interest, as the case may be, transfers the legal and beneficial
         ownership of its 66% participation interest in the Company to any
         member of the Purchaser's Group, or (Y) any member of the Purchaser's
         Group enters into any legally binding agreement whereunder such member
         of the Purchaser's Group is entitled to direct or approve the exercise
         of Minlay's vote or the vote of the successor in title to Minlay's 66%
         participation interest in the Company, as the case may be, as a Company
         participant, or otherwise acquires indirect control over the said 66%
         participation interest;

(f)      the Vendor shall have duly informed the Company (simultaneously with
         Minlay as provided in clause 3.1(e)), through a notification in the
         form attached as Schedule 8 (accompanied by a copy of this Agreement),
         of the Vendor's intention to sell the Share as contemplated by this
         Agreement, 40 calendar days shall have passed since the Vendor notified
         the Company as such, and the Purchaser shall have received from the
         Vendor:

                  (i)      during such 40 calendar day period, an original of
                           the Company's written waiver of the exercise of its
                           right of pre-emption in respect of

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                  the Share, which waiver shall be in the form attached as
                  Schedule 9 and shall have been signed on behalf of the Company
                  by the Company's general director, and

         (ii)     upon expiration of such 40 calendar day period, a certificate
                  in the form attached as Schedule 10 and duly signed on behalf
                  of the Vendor confirming that it has received no written
                  communication from the Company during such 40 calendar day
                  period that would constitute a revocation of such waiver
                  through an express exercise by the Company of its right of
                  pre-emption in respect of the Share;

         provided that the Condition set out in this clause 3.1(f) shall also be
         deemed fulfilled if, in the alternative, the Vendor shall have
         delivered to the Purchaser upon expiration of such 40 calendar day
         period a certificate in the form attached as Schedule 11 and duly
         signed on behalf of the Vendor confirming that the Company has
         impliedly waived the exercise of its right of pre-emption in respect of
         the Share by taking no action to exercise such right during such 40
         calendar day period; and

(g)      the Purchaser shall have obtained all governmental or regulatory
         consents, waivers, authorisations and approvals (including, without
         limitation, the final consent of MAP) to the consummation of the
         transactions contemplated by this Agreement.

3.2      The Vendor undertakes to use all reasonable endeavours to procure the
fulfilment of the Conditions set out in clause 3.1(a), (b), (d), (e) and (f) as
soon as reasonably practicable and in any event within 60 calendar days after
the date of this Agreement.

3.3      The Purchaser undertakes to use all reasonable endeavours to procure
the fulfilment of the Conditions set out in clause 3.1(d) and (g) as soon as
reasonably practicable and in any event within 60 calendar days after the date
of this Agreement.

3.4      The Vendor shall provide, and shall use its reasonable endeavours in
its capacity as a Company participant under the LLC Law and the Foundation
Documents to procure that the Company shall provide, all assistance and
co-operation as the Purchaser may require in order to obtain the consent of MAP
as contemplated by clause 3.1(g).

3.5      The Purchaser shall be entitled, by written notice to the Vendor, to
waive any or all of the Conditions set out in clause 3.1(a), (b), (e), (f) and
(g) either in whole or in part.

4.       INTERIM PERIOD

4.1      During the Interim Period, the Vendor shall not exercise its right to
vote on the basis of its participation interest in the Company without the
Purchaser's prior written consent (such consent not to be unreasonably withheld
or delayed), and the Vendor shall remain subject to all of its other obligations
in respect of the Interim Period pursuant to this Agreement without limiting the
generality of this clause 4.1.

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4.2      During the Interim Period, the Vendor shall also:

(a)      consult with the Purchaser and keep the Purchaser reasonably informed
         of all matters of which the Vendor is aware relating to the Licences
         other than those of a minor or routine nature;

(b)      use its reasonable endeavours within the scope of the LLC Law and the
         Foundation Documents (especially taking into account the restrictions
         on confidentiality set forth in Article 18 of the Foundation Agreement)
         to request copies from the Company of such books and records of the
         Company (including, without limitation, all statutory books, minute
         books, leases, contracts and licences) as the Purchaser may reasonably
         request, and shall deliver such copies to the Purchaser reasonably
         promptly upon their receipt from the Company;

(c)      not allow any act or omission, to the extent it is not beyond the
         Vendor's control, which would constitute or give rise to a material
         breach of any Warranty if the Warranties were to be repeated on or any
         time before Completion by reference to the facts and circumstances then
         existing;

(d)      ensure that prompt disclosure is made to the Purchaser of all relevant
         information which comes to the notice of the Vendor in relation to any
         fact or matter (whether existing on or before the date of this
         Agreement or arising afterwards) which may constitute a breach of any
         Warranty if the Warranties were to be repeated on or at any time before
         Completion by reference to the facts and circumstances then existing;

(e)      not vote in its capacity as a Company participant under the LLC Law and
         the Foundation Documents in favour of the distribution and payment of
         any dividend or other distribution of the Company's net profits (within
         the meaning of Article 28 of the LLC Law) to be paid or made by the
         Company;

(f)      not allow any transaction outside the ordinary or usual course of
         business between the Company on the one hand and the Vendor on the
         other hand and not vote in its capacity as a Company participant under
         the LLC Law and the Foundation Documents in favour of:

                  (i)      any agreement, contract, arrangement or transaction
                           (whether or not legally binding) that otherwise
                           constitutes an "interested party transaction" or a
                           "major transaction" under the LLC Law without the
                           Purchaser's prior written consent (such consent not
                           to be unreasonably withheld or delayed), and

                  (ii)     any action cancelling, revoking or withdrawing the
                           Company's grant of the waiver, if any, contemplated
                           by clause 3.1(f) or allowing the Company to demand
                           that the Purchaser's rights and obligations under
                           this Agreement be assigned or transferred to or
                           assumed by the Company within the meaning of Article
                           21(4) of the LLC Law;

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(g)      not pledge, sell, charge, transfer or otherwise encumber the Share save
         for the grant to EBRD of any Security Interests or other related rights
         pursuant to the Financing Agreements and save for any pre-emption
         rights existing under the LLC Law and the Foundation Documents;

(h)      use its reasonable endeavours within the scope of the LLC Law and the
         Foundation Documents (especially taking into account the restrictions
         on confidentiality set forth in Article 18 of the Foundation Agreement)
         to request such information from the Company regarding the business,
         assets, liabilities, contracts and affairs of the Company as the
         Purchaser may reasonably request, and to convey such information to the
         Purchaser reasonably promptly upon its receipt from the Company;

(i)      not vote in its capacity as a Company participant under the LLC Law and
         the Foundation Documents in favour of the Company, except as otherwise
         contemplated by this Agreement, creating, allotting, issuing or
         granting (or agreeing to do so) any share or loan capital or option in
         respect of any share or loan capital;

(j)      not vote in its capacity as a Company participant under the LLC Law and
         the Foundation Documents in favour of any increase in the remuneration
         of the general director of the Company without the prior written
         consent of the Purchaser (such consent not to be unreasonably withheld
         or delayed); and

(k)      ensure that the amount of any loans (except accrued interest) owed by
         the Company to the Vendor as at the date of this Agreement shall not be
         increased and that the Company shall not incur any new loans (except
         accrued interest) owed to the Vendor.

4.3      During the Interim Period, the Vendor shall use its reasonable
endeavours in its capacity as a Company participant under the LLC Law and the
Foundation Documents, to the extent that the Vendor has actual knowledge of any
acts or omissions of the Company relating to the matters covered by this clause
4.3, to procure that the Company:

(a)      carries on its business in the ordinary and usual course, including,
         without limitation, not entering into any material agreement, contract,
         arrangement or transaction other than in such ordinary and usual
         course;

(b)      takes all reasonable steps to preserve and protect its assets;

(c)      does not without the prior written consent of the Purchaser (such
         consent not to be unreasonably withheld or delayed) sell, charge,
         transfer, assign or encumber in any manner whatsoever the Licences or
         any other assets of the Company save for the sale of Petroleum in the
         ordinary and usual course of business and the grant to EBRD of any
         Security Interests or other related rights pursuant to the Financing
         Agreements;

                                                                         Page 10

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(d)      does not agree to any termination or material amendment of any Licence
         without the prior written consent of the Purchaser (such consent not to
         be unreasonably withheld or delayed);

(e)      conducts all business in relation to the Licences in a proper manner
         and in accordance with the applicable laws of the Russian Federation
         and continues to take all reasonable steps in accordance with the
         Vendor's and the Company's normal business practice to preserve and
         protect the Licences; and

(f)      maintains all insurance policies that are in effect on the date of this
         Agreement in relation to the Licences and that any claims against
         insurers for loss or damage relating to the Licences suffered prior to
         Completion are diligently pursued.

4.4      If, pending Completion, a material decision is required to be taken by
the Company, or by the Vendor in its capacity as a Company participant under the
LLC Law and the Foundation Documents, under or in connection with any of the
Licences on a matter relating to or affecting any Licences (including without
limitation a matter on which a vote is required under any of the Licences) the
Vendor shall:

(a)      to the extent the Vendor has actual knowledge of and actual details of
         that matter or the result of such material decision, as soon as
         reasonably practicable, supply the Purchaser with details of that
         matter and/or inform the Purchaser of the outcome of such material
         decision;

(b)      prior to taking or participating in taking the decision (to the extent
         that the Vendor actually participates in the taking of such decision)
         or exercising its vote or thereafter instructing its representatives to
         vote (to the extent that the decision to be taken is a matter upon
         which a participants' vote is required under the LLC Law and the
         Foundation Documents), to consult (to the extent practicable) with the
         Purchaser in relation to that matter and record the directions of the
         Purchaser in respect thereof; and

(c)      as soon as reasonably practicable after the taking of any such decision
         or the exercise of any such vote by the Vendor under clause 4.4 (b) (to
         the extent the Vendor actually participated in the taking of such
         decision or the exercise of such vote) inform the Purchaser of the
         result.

5.       COMPLETION

5.1      The sale and purchase of the Share and the Harvest Payables shall be
completed at the offices of Freshfields Bruckhaus Deringer, Moscow, on the third
Business Day following the fulfilment (or waiver) of all the Conditions or on
such other day as may be agreed between the Vendor and the Purchaser (but, in
any event, within five Business Days after such fulfilment or waiver). The
events referred to in the following provisions of this clause 5 shall take place
on Completion.

                                                                         Page 11

<PAGE>

5.2      The Vendor and the Purchaser shall execute the notification of transfer
of ownership of the Share in the form attached as Schedule 12 and shall procure
that:

(a)      such notification is delivered to the Company at its principal office
         located in the Gubkinsky Industrial Area, Purovsky District,
         Yamalo-Nenets Autonomous Region, the Russian Federation, in accordance
         with the provisions of the Foundation Documents and Article 21(6) of
         the LLC Law by one representative of each of Freshfields Bruckhaus
         Deringer (legal counsel to the Purchaser) and Baker & McKenzie (legal
         counsel to the Vendor) accompanied by the Notary; and

(b)      such representatives and the Notary prepare a duly notarised statement
         recording the time, place and manner of such delivery and the name(s)
         and title(s) of the person(s), if any, to whom such delivery was made.

5.3      Upon receipt of verbal confirmation by the Moscow office of each of
Freshfields Bruckhaus Deringer and Baker & McKenzie that their respective
representatives and the Notary have completed the actions specified in clauses
5.2(a) and 5.2(b):

(a)      the Vendor shall deliver to the Purchaser a deed of assignment in
         respect of the Harvest Payables in the form attached as Schedule 13;
         and

(b)      the Purchaser and the Vendor shall, in satisfaction of the Purchaser's
         obligations under clauses 2.2 and 2.4, execute an irrevocable escrow
         release instruction in the form attached as Schedule 14 and cause the
         Escrow Agent to transfer the Escrow Amount (for same day value) by wire
         transfer of immediately available funds from the Escrow Account to
         JPMorgan Chase Bank, Houston, TX, ABA Routing #: [____], SWIFT:
         [_______], FBO: Harvest Natural Resources, Inc., Account #: [_____],
         which transfer, together with the simultaneous crediting of the Earnest
         Money Deposit towards the total price payable for the Share and the
         Harvest Payables as agreed by the Parties, shall amount to full payment
         of such total price. The Parties acknowledge and agree, for the
         avoidance of doubt, that the Purchaser shall be entitled to all
         interest and other income due and payable on the funds held in the
         Escrow Account whether or not the sale and purchase of the Share and
         the Harvest Payables is completed as contemplated by this Agreement.

Each of the Parties hereby irrevocably instructs its respective legal counsel to
execute the irrevocable escrow release instruction upon receipt of verbal
confirmation as referred to in this clause 5.3.

5.4      If the Vendor fails, is unable or declines to perform its material
obligations required to be performed by it pursuant to clauses 5.2 and 5.3 by
the last date on which Completion is required to occur, the Purchaser shall not
be obliged to complete the sale and purchase of the Share and the Harvest
Payables and may, in its absolute discretion, by written notice to the Vendor:

(a)      terminate this Agreement (other than clauses 1, 2.3, 2.4 and 11 to 22
         (apart from clauses 13 and 18)), in which case neither Party shall have
         any claim of

                                                                         Page 12
<PAGE>
         any nature whatsoever against the other Party under this Agreement
         (save in respect of any rights and liabilities of the Parties which
         have accrued prior to termination); or

(b)      elect to complete this Agreement on that date, to the extent that the
         Vendor is ready, able and willing to do so, and specify a later date on
         which the Vendor shall be obliged to complete its outstanding
         obligations; or

(c)      elect to defer the completion of this Agreement by not more than twenty
         (20) Business Days to such other date as it may specify in such notice,
         in which event the provisions of this clause 5.4 shall apply, mutatis
         mutandis, if the Vendor fails or is unable to perform any such
         obligations on such other date.

5.5      If, due to any reason other than as contemplated by clause 5.4 or
clause 10.1(a), (b) or (c), the Purchaser fails, is unable or declines to
perform its material obligations required to be performed by it pursuant to
clause 5.2 by the last date on which Completion is required to occur, the Vendor
shall not be obliged to complete the sale and purchase of the Share and the
Harvest Payables and may, in its absolute discretion, by written notice to the
Purchaser terminate this Agreement (other than clauses 1, 2.3, 2.4 and 11 to 22
(apart from clauses 13 and 18)), in which case the Vendor shall be entitled to
receive payment of the sum of USD 5,500,000 from the Escrow Amount as liquidated
damages promptly upon such termination. Subject to the preceding sentence, in
the event this Agreement is terminated pursuant to this clause 5.5, neither
Party shall have any claim of any nature whatsoever against the other Party
under this Agreement (save in respect of any rights and liabilities of the
Parties which have accrued prior to termination). The Parties acknowledge and
agree that the liquidated damages payable to the Vendor pursuant to this clause
5.5 represent a genuine pre-estimate of the loss which would be suffered by the
Vendor, including opportunity costs, arising out of the failure by the Purchaser
to proceed with Completion.

6.       RESTRICTIONS ON VENDOR

6.1      The Vendor shall not (and shall procure that each other member of the
Vendor's Group shall not) within a period of six months after Completion,
directly or indirectly, solicit or endeavour to entice away from the Company,
offer employment to or employ, or offer or conclude any contract for services
with, any person who was employed by the Company in skilled or managerial work
(excluding translators) at any time during the six months prior to Completion.
For the avoidance of doubt, this restriction shall not apply to Vendor's
employees and/or independent contractors seconded to the Company in accordance
with the Services Agreement and all other additional agreements entered into
between the Vendor and the Company in furtherance of the transactions
contemplated by the Services Agreement, and the Vendor shall be entitled to
remove such seconded personnel from the Company at any time before or after
Completion.

6.2      Except so far as may be required by law and in such circumstances only
after prior consultation with the Purchaser, the Vendor shall not (and shall
procure that each other member of the Vendor's Group shall not) at any time use
to the detriment

                                                                         Page 13

<PAGE>

of the Company any trade secret or other confidential information of a technical
character which it holds in relation to the Company or its affairs.

7.       WARRANTIES

7.1      The Vendor warrants to the Purchaser in the terms of the Warranties
subject to:

(a)      any matter fairly disclosed in the Disclosure Letter; and

(b)      any matter apparent from the documents disclosed to the Purchaser, any
         member of the Purchaser's Group or any of their advisers in the Due
         Diligence which fairly relate to matters or circumstances covered by
         the Warranties, or any matter within the actual knowledge of the
         Purchaser, the Purchaser's Group or any of their advisers.

7.2      Each of the Warranties shall be construed as a separate warranty, and
(save as expressly provided to the contrary) shall not be limited by reference
to or inference from the terms of any of the other Warranties.

7.3      The Warranties shall be deemed to be repeated immediately before
Completion by reference to the facts and circumstances then existing.

7.4      The Vendor makes no representation or warranty to the Purchaser as to
the completeness, truth or accuracy of the matters disclosed in the Disclosure
Letter.

7.5      Save as and only to the extent set forth in clauses 7.1 and 7.3, and
save in the case of fraud, the Vendor makes no representations or warranties in
respect of any circumstance, matter or thing and disclaims all liability and
responsibility for any representation, warranty, statement, opinion, information
or advice made or communicated (orally or in writing) to the Purchaser
(including, without limitation, any representation, warranty, statement,
opinion, information or advice made and communicated to the Purchaser by any
officer, shareholder, director, employee, agent, consultant or representative of
the Vendor) and the Purchaser acknowledges and affirms that it has not relied on
any such representation, warranty, statement, opinion, information or advice in
entering into or carrying out the transactions contemplated by this Agreement.
Except as and to the extent set forth in clauses 7.1 and 7.3 and without
prejudice to the generality of the foregoing, the Vendor makes no
representations or warranties as to:

(a)      the quantity, quality or deliverability of Petroleum or other reserves
         attributable to the Licences or any of them;

(b)      any geological or other interpretations or economic evaluations
         concerning the Licences or any of them; or

(c)      the information contained in the Data.

7.6      The Purchaser acknowledges and agrees that the only remedy available to
it in respect of a breach of any provision of this Agreement shall be for
damages for

                                                                         Page 14

<PAGE>

breach of contract and that the Purchaser shall have no claim or remedy in tort
in respect of such breach. The Purchaser shall have no right to rescind or
terminate this Agreement other than pursuant to clauses 5.4 and 10.

7.7      The Purchaser acknowledges that the Purchaser has had the opportunity
to engage in the Due Diligence in full with regard to all objective data
concerning the Company's oil and gas reserves and has relied on its own
interpretations with regard to the oil and gas reserves to be found or that are
recoverable under the Licences to its satisfaction and not on any
interpretations of or supplied by the Vendor.

8.       LIMITATIONS ON CLAIMS

8.1      The Vendor's liability for any Claim is limited pursuant to the
limitations and qualifications set out in clause 7, clause 8.2 and Schedule 15.

8.2      If the Purchaser becomes aware that any claim has been made against the
Company by a third party after Completion which is likely to result in the
Purchaser being entitled to make a Claim against the Vendor in respect of a
breach of any Warranty:

(a)      the Purchaser shall give notice of such claim to the Vendor as soon as
         reasonably practicable and shall use its reasonable endeavours in its
         capacity as a Company participant under the LLC Law and the Foundation
         Documents to procure that the Company gives the Vendor all reasonable
         facilities to investigate any such claim;

(b)      the Purchaser shall use its reasonable endeavours in its capacity as a
         Company participant under the LLC Law and the Foundation Documents to
         procure that the Company takes such action as the Vendor shall
         reasonably request to avoid, resist or compromise any such claim
         (subject to the Company being entitled to employ its own legal advisers
         and being indemnified and secured to its reasonable satisfaction by the
         Vendor against all losses, costs, damages and expenses, including those
         of its legal advisers, incurred in connection with such claim);

(c)      the Purchaser shall use its reasonable endeavours in its capacity as a
         Company participant under the LLC Law and the Foundation Documents to
         procure that the Company consults as fully as is reasonably practicable
         with the Vendor as regards the conduct of any proceedings arising out
         of such claim and, if the Vendor so requests, to permit the Vendor to
         participate in those proceedings at its own expense.

9.       PURCHASER'S WARRANTIES

9.1      The Purchaser warrants to the Vendor that:

(a)      the Purchaser is a company duly incorporated and organised and validly
         existing under the laws of Cyprus;

                                                                         Page 15

<PAGE>

(b)      the Purchaser has the requisite power and authority to enter into,
         execute, deliver and perform this Agreement and, subject to clause 3.1,
         has obtained all corporate and other authorisations of the Purchaser
         and all other applicable governmental, statutory, regulatory or other
         consents, licenses, authorisations, waivers or exemptions to enter into
         and perform fully its obligations under this Agreement;

(c)      neither the entry into this Agreement nor the implementation of the
         transactions contemplated by it will result in:

            (i)   a violation or breach of any provision of the foundational
                  documents of the Purchaser;

            (ii)  a breach of, or give rise to a default under, any contract or
                  other instrument to which the Purchaser is a party or by which
                  it is bound which is material in the context of the
                  transactions contemplated by this Agreement;

            (iii) a violation or breach of any applicable laws or regulations or
                  of any order, decree or judgment of any court, governmental
                  agency or regulatory authority applicable to the Purchaser or
                  any of its assets which is material in the context of the
                  transactions contemplated by this Agreement; or

            (iv)  save as set out in clause 3.1, a requirement for the Purchaser
                  to obtain any consent or approval of, or give any notice to or
                  make any registration with, any governmental, regulatory or
                  other authority which has not been obtained or made at the
                  date of this Agreement which is material in the context of the
                  transactions contemplated by this Agreement;

(d)      this Agreement constitutes valid and legally binding obligations of the
         Purchaser enforceable in accordance with their terms;

(e)      the Purchaser is not the subject of any proceedings seeking its
         dissolution, liquidation, or winding up. The Purchaser is able to pay
         its debts as they become due, is not otherwise insolvent and has not
         made a transfer in fraud of creditors. The Purchaser has not filed a
         petition seeking the appointment of a trustee, receiver, liquidator,
         custodian or similar official with respect to the Purchaser or any
         significant portion of its property, nor has any other person filed any
         such petition against the Purchaser; and

(f)      the Purchaser is not engaged in any material litigation or arbitration
         or similar proceedings related to the transactions contemplated by this
         Agreement and to the knowledge of the Purchaser, no such litigation,
         arbitration or proceeding is threatened against the Purchaser.

9.2      The warranties set out in clause 9.1 shall be deemed to be repeated
immediately before Completion by reference to the facts and circumstances then
existing.

                                                                         Page 16

<PAGE>

10.      TERMINATION

10.1     The Purchaser may by written notice given to the Vendor at any time
prior to the Completion Date terminate this Agreement if any fact, matter or
event arising or occurring after (but not before) the date of this Agreement
comes to the notice of the Purchaser at any time prior to the Completion Date
which:

(a)      constitutes a material breach by the Vendor of this Agreement; or

(b)      would constitute a material breach of any Warranty if the Warranties
         were repeated on or at any time before the Completion Date by reference
         to the facts and circumstances then existing; or

(c)      in the context of the long term financial position of the Company,
         materially reduces the value of the Company,

provided that (i) in determining the value of the Company for the purposes of
clause 10.1(c), the determination of the purchase price for the Share agreed by
the Parties under this Agreement shall be taken into account, and (ii) clause
10.1(c) shall exclude any fact, matter or event affecting or likely to affect to
a similar extent generally all or most companies carrying out similar businesses
in the Russian Federation, as well as any fact, matter or event arising out of
or relating to the Company's reservoir performance or drilling and production
operations and results.

10.2     This Agreement may also be terminated at any time at or prior to the
Completion Date by the mutual written consent of the Vendor and the Purchaser,
or unilaterally by either Party by written notice to the other Party after 66
calendar days from the date of this Agreement have passed if Completion has not
occurred within such 66 calendar day period.

10.3     In the event this Agreement is terminated as provided in this clause
10, this Agreement (other than clauses 1, 2.3, 2.4 and 11 to 22 (apart from
clauses 13 and 18)) shall become null and void and of no further force and
effect and neither Party shall have any claim of any nature whatsoever against
the other Party under this Agreement (save in respect of any rights and
liabilities of the Parties which have accrued prior to termination).

11.      WITHHOLDING TAX

Except as otherwise provided in this Agreement, all payments to be made under
this Agreement shall be made in full without any set-off or counterclaim and
free from any deduction or withholding save as may be required by law in which
event such deduction or withholding will not exceed the minimum amount which it
is required by law to deduct or withhold and the payer will simultaneously pay
to the payee such additional amount as will result in the receipt by the payee
of a net amount equal to the full amount which would otherwise have been
receivable had no such deduction or withholding been required.

                                                                         Page 17

<PAGE>

12.      ENTIRE AGREEMENT

This Agreement constitutes the entire agreement and understanding between the
parties in connection with the sale and purchase of the Share and the Harvest
Payables. This Agreement supersedes all previous agreements between the Parties
relating to the sale and purchase of the Share and the Harvest Payables, all of
which shall cease to have any further force or effect and neither Party has
entered into this Agreement in reliance upon any representation, warranty or
undertaking which is not set out or referred to in this Agreement.

13.      VARIATION

13.1     No variation of this Agreement (or of any of the documents referred to
in this Agreement) shall be valid unless it is in writing and signed by or on
behalf of each of the parties to it. The expression "variation" shall include
any variation, supplement, deletion or replacement however effected.

13.2     Unless expressly agreed, no variation shall constitute a general waiver
of any provisions of this Agreement, nor shall it affect any rights, obligations
or liabilities under or pursuant to this Agreement which have already accrued up
to the date of variation, and the rights and obligations of the parties under or
pursuant to this Agreement shall remain in full force and effect, except and
only to the extent that they are so varied.

14.      ASSIGNMENT

No Party may assign this Agreement in whole or in part without first obtaining
the written consent of the other Party, except in the case of an assignment by
the Purchaser of the whole of this Agreement to any member of the Purchaser's
Group and provided and so long as such member of the Purchaser's Group at the
time of the assignment remains a member of Purchaser's Group (failing which the
benefit of this Agreement shall no longer be available to such assignee nor to
any assignor) and any purported assignment in contravention of this clause shall
be ineffective. In any event, no assignment shall be made pursuant to this
clause 14 until after the Completion Date and, in any event, until after the
payment of all amounts required to be paid to the Vendor from the Escrow Account
pursuant to clause 5.3.

15.      ANNOUNCEMENTS, CONFIDENTIALITY AND RETURN OF INFORMATION

15.1     No announcement, disclosure or circular in connection with the
existence or the subject matter of this Agreement shall be made or issued by or
on behalf of the Vendor or the Purchaser without the prior written approval of
the other, (such approval not to be unreasonably withheld or delayed) during any
period prior to or within three (3) months after Completion. This shall not
affect any announcement, disclosure or circular required by law, the rules of
any stock exchange, supervisory, regulatory or governmental body.

15.2     Notwithstanding clause 15.1, the Vendor shall without the prior written
consent of the Purchaser be allowed to make such public disclosures or
announcements as may be considered appropriate by its legal counsel in the
United

                                                                         Page 18

<PAGE>

States of America for purposes of United States Securities and Exchange
Commission filing rules and requirements, and United States New York Stock
Exchange rules and requirements, or such other public disclosures as may be
required by the Vendor's legal advisers in the United States of America. The
Vendor shall provide a copy of such disclosures to the Purchaser.

15.3     Each Party shall treat as strictly confidential and will not disclose
any information received or obtained by it or its officers, employees, agents or
advisers as a result of entering into or performing this Agreement which relates
to:

(a)      the provisions of this Agreement, or any document or agreement entered
         into pursuant to this Agreement;

(b)      the negotiations leading up to or relating to this Agreement; or

(c)      any other parties,

and the Parties acknowledge that they shall treat as strictly confidential all
information arising from the Vendor's ownership of the Share, provided that
these restrictions shall not apply to any disclosure of information if and to
the extent the disclosure is:

            (i)   required by the law of any jurisdiction;

            (ii)  required by any applicable securities exchange, supervisory or
                  regulatory or governmental body to which the relevant Party is
                  subject or submits, wherever situated, whether or not the
                  requirement for disclosure has the force of law;

            (iii) made to the relevant Party's professional advisers, auditors,
                  bankers or the professional advisers, auditors, bankers or any
                  other member of the relevant Party's group of companies; or

            (iv)  of information that has already come into public domain
                  through no fault of the relevant Party or any other member of
                  that Party's group of companies.

15.4     If for any reason whatsoever the transactions contemplated by this
Agreement are not consummated, the Purchaser shall return to the Vendor:

(a)      all books and records received from the Vendor, any member of the
         Vendor's Group or their advisers relating to or belonging to the
         Company;

(b)      the Disclosure Letter; and

(c)      all documents and information received by the Purchaser, any member of
         the Purchaser's Group or their advisers from the Vendor, any member of
         the Vendor's Group or their advisers for purposes of the Due Diligence.

15.5     For the avoidance of doubt, this clause 15 shall also not apply to any
disclosure or announcement made by the Vendor to Minlay and/or the Company to

                                                                         Page 19
<PAGE>

the extent that such disclosure or announcement is required under the LLC Law,
and/or the Foundation Documents in relation to Minlay's and the Company's
pre-emptive rights and Minlay's consent. Furthermore, this clause 15 shall not
apply to any disclosure or announcement made by the Vendor to EBRD, Minlay
and/or the Company with regard to the assumption by the Purchaser of the
Vendor's obligations under the EBRD Retention Agreement, the EBRD Pledge
Agreement and any other relevant Financing Agreement or Project Agreement as may
be required for such assumption by EBRD.

16.      COSTS

16.1     Subject to clause 16.2, each of the Parties shall pay its own costs
incurred in connection with the negotiation, preparation and implementation of
this Agreement, including but not limited to the fees of its own legal advisers,
accountants, financial advisers, brokers, technical specialists and investment
advisers.

16.2     The Purchaser and the Vendor shall bear the burden equally of:

(a)      any costs or fees charged by the Escrow Agent with respect to the
         Escrow Agreement; and

(b)      any costs, fees or charges relating to the Notary pursuant to clauses
         5.2 and 5.3.

17.      SEVERABILITY

If any provision of this Agreement is held to be invalid or unenforceable, then
such provision shall (so far as it is invalid or unenforceable) be given no
effect and shall be deemed not to be included in this Agreement but without
invalidating any of the remaining provisions of this Agreement. The Parties
shall then use all reasonable endeavours to replace the invalid or unenforceable
provision by a valid and enforceable substitute provision the effect of which is
as close as possible to the intended effect of the invalid or unenforceable
provision.

18.      FURTHER ASSURANCE

18.1     The Vendor agrees to perform (or procure the performance of) all
further acts and things, and execute and deliver (or procure the execution and
delivery of) such further documents, as may be required by law or as the
Purchaser may reasonably require, whether on or after Completion, to implement
and/or give effect to this Agreement and the transactions contemplated by it and
for the purpose of vesting in the Purchaser the full benefit of the assets,
rights and benefits to be transferred to the Purchaser under this Agreement.

18.2     After Completion, the Purchaser shall make available to the Vendor or
shall procure that any member of the Purchaser's Group shall make available to
the Vendor (except in the case of the Company after Completion, whereby the
Purchaser shall use its reasonable endeavours in its capacity as a Company
participant under the LLC Law and the Foundation Documents to procure that the
Company shall provide to the Vendor) such records of the Company as the Vendor
may reasonably require for the

                                                                         Page 20

<PAGE>

preparation of any federal, state or local tax return of the Vendor in the
United States of America or for purposes of any reporting required by any
securities laws, regulations or other rules in the United States of America and
such records as the Vendor may reasonably require for the defence of any
administrative or court proceeding in the United States of America concerning
any federal, state or local tax return and reporting of the Vendor in the United
States of America.

19.      NOTICES

19.1     Any notice or other communication to be given by either Party to the
other Party under, or in connection with, this Agreement shall be in writing and
signed by or on behalf of the Party giving it. It shall be served by sending it
by fax to the number set out in clause 19.2, or delivering it by hand, or
sending it by pre-paid recorded delivery, special delivery or registered post,
to the address set out in clause 19.2 and in each case marked for the attention
of the relevant Party set out in clause 19.2 (or as otherwise notified from
time to time in accordance with the provisions of this clause 19). Any notice
so served by hand, fax or post shall be deemed to have been duly given:

(a)      in the case of delivery by hand, when delivered;

(b)      in the case of fax, at the time of transmission;

(c)      in the case of prepaid recorded delivery, special delivery or
         registered post, at 10am on the third Business Day following the date
         of posting

provided that in each case where delivery by hand or by fax occurs after 6pm on
a Business Day or on a day which is not a Business Day, service shall be deemed
to occur at 9am on the next following Business Day.

References to time in this clause are to local time in the country of the
addressee.

19.2     The addresses and fax numbers of the parties for the purpose of clause
19.1 are as follows:

VENDOR

Address:              15835 Park Ten Place Drive, Suite 115
                      Houston, Texas 77084, USA

Fax:                  +1-281-579-6702

For the attention of: General Counsel

With a copy sent to the Vendor's legal counsel:

Name and Address:     Baker & McKenzie
                      Sadovaya Plaza, 11th Floor
                      Dolgorukovskaya Street, 7
                      127006 Moscow, Russia

                                                                         Page 21

<PAGE>

Fax:                  +7-095-787-2701

For the attention of: Alexander Chmelev

PURCHASER

Address:              Artemidos 4
                      City House, P.C. 6030
                      Larnaca, Cyprus

Fax:                  +7-095-785-1572

For the attention of: Christiana Christou

With a copy sent to the Purchaser's legal counsel:

Name and Address:     Freshfields Bruckhaus Deringer
                      Kadashevskaya Naberezhnaya 14/2
                      119017 Moscow, Russia

Fax:                  +7-095-785-3001

For the attention of: Dmitry Surikov

19.3     Either Party may notify the other Party of a change to its name,
relevant addressee, address or fax number for the purposes of this clause y19,
provided that, such notice shall only be effective on:

(a)      the date specified in the notice as the date on which the change is to
         take place; or

(b)      if no date is specified or the date specified is less than five
         Business Days after the date on which notice is given, the date
         following five Business Days after notice of any change has been given.

20.      WAIVERS/RIGHTS AND REMEDIES

20.1     No failure or delay by either Party in exercising any right or remedy
provided by law under or pursuant to this Agreement shall impair such right or
remedy or operate or be construed as a waiver or variation of it or preclude its
exercise at any subsequent time and no single or partial exercise of any such
right or remedy shall preclude any other or further exercise of it or the
exercise of any other right or remedy.

20.2     The rights and remedies of both Parties under or pursuant to this
Agreement are cumulative, may be exercised as often as the relevant Party
considers appropriate and are in addition to its rights and remedies under
general law.

20.3     The rights and remedies of both Parties under this Agreement shall not
be affected, and their liabilities under this Agreement shall not be released,
discharged or impaired, by Completion, provided that this clause 20.3 shall not
be construed to

                                                                         Page 22

<PAGE>

extend any right or remedy that otherwise would have been terminated upon
Completion under this Agreement.

20.4     Notwithstanding anything in this Agreement to the contrary, the Vendor
shall not be liable to the Purchaser for any loss of profits, loss of revenue,
lost opportunity, or lost business or any other indirect or consequential
losses.

21.      NO RIGHTS UNDER CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999

Save as expressly provided in clause 14, a person who is not a party to this
Agreement shall have no right under the Contracts (Rights of Third Parties) Act
1999 to enforce any of its terms.

22.      GOVERNING LAW AND DISPUTE RESOLUTION

22.1     This Agreement and the relationship between the Parties shall be
governed by, and interpreted in accordance with, English law.

22.2     Any dispute, controversy or claim arising out of or relating to this
Agreement, or the breach, termination or invalidity hereof, shall be settled by
final and binding arbitration under the Rules of the LCIA, which Rules are
deemed to be incorporated by reference into this clause 22. There shall be three
arbitrators, one to be selected by each Party and the two so selected shall
jointly select the third. The seat and place of the arbitration shall be London,
the United Kingdom. The language of the arbitration shall be English. The
Parties hereby waive any rights under the Arbitration Act 1996 or otherwise to
appeal any arbitration award to, or to seek determination of a preliminary point
of law by, the courts of England.

22.3     The Parties agree that they will provide discovery in any arbitration
proceeding conducted pursuant to this Agreement. The Parties agree to produce
all documents related to the activities of the Vendor, the Purchaser's Group and
the Company as they relate and to the extent applicable to negotiations, Due
Diligence, transactions, warranties, indemnities, breaches and any other matters
relating to this Agreement (DISCOVERY MATTERS). Such documents shall include,
but shall not be limited to, contracts, books, records, internal documents,
notes and memoranda, of any and all kinds and types, to the extent they relate
to such activities. It shall not be objectionable that documents are requested
by general category. The Parties also agree to provide oral depositions of their
employees, officers and directors as well as those of the Vendor, the
Purchaser's Group respective employees, as well as those of the Vendor, the
Purchaser's Group and the Company as they relate to the Discovery Matters. The
arbitral tribunal shall have the power, upon the application of the any party,
to make all appropriate orders for the discovery described above.

23.      COUNTERPARTS

This Agreement may be executed in any number of counterparts, and by the Parties
on separate counterparts, each of which is an original but all of which together
constitute one and the same instrument.

                                                                         Page 23

<PAGE>

AS WITNESS this Agreement has been signed on behalf of the Parties the day and
year first before written.

                                                                         Page 24

<PAGE>

                                   SCHEDULE 1

                             DETAILS OF THE COMPANY

1.   Date of Formation:               6 December 1991

2.   Country of Formation:            The Russian Federation

3.   Registration Authority:          Inspectorate of the Ministry of the
                                      Russian Federation for Taxes and Duties
                                      for the Purovsky District of the Yamalo-
                                      Nenets Autonomous Region.

4.   Registration Certificate         [_______________]
     Number:

5.   Registered Office:               Purpe Settlement, Purovsky District
                                      Yamalo-Nenets Autonomous Region Russian
                                      Federation, 629840

6.   General Director:                Avgeny V. Grebenshikov

7.   Authorised Capital:              RUR 62,957,763

8.   Issued Capital:                  RUR 62,957,763

9.   Registered Participants:         Open Joint Stock Company "Minlay"
                                      Tarko-Sale Settlement
                                      Ul. Pobedy 22 "a", Purovsky District
                                      Yamalo-Nenets Autonomous Region
                                      Russian Federation, 629850
                                      (Size of participation interest - 66%)

                                      Harvest Natural Resources, Inc.
                                      15835 Park Ten Place Drive, Suite 115,
                                      Houston, Texas 77084, USA
                                      (Size of participation interest - 34%)

10.  Auditors:                        None

                                                                         Page 25

<PAGE>

                                   SCHEDULE 2

                                  THE LICENCES

1.       Licence CJIX No. 10867 HP issued to OOO "Geoilbent" for geological
         exploration and production of oil, gas and condensate on the
         North-Gubkinskoye and Prisklonovoye fields.

2.       Licence CJIX No. 11053 HP issued to OOO "Geoilbent" for geological
         exploration and development of deposits of hydrocarbon resources in the
         Urabor-Yakhinsky license area.

3.       Licence CJIX No. 11054 HP issued to OOO "Geoilbent" for geological
         exploration and development of deposits of hydrocarbon resources in the
         Vansko-Namyssky license area.

4.       Licence CJIX No. 00391 HII issued to Russian-American Joint Venture
         Geoilbent Limited for geological exploration of mineral resources and
         feasibility study of oil and gas bearing capacity in the Yangyakhinsky
         area.

                                                                         Page 26

<PAGE>

                                   SCHEDULE 3

                                 THE WARRANTIES

1.       THE VENDOR AND THE COMPANY

1.1      AUTHORISATIONS

(a)      The Vendor is a corporation duly organised, validly existing and in
         good standing under the laws of the State of Delaware, U.S.A.

(b)      The Vendor has the requisite power and authority to enter into,
         execute, deliver and perform this Agreement and, subject to clause 3.1,
         has obtained all corporate and other authorisations of the Vendor and
         all other applicable governmental, statutory, regulatory or other
         consents, licences, authorisations, waivers or exemptions to enter into
         and perform its obligations under this Agreement.

(c)      This Agreement constitutes and the other documents executed by the
         Vendor which are to be delivered at Completion will, when executed,
         constitute binding obligations of the Vendor enforceable in accordance
         with their respective terms.

(d)      The execution and delivery of and the performance by the Vendor of its
         obligations under, this Agreement will not:

           (i)    result in a breach of any provision of the foundational or
                  governing documents of the Vendor or of the Company;

          (ii)    result in a breach of any law or regulation or any order,
                  judgement or decree of any court or governmental agency to
                  which the Vendor is a party or by which the Vendor is bound
                  which is material in the context of the transactions
                  contemplated by this Agreement; or

         (iii)    conflict with any document which is binding on the Vendor
                  which is material in the context of the transactions
                  contemplated by this Agreement.

(e)      The Vendor is not the subject of any proceedings seeking its
         dissolution, liquidation, or winding up. The Vendor is able to pay its
         debts as they become due, is not otherwise insolvent and has not made a
         transfer in fraud of creditors. The Vendor has not filed a petition
         seeking the appointment of a trustee, receiver, liquidator, custodian
         or similar official with respect to the Vendor or any significant
         portion of its property, nor has any other person filed any such
         petition against the Vendor.

(f)      The Vendor is not engaged in any material litigation or arbitration or
         similar proceedings related to the transactions contemplated by this
         Agreement and to

                                                                         Page 27

<PAGE>

         the best knowledge of the Vendor, no such litigation, arbitration or
         proceeding is threatened against the Vendor.

1.2      THE COMPANY AND THE SHARE

(a)      The Share is fully-paid or properly credited as fully-paid and the
         Vendor is the sole legal and beneficial owner of the Share free from
         all Security Interests, options, equities, claims or other rights or
         interests of third parties (including rights of pre-emption) of any
         nature whatsoever except for:

          (i)     the Security Interest and other related rights granted to EBRD
                  pursuant to the EBRD Pledge Agreement; and

         (ii)     the rights of pre-emption of the Company and Minlay (and the
                  grant of Minlay's consent) under the LLC Law and the
                  Foundation Documents until these rights have been expressly or
                  impliedly waived, and such consent granted, as contemplated by
                  clauses 3.1(e) and (f).

(b)      The information in respect of the Company set out in Schedule 1 is true
         and accurate.

(c)      The copies of the Foundation Documents in the Russian language that
         have been supplied to the Purchaser or the Purchaser's legal counsel
         are complete and accurate.

(d)      The Share represents 34% of the charter capital of the Company, and the
         total charter capital of the Company has a nominal value of
         RUR 62,957,763. The Company has no issued or authorised equity
         interests of any class or type other than that representing the total
         charter capital indicated in the preceding sentence of this paragraph
         1.2(d).

(e)      There has been no decision made and no agreement or commitment is
         outstanding which calls for the allotment, issue or transfer of, or
         accords to any person the right to call for the allotment or issue of,
         any equity interests (including the Share) or debentures in the
         Company.

(f)      The Company is a limited liability company duly organised and existing
         under the laws of the Russian Federation.

(g)      The Company does not have any "subsidiary" or "dependent" companies as
         defined in Articles 105 and 106 of the Russian Civil Code.

(h)      To the best knowledge of the Vendor, the Company does not have any
         obligations to third parties which are not reflected in the Accounts
         (including obligations based on suretyship, guarantee or similar
         agreements).

(i)      The total amount of the Company's obligations under any employment and
         other agreements with its General Director does not exceed the
         equivalent of USD 90,000 per year.

                                                                         Page 28

<PAGE>

(j)      To the best knowledge of the Vendor, the Company is not a party to any
         obligation or agreement envisaging the creation, increase or
         accelerated repayment of any debt of the Company or any other
         disadvantageous consequences for the Company as a result of conclusion
         of this Agreement or implementation of transactions contemplated hereby
         except for the Financing Agreements and the Subordinated Shareholder
         Loan.

(k)      To the best knowledge of the Vendor, no option, right to acquire,
         mortgage, charge, pledge, lien (other than a lien arising by operation
         of law in the ordinary course of trading) or other form of security or
         encumbrance or equity on, over or affecting the whole or any part of
         the undertaking or assets of the Company is outstanding except the
         Security Interests and other related rights granted to EBRD pursuant to
         the Financing Agreements.

2.       FINANCIAL MATTERS

2.1      THE ACCOUNTS OF THE COMPANY

(a)      To the best knowledge of the Vendor, the Accounts of the Company give a
         true and fair view of the state of affairs of the Company as at the
         Accounts Date and of the results thereof for the financial year ended
         on the Accounts Date.

(b)      Without limiting the generality of paragraph 2.1(a), to the best
         knowledge of the Vendor:

           (i)    the Accounts either make full provision for or, disclose all
                  liabilities (whether actual, contingent or disputed and
                  including financial lease commitments and pension
                  liabilities), all outstanding capital commitments and all bad
                  or doubtful debts of the Company as at the Accounts Date;

          (ii)    the Accounts for each of the last three (3) financial years
                  ended on the Accounts Date were prepared under and in
                  accordance with GAAP; and

         (iii)    the results shown by the Accounts for each of the last three
                  (3) financial years ended on the Accounts Date were not
                  (except as therein disclosed) affected by any material item or
                  by any other material factor.

2.2      POSITION OF THE COMPANY SINCE ACCOUNTS DATE

(a)      To the best knowledge of the Vendor, since the Accounts Date there has
         been no material adverse change in the financial position of the
         Company and no event, fact or matter has occurred which is reasonably
         likely to give rise to any such change.

(b)      To the best knowledge of the Vendor, since the Accounts Date:

                                                                         Page 29

<PAGE>

            (i)   the business of the Company has been carried on in the
                  ordinary and usual course and the Company has not made or
                  agreed to make any payment other than routine payments in the
                  ordinary and usual course of trading;

           (ii)   no dividend or other distribution has been declared, paid or
                  made by the Company (except for any dividends provided for in
                  the Accounts);

          (iii)   no share or loan capital has been allotted or issued or agreed
                  to be allotted or issued by the Company;

           (iv)   there has been no material change in the level of borrowing or
                  in the working capital requirements of the Company;

            (v)   no contract, liability or commitment (whether in respect of
                  capital expenditure or otherwise) has been entered into by the
                  Company which is of a long term or unusual nature or which
                  involved or could involve an obligation of a material nature
                  or magnitude (a liability for expenditure in excess of USD
                  1,000,000 being included as MATERIAL for this purpose);

           (vi)   the Company has not (whether in the ordinary and usual course
                  of business or otherwise) acquired or disposed of, or agreed
                  to acquire or dispose of, any business or any asset having a
                  value in excess of USD 1,000,000;

          (vii)   no debtor has been released by the Company on terms that it
                  pays less than the book value of its debt and no debt in
                  excess of USD 1,000,000 owing to the Company has been
                  deferred, subordinated or written off or has proved to any
                  extent irrecoverable; and

         (viii)   the Company has not repaid any loans in advance of its stated
                  maturity.

3.       REGULATORY MATTERS

(a)      To the best knowledge of the Vendor, the Company has obtained all
         material licences required for carrying on its business effectively in
         the places and in the manner in which such business is now carried on.

(b)      To the best knowledge of the Vendor, the licences referred to in
         paragraph 3(a) are in full force and effect.

4.       THE LICENCES

4.1      The Licences constitute all licences, permits, contracts, prospects and
concessions in or by which the Company holds an interest to explore or search,
bore for, get, produce or develop Petroleum, and the documents made available to
the Purchaser for inspection in the Due Diligence are, to the best of the
Vendor's knowledge, the only material agreements or arrangements relating to or
affecting the creation, existence or validity of the interests of the Company
under the Licences.

                                                                         Page 30

<PAGE>

4.2      To the best knowledge of the Vendor and subject to the provisions of
the Licences and applicable law, the Company is the legal and beneficial owner
of its interests under the Licences free from all charges, liens, encumbrances,
equities and claims whatsoever.

4.3      To the best knowledge of the Vendor, there are no binding arrangements
(except as may be set forth in the Licences or applicable law) which restrict
the ability of the Company freely to dispose of Petroleum which is or may become
attributable to those Licences in which it is interested.

4.4      To the best knowledge of the Vendor, the Company does not carry on, nor
has in the 5 years preceding this Agreement carried on, any business other than
that of exploring for and producing Petroleum and carrying out related
activities.

5.       LITIGATION

So far as the Vendor is aware, the Company is not a plaintiff or defendant in or
otherwise a party to any material litigation, arbitration or administrative
proceedings which are in progress or threatened or pending by or against or
concerning the Company or any of its assets, and no governmental or official
investigation or inquiry concerning the Company is in progress or pending except
as described in the Disclosure Letter.

6.       INSOLVENCY

6.1      So far as the Vendor is aware, no order has been made and no resolution
has been passed for the winding up of the Company and no petition has been
presented and no meeting has been convened for the purpose of winding up the
Company.

6.2      So far as the Vendor is aware, no administration order has been made
and no petition for such an order has been presented in respect of the Company.

6.3      So far as the Vendor is aware, no receiver (which expression shall
include an administrative receiver) has been appointed in respect of the Company
or all or any of its assets.

6.4      So far as the Vendor is aware, the Company is not insolvent, nor is it
unable to pay its debts within the meaning of Article 3 of the Law on Insolvency
(Bankruptcy) of the Russian Federation, nor has it stopped paying its debts as
they fall due.

6.5      No voluntary arrangement has been proposed under Article 61 of the
Russian Civil Code in respect of the Company.

6.6      So far as the Vendor is aware, no unsatisfied final judgment that would
materially adversely affect the business, assets and operations of the Company
is outstanding against the Company.

                                                                         Page 31

<PAGE>

                                   SCHEDULE 4

                       THE ESCROW AGENT'S ACKNOWLEDGEMENT

            [Copy of fax acknowledgement to be inserted upon receipt]

                                                                         Page 32

<PAGE>

                                   SCHEDULE 5

                   NOTIFICATION OF THE PROPOSED SALE TO MINLAY

                 [Letterhead of Harvest Natural Resources, Inc.]

[RUSSIAN LANGUAGE DOCUMENT]

                                                                         Page 33

<PAGE>

                                   SCHEDULE 6

                                MINLAY'S RESPONSE

                             [OAO Minlay Letterhead]

[RUSSIAN LANGUAGE DOCUMENT]

                                                                         Page 34

<PAGE>

                                   SCHEDULE 7

                     CERTIFICATE OF NO REVOCATION BY MINLAY

                                   CERTIFICATE

         Reference is hereby made to clause 3.1(e) of the Agreement for the sale
and purchase of a 34% interest in OOO "Geoilbent" dated 16 September 2003 (the
AGREEMENT) between Harvest Natural Resources, Inc. and Yukos Operational Holding
Limited. Capitalised terms used herein and not otherwise defined shall have the
same meanings as defined in the Agreement.

         Pursuant to the said clause 3.1(e), the Vendor informed Minlay through
a notification dated __________ 2003, in the form attached as Schedule 5 to the
Agreement (the NOTIFICATION), of the Vendor's intention to sell the Share as
contemplated by the Agreement. The Notification was accompanied by a copy of the
Agreement, and 30 calendar days have passed since the delivery of the
Notification. Minlay responded to the Notification through a response dated
__________ 2003, substantially in the form attached as Schedule 6 to the
Agreement and duly signed on behalf of Minlay (the RESPONSE), whereunder Minlay
granted its consent to the sale of the Share and expressly waived the exercise
of its right of pre-emption in respect of the Share, as specified in clauses
3.1(e)(i)(A) and 3.1(e)(i)(B) of the Agreement respectively, and the Response,
in original, was delivered to the Purchaser on __________ 2003. I, [Name] the
[Title] of the Vendor do hereby certify on behalf of the Vendor that during the
30 calendar day period following the delivery of the Notification, the Vendor
received no written communication from Minlay that would constitute a revocation
of the waiver specified in clause 3.1(e)(i)(B) through an express exercise by
Minlay of its right of pre-emption in respect of the Share.

HARVEST NATURAL RESOURCES, INC.

By:__________________
   Name:
   Title:

                                                                         Page 35

<PAGE>

                                   SCHEDULE 8

                NOTIFICATION OF THE PROPOSED SALE TO THE COMPANY

                 [Letterhead of Harvest Natural Resources, Inc.]

[Russian Language Document]

                                                                         Page 36

<PAGE>

                                   SCHEDULE 9

                          THE COMPANY'S EXPRESS WAIVER

                             [Geoilbent Letterhead]

[RUSSIAN LANGUAGE DOCUMENT]

                                                                         Page 37

<PAGE>

                                   SCHEDULE 10

                   CERTIFICATE OF NO REVOCATION BY THE COMPANY

                                   CERTIFICATE

         Reference is hereby made to clause 3.1(f) of the Agreement for the sale
and purchase of a 34% interest in OOO "Geoilbent" dated 16 September 2003 (the
AGREEMENT) between Harvest Natural Resources, Inc. and Yukos Operational Holding
Limited. Capitalised terms used herein and not otherwise defined shall have the
same meanings as defined in the Agreement.

         Pursuant to the said clause 3.1(f), the Vendor informed the Company
through a notification dated __________ 2003, in the form attached as Schedule 8
to the Agreement (the NOTIFICATION), of the Vendor's intention to sell the Share
as contemplated by the Agreement. The Notification was accompanied by a copy of
the Agreement, and 40 calendar days have passed since the delivery of the
Notification. The Company responded to the Notification through a response dated
__________ 2003, substantially in the form attached as Schedule 9 to the
Agreement and signed on behalf of the Company by the Company's general director
(the RESPONSE), whereunder the Company granted a written waiver of the exercise
of its right of pre-emption in respect of the Share, and the Response, in
original, was delivered to the Purchaser on __________ 2003. I, [Name] the
[Title] of the Vendor do hereby certify on behalf of the Vendor that during the
40 calendar day period following the delivery of the Notification, we received
no written communication from the Company that would constitute a revocation by
the Company of the waiver granted by it pursuant to the Response through an
express exercise by the Company of its right of pre-emption in respect of the
Share.

HARVEST NATURAL RESOURCES, INC.

By:__________________
   Name:
   Title:

                                                                         Page 38

<PAGE>

                                   SCHEDULE 11

                   CERTIFICATE OF THE COMPANY'S IMPLIED WAIVER

                                   CERTIFICATE

         Reference is hereby made to clause 3.1(f) of the Agreement for the sale
and purchase of a 34% interest in OOO "Geoilbent" dated 16 September 2003 (the
AGREEMENT) between Harvest Natural Resources, Inc. and Yukos Operational Holding
Limited. Capitalised terms used herein and not otherwise defined shall have the
same meanings as defined in the Agreement.

         Pursuant to the said clause 3.1(f), the Vendor informed the Company
through a notification dated __________ 2003, in the form attached as Schedule 8
to the Agreement (the NOTIFICATION), of the Vendor's intention to sell the Share
as contemplated by the Agreement. The Notification was accompanied by a copy of
the Agreement, and 40 calendar days have passed since the delivery of the
Notification. I, [Name] the [Title] of the Vendor do hereby certify on behalf of
the Vendor that during the 40 calendar day period following the delivery of the
Notification, the Vendor received no response from the Company in respect of the
Notification and, accordingly, the Company has impliedly waived the exercise of
its right of pre-emption in respect of the Share.

HARVEST NATURAL RESOURCES, INC.

By:__________________
   Name:
   Title:

                                                                         Page 39

<PAGE>

                                   SCHEDULE 12

                TRANSFER OF OWNERSHIP NOTIFICATION TO THE COMPANY

                 [Letterhead of Harvest Natural Resources, Inc.]

[RUSSIAN LANGUAGE DOCUMENT]

                                                                         Page 40

<PAGE>

                                   SCHEDULE 13

                         ASSIGNMENT OF HARVEST PAYABLES

                               DEED OF ASSIGNMENT

THIS DEED OF ASSIGNMENT is made the ___ day of ____ 2003.

BETWEEN:

(1)      HARVEST NATURAL RESOURCES, INC., a corporation organised under the laws
         of Delaware, USA, whose principal place of business is at 15835 Park
         Ten Place Drive, Suite 115, Houston, Texas 77084, USA (the ASSIGNOR);
         and

(2)      YUKOS OPERATIONAL HOLDING LIMITED, a company organised under the laws
         of Cyprus, whose principal place of business is at Artemidos 4, City
         House, P.C. 6030, Larnaca, Cyprus (the ASSIGNEE).

WHEREAS:

The Assignor and the Assignee have entered into an Agreement for the sale and
purchase of a 34% interest in OOO "Geoilbent" dated 16 September 2003 (the
AGREEMENT) pursuant to which the Assignor agreed to assign to the Assignee at
Completion (as defined in the Agreement) all debts outstanding and payable by
OOO "Geoilbent" (the COMPANY) to the Assignor (including principal, interest and
all other amounts payable as of 30 June 2003) under and pursuant to:

(a)      the Subordinated Loan Agreement dated 14 June 2002 between the Assignor
         and the Company;

(b)      the Services Agreement dated 1 January 1999 between the Assignor and
         the Company;

(c)      the Secondment Agreement dated 1 June 2002 between the Assignor and the
         Company; and

(d)      all other additional agreements entered into between the Assignor and
         the Company in furtherance of the transactions contemplated by the
         aforementioned Secondment Agreement and Services Agreement,

such debts not to exceed US$ 5,500,000 in the aggregate (collectively, the
DEBT).

NOW THIS DEED WITNESSES:

1.       In consideration of the Assignee paying the Assignor a consideration in
         the amount of US$ 5,500,000 the Assignor hereby assigns the Debt to the
         Assignee absolutely.

2.       This Deed shall be governed by and construed in accordance with the
         laws of England. Clauses 22.2 and 22.3 of the Agreement are hereby
         incorporated by reference, mutatis mutandis, and shall have the same
         force and effect as if set forth in this Deed.

                                                                         Page 41

<PAGE>

IN WITNESS WHEREOF the parties hereto have executed this document as a deed on
the day and year first hereinbefore mentioned.

SIGNED as a deed and delivered on behalf of          )
HARVEST NATURAL RESOURCES, INC.,                     )
a company incorporated in the State of Delaware,     )
the United States of America,                        )
by _____________________                             )
being a person who, in accordance with the laws of   )
that territory, is acting under the authority of     )
HARVEST NATURAL RESOURCES, INC.                      )

SIGNED as a deed and delivered on behalf of          )
YUKOS OPERATIONAL HOLDING LIMITED,                   )
a company incorporated in Cyprus,                    )
by _____________________                             )
being a person who, in accordance with the laws of   )
that territory, is acting under the authority of     )
YUKOS OPERATIONAL HOLDING LIMITED                    )

                                                                         Page 42

<PAGE>

                                   SCHEDULE 14

                     IRREVOCABLE ESCROW RELEASE INSTRUCTION

Citibank, N.A.,
5 Carmelite Street,
LondonEC4Y 0PA

FOR THE ATTENTION OF: SPECIALISED AGENCY GROUP

[DATE]

ESCROW AGREEMENT

We refer to the Agreement dated 16 September 2003 between Harvest Natural
Resources Inc., as Vendor, Yukos Operational Holding Limited, as Purchaser and
Citibank, N.A., as Escrow Agent (the "ESCROW AGREEMENT"). Words and expressions
used in this Completion Instruction shall have the same meanings as in the
Escrow Agreement.

This irrevocable escrow release instruction is being provided to you in
accordance with Clause 5(2)(a) of the Escrow Agreement. You are hereby
irrevocably instructed to pay the following amount from the Escrow Account:

(a)      to the Vendor an amount of USD 73,000,000.00 into the following
         account:

         Account of:  Harvest Natural Resources, Inc.

         Account No.: [_____________]

         Bank:        JPMorgan Chase Bank, Houston, Texas

         ABA#:        [______________]

         SWIFT:       [______________]

(b)      to the Purchaser, all interest and other income accrued
         on the Escrow Amount from 16 September 2003 until the
         date of this irrevocable escrow release instruction
         (both days inclusive), into the following account:

         Account of:  Yukos Operational Holding Limited

         Account No.: [_____________________]

         Bank:        [_____________________]

         SWIFT:       [_____________________]

                                                                         Page 43

<PAGE>

This Completion Instruction shall be governed by English law.

Yours sincerely,

HARVEST NATURAL RESOURCES, INC.

By: ____________________________________
    (Authorised Representative)

and

YUKOS OPERATIONAL HOLDING LIMITED

By: ____________________________________
    (Authorised Representative)

                                                                         Page 44

<PAGE>

                                  SCHEDULE 15

                     LIMITATIONS ON THE VENDOR'S LIABILITY

1.       SCOPE

Save as otherwise expressly provided in this Schedule 15, the provisions of this
Schedule 15 shall operate to limit the liability of the Vendor in respect of any
Claim.

2.       LIMITATIONS ON QUANTUM

2.1      The maximum aggregate liability of the Vendor in respect of all Claims
         shall not exceed USD 69,500,000.

2.2      No liability shall attach to the Vendor in respect of any Claim unless
the liability of the Vendor in respect of such Claim exceeds USD 69,500 in which
case the Vendor shall (subject to paragraph 2.3) be liable for the whole of such
amount and not merely the excess.

2.3      No liability shall attach to the Vendor unless the aggregate amount of
all Claims for which it would, in the absence of this provision, be liable shall
exceed USD 695,000 and in such event the Vendor shall be liable for the whole of
such amount and not merely the excess.

2.4      Paragraphs 2.1 to 2.3 shall not apply to any Claim against the Vendor
to the extent that it is established that the liability of the Vendor in respect
of that Claim arises from fraud on the part of the Vendor.

3.       TIME LIMITS

3.1      The Vendor shall be under no liability in respect of any Claim and any
such Claim shall be wholly barred and unenforceable unless notice of such Claim
(stating in reasonable detail the specific matters in respect of which the Claim
is made and including so far as reasonably practicable an estimate of the
maximum amount of the Claim) shall have been served upon the Vendor by the
Purchaser by no later than eighteen months after the Completion Date PROVIDED
THAT the liability of the Vendor in respect of any Claim specified in such
notice shall absolutely determine and cease (if such Claim has not been
previously satisfied, settled or withdrawn) if legal proceedings in respect of
the Claim shall not have been commenced against the Vendor by being both
properly issued and validly served on the Vendor within six months of the giving
of such notice.

3.2      No liability shall attach to the Vendor to the extent that a Claim has
arisen or the amount of the Claim has been increased because notice was not
given to the Vendor of the relevant facts of that Claim as soon as reasonably
practicable and in any event no later than 60 days after the Purchaser became
aware thereof.

                                                                         Page 45

<PAGE>

3.3      Paragraphs 3.1 and 3.2 shall not apply to any Claim against the Vendor
to the extent that it is established that the liability of the Vendor in respect
of that Claim arises from fraud on the part of the Vendor.

4.       RECOVERY FROM THIRD PARTIES

In circumstances where the Vendor shall have paid to the Purchaser an amount in
respect of a Claim and subsequent to the making of such payment any member of
the Purchaser's Group becomes or shall become entitled to recover from some
other person a sum which is referable to that payment, the Purchaser shall take
all reasonable steps to recover that amount and shall procure that each other
member of the Purchaser's Group shall promptly repay to the Vendor an amount
equal to the amount so recovered or, if lower, the amount paid by the Vendor to
the Purchaser.

5.       NO LIABILITY IF LOSS IS OTHERWISE COMPENSATED

5.1      PROVISION OR RESERVE IN THE ACCOUNTS

No liability shall attach to the Vendor in respect of any Claim to the extent
that allowance, provision or reserve in respect of the matter or thing giving
rise to such Claim has been made in the Accounts or that such matter or thing
has specifically been taken into account therein.

5.2      INSURANCE

No liability shall attach to the Vendor in respect of any Claim if and to the
extent that such Claim relates to any loss or damage recoverable by any member
of the Purchaser's Group under any policy of insurance or which would have been
so recoverable but for any change in insurance after the Completion Date.

6.       FUTURE ACTS

6.1      CHANGE IN LEGISLATION

No liability shall attach to the Vendor in respect of any Claim to the extent
that such Claim would not have arisen (or the amount of the Claim would not have
been increased) but for a change in legislation made after the date hereof or a
change in the interpretation of the law after the Completion Date (whether or
not such change purports to be effective retrospectively in whole or in part) or
if such Claim would not have arisen (or the amount of the Claim would not have
been increased) but for any judgement delivered after the date hereof.

6.2      VOLUNTARY ACTS AND OMISSIONS

No liability shall attach to the Vendor in respect of any Claim to the extent
that such Claim would not have arisen but for an omission or a voluntary act
(other than an omission or act carried out pursuant to a legally binding
obligation created on or before the Completion Date) of the Company (or any
member of the Purchaser's Group carrying on the business of the Company in
succession thereto) outside the

                                                                         Page 46

<PAGE>

ordinary course of such business in circumstances such that, when such action
was taken:

(a)      the Purchaser, any controlling entity of the Purchaser or any direct or
         indirect subsidiaries of such controlling entity from time to time:

           (i)    held itself or jointly with any other member of the
                  Purchaser's Group more than a 50 per cent participation
                  interest in the charter capital of the Company; or

          (ii)    otherwise held or controlled (itself or jointly with any other
                  member of the Purchaser's Group or by legally binding
                  agreement with other participants in the Company) a majority
                  of the voting rights in the Company or otherwise controlled
                  the decisions made by the Company with respect to such
                  omission or act in the capacity of a Company participant under
                  the LLC Law and the Foundation Documents; or

         (iii)    itself or jointly with any other member of the Purchaser's
                  Group had the right to appoint or remove the general director
                  or any other governing body of the Company as may from time to
                  time be provided by the Charter, and

(b)      a member of the Purchaser's Group was aware that the action would
         entitle the Purchaser to bring a Claim against the Vendor and there was
         available to the relevant member of the Purchaser's Group a reasonable
         alternative course of action which would not have so entitled the
         Purchaser.

7.       ACTS APPROVED BY THE PURCHASER

The Purchaser shall not be entitled to bring any Claim in respect of any act or
omission whatsoever carried out at the written request or with the written
approval of the Purchaser or its authorised agent or representative prior to the
Completion Date or which is expressly authorised by this Agreement unless,
acting reasonably, the Purchaser is unaware that such act or omission would
cause a breach of Warranty.

8.       CONTINGENT AND UNQUANTIFIABLE LIABILITIES

No liability shall attach to the Vendor in respect of any Claim to the extent
that the Claim is based upon a liability which is contingent only or is
otherwise not capable of being quantified unless and until such liability ceases
to be contingent and becomes an actual liability or becomes capable of being
quantified, as the case may be.

9.       NO DOUBLE RECOVERY

The Purchaser shall not be entitled to recover damages or obtain payment,
reimbursement, restitution or indemnity more than once for the same loss, damage
or deficiency.

                                                                         Page 47

<PAGE>

10.      OPPORTUNITY TO REMEDY

No liability shall attach to the Vendor in respect of any Claim if and to the
extent that the breach giving rise to such Claim is capable of remedy (without
cost or loss to any member of the Purchaser's Group) except to the extent that
the relevant breach remains either wholly or partially unremedied (without such
cost) after the expiry of 30 days following receipt by the Vendor of notice from
the Purchaser giving full particulars of the relevant breach and requiring it to
be so remedied.

11.      CORRESPONDING BENEFIT

In assessing any damages or other amounts recoverable under this Agreement,
there shall be taken into account the value of any monetary benefit accruing to
any member of the Purchaser's Group in consequence of the matter or
circumstances giving rise to the Claim pursuant to which the damages or such
other amounts become recoverable, including, without prejudice to the generality
of the foregoing, any amount of any tax relief obtained or obtainable by any
member of the Purchaser's Group and any amount by which any tax for which any
member of the Purchaser's Group is or may be liable to be assessed or made
accountable is reduced or extinguished arising in consequence of such matter or
circumstances.

12.      SURVIVAL OF THESE PROVISIONS

The provisions of this Schedule 15 apply notwithstanding any other provision of
this Agreement and will not be discharged or cease to have effect in consequence
of any rescission or termination of any other provisions of this Agreement.

13.      DUTY TO MITIGATE NOT AFFECTED

Nothing in this Agreement shall relieve the Purchaser of any common law or other
duty to mitigate any loss or damage suffered or incurred by it.

                                                                         Page 48

<PAGE>

SIGNED

by _____________________                     )
Name: Peter Hill                             )
Title: President and Chief Executive Officer )
                                             )
for and on behalf of HARVEST                 )
NATURAL RESOURCES, INC.                      )

SIGNED

by _____________________                     )
Name:                                        )
Title:                                       )
                                             )
for and on behalf of YUKOS                   )
OPERATIONAL HOLDING LIMITED                  )

                                                                         Page 49<PAGE>

================================================================================

                                 TRUST INDENTURE

                                     BETWEEN

                         PMC JOINT VENTURE, L.P. 2003-1,

                         A DELAWARE LIMITED PARTNERSHIP

                                       AND

                              THE BANK OF NEW YORK,

                                   AS TRUSTEE

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

                         DATED AS OF SEPTEMBER 16, 2003

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

                                   $92,893,169

                         PMC JOINT VENTURE, L.P. 2003-1

                         LOAN-BACKED FLOATING RATE NOTES

================================================================================

<PAGE>

                                TABLE OF CONTENTS

(This Table of Contents is for convenience of reference only and is not a part
of the Trust Indenture.)

<Table>
<Caption>
                                                                                                         Page
                                                                                                         ----
<S>             <C>                                                                                      <C>
ARTICLE I       DEFINITIONS.................................................................................3

ARTICLE II      THE NOTES...................................................................................3

     2.1        Authorized Amount of Notes..................................................................3
     2.2        Issuance of Notes; Denominations; Form of Notes.............................................3
     2.3        Book-Entry-Only System......................................................................4
     2.4        Execution...................................................................................5
     2.5        Authentication..............................................................................5
     2.6        Delivery of Notes and Receipt of Loans......................................................6
     2.7        Payments of Principal of and Interest on Notes.............................................10
     2.8        Mutilated, Lost, Stolen or Destroyed Notes.................................................10
     2.9        Registration and Exchange of Notes; Persons Treated as Holders; Restrictions on
                Transfers of Notes.........................................................................11
     2.10       Destruction of Notes.......................................................................12

ARTICLE III     REPRESENTATIONS AND WARRANTIES; SUBSTITUTION OF LOANS......................................13

     3.1        Representations and Warranties of Issuer...................................................13
     3.2        Representations and Warranties With Respect to Loans.......................................14
     3.3        Repurchase and Substitution of Loans.......................................................18
     3.4        Release and Exchange of Loans..............................................................20

ARTICLE IV      REDEMPTION PROVISIONS......................................................................21

     4.1        Optional Redemption of the Notes...........................................................21
     4.2        Notice of Redemption.......................................................................21
     4.3        Redemption Payments........................................................................22
     4.4        Cancellation...............................................................................22

ARTICLE V       COVENANTS OF ISSUER........................................................................22

     5.1        Payment of Principal and Interest..........................................................22
     5.2        Performance of Covenants...................................................................22
     5.3        Instruments of Further Assurance...........................................................22
     5.4        Recording and Filing.......................................................................23
     5.5        Existence..................................................................................23
     5.6        Access to Records; Discussions With Officers...............................................23
     5.7        Notice of Material Events..................................................................23
     5.8        Maintenance of Licenses; Rating............................................................24
     5.9        Use of Funds...............................................................................24
     5.10       Negative Covenants of the Issuer...........................................................24
     5.11       Opinions as to Loans and Trust Estate......................................................26
</Table>

                                       i

<PAGE>

<Table>
<S>             <C>                                                                                      <C>
     5.12       Maintenance of Office......................................................................26
     5.13       Restrictions on Issuer's Actions...........................................................26
     5.14       Insurance Coverage.........................................................................28
     5.15       Financial Statements and Accountants' Reports..............................................28

ARTICLE VI      REVENUES AND ACCOUNTS......................................................................29

     6.1        Creation of Accounts.......................................................................29
     6.2        Deposits to the Collection Account.........................................................29
     6.3        Deposits in Spread Account; Permitted Withdrawals from Spread Account......................29
     6.4        Distributions..............................................................................30
     6.5        Moneys To Be Held in Trust.................................................................31
     6.6        Amounts Remaining in Funds and Accounts....................................................32
     6.7        Accounts and Reports.......................................................................32
     6.8        Tax Reporting..............................................................................32

ARTICLE VII     INVESTMENT OF MONEYS.......................................................................32

ARTICLE VIII    DISCHARGE OF INDENTURE.....................................................................33

ARTICLE IX      DEFAULT PROVISIONS AND REMEDIES OF TRUSTEE
                AND NOTEHOLDERS............................................................................34

     9.1        Events of Default..........................................................................34
     9.2        Remedies; Rights of Noteholders............................................................35
     9.3        Right of Noteholders To Direct Proceedings.................................................36
     9.4        Appointment of Receivers...................................................................36
     9.5        Application of Moneys......................................................................36
     9.6        Remedies Vested in Trustee.................................................................37
     9.7        Rights and Remedies of Noteholders.........................................................37
     9.8        Termination of Proceedings.................................................................38
     9.9        Waivers of Events of Default...............................................................38

ARTICLE X       TRUSTEE....................................................................................39

     10.1       Acceptance of the Trusts...................................................................39
     10.2       Fees, Charges and Expenses of Trustee......................................................42
     10.3       Notice to Noteholders if Default Occurs....................................................42
     10.4       Intervention by Trustee....................................................................42
     10.5       Merger or Consolidation of Trustee.........................................................42
     10.6       Resignation by Trustee.....................................................................42
     10.7       Removal of Trustee.........................................................................43
     10.8       Appointment of Successor Trustee; Temporary Trustee........................................43
     10.9       Concerning Any Successor Trustee...........................................................43
     10.10      Designation and Succession of Paying Agents................................................44
     10.11      Appointment of Co-Trustee..................................................................44

ARTICLE XI      SUPPLEMENTAL INDENTURES....................................................................45

     11.1       Supplemental Indentures; Consent of Noteholders............................................45
</Table>

                                       ii

<PAGE>

<Table>
<S>             <C>                                                                                      <C>
     11.2       Copy of Supplemental Indentures............................................................47
     11.3       Amendments to Transaction Documents........................................................47

ARTICLE XII     MISCELLANEOUS..............................................................................47

     12.1       Consents, etc., of Noteholders.............................................................47
     12.2       Limitation of Rights; Non-recourse Obligations.............................................48
     12.3       Severability...............................................................................48
     12.4       Notices....................................................................................48
     12.5       Payments Due on Saturdays, Sundays and Holidays............................................48
     12.6       Counterparts...............................................................................48
     12.7       Applicable Provisions of Law...............................................................49
     12.8       Captions...................................................................................49
</Table>

SCHEDULE 1           DEFINITIONS
SCHEDULE 2           FEES
EXHIBIT A            FORM OF NOTE
EXHIBIT B            LOAN SCHEDULE
EXHIBIT B-1          SUBSTITUTE LOAN SCHEDULE
EXHIBIT C            FORM OF MONTHLY TRUSTEE REPORT
EXHIBIT D-1          FORM OF TRANSFEREE'S LETTER
EXHIBIT D-2          FORM OF TRANSFEREE'S LETTER
EXHIBIT E            FORM OF RELEASE OF LIENS

                                      iii

<PAGE>

                                 TRUST INDENTURE

         THIS TRUST INDENTURE (this "INDENTURE") is made and entered into as of
September 16, 2003 by and between PMC JOINT VENTURE, L.P. 2003-1, a Delaware
limited partnership (the "ISSUER"), and THE BANK OF NEW YORK, a New York banking
corporation, as trustee (the "TRUSTEE"), who did declare that they have made and
entered into, and do hereby make, enter into and effect, a Trust Indenture under
the following terms and conditions,

                                   WITNESSETH:

         WHEREAS, pursuant to its Limited Partnership Agreement and the
applicable provisions of Delaware law, the Issuer is authorized to issue notes
secured as provided herein and to enter into any agreements made in connection
therewith; and

         WHEREAS, the Issuer is hereby issuing its Loan-Backed Floating Rate
Notes (collectively, the "NOTES") and will use the proceeds from the sale of the
Notes to effect a pro rata distribution to its partners and deposit funds into
the Spread Account (as defined herein); and

         WHEREAS, the Issuer has authorized the issuance of the Notes pursuant
to and secured by this Indenture and the execution of this Indenture to secure
the Notes by a pledge of the Loans (as defined herein) and moneys held by the
Trustee; and

         WHEREAS, upon satisfaction of certain requirements contained herein and
simultaneously with the authentication and delivery of the Notes, the Issuer
will deliver and pledge the Loans to the Trustee to secure the obligations of
the Issuer under the Notes and hereunder, and the Trustee is instructed to
accept the deposit of the Loans from the Issuer, fund the Spread Account and to
release the net proceeds of the Notes to the Issuer.

                      NOW, THEREFORE, THIS TRUST INDENTURE

                                   WITNESSETH:

                                GRANTING CLAUSES

         The Issuer, in consideration of the premises and the acceptance by the
Trustee of the trusts hereby created and of the purchase and acceptance of the
Notes by the Holders thereof, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, to secure the payment
of the principal of and interest, when due, on the Notes according to their
tenor and effect and to secure the performance and observance by the Issuer of
all the covenants expressed or implied herein and in the Notes, does hereby
irrevocably pledge, set over and grant a security interest (which security
interest is hereby represented and warranted by the Issuer to be a first
priority perfected security interest) in and unto the Trustee, and its
successors in trust and assigns forever, for the securing of the performance of
the obligations of the Issuer hereinafter set forth, all right, title and
interest of the Issuer in, to and under:

TRUST INDENTURE - Page 1
<PAGE>

         (a) the Loans, the Related Assets and any REO Property, including all
payments with respect thereto (other than the Prepayment Premiums) and escrow
deposits and fees, if any, and any interest, profits and other income derived
from the investment thereof and any and all insurance policies and Loan Files
related thereto;

         (b) any moneys, investments or investment property held or entitled to
be held by the Trustee under this Indenture, including, without limitation,
moneys held in the Collection Account and the Spread Account, any investments
therein and thereof and the security entitlements to all financial assets
credited thereto from time to time, and the interest, profits and other income
derived from the investment thereof;

         (c) all right, title and interest of the Issuer in, to and under the
Servicing Agreement, the Supervisory Servicing Agreement, the Contribution
Agreement and the other Transaction Documents, including all extensions and
renewals of their terms, if any, including, but without limiting the generality
of the foregoing, the present and continuing right to make claim for, collect
and receive any income, revenues, receipts, issues, profits, insurance proceeds
and other sums of money payable to or receivable by the Issuer under the
Servicing Agreement, the Supervisory Servicing Agreement, the Contribution
Agreement or the other Transaction Documents, whether payable pursuant to the
Servicing Agreement, the Supervisory Servicing Agreement, the Contribution
Agreement or the other Transaction Documents, or otherwise, to bring actions and
proceedings under the Servicing Agreement, the Supervisory Servicing Agreement,
the Contribution Agreement or the other Transaction Documents or for the
enforcement thereof, and to do any and all things which the Issuer is or may
become entitled to do under the Servicing Agreement, the Supervisory Servicing
Agreement, the Contribution Agreement or the other Transaction Documents;

         (d) any and all other real or personal property of every name and
nature from time to time hereafter by delivery or by writing of any kind
conveyed, mortgaged, pledged, assigned or transferred as and for additional
security hereunder by the Issuer, or by anyone on its behalf or with its written
consent, to the Trustee which is hereby authorized to receive any and all such
property at any and all times and to hold and apply the same subject to the
terms hereof; and

         (e) all proceeds of the above, and any proceeds thereof.

         TO HAVE AND TO HOLD all and singular the Trust Estate, whether now
owned or hereafter acquired, unto the Trustee and its respective successors in
trust and assigns forever;

         IN TRUST NEVERTHELESS, upon the terms and trusts herein set forth for
the equal and proportionate benefit and security of all present and future
Holders of the Notes without preference of any Note over any other, and for
enforcement of the payment of the Notes in accordance with their terms, and all
other sums payable hereunder or on the Notes and for the performance of and
compliance with the obligations, covenants and conditions of this Indenture, as
if all the Notes at any time outstanding had been authenticated, executed and
delivered simultaneously with the execution and delivery of this Indenture, all
as herein set forth;

TRUST INDENTURE - Page 2
<PAGE>

         PROVIDED, HOWEVER, that if the Issuer, its successors or assigns shall
indefeasibly pay, or cause to be paid, the principal of and interest on the
Notes due or to become due thereon, at the times and in the manner mentioned in
the Notes according to the true intent and meaning thereof, and shall cause the
payments to be made as required under Article V hereof, or shall provide, as
permitted hereby, for the payment thereof by depositing with the Trustee the
entire amount due or to become due thereon, and shall keep, perform and observe
all the covenants and conditions pursuant to the terms of this Indenture to be
kept, performed and observed by it, and shall pay or cause to be paid to the
Trustee and any paying agent all sums of money due or to become due in
accordance with the terms and provisions hereof, then upon such final payments
this Indenture and the rights hereby and thereby granted shall cease, determine
and be void; otherwise this Indenture is to be and remain in full force and
effect;

         AND PROVIDED, FURTHER, the Trustee agrees to accept receipt of the
Loans and the Trustee Loan Files, and declares that it holds and will hold for
the benefit of the Noteholders such documents and the other documents
constituting a part of the Loans and the Trustee Loan Files delivered to it as
the Trustee upon the terms stated herein.

         THIS TRUST INDENTURE FURTHER WITNESSETH, and it is expressly declared,
that all Notes issued and secured hereunder are to be issued, authenticated and
delivered, and all said property, rights and interests, including, without
limitation, the amounts hereby assigned and pledged, are to be dealt with and
disposed of, under, upon and subject to the terms, conditions, stipulations,
covenants, agreements, trusts, uses and purposes hereinafter expressed, and the
Issuer has agreed and covenanted, and does hereby agree and covenant, with the
Trustee and with the respective Holders, from time to time or at any time, of
the Notes, or any part thereof, as follows:

                                   ARTICLE I

                                   DEFINITIONS

         All capitalized terms used herein and not otherwise defined herein
shall have the same meanings as set forth in Schedule 1 attached hereto.

                                   ARTICLE II

                                    THE NOTES

         2.1 AUTHORIZED AMOUNT OF NOTES. No Notes may be issued under the
provisions of this Indenture, except in accordance with this Article. Except as
provided in Sections 2.8 and 2.9 hereof, the total principal amount of Notes
that may be issued is hereby expressly limited to $92,893,169.

         2.2 ISSUANCE OF NOTES; DENOMINATIONS; FORM OF NOTES.

                  (a) The Notes shall be designated the "PMC Joint Venture, L.P.
2003-1 Loan-Backed Floating Rate Notes" and shall be issued in an initial
aggregate principal amount equal to $92,893,169.

TRUST INDENTURE - Page 3
<PAGE>

         The Notes shall mature on the Maturity Date, and shall accrue interest
during each Interest Accrual Period at the Applicable Remittance Rate. The Notes
shall also accrue interest on the unpaid principal and, to the extent permitted
by applicable law, accrued interest to the extent that such amount has not been
distributed to the Noteholders when due at the Applicable Remittance Rate. The
Notes shall be non-recourse to the Issuer's partners and neither the Trustee nor
the Noteholders shall have any right to enforce the payment or performance of
the Issuer's obligations under this Indenture and the Notes against the partners
of the Issuer or their respective assets.

                  (b) The Notes will be available for purchase in book-entry
form only, except as otherwise provided herein, in minimum denominations of
$250,000 and integral multiples of $1,000 in excess thereof. One (1) Note may be
issued in an additional amount equal to the remainder of the aggregate stated
principal balance of the Notes on the Closing Date.

                  (c) The Notes issued under this Indenture shall be
substantially in the form set forth in Exhibit A hereto with such variations,
omissions and insertions as are permitted or required thereby and hereby.

         2.3 BOOK-ENTRY-ONLY SYSTEM.

                  (a) The Notes may be issued in the form of a separate single
authenticated Note in substantially the form of Exhibit A hereto. On the Closing
Date, if so directed by the Issuer in writing, the Notes shall be registered in
the Note Register in the name of DTC's Nominee. With respect to the Notes
registered in the Note Register in the name of DTC's Nominee, no Person other
than DTC shall receive an authenticated Note, and the Issuer, the Trustee and
the Servicers shall have no responsibility or obligation to any DTC Participant
or to any Beneficial Owner with respect to the following: (i) the accuracy of
the records of DTC or DTC's Nominee or any DTC Participant with respect to any
ownership interest in the Notes, (ii) the delivery to any DTC Participant, any
Beneficial Owner, or any other Person, other than DTC, of any notice with
respect to the Notes, including any notice of redemption, or (iii) the payment
to any DTC Participant, any Beneficial Owner, or any other Person, other than
DTC, of any amount with respect to the Notes. The Trustee shall make payments
with respect to the Notes only to or upon the written order of DTC and all such
payments shall be valid and effective fully to satisfy and discharge the
obligations with respect to the Notes to the extent of the sum or sums so paid.

                  (b) Upon receipt by the Issuer, the Trustee and the Servicers
of written notice from DTC to the effect that DTC is unable or unwilling to
discharge its responsibilities, the Trustee shall, at the expense of the Issuer,
issue, transfer and exchange Notes requested by DTC in appropriate amounts and,
whenever DTC requests the Issuer and the Trustee to do so, the Issuer and the
Trustee shall cooperate with DTC in taking appropriate action after reasonable
notice (i) to arrange for a substitute depository willing and able upon
reasonable and customary terms to maintain custody of the Notes or (ii) to make
available Definitive Notes registered in whatever name or names the Beneficial
Owners transferring or exchanging such Notes shall designate.

TRUST INDENTURE - Page 4
<PAGE>

                  (c) Definitive Notes shall be issued to Beneficial Owners or
their respective nominees, if (i) the Issuer, at its option, elects to terminate
the book-entry system through DTC or its successors and assigns or (ii) after
the occurrence of an Event of Default or a Servicer Default with respect to the
Notes, the Required Noteholders advise the Trustee through DTC in writing that
the continuation of a book-entry system through DTC or its successors and
assigns with respect to the Notes is no longer in the best interests of the
Noteholders.

                  (d) Notwithstanding any other provision of this Indenture to
the contrary, so long as any Note is registered in the name of DTC or DTC's
Nominee, all payments with respect to such Note and all notices with respect to
such Note shall be made and given, respectively, to DTC as provided in a
representation letter in the form required by DTC acceptable to the Issuer and
the Trustee.

                  (e) In the event the Notes are issued in book-entry form with
DTC and until any such time that Definitive Notes are issued: (i) the Trustee
and the Issuer may deal with DTC as the authorized representative of the
Noteholders; (ii) the rights of the Noteholders shall be exercised only through
DTC and shall be limited to those established by law and agreement between the
Noteholders and DTC and/or direct participants of DTC; (iii) DTC will make
book-entry transfers among the direct participants of DTC and will receive and
transmit distributions of principal and interest on the Notes to such direct
participants; and (iv) the direct participants of DTC shall have no rights under
this Indenture under or with respect to any of the Notes held on their behalf by
DTC, and DTC may be treated by the Trustee and the Issuer and their respective
agents, employees, officers and directors as the absolute owner of the Notes for
all purposes whatsoever.

         2.4 EXECUTION. The Notes shall be executed on behalf of the Issuer with
the signature of any Authorized Officer of the General Partner and attested by
the signature of the Secretary or Assistant Secretary of the General Partner. In
case any officer of the General Partner of the Issuer whose signature shall
appear on the Notes shall cease to be such officer before the delivery of such
Notes, such signature shall nevertheless be valid and sufficient for all
purposes, the same as if he had remained in office until delivery.

         The Notes are negotiable instruments (subject to compliance with
applicable Securities Laws) and shall be solely the obligations of the Issuer.

         2.5 AUTHENTICATION. No Note shall be valid or obligatory for any
purpose or entitled to any security or benefit under this Indenture unless and
until a certificate of authentication on such Note shall have been duly executed
by the Trustee by manual signature, which execution shall be at the written
direction of the Issuer, and such executed certificate of the Trustee upon any
such Note shall be conclusive evidence that such Note has been authenticated and
delivered under this Indenture. The Trustee's certificate of authentication on
any Note shall be deemed to have been executed by it if signed by an Authorized
Officer or signatory of the Trustee, but it shall not be necessary that the same
officer or signatory sign the certificate of authentication on all of the Notes
issued hereunder. Except as provided in Sections 2.8 and 2.9(d), all Notes shall
be dated the date of their authentication.

TRUST INDENTURE - Page 5
<PAGE>

         2.6 DELIVERY OF NOTES AND RECEIPT OF LOANS.

                  (a) After the execution and delivery of this Indenture, the
Issuer shall execute and deliver to the Trustee, and the Trustee shall
authenticate, the Notes and deliver the Notes to DTC for the benefit of the
Beneficial Owners, for the purchase price specified by the Issuer, as
hereinafter in this Section provided.

         Simultaneously with or prior to the delivery by the Trustee of all of
the Notes and the disbursement of a portion of the net proceeds of the issuance
of the Notes, there shall be received by the Trustee:

                           (i) A copy, duly certified by the General Partner of
the Issuer, of the resolutions of the managers of the General Partner
authorizing the issuance of the Notes by the Issuer and the execution and
delivery of this Indenture by the General Partner in it capacity as general
partner of the Issuer;

                           (ii) An original executed counterpart of each
Transaction Document;

                           (iii) A request and authorization to the Trustee on
behalf of the Issuer and signed by the General Partner of the Issuer to
authenticate and deliver such series of Notes to the purchasers therein
identified upon payment to the Trustee, but for the account of the Issuer, of a
sum specified in such request and authorization. The proceeds of such payment
shall be paid over to the Trustee and deposited as required by such request and
authorization in the various funds specified in, and pursuant to Article VI
hereof;

                           (iv) An Opinion of Counsel, satisfactory in form and
scope to the Trustee, that the Notes constitute debt of the Issuer for federal
income tax purposes;

                           (v) The documents with respect to the Loans described
in the Loan Schedule in accordance with paragraph (b) below;

                           (vi) A letter from Moody's indicating that the Notes
have been rated at least "Aaa;"

                           (vii) Certified copies of resolutions, organizational
documents, bylaws and incumbency certificates for PMC, PMCT, the Issuer and the
General Partner of the Issuer;

                           (viii) Opinions of Issuer's counsel, satisfactory in
form and scope to the Trustee and the Initial Purchaser, addressed to, among
others, the Trustee, the Initial Purchaser and the Beneficial Owners to the
effect that, among other things, and based upon the qualifications, assumptions
and reasoning stated therein:

                                    (A) (1) The contribution and assignment of

         the Loans (and related rights) by each of PMC and PMCT to the Issuer
         constitutes a "true sale" and will result in the Loans not being deemed
         property of PMC's or PMCT's estate, as applicable, pursuant to Section
         541 of the Bankruptcy Code (and based upon Lien search reports, there
         is no public record of any prior UCC financing statements covering such
         Loans, other than by entities which have authorized the filing of a UCC
         termination statement or

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         other appropriate agreement(s) indicating the release of their security
         interests, or any notice of any federal tax Lien), and (2) based upon
         Lien search reports, the Trustee has a valid first priority perfected
         security interest in the Trust Estate as security for the Notes (and
         based upon Lien search reports, there is no public record of any prior
         UCC financing statements covering such Loans, other than by entities
         which have executed a UCC termination statement or other appropriate
         agreement(s) indicating the release of their security interests, or any
         notice of any federal tax Lien); and

                                    (B) in the event of a bankruptcy of PMC,
         PMCT or the General Partner of the Issuer, the assets and liabilities
         of the Issuer would not be substantively consolidated with the assets
         and liabilities of PMC, PMCT or the General Partner, as applicable.

                           (ix) Copies of properly prepared financing statements
         in sufficient form for filing, naming (A) PMC or PMCT, as the case may
         be, as seller, the Issuer as purchaser, and the Trustee as assignee of
         the purchaser to reflect the conveyance of the Loans to the Issuer, and
         (B) the Issuer as debtor and the Trustee as secured party, covering the
         Issuer's interest in the Trust Estate, as may be necessary or desirable
         to perfect the security interest of the Trustee (for the benefit of the
         Noteholders) in the Issuer's interest in the Trust Estate and copies of
         properly prepared and authorized releases in sufficient form for
         filing, indicating the release of any security interest by any third
         party in such assets; and

                           (x) Copies of UCC and tax and judgment Lien search
reports against PMC, PMCT and the Issuer.

         Any of the foregoing statements which are not, as of the Closing Date,
properly filed in the appropriate office as necessary to evidence the conveyance
of the Loans to the Issuer or perfect the security interest of the Trustee (for
the benefit of the Noteholders) in the Issuer's interest in the Trust Estate or
to effect the release of any security interest held by any third party in such
assets shall be mailed on the Closing Date by overnight mail to the
jurisdictions in which such statements are to be filed.

                  (b) In connection with the transfer and assignment of the
Loans to the Trustee, the Issuer does hereby deliver to, and deposit with, or
cause to be delivered to and deposited with, the Trustee the following documents
or instruments with respect to each Loan so transferred and assigned
(hereinafter referred to as the "TRUSTEE LOAN File"):

                           (i) the original Underlying Note showing a complete
chain of endorsement from the originator to the current holder (if other than
the originator) and endorsed by the originator or current holder by means of an
allonge as follows: "Pay to the order of The Bank of New York, as Trustee under
the Trust Indenture, dated as of September 16, 2003, for the benefit of the
holders of PMC Joint Venture, L.P. 2003-1 Loan-Backed Floating Rate Notes,
without recourse";

                           (ii) either: (A) the original Mortgage with evidence
of recording thereon, (B) with respect to a Loan for which the original Mortgage
was not returned after recordation, a copy of the Mortgage certified by the
appropriate recording officer to be true and

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<PAGE>

accurate, or (C) with respect to a Loan for which the original Mortgage has been
sent to the appropriate public official for recording and with respect to which
a certified copy of the Mortgage is not available from such public official, a
copy of the Mortgage certified as a true copy by an Authorized Officer of the
Issuer;

                           (iii) either: (A) the original executed assignments
of the Mortgage (which may be in the form of a blanket assignment in which case
the Issuer shall execute and deliver to the appropriate public office for
recording or filing within six (6) months after the Closing Date, an original
assignment of each Mortgage), showing a complete chain of assignment from the
originator to the current assignee (if other than the originator) and acceptable
for recording in the jurisdiction in which the applicable Mortgaged Property is
located, and from the originator or current assignee in the following form: "The
Bank of New York, as the Trustee under the Trust Indenture, dated as of
September 16, 2003" or (B) copies of such assignments certified as true copies
by an Authorized Officer of the Issuer where the original of such assignment has
been transmitted for recording, which such certification may be in the form of
one or more blanket certificates;

                           (iv) the original of each assumption, modification,
written assurance or substitution agreement, if any, or if an original is
unavailable, copies thereof certified by PMC or PMCT, as applicable, to be true
and complete;

                           (v) either (i) originals of any title insurance
policies relating to the Mortgaged Properties or (ii) copies of any title
insurance policies certified as true by PMC or PMCT, as applicable;

                           (vi) for all Loans, a blanket assignment of all
collateral securing the Loan, including without limitation, all rights under
applicable guarantees and insurance policies;

                           (vii) for all Loans, an irrevocable power of attorney
from PMC or PMCT, as applicable to the Trustee, delegable by the Trustee to the
Servicer and any successor servicer, to execute, deliver, file or record and
otherwise deal with the collateral for the Loans in accordance with the
Contribution Agreement and to prepare, execute and file or record UCC financing
statements and notices to insurers; and

                           (viii) for all Loans, a blanket UCC-1 financing
statement describing the Loans and identifying by type all collateral for the
Loans in the Loan Pool and naming the Trustee as Secured Party and the Issuer as
Debtor, such UCC-1 to be filed promptly following the Closing Date in the office
of the Secretary of State of Delaware.

         The Issuer will cause to be recorded or filed each assignment of a Loan
to the Trustee in the appropriate public office for real property records within
six (6) months after the Closing Date to protect the Trustee's interest in the
Loans against sale, further assignments, satisfaction or discharge by the
Servicer, PMC, PMCT, the Issuer or any third party. The Issuer shall confirm the
recordation or filing of the assignments of the loans in writing to the Trustee
and the Noteholders within thirty (30) days following such six (6) month period.

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<PAGE>

         For Loans which have been prepaid in full after the Cut-Off Date and
prior to the Closing Date, the Issuer, in lieu of delivering the above
documents, and with respect to all Monthly Payments and Principal Prepayments
received after the Cut-Off Date, herewith delivers to the Trustee an Officers'
Certificate to the effect that all amounts received in connection with such
payments which are required to be deposited in the Lockbox Account have been so
delivered to the Trustee and indicating the amount of any payment received with
respect to each such Loan.

         With respect to Loans for which the original Mortgage and related
assignment have been sent to the appropriate public official for recording, the
Issuer shall provide the original Mortgage and related assignments to the
Trustee promptly upon receipt from the public official after recording. Within
seven (7) months after the Closing Date, the Trustee shall certify that all such
original Mortgages and related assignments have been recorded and, if not,
shall, upon prior written consent of the Required Noteholders, demand repurchase
of the related Loan pursuant to Section 3.3.

                  (c) The Trustee, by execution and delivery hereof, subject to
the next preceding paragraph and the last paragraph of this Section,
acknowledges receipt of the documents and other property referred to in and
required to be delivered pursuant to this Section 2.6 and declares that the
Trustee holds and will hold all other property to be received pursuant to this
Indenture, in trust, for the benefit of all Holders.

         The Trustee further acknowledges that it has also received a
certificate from the Supervisory Servicer, a copy of which has been provided to
the Rating Agency and the Initial Purchaser, to the effect that, as to each Loan
listed in the Loan Schedule, (i) all documents constituting part of such Trustee
Loan File required to be delivered to the Trustee pursuant to this Indenture
have been delivered to the Trustee, (ii) such documents have been reviewed by it
as to form and appear to have been properly executed and regular on their face,
purport to be recorded or filed (as applicable), have not been torn, mutilated
or otherwise defaced and relate to such Loan and (iii) based on its examination
and only as to the foregoing, the information set forth in the Loan Schedule
accurately reflects information set forth in the Trustee Loan File, except for
exceptions detailed on the exhibit attached to such list. In performing such
review, the Supervisory Servicer may rely upon the purported genuineness and due
execution of any such document and on the purported genuineness of any signature
thereon. If at any time the Trustee finds any document or documents constituting
a part of a Trustee Loan File to be defective, or to be unrelated to the Loans
identified on the Loan Schedule, the Trustee shall promptly so notify the
Noteholders, the Issuer, the applicable Servicer, the Rating Agency, the Initial
Purchaser, PMCT and PMC, and the Trustee, as assignee under the Contribution
Agreement, shall make written demand upon PMC or PMCT, as applicable, to comply
with its obligation under Section 8 of the Contribution Agreement and shall send
copies of such written demand to the Noteholders, the Issuer, the applicable
Servicer and the Rating Agency. If PMC or PMCT, as applicable, fails to comply
with such obligation, the Trustee will give prompt written notice to the
Noteholders, the Supervisory Servicer and the Rating Agency, the Initial
Purchaser and the Trustee shall take such reasonable action as the Required
Noteholders direct in writing, at the expense of the applicable Servicer if such
Servicer is an Affiliate of the Issuer.

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<PAGE>

         2.7 PAYMENTS OF PRINCIPAL OF AND INTEREST ON NOTES.

                  (a) The person in whose name any Note is registered as of a
Record Date with respect to a Payment Date shall be entitled to receive the
interest and principal payable on such Payment Date notwithstanding the
cancellation of such Note upon any registration of transfer or exchange thereof
subsequent to such Record Date and prior to such Payment Date.

                  (b) The Notes shall bear interest from and including the
Closing Date. In all cases, interest shall be calculated on the basis of a
360-day year and the actual number of days elapsed during the period from and
including the immediately preceding Payment Date to but excluding such Payment
Date. Interest accrued on the Notes during an Interest Accrual Period will be
due and payable on the related Payment Date.

         Subject to the foregoing provisions of this Section, each Note
delivered under this Indenture upon transfer of or exchange for or in lieu of
any other Note shall carry the rights to interest due and unpaid, and to become
due, which were carried by such other Note.

                  (c) Principal payments on the Notes shall be made on each
Payment Date as provided in Section 6.4 hereof. Principal payments on the Notes
shall be applied pro rata to all Notes.

                  (d) Payments to each Holder shall be made by wire transfer of
immediately available funds to the account of such Noteholder and without
presentation of the Note or the making of any notations thereon, if such
Noteholder shall have given the Trustee appropriate written notice of such
account, and changes (if any) to such instructions at least five (5) Business
Days prior to the Record Date immediately preceding the Payment Date.

         2.8 MUTILATED, LOST, STOLEN OR DESTROYED NOTES. In the event any Note
is mutilated, lost, stolen or destroyed, upon receipt by the Trustee of evidence
reasonably satisfactory to it of the ownership of the Note and in the absence of
notice to the Trustee that such Note has been acquired by a bona fide purchaser,
the Issuer shall execute and the Trustee shall authenticate and deliver a new
Note executed in the same manner as the Note being replaced, in the same
principal amount as the unpaid principal amount of such Note and dated the date
to which interest shall have been paid on such Note or, if no interest shall
have yet been so paid, dated the date of such Note, provided that, in the case
of any mutilated Note, such mutilated Note shall first be surrendered to the
Trustee, and, in the case of any lost, stolen or destroyed Note, there shall be
first furnished to the Trustee and the Issuer evidence of such loss, theft or
destruction reasonably satisfactory to the Trustee, together with any indemnity
satisfactory to each of them. Further, in the case of a past due or a matured,
lost, stolen or destroyed Note, the Trustee shall pay the face amount of such
past due or matured Note upon delivery to the Trustee of evidence of such loss,
theft or destruction reasonably satisfactory to the Trustee, together with any
indemnity satisfactory to each of them. Upon the execution of any new Note under
this Section 2.8, the Trustee may require the Holder to pay a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Trustee)
connected therewith. Any new Note issued pursuant to this Section 2.8 shall
constitute complete and indefeasible evidence of ownership of the Note, as if
originally issued, whether or not the lost, stolen or destroyed Note shall be
found at any time.

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<PAGE>

         2.9 REGISTRATION AND EXCHANGE OF NOTES; PERSONS TREATED AS HOLDERS;
RESTRICTIONS ON TRANSFERS OF NOTES.

                  (a) The Issuer shall cause books for the registration and for
the transfer of the Notes as provided in this Indenture to be kept by the
Trustee, who is hereby appointed as the initial Registrar. The Trustee hereby
accepts its appointment as initial Registrar and shall maintain the Note
Register. The Registrar may resign or be discharged or removed and a new
successor appointed in accordance with the procedures and requirements set forth
in Article X hereof with respect to the resignation, discharge or removal of the
Trustee and the appointment of a successor Trustee. The Registrar may appoint,
by a written instrument delivered to the Issuer, the Trustee, the Supervisory
Servicer, the Noteholders, the Servicer and the Holders, any other bank or trust
company to act as co-registrar under such conditions as the Registrar may
prescribe, provided that the Registrar shall not be relieved of any of its
duties or responsibilities hereunder by reason of such appointment. The
ownership of Notes shall be proved by the Note Register. The Trustee will keep
on file at the Corporate Trust Office of the Trustee a list of names and
addresses of the owners of all Notes as shown on the Register maintained by the
Trustee as Registrar.

         At reasonable times and under reasonable regulations established by the
Trustee, the Note Register may be inspected and copied by the Issuer, the
Supervisory Servicer, any Holder or any Beneficial Owner (or a designated
representative thereof).

                  (b) Prior to presentation of any Note for registration of
transfer, the Issuer and the Trustee shall treat the Person in whose name such
Note is registered as the owner and holder of such Note for all purposes
whatsoever, whether or not such Note shall be overdue, and the Issuer and the
Trustee or their agents shall not be affected by notice to the contrary.

                  (c) No transfer or sale of any Note shall be made unless the
registration requirements of the Act and any applicable state securities laws
are complied with, or such transfer or sale is exempt from the registration
requirements under said Act and laws. In the event that a transfer of any Note
is to be made, the Trustee shall require the Holder of such Note to deliver, at
its expense, a certificate in the form of Exhibit D-1 or Exhibit D-2 hereto, as
the case may be, or a certificate otherwise reasonably acceptable to and in form
and substance reasonably satisfactory to the Trustee that such transfer is being
made pursuant to an exemption, describing the applicable exemption and the basis
therefor, from said Act and laws or is being made pursuant to said Act and laws.
If a certificate is not in the form of either Exhibit D-1 or Exhibit D-2 hereto,
the Trustee may request an Opinion of Counsel (which counsel may be in-house
counsel of the transferor or transferee) to establish compliance with such Act
or laws. The Opinion of Counsel shall not be an expense of the Trustee or the
Issuer. Neither the Issuer nor the Trustee is under an obligation to register
any such Note under said Act or any other Securities Law. Any Noteholder
desiring to effect a transfer under this Section 2.9(c) shall indemnify the
Trustee, PMC, PMCT and the Issuer against any liability that may result if the
transfer is not exempt from the registration requirements under the Act or
applicable state securities laws or if the transfer is not conducted in
accordance with such laws. In the event that any Note is transferred to a
transferee which is using funds to purchase the Note which constitute assets of
one or more employee benefit plans, such transferee shall advise the Issuer in
writing of such source of funds and the Issuer shall advise such transferee in
writing whether the Issuer is

TRUST INDENTURE - Page 11
<PAGE>

or is not a party in interest with respect to any employee benefit plan
disclosed to the Issuer by such transferee. As used in this Section, the terms
"party-in-interest" and "employee benefit plan" shall have the respective
meanings assigned to them in ERISA.

                  (d) The holder of any Note, at its option, may in person or by
duly authorized attorney surrender the same for exchange at the Corporate Trust
Office and promptly thereafter and at the Issuer's expense, except as provided
in Section 2.9(e), receive in exchange therefor a new Note or Notes, each in the
denomination requested by such Holder (but not less than $250,000, or, if such
Holder shall be a Holder of less than $250,000 in aggregate principal amount of
Notes, such lesser amount), dated the date to which interest shall have been
paid on the Note so surrendered or, if no interest shall have yet been so paid,
dated the date of the Note so surrendered and registered in the name of such
Person or Persons as shall have been designated in writing by such Holder or its
attorney for the same principal amount as the then unpaid principal amount of
the Note so surrendered. Upon surrender for transfer of any Note at the
Corporate Trust Office of the Trustee, the Trustee shall authenticate and
deliver (upon satisfaction of the conditions stated above) in the name of the
transferee or transferees a new Note or Notes of authorized denomination for the
aggregate principal amount entitled to be received by such transferee or
transferees. Notes to be exchanged shall be surrendered at the Corporate Trust
Office of the Trustee and the Trustee shall authenticate and deliver in exchange
therefor the Note or Notes which the Noteholder making the exchange shall be
entitled to receive (upon satisfaction of the conditions stated above).

                  (e) All Notes presented for transfer, exchange, registration,
discharge from registration, redemption or payment (if so required by the Issuer
or the Trustee) shall be accompanied by a written instrument or instruments of
transfer or authorization for exchange, in form (and with guaranty of signature)
reasonably satisfactory to the Issuer and the Trustee, duly executed by the
registered Holder or by his duly authorized attorney.

         Notes shall be transferred or exchanged without cost to the Noteholder,
except for any stamp or other tax or governmental charge required to be paid
with respect to such transfer or exchange.

                  (f) New Notes delivered upon any transfer or exchange shall be
valid obligations of the Issuer, evidencing the same debt as the Notes
surrendered, shall be secured by this Indenture and shall be entitled to all of
the security and benefits hereof to the same extent as the Notes surrendered.

         2.10 DESTRUCTION OF NOTES. If any Note shall be delivered to the
Trustee for cancellation pursuant to this Indenture, upon payment of the final
principal amount and interest with respect to the Note represented thereby, or
for replacement pursuant to Section 2.8 hereof or transfer or exchange pursuant
to Section 2.9 hereof, such Note shall be canceled and destroyed by the Trustee
and counterparts of a certificate of destruction evidencing such destruction
shall be furnished by the Trustee to the Issuer.

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<PAGE>

                                  ARTICLE III

                         REPRESENTATIONS AND WARRANTIES;
                              SUBSTITUTION OF LOANS

         3.1 REPRESENTATIONS AND WARRANTIES OF ISSUER. The Issuer represents and
warrants to the Trustee for the benefit of the Noteholders as follows:

                  (a) the Issuer is a limited partnership duly organized and
validly existing under the laws of the State of Delaware and has full power to
own its property, to carry on its business as presently conducted, to enter into
and perform its obligations under this Indenture and the other Transaction
Documents, and to create the trusts created pursuant hereto;

                  (b) the execution and delivery by the Issuer of the
Transaction Documents have been duly authorized by all necessary action on the
part of the Issuer;

                  (c) neither the execution and delivery of the Transaction
Documents by the Issuer, nor the consummation of the transactions herein or
therein contemplated, nor compliance by the Issuer with the provisions hereof or
thereof, will conflict with or result in a breach of, or constitute a default
under, any of the provisions of the certificate of limited partnership or the
partnership agreement of the Issuer or conflict with, result in a breach or
violation of or constitute a default under, the terms of any indenture or other
agreement or instrument to which the Issuer is a party or by which the Issuer is
bound, or any statute, order or regulation applicable to the Issuer of any
court, regulatory body, administrative agency or governmental body having
jurisdiction over the Issuer;

                  (d) the execution, delivery and performance by the Issuer of
the Transaction Documents and the consummation of the transactions contemplated
hereby and thereby do not require the consent or approval of, the giving of
notice to, the registration with, or the taking of any other action in respect
of, any state, federal or other governmental authority or agency, except for
such consents or approvals which have been obtained on or before the Closing
Date;

                  (e) each Transaction Document has been duly executed and
delivered by the Issuer and, assuming due authorization, execution and delivery
by the other parties thereto, constitutes a legal, valid and binding obligation
of the Issuer enforceable against it in accordance with its terms (subject to
applicable bankruptcy and insolvency laws and other similar laws affecting the
enforcement of the rights of creditors generally and general principles of
equity);

                  (f) there are no actions, suits or proceedings pending or, to
the knowledge of the Issuer, threatened or likely to be asserted against or
affecting the Issuer, before or by any court, administrative agency, arbitrator
or governmental body (i) with respect to any of the transactions contemplated by
the Transaction Documents or (ii) with respect to any other matter which, in the
reasonable judgment of the Issuer will be determined adversely to the Issuer and
will, if determined adversely to the Issuer, materially and adversely affect it
or its business, assets, operations or condition, financial or otherwise, or
materially and adversely affect its ability to perform its obligations under the
Transaction Documents. The Issuer is not in default with respect to any order of
any court, administrative agency, arbitrator or governmental body so

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<PAGE>

as to materially and adversely affect the transactions contemplated by the
Transaction Documents;

                  (g) as of the Closing Date, the Issuer had good title to, and
was the sole owner of, each Loan and any other asset included in the Trust
Estate free and clear of all Liens, and, immediately upon the transfer and
assignment herein contemplated and taking possession of the Trustee Loan File,
the Trustee shall have a first priority perfected security interest in the Trust
Estate free and clear of all Liens; and

                  (h) the Issuer acquired title to the Loans in good faith,
without notice of any adverse claim.

         3.2 REPRESENTATIONS AND WARRANTIES WITH RESPECT TO LOANS.

                  (a) The Issuer hereby represents and warrants to the Trustee
for the benefit of the Noteholders as of the date hereof with respect to each
Loan as follows:

                           (i) Immediately prior to the collateral assignment of
the Loan to the Trustee, the Issuer had good title to, and was the sole owner
of, the Loan free and clear of all Liens. Except for the Issuer, no Person other
than the Trustee has any interest in the Mortgage, whether as mortgagee,
assignee, pledgee or otherwise. Immediately upon the collateral assignment of
the Loan and taking possession thereof, the Trustee will have a first priority
perfected security interest in each Loan, free and clear of all Liens.

                           (ii) The Loan was originated in the United States, in
a state where the originator of such Loan is qualified to transact such
business, in the ordinary course of its business, except to the extent that any
failure to be so qualified would not adversely affect the Loan or the Mortgage
or the transfer thereof or the enforceability of the Obligor's obligations
thereunder. The Issuer acquired title to the Loans in good faith, without notice
of any adverse claim.

                           (iii) The Loan has not been originated in, nor is
such Loan subject to the laws of, any jurisdiction under which the transfer and
assignment of such Loan to the Issuer would be unlawful, void or voidable.

                           (iv) The information set forth in the Loan Schedule
is true and correct in all material respects.

                           (v) The terms of the Underlying Note and the Mortgage
have not been impaired, waived, altered or modified in any respect, except by
written instruments, executed in accordance with the customary credit policies
of PMC or PMCT, as the case may be, which are reflected on the Loan Schedule. No
Obligor has been released, in whole or in part, except pursuant to the terms of
an assumption agreement which is part of the related Loan File and the terms of
which are reflected in the Loan Schedule.

                           (vi) The Underlying Note and the related Mortgage are
not subject to any right of rescission, setoff, abatement, diminution,
counterclaim or defense, including the defense of usury, nor will the operation
of any of the terms of the Underlying Note or the

TRUST INDENTURE - Page 14
<PAGE>

Mortgage, or the exercise of any right thereunder in accordance with the terms
thereof, render the Underlying Note or the Mortgage unenforceable, in whole or
in part, or subject to any right of rescission, setoff, abatement, diminution,
counterclaim or defense, including the defense of usury, and no such right of
rescission, setoff, abatement, diminution, counterclaim or defense has been
asserted with respect thereto.

                           (vii) The Mortgage has not been satisfied, canceled
or subordinated, in whole or in part, or rescinded, and except as reflected on
the Loan Schedule, the Mortgaged Property has not been released from the Lien of
the Mortgage or the security interest of any applicable security agreement or
chattel mortgage, in whole or in part, nor has any instrument been executed that
would effect any such release, cancellation, subordination or rescission.

                           (viii) The Underlying Note and the Mortgage delivered
to the Trustee are genuine originals (except where certified copies of the
Mortgage have been delivered in accordance with this Indenture) and each is the
legal, valid and binding obligation of the maker thereof, enforceable in
accordance with its terms.

                           (ix) There has been no fraud, dishonesty,
misrepresentation or negligence on the part of the Issuer, the Independent
Managers or the General Partner or, to the Issuer's knowledge, on the part of
the originator, PMC, PMCT or the Obligor in connection with the origination of
any Loan or in connection with the transfer and assignment of such Loan to the
Issuer.

                           (x) As of the Closing Date, there was no material
default, breach, violation or event of acceleration existing under the Mortgage
or the Underlying Note and no event which, with the passage of time or with
notice and the expiration of any grace or cure period, would constitute such a
default, breach, violation or event of acceleration, and since the Cut-off Date
the Issuer had not waived any such default, breach, violation or event of
acceleration.

                           (xi) The Mortgage and the Underlying Note comply with
all requirements of applicable federal, state and local laws and regulations.
The origination and servicing of the Loan and the assignment of the Loan comply
with any and all applicable requirements of any applicable federal, state or
local law, including, without limitation, usury, truth-in-lending, real estate
settlement procedures, consumer credit protection, equal credit opportunity and
disclosure laws. To the Issuer's knowledge, each Mortgaged Property is in
compliance in all material respects with all applicable laws, zoning ordinances,
rules, covenants and restrictions affecting the construction, occupancy, use and
operation of such Mortgaged Property. To the Issuer's knowledge, all
inspections, licenses and certificates required, including certificates of
occupancy, whether by law, ordinance, regulation or insurance standards to be
made or issued with regard to the Mortgaged Property, have been obtained and are
in full force and effect.

                           (xii) To the Issuer's knowledge, each Loan was
originated or purchased in accordance with PMCT's or PMC's standard mortgage,
underwriting, origination and lending procedures. To the Issuer's knowledge, no
adverse selection criteria were utilized by PMC, PMCT or the Issuer in selecting
the Loans for inclusion in this transaction.

TRUST INDENTURE - Page 15
<PAGE>

                           (xiii) No Loan is a 30-Day Delinquent Loan.

                           (xiv) The Issuer has not advanced funds or induced,
solicited or knowingly received any advance of funds from a party other than the
owner of the Mortgaged Property subject to the Mortgage, directly or indirectly,
for the payment of any amount required by the Loan.

                           (xv) To the Issuer's knowledge, there are no
delinquent taxes, ground rents, water charges, sewer rents, assessments
(including assessments payable in future installments) or other outstanding
charges affecting the related Mortgaged Property.

                           (xvi) The Mortgaged Property is located in the state
indicated on the Loan Schedule, and, except as reflected on the Loan Schedule,
consists of a single parcel of real property. The Mortgaged Property is in good
repair, is free of damage and waste that would materially and adversely affect
its value and such Mortgaged Property has not been materially damaged by fire,
wind or other cause, which damage has not been fully repaired or for which
insurance proceeds have not been received or are not expected to be received in
an amount sufficient to pay for such repairs.

                           (xvii) The Mortgage is a valid, subsisting and
enforceable first Lien on the Mortgaged Property, including all buildings on the
Mortgaged Property and all fixtures related thereto, and all additions,
alterations and replacements made at any time with respect to the foregoing,
except as reflected on the Loan Schedule. Such Lien is subject only to (1) the
Lien of current real property taxes and assessments not yet due and payable, (2)
covenants, conditions and restrictions, rights-of-way, easements and other
matters of the public record as of the date of recording, none of which
individually or in the aggregate materially interfere with the benefits of the
security intended to be provided by the Mortgage or the operation and use of the
related Mortgaged Property, and (3) other matters to which like properties are
commonly subject which do not materially interfere with the benefits of the
security intended to be provided by the Mortgage or the use, enjoyment, value or
marketability of the related Mortgaged Property. Any security agreement, chattel
mortgage or equivalent document related to and delivered in connection with the
Loan establishes and creates a valid, subsisting and enforceable first Lien and
first priority security interest on the property described therein, except as
reflected on the Loan Schedule. Except as reflected on the Loan Schedule, the
Underlying Note is not secured by any collateral except the Lien of the
corresponding Mortgage and the security interest of any applicable security
agreement or chattel mortgage referred to in this paragraph.

                           (xviii) The Mortgage contains provisions for the
acceleration of the payment of the unpaid principal balance of the Loan in the
event the related Mortgaged Property is sold without the prior written consent
of the Mortgagee thereunder.

                           (xix) The Issuer has no knowledge of any mechanics'
or similar liens or claims which have been filed for work, labor or material (or
any rights outstanding that under applicable law could give rise to such Lien)
affecting the Mortgaged Property which are or may be liens prior to, or equal or
on parity with, the Lien of the Mortgage.

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<PAGE>

                           (xx) The proceeds of the Loan have been fully
disbursed and there is no requirement for future advances thereunder, and any
and all requirements as to completion of any on-site or off-site improvements
and as to disbursements of any escrow funds therefor have been complied with.

                           (xxi) There is no proceeding pending for the total or
partial condemnation of the Mortgaged Property.

                           (xxii) The Mortgage contains customary provisions
such as to render the rights and remedies of the holder thereof adequate for the
realization against the Mortgaged Property of the benefits of the security
provided thereby, including, (1) in the case of a Mortgage designated as a deed
of trust, by trustee's sale and (2) otherwise by judicial foreclosure or power
of sale. To the Issuer's knowledge, there is no homestead or other exemption
available to the Obligor which would interfere with the right to sell the
Mortgaged Property at a trustee's sale or the right to foreclose the Mortgage.

                           (xxiii) In the event the Mortgage constitutes a deed
of trust, a trustee, duly qualified under applicable law to serve as such, has
been properly designated and currently so serves and is named in the Mortgage,
and no fees or expenses are or will become payable by the Issuer or its
assignees to the trustee under the deed of trust, except in connection with a
trustee's sale after default by the Obligor.

                           (xxiv) The Loan is an Eligible Loan as of the Closing
Date.

                           (xxv) The form of endorsement of each Underlying Note
satisfies the requirement, if any, of endorsement in order to transfer all
right, title and interest of the party so endorsing, as noteholder or assignee
thereof, in and to that Underlying Note, and each form of assignment is in
recordable form and is sufficient to effect the assignment of and to transfer to
the assignee thereof, all right, title and interest under each Mortgage to which
that assignment relates.

                           (xxvi) Each document required under Section 2.6(b)
hereof to be delivered to the Trustee on behalf of the Issuer for each Loan
meets the requirements of Section 2.6(b) and has been or will be, on or before
the Closing Date, delivered to the Trustee.

                           (xxvii) A Phase I environmental report was prepared
with respect to each Mortgaged Property or part thereof constituting primary
collateral securing the Loan, other than the Mortgaged Properties indicated in
the Loan Schedule, prior to the date of this Agreement. To the Issuer's
knowledge, each Mortgaged Property was, as of its date of origination of the
Underlying Note and as of the Closing Date in material compliance with all
applicable environmental laws and regulations.

                           (xxviii) All escrow deposits, if any, and other
payments relating to each Loan have been delivered to the Servicer or its agent,
and all amounts required to be deposited by the Issuer or the related Obligor
have been deposited and there are no deficiencies with regard thereto.

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<PAGE>

                           (xxix) The Lien of each Mortgage is insured by an
ALTA lender's title insurance policy (or a binding commitment) or its
equivalent, as adopted in the applicable jurisdiction. Except as reflected on
the Loan Schedule, the policy (or such binding commitment) insures the
originator of such Loan, its successors and assigns, as to the first priority
Lien of the Mortgage in the original principal amount after all advances of
principal, subject only to permitted encumbrances, none of which, individually
or in the aggregate should interfere with the current use of the Mortgaged
Property or materially detract from the benefit of the first priority Lien of
the Mortgage. The originator of such Loan (including its successors and assigns)
is the sole named insured of the policy (or such binding commitment), and the
policy (or such binding commitment) is assignable to the Issuer without the
consent of or any notification to the insurer. No claims have been made under
such policy (or such binding commitment), and the Issuer has no knowledge of any
matter that would impair or diminish the coverage of such policy.

                           (xxx) Each Mortgaged Property is covered by insurance
policies providing (1) coverage against loss or damage sustained by fire and
extended perils included within the classification "All Risk of Physical Loss"
in an amount sufficient to prevent the Obligor from being deemed a co-insurer,
and to provide coverage of replacement or actual cost, consistent with industry
standards; and the policies contain a standard mortgagee clause naming the
mortgagee and its successors as mortgagees and loss payees; (2) flood insurance
(if any portion of the Mortgaged Property is located in an area identified by
the Federal Emergency Management Agency as having special hazards); and (3)
comprehensive general liability insurance in amounts as are generally required
by commercial mortgage lenders. The insurance policies contain clauses providing
they are not terminable and may not be reduced without 10 days prior written
notice to the mortgagee, and all premiums due and payable through the Closing
Date have been made. To the Issuer's knowledge, no notice of termination or
cancellation with respect to any such policies has been received by PMC or PMCT,
as applicable, which remains effective. The Mortgage obligates the Obligor to
maintain all such insurance at its cost and expense, and on the Obligor's
failure to do so, authorizes the holder of the Mortgage to maintain such
insurance and obtain reimbursement therefore from the Obligor

                           (xxxi) To the Issuer's knowledge, the Obligor has
good title to the Mortgaged Property.

                           (xxxii) The Issuer acknowledges that the Trustee, as
assignee of the Issuer with respect to the Contribution Agreement, may enforce
any right or remedy thereunder, including any right or remedy with respect to
breaches of the representations and warranties thereunder.

         3.3 REPURCHASE AND SUBSTITUTION OF LOANS.

                  (a) Upon discovery by either the Issuer, the Servicer, the
Trustee or the Supervisory Servicer of a breach of any of the representations
and warranties made by PMC or PMCT, as the case may be, pursuant to the
Contribution Agreement or made by the Issuer pursuant to Section 3.2 hereof, the
party discovering such breach shall give prompt written notice to the others, to
the Noteholders, to the Rating Agency and to PMC or PMCT, as the case may be,
and the Trustee, upon such discovery or receipt of such notice, shall make
written demand

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<PAGE>

upon the Issuer with respect to a breach of any of the representations or
warranties contained in Section 3.2 hereof to comply with this Section 3.3 or
upon PMC or PMCT, as the case may be, to comply with Section 8 or Section 13, as
applicable, of the Contribution Agreement. Within thirty (30) days of its
discovery or its receipt of notice of any breach or defect the Issuer, PMC or
PMCT, as the case may be, shall, at its option, (i) promptly cure such defect or
breach in all material respects, (ii) purchase or cause to be purchased the
affected Loan at a price equal to the Takeout Price, or (iii) if such defect or
breach occurs within two (2) years of the Closing Date, deliver to the Trustee,
in exchange for the affected Loan, a Substitute Loan, together with any related
Asset Substitution Shortfall. If the breach or defect has not been cured or a
Substitute Loan so delivered to the Trustee within thirty (30) days after such
discovery or receipt of notice, the Issuer, PMC or PMCT, as the case may be,
must purchase the Defective Loan within one (1) Business Day for an amount equal
to the Takeout Price.

                  (b) In the event a Loan becomes (i) 150 days contractually
past due, or (ii) a Charged-Off Loan, PMC or PMCT, as the case may be, may at
its option, but without obligation, purchase such Loan at a price equal to the
Takeout Price or cause or permit such Loan to be released from the Lien of this
Indenture in accordance with Section 3.4(a)(iii) hereof.

                  (c) In the event a Loan becomes a Refinancable Loan, the
applicable Servicer shall give prompt written notice to the Noteholders, the
Trustee, the other Servicer and the Supervising Servicer and PMC or PMCT, as the
case maybe, may at its option, but without obligation, purchase the Loan at a
price equal to the Takeout Price and cause or permit the Refinancable Loan to be
released from the Lien of this Indenture in accordance with Section 3.4(a)(iii)
hereof; provided, however, the aggregate principal balance of all Loans that
become Refinancable Loans and that may be purchased pursuant to this Section
shall not exceed 10% of the aggregate Cut-Off Date Principal Balance of all
Loans without the prior written consent of the Required Noteholders and in no
event shall exceed 20% of the aggregate Cut-Off Date Principal Balance of the
Loans on a cumulative basis.

                  (d) If PMC or PMCT, as the case may be, pursuant to Section 8
of the Contribution Agreement, or the Issuer, PMC or PMCT, as the case may be,
pursuant to paragraph (a) above, elects to cause one or more Substitute Loans to
be delivered to the Trustee in substitution for any one or more of the original
Loans, the Issuer, PMC or PMCT, as the case may be, shall deliver to the Trustee
the information required by the Substitute Loan Schedule with respect to the
Substitute Loan in substantially the form of Exhibit B-1 attached hereto and any
required documentation must be delivered pursuant to paragraph (e) below. A
Substitute Loan must (i) be an Eligible Loan; (ii) contractually require
interest payments to be made each month in an aggregate amount at least equal to
that of the Deleted Mortgage Loan; and (iii) have characteristics such that, as
of the Substitution Date (instead of as of the Closing Date), each of the
representations and warranties set forth in Section 3.2(a) and Sections 3.1(g)
and (h) hereof is true and correct in all material respects with respect to the
Substitute Loan. If the Substitute Loan has an outstanding Loan Principal
Balance (after application of the Monthly Payment due in the month of
substitution) which is less than the Takeout Price of the Deleted Mortgage
Loan(s) (an "Asset Substitution Shortfall"), the Person delivering the
Substitute Loan(s) must deliver to the Trustee on the Substitution Date
immediately available funds in the amount of any such Asset Substitution
Shortfall, which the Trustee shall deposit in the Collection Account on the
Substitution Date. In the case of a substitution pursuant to Section 3.3(a), the
Asset

TRUST INDENTURE - Page 19
<PAGE>

Substitution Shortfall shall include the amounts described in clauses (ii),
(iii) and (iv) of the definition of Takeout Price.

                  (e) In connection with any such substitution, on the
Substitution Date, PMC, PMCT or the Issuer, as the case may be, shall deliver to
the Trustee (i) each Substitute Loan to be delivered on such date and (ii) the
amount of any Asset Substitution Shortfall relating to the Substitute Loan. In
addition, on the Substitution Date, PMC, PMCT or the Issuer, as the case may be,
shall deliver the related Trustee Loan File to the Trustee and the Servicer Loan
File to the Servicer with respect to each Substitute Loan.

                  (f) Upon such purchase or substitution, the Trustee shall
deliver to the Person purchasing the Loans or delivering the Substitute Loans,
the related Deleted Mortgage Loans and shall amend the Loan Schedule to reflect
the deletion of the Deleted Mortgage Loans and, if applicable, the addition of
the Substitute Loans and shall release the Deleted Mortgage Loans from the Lien
of this Indenture by executing and delivering to such Person the release in the
form of Exhibit E attached hereto.

                  (g) Pursuant to the Servicing Agreement, the applicable
Servicer shall prepare any instruments necessary for transfers pursuant to this
Section.

                  (h) Substitute Loans may not be delivered (and Defective Loans
may not be purchased) pursuant to this Section 3.3 on any date which is a
Determination Date.

         3.4 RELEASE AND EXCHANGE OF LOANS.

                  (a) The Trustee shall not release and discharge any Loan from
the Lien of this Indenture until the principal of and interest on the Notes
shall have been paid or duly provided for under this Indenture except as
follows:

                           (i) in accordance with the provisions of Section 3.3
hereof;

                           (ii) upon any Servicer's request provided that the
conditions to release have been met pursuant to Sections 3.10 and 4.4 of the
Servicing Agreement; and

                           (iii) on each Payment Date, the Trustee shall release
all Loans 150 days contractually past due, Charged-Off Loans and Refinancable
Loans from the Lien of this Indenture and deliver to the Issuer the deleted
Loans 150 days contractually past due, Charged-Off Loans and Refinancable Loans;
provided, however, that the Trustee shall release any Loans 150 days
contractually past due, Charged-Off Loan or Refinancable Loan from the Lien of
this Indenture only if (x) there then exists no Event of Default, (y) all
outstanding amounts due and payable with respect to the Loans 150 days
contractually past due, Charged-Off Loan or Refinancable Loan have been paid to
the Noteholders as Required Principal Distribution Amounts or the Takeout Price
has been paid for the Loans 150 days contractually past due, Charged-Off Loan or
Refinancable Loan, and (z) the amount on deposit in the Spread Account after
giving effect to such proposed release is at least equal to the Specified Spread
Account Requirement.

TRUST INDENTURE - Page 20
<PAGE>

                  (b) The Trustee shall release a Loan from the Lien of this
Indenture by executing and delivering a release in the form of Exhibit E hereto,
to the Issuer with respect to such Loan. Upon release from the Lien of this
Indenture, the Issuer simultaneously shall distribute to its partners, or
otherwise dispose of, any Loan released pursuant to this Section 3.4. Upon
release from the Lien of this Indenture, the Trustee shall amend the Loan
Schedule to reflect the deletion of the Loans.

                  (c) Neither the Issuer nor the Trustee shall, without the
consent of the Holders of 100% of the principal amount of the Notes Outstanding,
sell, assign, transfer, pledge, distribute or otherwise dispose of the Loans as
a whole or in part after the Closing Date other than as provided in the
Transaction Documents.

                                   ARTICLE IV

                              REDEMPTION PROVISIONS

         4.1 OPTIONAL REDEMPTION OF THE NOTES. The Notes are subject to
redemption in whole, but not in part, at the option of the Issuer on any Payment
Date on or after the date on which the Outstanding Note Amount is less than 10%
of the Outstanding Note Amount on the Closing Date, at a redemption price equal
to 100% of the Outstanding Note Amount plus accrued and unpaid interest thereon
at the Remittance Rate to the redemption date. Following the occurrence of a
Redemption Trigger Event, the Notes will bear interest at a per annum rate equal
to the Remittance Rate, plus the Post Optional Redemption Remittance Margin.

         4.2 NOTICE OF REDEMPTION. When the Trustee shall receive written notice
from the Issuer of its election to redeem the Notes in accordance with Section
4.1 hereof, the Trustee shall, subject to Section 4.3 hereof and in accordance
with the provisions of this Indenture, give notice of the redemption of the
Notes not less than twenty (20) nor more than sixty (60) days prior to the date
fixed for redemption by certified mail, registered mail or overnight delivery to
the Holders of the Notes at the last address for each appearing on the Note
Register, in the name of the Issuer, which notice shall specify the following:
(a) the complete official name of the Notes, (b) the CUSIP number (if any) of
the Notes, (c) the date of such notice, (d) the issuance date for the Notes, (e)
the redemption price, the Applicable Remittance Rate and Maturity Date of the
Notes, (f) the redemption date, (g) the place or places where amounts due upon
such redemption will be payable, (h) that on the redemption date there shall
become due and payable upon each Note to be redeemed the amount of the
principal, together with interest accrued to the redemption date and (i) the
redemption agent name and address with a contact person and telephone number.
Notice having been so given by the Trustee, the redemption price and unpaid
interest accrued to the redemption date shall be due and payable on the
specified redemption date. The registered owner of $1,000,000 or more in
original principal amount of Notes may specify in writing to the Trustee one
additional address to which such notice of redemption shall be sent. Failure to
give such notice by mail to any Noteholder, or any defect therein, shall not
affect the validity of any proceedings for the redemption of other Notes.

TRUST INDENTURE - Page 21
<PAGE>

         Upon the giving of notice and the payment of funds for redemption
pursuant to Section 4.3, the Trustee is hereby authorized and directed to apply
such funds to the payment of the Notes, together with accrued interest thereon
to the redemption date in accordance with the priorities set forth in Section
6.4 herein.

         4.3 REDEMPTION PAYMENTS. On or prior to the date specified for
redemption set forth in Section 4.2 hereof, the Issuer shall deposit with the
Trustee funds, which together with amounts then on deposit in the Collection
Account, are sufficient to pay on the redemption date, the principal of and
accrued and unpaid interest on the Notes, plus accrued and unpaid fees and
expenses of the Trustee, the Servicers and the Supervisory Servicer. If the
Trustee is required to redeem the Notes pursuant to Section 4.1, and subject to
and in accordance with the terms of this Article, the Trustee shall give notice
of the redemption in the manner prescribed by Section 4.2 hereof; provided,
however, that no such notice of redemption shall be given until the Trustee
holds, on the date notice is given pursuant to this Indenture, Available Moneys
in the amount necessary to pay, on the redemption date, the principal of and
interest on the Notes called for redemption.

         The Trustee shall apply moneys held in the Collection Account for the
redemption of Notes in accordance with the priorities set forth in Section 6.4
herein, and upon such redemption such Notes shall be canceled.

         4.4 CANCELLATION. All Notes which have been redeemed, paid or retired
or received by the Trustee for exchange shall not be reissued but shall be
canceled and destroyed by the Trustee in accordance with Article II hereof.

                                   ARTICLE V

                               COVENANTS OF ISSUER

         5.1 PAYMENT OF PRINCIPAL AND INTEREST. The Issuer covenants that it
will promptly pay the principal of and interest on every Note issued under this
Indenture at the place, on the dates and in the manner provided herein and in
said Notes according to the intent and meaning thereof.

         5.2 PERFORMANCE OF COVENANTS. The Issuer covenants that it will perform
at all times any and all covenants, undertakings, stipulations and provisions
contained in the Transaction Documents, in any and every Note executed,
authenticated and delivered hereunder and in all of its proceedings pertaining
hereto and comply with all material requirements of any law, rule or regulation
applicable to it.

         5.3 INSTRUMENTS OF FURTHER ASSURANCE. The Issuer agrees that the
Trustee may defend its rights to the payments and other amounts due under the
Loans for the benefit of the Holders against the claims and demands of all
persons whomsoever. The Issuer covenants that it will do, execute, acknowledge
and deliver, or cause to be done, executed, acknowledged and delivered, such
indentures supplemental hereto and such further acts, instruments and transfers
as the Trustee may reasonably require for the better assuring, transferring,
pledging, assigning and

TRUST INDENTURE - Page 22
<PAGE>

confirming unto the Trustee all and singular the rights assigned hereby and the
amounts pledged hereby to the payment of the principal of and interest on the
Notes.

         5.4 RECORDING AND FILING. The Issuer will cause all financing
statements related to this Indenture and the Contribution Agreement, and such
other documents as may, in the Opinion of Independent Counsel reasonably
acceptable to the Trustee, be necessary to be kept and filed in such manner and
in such places as may be required by law in order to preserve and protect fully
the security of the Holders and the rights of the Trustee hereunder.

         5.5 EXISTENCE. The Issuer will take and fulfill, or cause to be taken
and fulfilled, all actions and conditions necessary to preserve and keep in full
force and effect its existence, rights and privileges as a limited partnership
and will not liquidate or dissolve, and it will take and fulfill, or cause to be
taken and fulfilled, all actions and conditions necessary to qualify, and to
preserve and keep in full force and effect its qualification to do business as a
foreign limited partnership in each jurisdiction in which the conduct of its
business or the ownership or leasing of its properties requires such
qualification, except to the extent that any failure to so qualify, or to so
preserve and keep in full force and effect such qualification, would not have a
material and adverse effect on the business, earnings, prospects, properties or
condition (financial or other) of the Issuer. The Issuer shall conduct its
business in accordance with the terms of its partnership agreement.

         5.6 ACCESS TO RECORDS; DISCUSSIONS WITH OFFICERS. The Issuer shall,
upon the request of the Trustee, a Noteholder, a Beneficial Owner, the
Supervisory Servicer or the Rating Agency, permit the Trustee, the Noteholders,
the Beneficial Owners, the Supervisory Servicer, the Rating Agency or their
designees or authorized agents:

                  (a) to inspect the books and records of the Issuer as they may
relate to the Notes, the Loans and the obligations of the Issuer under the
Transaction Documents; and

                  (b) to discuss the affairs, finances and accounts of the
Issuer with the General Partner.

         Such inspections and discussions shall be conducted during normal
business hours and shall not unreasonably disrupt the business of the Issuer,
PMCT or PMC. Such inspections shall be at the expense of the inspecting party,
or the party requesting the Trustee to conduct such inspection, unless an Event
of Default shall have occurred and then be continuing in which case, any such
inspection shall be at the expense of the Issuer. The books and records of the
Issuer will be maintained at the address of the Issuer designated herein for
receipt of notices, unless the Issuer shall otherwise advise the Trustee and the
Noteholders in writing.

         5.7 NOTICE OF MATERIAL EVENTS. The Issuer shall promptly and, in any
event, within five Business Days after the occurrence thereof, inform the
Trustee, the Noteholders, the Supervisory Servicer and the Rating Agency in
writing of the occurrence of any of the following:

                  (a) the submission of any material claim or the initiation of
any legal process, litigation or administrative or judicial investigation
against the Issuer;

TRUST INDENTURE - Page 23
<PAGE>

                  (b) any change in the location of the Issuer's principal
office or any change in the location of the Issuer's books and records;

                  (c) the occurrence of any Event of Default, any "event of
default" under any other Transaction Document or the occurrence of any event or
condition which with the giving of notice or lapse of time or both would
constitute an Event of Default or "event of default" under any other Transaction
Document;

                  (d) the commencement or threat of any proceedings instituted
by or against the Issuer in any federal, state or local court or before any
governmental body or agency, or before any arbitration board, or the
promulgation of any proceeding or any proposed or final rule which, if adversely
determined, would result in a material adverse change with respect to the
Issuer;

                  (e) the commencement of any proceedings by or against the
Issuer under any applicable bankruptcy, reorganization, liquidation,
rehabilitation, insolvency or other similar law now or hereafter in effect or of
any proceeding in which a receiver, liquidator, conservator, trustee or similar
official shall have been, or may be, appointed or requested for the Issuer or
any of its assets.

                  (f) any merger, consolidation or sale of substantially all of
the assets of PMC or PMCT (except any acquisition by PMCT or PMC of the other,
merger or consolidation between PMC and PMCT or where PMC or PMCT, as
applicable, is the surviving entity) or the Issuer;

                  (g) any change in the Issuer's name, corporate or other
structure or jurisdiction of organization;

                  (h) any amendment or other modification of this Indenture, the
Servicing Agreement or any of the other Transaction Documents; or

                  (i) the final payment in full of the Notes.

         5.8 MAINTENANCE OF LICENSES; RATING. The Issuer shall maintain all
licenses, permits, charters and registrations which are material to the conduct
of its business. The Issuer shall at all times while the Notes are outstanding
cause the Rating Agency to maintain an ongoing monitoring rating with respect to
the Notes.

         5.9 USE OF FUNDS. Except for the distribution of the net proceeds
(other than amounts utilized to fund the Spread Account) from the sale of the
Notes pro rata to its partners and the distribution of funds and other assets
released from the Lien of this Indenture pursuant to its partnership agreement
which are contemplated and expressly permitted hereby, the Issuer shall apply
its funds only towards the payment of amounts due under the Notes and towards
the other sums payable by the Issuer under or in accordance with the Transaction
Documents.

         5.10 NEGATIVE COVENANTS OF THE ISSUER. The Issuer hereby agrees that as
long as any Notes remain Outstanding:

TRUST INDENTURE - Page 24
<PAGE>

                  (a) No Amendments to Organization Documents. The Issuer shall
not amend, supplement or otherwise modify Section 2.3 of its partnership
agreement (or permit any of the foregoing). The Issuer shall not amend,
supplement or otherwise modify Sections 2.2, 8.1 or 9.1 or Articles V or VI of
its partnership agreement without the prior written consent of the Required
Noteholders.

                  (b) Limitation on Indebtedness. The Issuer shall not create,
incur or suffer to exist any indebtedness other than the Notes.

                  (c) No Subsidiaries. The Issuer shall not form, or cause to be
formed, any subsidiaries.

                  (d) Restrictions on Liens. The Issuer shall not (i) create,
incur or suffer to exist, or agree to create, incur or suffer to exist, or
consent to cause or permit in the future (upon the happening of a contingency or
otherwise) the creation, incurrence or existence of any Lien on the Loans or on
any of its assets except for Liens in favor of the Trustee or (ii) sign or file
under the Uniform Commercial Code of any jurisdiction any financing statement
which names the Issuer as a debtor, or sign any security agreement authorizing
any secured party thereunder to file such financing statement, except in each
case any such instrument solely securing the rights and preserving the Lien of
the Trustee.

                  (e) No Impairment of Rights. The Issuer shall not (i) take any
action, or fail to take any action, if such action or failure to take action may
interfere with the enforcement of any material rights, benefits or obligations
of the Trustee under the Transaction Documents; (ii) waive or alter any rights
with respect to the Loans (or any agreement or instrument relating thereto);
(iii) take any action, or fail to take any action, if such action or failure to
take action may interfere with the enforcement of any rights with respect to the
Loans; or (iv) fail to pay any tax, assessment, charge or fee with respect to
the Loans, or fail to defend any action, if such failure to pay or defend may
adversely affect the priority or enforceability of the Trustee's first priority
Lien on or perfected security interest in the Loans or the Issuer's right, title
or interest in the Loans.

                  (f) Limitation on Mergers, Etc. The Issuer shall not
consolidate with or merge with or into any Person or transfer all or any
material amount of its assets to any Person or liquidate or dissolve unless (i)
the Issuer shall have provided prior written notice thereof to the Noteholders,
together with an officer's certificate and an Opinion of Counsel to the effect
that such consolidation, merger or transfer complies with the terms of the
Transaction Documents and the Issuer's partnership agreement, and (ii) the
Required Noteholders have consented thereto in writing. The Issuer shall not
permit the General Partner, PMCT or PMC to sell, transfer, assign or otherwise
dispose of or convey its respective partnership interest in the Issuer.

                  (g) No Waiver, Amendments, Etc. The Issuer shall not waive,
modify or amend, or consent to any waiver, modification or amendment of, any of
the provisions of any of the Transaction Documents, except as expressly
permitted thereby.

                  (h) Restriction on Actions Under Partnership Agreement. The
Issuer shall not take any of the actions prohibited by Section 2.3 of its
partnership agreement.

TRUST INDENTURE - Page 25
<PAGE>

                           (i) No Action Making Issuer a Taxable Mortgage Pool.
The Issuer shall not take any action or fail to take any action that would cause
the Issuer to be treated as a "taxable mortgage pool" as defined in Section
7701(i) of the Code.

         5.11 OPINIONS AS TO LOANS AND TRUST ESTATE.

                  (a) On the Closing Date, the Issuer shall furnish to the
Trustee an Opinion of Independent Counsel either stating that, in the opinion of
such counsel, such actions have been taken as are necessary to perfect and make
effective the Lien and first priority perfected security interest of (i) the
Issuer with respect to PMCT's and PMC's interest in the Loans in the event the
contribution of the Loans to the Issuer by PMC or PMCT pursuant to the
Contribution Agreement is recharacterized as a secured lending transaction, and
(ii) the Trustee, for the benefit of the Noteholders, created by this Indenture
with respect to the Trust Estate and reciting the details of such action, or
stating that, in the opinion of such counsel, no such action is necessary to
make such liens and security interests effective. Such Opinion of Counsel shall
also describe the recording, filing, re-recording and refiling of this
Indenture, any supplemental indentures and any other requisite documents and the
execution and filing of any financing statements and continuation statements and
the taking of any other action that will, in the opinion of such counsel, be
required to maintain such liens and first priority perfected security interests.

                  (b) The Issuer shall furnish to the Trustee an Opinion of
Counsel on or before March 30 of each calendar year, commencing March 30, 2004,
either stating that, in the opinion of such counsel, such actions have been
taken as are necessary to maintain the liens and first priority perfected
security interests of the Issuer in the Loans (to the extent the contribution of
the Loans to the Issuer by PMC or PMCT pursuant to the Contribution Agreement is
recharacterized as a secured lending transaction) and of the Trustee created by
this Indenture with respect to the Trust Estate and reciting the details of such
action or stating that, in the opinion of such counsel, no such action is
necessary to maintain such liens and security interests. Such Opinion of Counsel
shall also describe the recording, filing, re-recording and refiling of this
Indenture, any supplemental indentures and any other requisite documents and the
execution and filing of any financing statements and continuation statements and
the taking of any other action that will, in the opinion of such counsel, be
required to maintain such liens and first priority perfected security interests
of this Indenture and the Contribution Agreement until March 30 in the following
calendar year.

         5.12 MAINTENANCE OF OFFICE. The Issuer will maintain at its office
located at its address shown in the definition of "Notice Address" an office
where notices, presentations and demands in respect of this Indenture and the
Notes may be given to and made upon it; provided, however, that it may, upon
fifteen (15) Business Days' prior written notice to the Noteholders and the
Trustee, move such office to any other location within the boundaries of the
continental United States of America.

         5.13 RESTRICTIONS ON ISSUER'S ACTIONS. The Issuer covenants and agrees,
until the cancellation and discharge of the Lien of this Indenture, to take any
and all actions to ensure that the Issuer will be recognized as a Person
separate from each of its Affiliates and that its assets and liabilities will
not be commingled with the assets and liabilities of any of its Affiliates. In
furtherance and not in limitation of the foregoing, the Issuer covenants and
agrees that:

TRUST INDENTURE - Page 26
<PAGE>

                  (a) Until the cancellation and discharge of the Lien of this
Indenture, at least two (2) of the managers of the General Partner will be
persons who are not and have not been during the five (5) years preceding such
appointment (i) a stockholder (whether direct, indirect or beneficial), member,
partner, director, manager (except Independent Manager), officer or employee of
the General Partner, the Issuer or their Affiliates; (ii) affiliated with a
significant customer or supplier of the General Partner, the Issuer or their
Affiliates; (iii) a spouse, parent, sibling or child of any person described by
(i) or (ii) above; or (iv) a trustee, conservator or receiver of any Affiliate
(each such manager, an "INDEPENDENT MANAGER").

                  (b) Funds and other assets of the Issuer shall be separately
identified and segregated. All of the Issuer's assets shall at all times be held
by or on behalf of the Issuer, and, if held by another entity, shall at all
times be kept identifiable (in accordance with customary usages) as assets owned
by the Issuer. The Issuer shall maintain its own separate bank accounts, payroll
and books of account. In no event shall any of the Issuer's assets be held on
its behalf by any Affiliate.

                  (c) The Issuer shall pay from its assets all obligations of
any kind incurred by the Issuer (other than organizational expenses) and shall
maintain adequate capital in light of its contemplated business operations.

                  (d) All financial statements, accounting records and other
corporate documents of the Issuer shall be maintained at its office separate
from those of any Affiliate or any other Person.

                  (e) The Issuer shall observe all customary formalities
regarding its existence as a limited partnership and shall comply with its
agreement of limited partnership.

                  (f) The audited annual, consolidated balance sheets and income
statements of PMC and PMCT and the unaudited annual balance sheet and income
statement of the Issuer shall disclose, in accordance with and to the extent
required under generally accepted accounting principles, any transactions
between the Issuer and any Affiliate.

                  (g) All business transactions, other than those contemplated
by this Indenture, entered into by the Issuer with any Affiliate shall be on
terms and conditions that are not more or less favorable to the Issuer than the
terms and conditions that would be expected to have been obtained, under similar
circumstances, from unaffiliated persons. In addition, all such transactions
shall be approved by the Independent Managers. The Issuer shall not guarantee
any liabilities or obligations of any Affiliate, nor shall it assume any
indebtedness or other liabilities or obligations of any Affiliate or hold out
its credit as being available to satisfy the obligations of others.

                  (h) The Issuer shall at all times hold itself out to the
public (including any Affiliate's creditors) as a separate and distinct entity
operating under the Issuer's own name and the Issuer shall act solely on its own
name and through its own authorized partners, officers and agents and correct
any known misunderstanding regarding its separate identity.

                  (i) The Issuer shall pay out of its own funds fees, if any,
for its directors and salaries, if any, of its officers and employees, and shall
promptly reimburse any Affiliate for any

TRUST INDENTURE - Page 27
<PAGE>

service provided to the Issuer by such Affiliate (other than the Servicers
pursuant to the terms of the Servicing Agreement) and shall allocate fairly and
reasonably any overhead for shared office space.

                  (j) Notwithstanding any other provision of the Issuer's
partnership agreement and any provision of law that otherwise so empowers the
Issuer, the Issuer shall not:

                           (i) engage in any business or activity other than as
set forth in the Issuer's agreement of limited partnership;

                           (ii) without the approval of a majority of the
managers of the General Partner, including all of the Independent Managers and
only upon the Issuer's insolvency, institute proceedings to be adjudicated a
bankrupt or insolvent, or consent to the institution of bankruptcy or insolvency
proceedings against it, or file a petition seeking or consent to reorganization
or relief under any applicable federal or state law relating to bankruptcy, or
consent to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the Issuer or a substantial part of
its property, or make any assignment for the benefit of creditors, or admit in
writing its inability to pay its debts generally as they become due, or take any
corporate action in furtherance of any such action;

                           (iii) liquidate, in whole or in part; or

                           (iv) acquire, by redemption or otherwise, any of its
partnership interests during the period in which any Notes are Outstanding.

         5.14 INSURANCE COVERAGE. In the event the Trust Estate shall include
REO Property, the Issuer will notify the Trustee and the Noteholders in writing
no later than five (5) Business Days prior to the acquisition of such REO
Property. The Servicer will maintain liability and casualty insurance with
respect to the related Mortgaged Property in accordance with the terms of the
Servicing Agreement.

         5.15 FINANCIAL STATEMENTS AND ACCOUNTANTS' REPORTS. The Issuer shall
furnish or cause to be furnished to the Trustee, the Noteholders and the Rating
Agency:

                  (a) Annual Financial Statements. As soon as available, and in
any event within one hundred twenty (120) days after the close of each fiscal
year of the Issuer, the Issuer's financial statements as of the end of such
fiscal year; and

                  (b) Accountants' Reports. Promptly upon receipt thereof,
copies of any reports submitted to the Issuer by its independent accountants, if
any, in connection with any examination of the financial statements of the
Issuer.

         In addition to the foregoing, the Issuer shall furnish or cause to be
furnished to any Noteholder or any prospective purchaser of the Notes, upon the
written request of any Noteholder, any additional information required by Rule
144A(d)(4) under the Act.

TRUST INDENTURE - Page 28
<PAGE>

                                   ARTICLE VI

                              REVENUES AND ACCOUNTS

         6.1 CREATION OF ACCOUNTS. On the Closing Date, the Trustee shall
establish the Collection Account and the Spread Account as non-interest bearing
trust accounts in its corporate trust department if the Trustee is a depository
institution that is not rated at least "P-1" or the equivalent by the Rating
Agency. The Collection Account shall be entitled "Collection Account--The Bank
of New York, as Trustee, in trust for registered Holders of $92,893,169 PMC
Joint Venture, L.P. 2003-1 Loan-Backed Floating Rate Notes" and the Spread
Account shall be entitled "Spread Account--The Bank of New York, as Trustee, in
trust for registered Holders of $92,893,169 PMC Joint Venture, L.P. 2003-1
Loan-Backed Floating Rate Notes." If the Trustee is a depository institution
rated at least "P-1" or the equivalent by the Rating Agency, the Collection
Account and the Spread Account may be established as deposit accounts. All
amounts credited to the Collection Account or the Spread Account shall be held
by the Trustee in trust for the Holders of the Notes until distribution of any
such amounts is authorized under this Indenture. All distributions, payments and
withdrawals from the Collection Account and the Spread Account shall be
determined in accordance with the related Determination Date Report.

         6.2 DEPOSITS TO THE COLLECTION ACCOUNT. There shall be deposited into
the Collection Account by the Trustee:

                  (a) so long as the Notes are Outstanding, on each Business
Day, all Collections deposited to the Lockbox Account;

                  (b) on the date of receipt thereof, any Takeout Price or Asset
Substitution Shortfall received pursuant to Section 3.3 hereof;

                  (c) on the date of receipt thereof, all income from investment
or reinvestment of amounts held in the Collection Account;

                  (d) on the relevant Payment Date, any amounts transferred from
the Spread Account pursuant to Section 6.3; and

                  (e) on the date of receipt thereof, any other amounts received
by the Trustee with respect to the Loans or the trusts created hereby,
including, without limitation, any amounts received pursuant to Section 4.3 to
redeem the Notes.

         6.3 DEPOSITS IN SPREAD ACCOUNT; PERMITTED WITHDRAWALS FROM SPREAD
ACCOUNT.

                  (a) The Trustee shall, promptly upon receipt, deposit in the
Spread Account:

                           (i) on the Closing Date, the Initial Deposit; and

                           (ii) on each Payment Date, from amounts then on
deposit in the Collection Account, the amount required to be deposited into the
Spread Account pursuant to Section 6.4(b) until the amount on deposit therein
equals the then applicable Specified Spread Account Requirement.

TRUST INDENTURE - Page 29
<PAGE>

                  (b) Amounts on deposit in the Spread Account shall be
withdrawn by the Trustee in the manner set forth in subclause (c) below on each
Payment Date in the following order of priority:

                           (i) to deposit in the Collection Account an amount by
which (a) the Interest Distribution Amount, the Required Principal Distribution
Amount and the Carry Forward Amount, if any, exceed (b) the Amount Available for
such Payment Date; and

                           (ii) to the extent that the amount then on deposit in
the Spread Account after giving effect to any required transfers from the Spread
Account to the Collection Account on such Payment Date pursuant to clause (i)
above then exceeds the Specified Spread Account Requirement as of such Payment
Date (such excess, a "Spread Account Excess"), an amount equal to such Spread
Account Excess shall be deposited in the Collection Account prior to the making
of any distributions to the Servicers in reimbursement of Servicing Expenses on
such Payment Date;

         and also, in no particular order of priority:

                           (iii) to invest amounts on deposit in the Spread
Account in Eligible Investments pursuant to Article VII;

                           (iv) to withdraw any amount not required to be
deposited in the Spread Account or deposited therein in error; and

                           (v) to clear and terminate the Spread Account upon
the termination of this Indenture in accordance with the terms hereof.

                  (c) Any amounts which are required to be withdrawn from the
Spread Account pursuant to paragraph (b) above shall be withdrawn from the
Spread Account in the following order of priority: (i) first, from any
uninvested funds therein, and second, from the proceeds of the liquidation of
any investments therein pursuant to Article VII.

         6.4 DISTRIBUTIONS.

                  (a) The rights of the Noteholders to receive payments of
principal and interest on the Notes shall be as set forth in this Indenture.

                  (b) On each Payment Date, based on information contained in
the related Determination Date Report, the Trustee shall withdraw the Amount
Available from the Collection Account and make distributions thereof in the
following order of priority:

                           (i) First, to the Trustee, the Servicers, and the
Supervisory Servicer, if any, for payment of the Trustee's Fee, the Servicing
Fee, and the Supervisory Servicing Fee, if any;

                           (ii) Second, to the Noteholders, in an amount up to
the Regular Interest Distribution Amount;

TRUST INDENTURE - Page 30
<PAGE>

                           (iii) Third, to the Noteholders, in an amount up to
the sum of (a) the Required Principal Distribution Amount and (b) the Carry
Forward Amount, if any;

                           (iv) Fourth, to the Spread Account, any remainder
unless and until the amount therein equals the Specified Spread Account
Requirement;

                           (v) Fifth, to the Noteholders, in an amount up to the
difference of (1) the Interest Distribution Amount, minus (2) the Regular
Interest Distribution Amount;

                           (vi) Sixth, to the Servicers, in reimbursement of
Servicing Expenses paid by the Servicers pursuant to Section 3.8 of the
Servicing Agreement and to the Trustee, Supervisory Servicer, Registrar and
Paying Agent in reimbursement of expenses incurred pursuant to the Transaction
Documents;

                           (vii) Seventh, provided no Event of Default then
exists, to the Issuer, in an amount sufficient to pay the administrative and
operating expenses of the Issuer, including without limitation, any unpaid
expenses and other amounts owed by the Issuer to the Trustee and Supervisory
Servicer and other administrative costs of maintaining the Trust Estate;
provided, however, in the event that an Event of Default then exists, no amount
shall be paid to the Issuer on such Payment Date pursuant to this clause
6.4(b)(vii); and

                           (viii) Eighth, provided no Event of Default or
Redemption Trigger Event then exists, to the Issuer any remaining amounts,
together with any permitted release from the Spread Account free and clear of
the Lien of this Indenture; provided, however, in the event that an Event of
Default then exists, no amount shall be paid to the Issuer on such Payment Date
pursuant to this clause 6.4(b)(viii); and provided further, notwithstanding the
foregoing, in the event a Redemption Trigger Event then exists, any remaining
amount that would have otherwise been paid to the Issuer on such Payment Date
pursuant to this clause 6.4(b)(viii) shall be paid to the Noteholders and
applied to the outstanding principal balance of the Notes until the Notes are
paid in full.

                  (c) All distributions made to the Noteholders will be made on
a pro rata basis among the Noteholders of record on the next preceding Record
Date based on each such Noteholder's percentage of the Outstanding Note Amount
represented by its respective Notes, and shall be made by wire transfer of
immediately available funds to the account of such Noteholder at a bank or other
entity having appropriate facilities therefor.

         6.5 MONEYS TO BE HELD IN TRUST. All moneys required to be deposited
with or paid to the Trustee for the account of any fund or account established
under any provision of this Indenture shall be held by the Trustee in trust and
not commingled with the funds or accounts of any other Person, and notice of the
redemption of which has been duly given, shall, while held by the Trustee,
constitute part of the Trust Estate and be subject to the security interest
created hereby. Any moneys (including, without limitation, Prepayment Premiums)
erroneously deposited in any fund or account established under this Indenture
shall be promptly returned to the Issuer and shall not constitute part of the
Trust Estate or be subject to the security interest granted hereby.

TRUST INDENTURE - Page 31
<PAGE>

         6.6 AMOUNTS REMAINING IN FUNDS AND ACCOUNTS. Any amounts remaining in
any fund or account after full payment of the Notes, and all other amounts
required to be paid hereunder, shall be released to the Issuer.

         6.7 ACCOUNTS AND REPORTS. The Trustee, on behalf of the Issuer, shall
keep, or cause to be kept, proper books of record and account in which complete
and accurate entries shall be made of all its transactions relating to the Notes
and all funds and accounts established by or pursuant to this Indenture, which
shall at all reasonable times during regular business hours, be subject to the
inspection of the Issuer or of the Holders of an aggregate of not less than ten
percent in principal amount of Notes Outstanding or their representatives duly
authorized in writing.

         By the fifteenth (15th) day of each month or the next Business Day if
the 15th is not a Business Day, the Trustee shall furnish to the Issuer, the
Rating Agency and the Noteholders monthly statements in the form attached hereto
as Exhibit C (the "MONTHLY TRUSTEE REPORT") showing the beginning and ending
balances of and deposits to and withdrawals from and assets held in the
Collection Account and the Spread Account as of the close of business on the
last day of the preceding month. The Trustee shall also provide such other
information regarding the Trust Estate and the Issuer as may be reasonably
requested by the Rating Agency or any Noteholders to the extent the Trustee can
obtain such information without unreasonable effort or expense.

         6.8 TAX REPORTING. The Issuer shall be responsible for the preparation
and filing with the appropriate governmental agency of all tax returns and
reports ("TAX RETURNS") with respect to the Issuer. The Issuer shall cause a
copy of the completed and signed Tax Return (and a copy of any check delivered
in connection therewith in payment of any tax due) to be delivered to the
Trustee, at least five (5) Business Days prior to the required filing date,
after any additional time granted pursuant to any properly filed extensions. The
Trustee shall have no responsibility to verify the accuracy of the information
in any such Tax Return, may rely on the information included therein and shall
not have any liability for any inaccuracy or misstatement in such Tax Return.

                                  ARTICLE VII

                              INVESTMENT OF MONEYS

         Any moneys held as part of any fund or account shall be invested and
reinvested in Eligible Investments by the Trustee at the written direction of
the Servicers; provided, however, in the event that the Servicers at any time
fail to give or confirm such direction to the Trustee, the Servicers shall be
deemed to have directed the Trustee in writing to invest any moneys held as part
of any fund or account and not already invested in Eligible Investments, in a
money market fund meeting the requirements of clause (vi) of the definition of
"Eligible Investments." With respect to each investment made by the Trustee, the
Trustee shall make such investment in its name as Trustee and take such action
as shall be required from time to time to accomplish the transfer to the Trustee
the ownership thereof and all income thereon and all proceeds thereof, in good
faith and free and clear of any adverse claim. All such investments shall at all
times be a part of the fund or account from whence the moneys used to acquire
such investments shall have

TRUST INDENTURE - Page 32
<PAGE>

come, and all income and profits on such investments shall be first used to
offset any investment losses in such fund, and then shall be credited as
provided in Article VI. All Eligible Investments shall mature no later than the
day prior to the next Payment Date, provided that any investments in money
market funds may mature on the applicable Payment Date. The Trustee shall sell
and reduce to cash a sufficient amount of such investments in the respective
fund or account whenever the cash balance therein is insufficient to pay the
amounts contemplated to be paid therefrom. The Trustee shall have no liability
or responsibility for the selection of investments or for any loss resulting
from any investment made in accordance with the provisions of this Article VII.
The Trustee shall have no liability with respect to losses incurred as a result
of the liquidation of any investment prior to its stated maturity or the failure
of the Servicers to provide timely written investment directions. The Trustee
shall not be liable for any investment made in accordance with the directions of
the Servicers or for keeping the funds fully invested at all times, provided
that the Trustee invests funds in a non-negligent manner in accordance with this
Article VII and the Servicers' directions.

                                  ARTICLE VIII

                             DISCHARGE OF INDENTURE

         If the Issuer shall (i) pay or cause to be paid to the Holders of the
Notes all outstanding principal and accrued and unpaid interest due thereon at
the times and in the manner stipulated therein, and shall pay or cause to be
paid to the Trustee all sums of moneys due according to the provisions hereof
(including the Trustee's reasonable fees and expenses and those of its
attorneys) and the Notes, and (ii) deliver to the Trustee an Officer's
Certificate and Opinion of Counsel stating that all conditions precedent under
the Indenture relating to the discharge of the Indenture have been complied
with, then these presents and the estate and rights hereby granted shall cease,
determine and be void, whereupon the Trustee shall cancel and discharge the Lien
of this Indenture, and execute and deliver to the Issuer such instruments in
writing as shall be requisite to cancel and discharge the Lien hereof, and
release, assign and deliver unto the Issuer any and all of the estate, right,
title and interest in and to any and all rights assigned or pledged to the
Trustee or otherwise subject to the Lien of this Indenture, including, but not
limited to, all moneys, securities and other property held in the Trust Estate.

         Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Issuer to the Trustee under Section 9.2 hereof, the
obligations of the Trustee and each Paying Agent to the Issuer and to the
Holders of Notes under Section 10.10 hereof, the obligations of the Trustee to
the Holders of Notes under this Article VIII and the provisions of Article II
hereof with respect to lost, stolen, destroyed and mutilated Notes, registration
of transfers and exchanges of Notes, and rights to receive payments of principal
of the Notes and accrued and unpaid interest thereon shall survive.

TRUST INDENTURE - Page 33
<PAGE>

                                   ARTICLE IX

                       DEFAULT PROVISIONS AND REMEDIES OF
                             TRUSTEE AND NOTEHOLDERS

         9.1 EVENTS OF DEFAULT. The happening of any one or more of the
following events shall constitute an "EVENT OF DEFAULT":

                  (a) default in the due and punctual payment of the entire
amount of any interest due and payable on any Note which continues unremedied
for five (5) Business Days;

                  (b) default in the due and punctual payment of (i) the
Required Principal Distribution Amount on any Payment Date which continues
unremedied for five (5) Business Days or (ii) the entire remaining principal
upon the redemption of the Notes pursuant to Section 4.1 or at the Maturity
Date;

                  (c) default in the performance or observance of any of the
covenants in Section 5.10 or 5.13;

                  (d) default in the performance or observance of any of the
covenants, agreements or conditions on the part of the Issuer contained in this
Indenture or in the Notes and not described in another paragraph of this Section
9.1, which failure shall continue for a period of thirty (30) days after the
earlier to occur of the date on which the Issuer obtained actual knowledge of
such failure or the date written notice of such failure, requiring the same to
be remedied, shall have been received by the Issuer from the Trustee or any
Holder, provided that, if such failure shall be of a nature that it cannot be
cured within thirty (30) days, such failure shall not constitute an Event of
Default hereunder if within such 30-day period the Issuer shall have given
notice to the Trustee and the Noteholders of the Notes of corrective action it
proposes to take, which corrective action is agreed in writing by the Trustee
and the Required Noteholders to be satisfactory and the Issuer shall thereafter
pursue such corrective action diligently until such default is cured but in no
event longer than ninety (90) days;

                  (e) any representation or warranty made by the Issuer under
this Indenture, or any representation or warranty made by the Issuer or any
Affiliate of the Issuer in any Transaction Document or in any certificate or
report furnished under this Indenture or any Transaction Document, shall prove
to be untrue or incorrect in any material respect and such breach is not cured
in all material respects within thirty (30) days after the date written notice
of such inaccuracy, requiring it to be remedied, is given to the Issuer by the
Trustee or any Holder;

                  (f) (i) the Issuer shall have asserted that any of the
Transaction Documents to which it is a party are not valid and binding on the
parties thereto; or (ii) any court, governmental authority or agency having
jurisdiction over any of the parties to any of the Transaction Documents or any
property thereof shall find or rule that any material provision of any of the
Transaction Documents is not valid and binding on the parties thereto;

                  (g) the General Partner or the Issuer shall fail to pay its
debts generally as they come due, or shall admit in writing its inability to pay
its debts generally, or shall make a general assignment for the benefit of
creditors, or shall institute any proceeding seeking to adjudicate the

TRUST INDENTURE - Page 34
<PAGE>

General Partner or the Issuer insolvent or seeking a liquidation, or shall take
advantage of any insolvency act, or shall commence a case or other proceeding
naming the Issuer as debtor under the United States Bankruptcy Code or similar
law, domestic or foreign, or a case or other proceeding shall be commenced
against the General Partner or the Issuer under the United States Bankruptcy
Code or similar law, domestic or foreign, or any proceeding shall be instituted
against the General Partner or the Issuer seeking liquidation of the General
Partner's or the Issuer's assets and the General Partner or the Issuer, as
applicable, shall fail to take appropriate action resulting in the withdrawal or
dismissal of such proceeding within ninety (90) days or there shall be appointed
or the General Partner or the Issuer shall consent to, or acquiesce in, the
appointment of a receiver, liquidator, conservator, trustee or similar official
in respect of the General Partner or the Issuer or the whole or any substantial
part of its properties or assets or the General Partner or the Issuer shall take
any corporate action in furtherance of any of the foregoing;

                  (h) the existence of any Event of Default by PMC or PMCT under
the Contribution Agreement, any Servicer Default under the Servicing Agreement
if the Servicer is PMC and/or PMCT or an Affiliate of PMC, PMCT or the Issuer,
and any Supervisory Servicer Default under the Supervisory Servicer Agreement if
the Supervisory Servicer is PMC, PMCT or an Affiliate of PMC, PMCT or the
Issuer; or

                  (i) the occurrence of an "event of default" under any other of
the Transaction Documents (other than an "event of default" by the Supervisory
Servicer or a Servicer Default if the Servicer is not an Affiliate of the
Issuer), after the satisfaction of any applicable notice provisions and the
expiration of any applicable cure periods.

         The Trustee shall give written notice to the Noteholders, the Rating
Agency and the U.S. Small Business Administration of any Event of Default within
five Business Days after the Trustee has actual knowledge of such Event of
Default.

         9.2 REMEDIES; RIGHTS OF NOTEHOLDERS. Upon the occurrence of an Event of
Default, the Trustee, upon the request of the Required Noteholders shall, pursue
any available remedy at law or in equity to enforce the payment of the principal
of and interest on the Notes then outstanding and all other amounts due and
owing under the Transaction Documents, including enforcement of any rights of
the Issuer under the Transaction Documents, Loans and any documents or
instruments related thereto.

         If an Event of Default described in Section 9.1(g) occurs, the
principal of all the Notes and all accrued and unpaid interest thereon shall
become immediately due and payable. The Trustee shall provide notice in writing
of such Event of Default to the Noteholders, the Servicer and the Supervisory
Servicer.

         If an Event of Default (other than an Event of Default described in
Section 9.1(g)) occurs and is continuing and if the Required Noteholders have
requested the Trustee to accelerate the Notes, the Trustee shall declare the
principal of all the Notes to be immediately due and payable, by a notice in
writing to the Issuer, the Noteholders, the Servicers and the Supervisory
Servicer (and to the Trustee if given by the Noteholders), and upon any such
declaration such principal and accrued and unpaid interest shall become
immediately due and payable.

TRUST INDENTURE - Page 35
<PAGE>

         If an Event of Default shall have occurred, and if indemnified as
provided in Section 10.1(p) hereof, the Trustee shall, if directed in writing by
the Required Noteholders, be obligated to exercise one or more of the rights and
powers conferred by this Article IX, as the Trustee shall be directed by the
Required Noteholders.

         No remedy by the terms of this Indenture conferred upon or reserved to
the Trustee (or to the Noteholders) is intended to be exclusive of any other
remedy, but each and every such remedy shall be cumulative and shall be in
addition to any other remedy given to the Trustee or to the Noteholders of the
Notes hereunder or now or hereafter existing at law or in equity or by statute.

         No delay or omission to exercise any right or power accruing upon any
Event of Default shall impair any such right or power or shall be construed to
be a waiver of any such Event of Default or acquiescence therein; and every such
right and power may be exercised from time to time as often as may be deemed
expedient.

         No waiver of any Event of Default hereunder, whether by the Trustee or
by the Noteholders, shall extend to or shall affect any subsequent Event of
Default or shall impair any rights or remedies consequent thereon.

         9.3 RIGHT OF NOTEHOLDERS TO DIRECT PROCEEDINGS. Anything in this
Indenture to the contrary notwithstanding, the Required Noteholders shall have
the right, at any time, by an instrument or instruments in writing executed and
delivered to the Trustee, to direct the method and place of conducting all
proceedings to be taken in connection with the enforcement of the terms and
conditions of this Indenture, or for the appointment of a receiver or any other
proceedings hereunder or thereunder; provided that such direction shall not be
otherwise than in accordance with the provisions of law and of this Indenture.

         9.4 APPOINTMENT OF RECEIVERS. Upon the occurrence of an Event of
Default, and upon the filing of a suit or other commencement of judicial
proceedings to enforce the rights of the Trustee and of the Noteholders under
this Indenture, the Trustee shall be entitled, as a matter of right, to the
appointment of a receiver or receivers of the Trust Estate and of the revenues,
issues, earnings, income, products and profits thereof, pending such
proceedings, with such powers as the court making such appointment shall confer.

         9.5 APPLICATION OF MONEYS. All moneys received by the Trustee pursuant
to any right given or action taken under the provisions of this Article shall,
after payment of any fees and expenses, including any extraordinary fees and
expenses, due and payable to the Trustee and the Supervisory Servicer (so long
as the Supervisory Servicer is, the same corporate entity as the Trustee or an
Affiliate thereof) hereunder or under the Servicing Agreement or the Supervisory
Servicing Agreement, be deposited in the Collection Account and all moneys in
the Collection Account (other than moneys held for redemption of the Notes duly
called for redemption) shall be applied as follows:

                  FIRST--To the payment to the Persons entitled thereto of all
interest then due on the Notes, in the order of the maturity of such interest,
with interest on unpaid principal and, to the extent permitted by applicable
law, accrued interest at the Applicable Remittance Rate to the

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extent such amount has not been distributed to the Noteholders when due, and, if
the amount available shall not be sufficient to pay in full said amount, then to
the payment ratably, according to the amounts due to the Persons entitled
thereto, without any discrimination or privilege;

                  SECOND-- To the payment to the Persons entitled thereto of any
unpaid principal of the Notes which shall have become due in order of maturity
and, if the amount available shall not be sufficient to pay in full such
principal due on any particular date, then to the payment ratably, according to
the amount of principal due on such date, to the Persons entitled thereto
without any discrimination or privilege;

                  THIRD--To be held for the payment to the Persons entitled
thereto as the same shall become due.

         Whenever moneys are to be applied pursuant to the provisions of this
Section, such moneys shall be applied at such times, and from time to time, as
the Trustee shall determine, having due regard for the amount of such moneys
available for application and the likelihood of additional moneys becoming
available for such application in the future. Whenever the Trustee shall apply
such funds, it shall fix the date upon which such application is to be made. The
Trustee shall give such notice as it may deem appropriate of the deposit with it
of any such moneys and of the fixing of any such date.

         Whenever all principal of and interest on all Notes and all other
amounts due and owing hereunder and under the Notes have been paid under the
provisions of this Section, any balance remaining in the Collection Account and
the Spread Account shall be released to the Issuer.

         9.6 REMEDIES VESTED IN TRUSTEE. All rights of action (including the
right to file proof of claims) under this Indenture or under any of the Notes
may be enforced by the Trustee without the possession of any of the Notes or the
production thereof in any trial or other proceeding related thereto and any such
suit or proceeding instituted by the Trustee shall be brought in its name as the
Trustee without the necessity of joining as plaintiffs or defendants any Holder
of the Notes, and any recovery of judgment shall be for the equal and ratable
benefit of the Holders of the Outstanding Notes.

         9.7 RIGHTS AND REMEDIES OF NOTEHOLDERS. No Holder of any Note shall
have any right to institute any suit, action or proceeding at law or in equity
for the enforcement of this Indenture or for the execution of any trust hereof
or for the appointment of a receiver or any other remedy hereunder or
thereunder, unless (a) an Event of Default has occurred of which the Trustee has
been notified by such Holder as provided in Section 10.1(l) hereof, or of which
by said subsection it is deemed to have notice, (b) the Holders of not less than
25% of the Outstanding Note Amount shall have given written notice to the
Trustee and shall have offered it reasonable opportunity either to proceed to
exercise the powers herein before granted or to institute such action, suit or
proceeding in their own name or names, (c) Noteholders have offered to the
Trustee indemnity as provided in Section 10.1(p) hereof, and (d) the Trustee
shall thereafter fail or refuse to exercise the powers herein before granted
within thirty (30) days thereafter, or to institute such action, suit or
proceeding in its own name; and such notification, request and offer of
indemnity are hereby declared in every case at the option of the Trustee to be
conditions precedent to the execution of the powers and trusts of this
Indenture, and to any action

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<PAGE>

or cause of action for the enforcement of this Indenture, or for the appointment
of a receiver or for any other remedy hereunder or thereunder; it being
understood and intended that no one or more Holders of the Notes shall have any
right in any manner whatsoever to affect, disturb or prejudice the Lien of this
Indenture by its, his or their action or to enforce any right hereunder except
in the manner herein provided, and that all proceedings at law or in equity
shall be instituted, had and maintained in the manner herein provided and for
the equal and ratable benefit of the Holders of all Notes Outstanding. However,
nothing contained in this Indenture shall affect or impair the right of any
Noteholders to enforce the payment of the principal of and interest on any Note
at and after the Maturity Date thereof, or the obligation of the Issuer to pay
the principal of and interest on each of the Notes issued hereunder to the
respective Holders thereof at the time, place, from the source and in the manner
in the Notes expressed.

         9.8 TERMINATION OF PROCEEDINGS. In case the Trustee shall have
proceeded to enforce any right under this Indenture by the appointment of a
receiver or otherwise, and such proceedings shall have been discontinued or
abandoned for any reason, or shall have been determined adversely, then and in
every such case the Issuer, the Trustee and the Noteholders shall be restored to
their former positions and rights hereunder and thereunder, respectively, with
regard to the property herein subject to this Indenture, and all rights,
remedies and powers of the Trustee shall continue as if no such proceedings had
been taken.

         9.9 WAIVERS OF EVENTS OF DEFAULT. The Trustee may waive any Event of
Default that has been remedied and any Event of Default (and its consequences)
relating to a default in the performance or observance of any covenant,
agreement or condition contained in the Indenture, or a breach of a
representation or warranty made by the Issuer in the Indenture or in any
certificate or report furnished under the Indenture, or the occurrence of any
"event of default" under the contracts and related documents governing the
transfer and servicing of the Loans and other matters relating to the issuance
of the Notes. The Trustee may waive any other Event of Default that has occurred
and is continuing only upon the written request of the Required Noteholders;
provided, however, that there shall not be waived (x) any Event of Default in
the payment of the principal of any outstanding Notes when due or (y) any
default in the payment when due of the interest on any such Notes unless, prior
to such waiver or rescission, all arrears of interest or all arrears of payments
of principal when due, with interest on overdue principal and, to the extent
permitted by applicable law, interest at the Applicable Remittance Rate, and all
expenses of the Trustee in connection with such Event of Default shall have been
paid or provided for, and in case of any such waiver or rescission, or in case
any proceedings taken by the Trustee on account of any such Event of Default
shall have been discontinued or abandoned or determined adversely, then and in
every such case the Issuer, the Trustee and the Noteholders shall be restored to
their former positions and rights hereunder, respectively, but no such waiver or
rescission shall extend to any subsequent or other Event of Default or impair
any right consequent thereon. Any waivers made by the Trustee pursuant to this
Section shall be in writing and shall specify the nature of the Event of Default
and the effective date of the waiver and the Trustee shall send a copy of all
such waivers to the Noteholders and the Rating Agency.

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<PAGE>

                                   ARTICLE X

                                     TRUSTEE

         10.1 ACCEPTANCE OF THE TRUSTS. The Trustee hereby accepts the trusts
imposed upon it by this Indenture, and agrees to perform said trusts and to
continue to perform, provided that the Trustee may, in accordance with Section
10.6 hereof, exercise its right to resign from the trusts created hereby; and
provided further that the acceptance by the Trustee of the trusts imposed under
this Indenture and the agreement to perform said trusts are subject to the
following express terms and conditions:

                  (a) The Trustee agrees to accept receipt, subject to review as
stated herein, of the Loans and other assets in the Trust Estate and declares
that it holds and will hold the Loans and other assets in the Trust Estate in
trust for the benefit of the Noteholders.

                  (b) The Trustee, prior to the occurrence of an Event of
Default and after the curing of all Events of Default which may have occurred,
undertakes to perform such duties and only such duties as are specifically set
forth in this Indenture, and no implied duties shall be read into this Indenture
against the Trustee. In case an Event of Default has occurred (which has not
been cured or waived), the Trustee shall exercise such of the rights and powers
vested in it by this Indenture, and use the same degree of care and skill in
their exercise, as a prudent man would exercise or use under the circumstances
in the conduct of his own affairs.

                  (c) The Trustee shall not be liable for its acts or omissions
in carrying out its duties hereunder, except for its own negligence or willful
misconduct. The Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it shall be proved that the Trustee
was negligent in ascertaining the pertinent facts.

                  (d) The Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the
directions of the Required Noteholders relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred upon the Trustee under this Indenture.

                  (e) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.

                  (f) The Trustee may execute any of the trusts or powers
hereunder and perform any of its duties hereunder either directly or by or
through agents or attorneys or a custodian or nominee and the Trustee shall not
be responsible for any misconduct or negligence on the part of any such party
appointed in good faith with due care by it hereunder. The Trustee may consult
with counsel, including Issuer's counsel, concerning all matters of trusts
hereof and the duties hereunder, and may in all cases pay such reasonable
compensation to all such attorneys, agents, receivers and employees as may
reasonably be employed in connection with the trusts hereof. The Trustee may act
or refrain from acting upon the opinion or advice of any

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<PAGE>

attorneys approved by the Trustee in the exercise of reasonable care. The
Trustee shall not be responsible for any loss or damage resulting from any
action or inaction in good faith in reliance upon such opinion or advice.

                  (g) The recitals contained herein and in the Notes, other than
the certificate of authentication, shall be taken as statements of the Issuer,
and the Trustee assumes no responsibility for their correctness. The Trustee
makes no representation as to the validity or sufficiency of this Indenture or
of the Notes or of any Loans or related document. The Trustee shall not be
accountable for the use or application by the Issuer of any of the proceeds of
any of the Notes, or for the use or application of any funds deposited in or
withdrawn from the Collection Account or the Spread Account or any other account
by or on behalf of the Issuer. The Trustee shall not be responsible for the
accuracy or content of any resolution, certificate, statement, opinion, report,
document, order or other instrument furnished by the Issuer and accepted by the
Trustee in good faith, pursuant to this Indenture. The Trustee shall have no
duty to monitor the performance of the Issuer and Servicers, nor shall it have
any liability in connection with the malfeasance or nonfeasance by the Issuer
and Servicers except for its obligations under the Supervisory Servicing
Agreement; provided, however, if the Trustee has assumed the role of a Servicer
it shall be liable for its own malfeasance or nonfeasance in acting as Servicer.
The Trustee shall have no liability in connection with compliance by the Issuer
and Servicers with statutory or regulatory requirements related to the Indenture
and the Notes.

                  (h) The Trustee shall not be accountable for the use of any
Notes authenticated or delivered hereunder. The Trustee may in good faith buy,
sell, own and hold any of the Notes and may join in any action which any Holder
of Notes may be entitled to take with like effect as if the Trustee were not a
party to this Indenture. The Trustee may also engage in or be interested in any
financial or other transaction with the Issuer or any Holder, provided that if
the Trustee determines that any such relationship is in conflict with its duties
under this Indenture, it shall eliminate the conflict or resign as the Trustee.

                  (i) The Trustee may rely and shall be protected in acting or
refraining from acting to the extent such action or inaction is directed by any
notice, request, consent, certificate, order, affidavit, letter, telegram or
other paper or document believed to be genuine and correct and to have been
signed or sent by the proper person or persons. Any action taken by the Trustee
pursuant to this Indenture upon the request or authority or consent of any
person who at the time of making such request or giving such authority or
consent is the Holder of any Note, shall be conclusive and binding upon all
future Holders of the same Note and upon Notes issued in exchange therefor or in
place thereof.

                  (j) As to the existence or nonexistence of any fact or as to
the sufficiency or validity of any instrument, paper or proceeding, the Trustee
shall be entitled to rely upon a certificate signed by an Authorized Officer of
the Issuer as sufficient evidence of the facts therein contained and prior to
the occurrence of an Event of Default of which the Trustee has been notified as
provided in subsection (l) of this Section, or of which by said subsection it is
deemed to have notice, shall also be at liberty to accept a similar certificate
to the effect that any particular dealing, transaction or action is necessary or
expedient, but may, at its discretion, secure such further evidence deemed
necessary or advisable, but shall in no case be bound to secure the same. The
Trustee may accept a certificate of an Authorized Officer of the Issuer to

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<PAGE>

the effect that a resolution in the form therein set forth has been adopted by
the Issuer as conclusive evidence that such resolution has been duly adopted,
and is in full force and effect.

                  (k) The permissive right of the Trustee to do things
enumerated in this Indenture shall not be construed as a duty and it shall not
be answerable for other than its negligence or willful misconduct.

                  (l) The Trustee shall not be required to take or be charged
with notice or be deemed to have notice of any Event of Default hereunder,
except any Event of Default described in Sections 9.1(a) and (b) or the failure
of the Issuer to file with the Trustee any document required by this Indenture,
or of the Servicers to file with the Trustee any document required by the
Servicing Agreement to be so filed subsequent to the issuance of the Notes,
unless the Trustee shall be specifically notified in writing of such Event of
Default by the Issuer, the Servicers, the Supervisory Servicer or any Holder,
and all notices or other instruments required by this Indenture to be delivered
to the Trustee must, in order to be effective, be delivered at the Corporate
Trust Office of the Trustee, and, in the absence of such delivery, the Trustee
may conclusively assume there is no Event of Default except as aforesaid.

                  (m) At any and all reasonable times the Trustee, and its duly
authorized agents, attorneys, experts, engineers, accountants and
representatives, shall have the right fully to inspect any and all of the
property herein conveyed, including all books, papers and records of the Issuer
and the Servicers pertaining to the revenues and receipts under the Loans and
the Underlying Notes, and to take such notes from and in regard thereto as may
be desired.

                  (n) The Trustee shall not be required to give any bond or
surety in respect of the execution of the said trusts and powers or otherwise in
respect of the premises.

                  (o) Notwithstanding anything elsewhere in this Indenture
contained, the Trustee shall have the right, but shall not be required, to
demand, in respect of the authentication of any Notes, the withdrawal of any
cash, or any action whatsoever within the purview of this Indenture, any
showings, certificates, opinions, appraisals or other information, or corporate
action or evidence thereof, in addition to that by the terms hereof required as
a condition of such action by the Trustee deemed desirable for the purpose of
establishing the right of the Issuer to the authentication of any Notes, the
withdrawal of any cash, or the taking of any other action by the Trustee.

                  (p) Before taking the action referred to in Article IX hereof,
the Trustee may require that a satisfactory indemnity bond be furnished for the
reimbursement of all expenses to which the Trustee may be put and to protect it
against all liability, except liability which is adjudicated to have resulted
from its negligence or willful misconduct by reason of any action so taken.

                  (q) All moneys received by the Trustee or any Paying Agent
shall, until used or applied or invested as herein provided, be held in trust
for the purposes for which they were received and shall be segregated from other
funds and accounts and not commingled with any other funds.

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<PAGE>

         10.2 FEES, CHARGES AND EXPENSES OF TRUSTEE. The Trustee shall be
entitled to payment and reimbursement for the Trustee's Fee and all reasonable
counsel fees and other out-of-pocket expenses reasonably incurred by the Trustee
to third parties in connection with such services from moneys available therefor
in accordance with the priority set forth in Section 6.4 hereof and the Trustee
shall have the first Lien with right of payment prior to payment on any Note
upon the Trust Estate for the amount of the Trustee's Fee. The Trustee shall
have no claims against the Trust Estate for amounts owed to it hereunder other
than as specified above. The Issuer agrees to indemnify and hold the Trustee and
its officers, directors, agents and employees harmless from any loss, claim,
demand, liability or expense (including, without limitation, fees and expenses
of its attorneys) arising from or related to the acceptance of and performance
of its duties under this Indenture which do not result from the Trustee's
negligence or willful misconduct. This Section 10.2 shall survive the
termination of this Indenture or resignation or removal of the Trustee. Such
indemnity shall not be payable from the Trust Estate, except as provided in
Section 6.4, and the Trustee shall not institute any legal action, including a
bankruptcy proceeding against the Issuer to enforce such indemnity while the
Notes are outstanding.

         10.3 NOTICE TO NOTEHOLDERS IF DEFAULT OCCURS. If an Event of Default
occurs of which the Trustee is by Section 10.1(l) hereof required to take notice
or if notice of an Event of Default be given as in Section 10.1(l) hereof
provided, then the Trustee shall promptly, and in any event, within three
Business Days, give written notice thereof by overnight mail to the Holders of
all Notes Outstanding, shown by the list of Noteholders required by Section 2.9
hereof to be kept at the office of the Trustee.

         10.4 INTERVENTION BY TRUSTEE. In any judicial proceeding concerning the
issuance or the payment of the Notes to which the Issuer is a party and which in
the opinion of the Trustee and its counsel has a substantial bearing on the
interests of the Holders of the Notes, the Trustee may intervene on behalf of
Noteholders and shall do so if requested in writing by the owners of at least
25% of the Outstanding Note Amount, subject to receipt of satisfactory indemnity
as contemplated by Section 10.1(p).

         10.5 MERGER OR CONSOLIDATION OF TRUSTEE. Any corporation or association
into which the Trustee may be converted or merged, or with which it may be
consolidated, or to which it may sell or transfer its trust business and assets
as a whole or substantially as a whole, or any corporation or association
resulting from any such conversion, sale, merger, consolidation or transfer to
which it is a party, ipso facto, shall be and become successor Trustee hereunder
and vested with all of the title to the Trust Estate and all the trusts, powers,
discretions, immunities, privileges and all other matters as was its
predecessor, without the execution or filing of any instrument or any further
act, deed or conveyance on the part of any of the parties hereto, anything
herein to the contrary notwithstanding; provided such successor Trustee accepts
the duties and responsibilities hereunder and is eligible pursuant to Section
10.9.

         10.6 RESIGNATION BY TRUSTEE. The Trustee and any successor Trustee may
at any time resign from the trusts hereby created by giving sixty (60) days'
written notice by registered or certified mail to the Issuer, the Servicers, the
Supervisory Servicer, the Noteholders, the Rating Agency and by first-class mail
(postage prepaid) to the Holders of the Notes and such resignation shall take
effect upon the appointment of a successor Trustee by the Issuer pursuant to

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Section 10.8 and in accordance with Section 10.9 hereof. Upon receiving such
notice of resignation, the Issuer shall promptly appoint a successor Trustee
approved by the Servicers, such consent not to be unreasonably withheld or
delayed. If no successor Trustee shall have been so appointed and have accepted
appointment within sixty (60) days of the mailing of such notice of resignation,
the resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee. Such court may thereupon, after such notice,
if any, as it may deem proper and prescribed, appoint a successor Trustee.

         10.7 REMOVAL OF TRUSTEE. The Trustee may be removed at any time, by the
Issuer, provided no Event of Default then exists and is continuing, by an
instrument or concurrent instruments in writing delivered to the Trustee, the
Supervisory Servicer, the Rating Agency, and the Noteholders.

         10.8 APPOINTMENT OF SUCCESSOR TRUSTEE; TEMPORARY TRUSTEE. In case the
Trustee hereunder shall resign or be removed, or be dissolved, or shall be in
course of dissolution or liquidation, or otherwise become incapable of acting
hereunder, or in case it shall be taken under the control of any public officer
or officers, or of a receiver appointed by a court, a successor may be appointed
by the Issuer with the written consent of the Servicers, such consent not to be
unreasonably withheld or delayed, by an instrument in writing signed by the
Issuer and a copy of which shall be delivered personally or sent by registered
mail to the Noteholders. Nevertheless, in case of such vacancy, the Issuer by
resolution may appoint a temporary Trustee to fill such vacancy until a
successor Trustee shall be appointed in the manner above provided; and any such
temporary Trustee so appointed by the Issuer shall immediately and without
further act be superseded by the Trustee so appointed. Notice of the appointment
of a successor Trustee shall be given in the same manner as provided by Section
10.6 hereof with respect to the resignation of a Trustee; provided in each case
any successor Trustee shall meet the eligibility requirements of Section 10.9.

         10.9 CONCERNING ANY SUCCESSOR TRUSTEE. Every successor Trustee
appointed hereunder shall execute, acknowledge and deliver to its or his
predecessor and also to the Issuer, the Servicers, the Supervisory Servicer, the
Noteholders and the Rating Agency an instrument in writing accepting such
appointment hereunder, and thereupon such successor, without any further act,
deed or conveyance, shall become fully vested with all the estates, properties,
rights, powers, trusts, duties and obligations of its predecessors; but such
predecessor shall, nevertheless, on the written request of the Issuer, or of its
successor, execute and deliver an instrument transferring to such successor
Trustee all the estates, properties, rights, powers and trusts of such
predecessor hereunder; and every predecessor Trustee shall deliver all
securities and moneys held by it as the Trustee hereunder to its or his
successor, including, but not limited to, a transfer of the Loans and the
Trustee Loan Files. Should any instrument in writing from the Issuer be required
by any successor Trustee for more fully and certainly vesting in such successor
the estate, rights, powers and duties hereby vested or intended to be vested in
the predecessor, any and all such instruments in writing shall, on request, be
executed, acknowledged and delivered by the Issuer. The resignation of any
Trustee and the instrument or instruments removing any Trustee and appointing a
successor hereunder, together with all other instruments provided for in this
Article, shall be filed or recorded by the successor Trustee in each recording
office where this Indenture shall have been filed or recorded. Any successor
Trustee shall be required to (i) have corporate trust powers, (ii) have not less
than $100,000,000

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<PAGE>

in capital and surplus, (iii) be a member of the Federal Deposit Insurance
Corporation, and (iv) have a long-term unsecured debt rating from the Rating
Agency of at least "Baa3" or its equivalent, as applicable.

         10.10 DESIGNATION AND SUCCESSION OF PAYING AGENTS. The Paying Agent for
the Notes shall be the Trustee. Any bank or trust company with or into which any
Paying Agent may be merged or consolidated, or to which the assets and business
of such Paying Agent may be sold, shall be deemed the successor of such Paying
Agent for the purposes of this Indenture. If the position of Paying Agent shall
become vacant for any reason, the Issuer shall, within thirty (30) days
thereafter, appoint a bank or trust company having corporate trust powers and
having a long-term unsecured debt rating from the Rating Agency of at least
"Baa3" or its equivalent, as applicable, to fill such vacancy; provided,
however, that if the Issuer shall fail to appoint such Paying Agent within said
period, the Trustee shall make such appointment, subject to the foregoing
eligibility requirements. Other Paying Agents or fiscal agents may be appointed
pursuant to this Section 10.10 by the Issuer if in its discretion additional
Paying Agents or fiscal agents are deemed advisable.

         The Paying Agents shall enjoy the same protective provisions in the
performance of their duties hereunder as are specified in Section 10.1 hereof
with respect to the Trustee insofar as such provisions may be applicable.

         Notice of the appointment of additional Paying Agents or fiscal agents
shall be given in the same manner as provided by Section 10.8 hereof with
respect to the appointment of a successor Trustee.

         10.11 APPOINTMENT OF CO-TRUSTEE. It is the purpose of this Indenture
that there shall be no violation of any law of any jurisdiction denying or
restricting the right of banking corporations or associations to transact
business as the Trustee in such jurisdiction. It is recognized that, in case of
litigation under this Indenture, the Loans and, in particular, in case of the
enforcement thereof on default, or in case the Trustee deems that by reason of
any present or future law of any jurisdiction it may not exercise any of the
powers, rights or remedies herein granted to the Trustee or hold title to the
properties, in trust, as herein granted, or take any other action which may be
desirable or necessary in connection therewith, it may be necessary that the
Trustee appoint an additional individual or institution as a separate or
Co-Trustee.

         Therefore, the Trustee shall have the right to appoint one or more
persons to act as its Co-Trustee or Co-Trustees, jointly with the Trustee, of
all or any part of the Trust Estate, and to vest in such person or persons, in
such capacity, such title to the Trust Estate, or any part thereof, and, subject
to the other provisions of this Section 10.11, such powers, duties, obligation,
rights and trusts as the Trustee may consider necessary or desirable.

         Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the Co-Trustees, as effectively as if given
to each of them. Every instrument appointing any Co-Trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument or appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Indenture,
specifically

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<PAGE>

including every provision of this Indenture relating to the conduct of,
affecting the liability of, or affording protection to, the Trustee. Every such
instrument shall be filed with the Trustee.

         Any Co-Trustee may, at any time, constitute the Trustee, its agent or
attorney-in-fact, with full power and authority, to the extent not prohibited by
law, to do any lawful act under or in respect of this Agreement on its behalf
and in its name. If any Co-Trustee shall die, become incapable of acting, resign
or be removed, all of its estates, properties, rights, remedies and trusts shall
vest in and be exercised by the Trustee, to the extent permitted by law, without
the appointment of a new or successor Trustee. No Co-Trustee shall be required
to satisfy the eligibility requirements for a successor Trustee set forth in
Section 10.9 hereunder and no notice to the Noteholders of the appointment of a
Co-Trustee shall be required.

         In the event that the Trustee appoints an additional individual or
institution as a separate or Co-Trustee, each and every remedy, power, right,
claim, demand, cause of action, immunity, estate, title, interest and Lien
expressed or intended by this Indenture to be exercised by or vested in or
conveyed to the Trustee with respect thereto shall be exercisable by and vest in
such separate or Co-Trustee but only to the extent necessary to enable such
separate or Co-Trustee to exercise such powers, rights and remedies, and every
covenant and obligation necessary to the exercise thereof by such separate or
Co-Trustee shall run to and be enforceable by either of them.

         Should any instrument in writing from the Issuer be required by the
separate or Co-Trustee so appointed by the Trustee for more fully and certainly
vesting in and confirming to him or it such properties, rights, powers, trusts,
duties and obligations, any and all such instruments in writing shall, on
request, be executed, acknowledged and delivered by the Issuer. In case any
separate or Co-Trustee, or a successor to either, shall die, become incapable of
acting, resign or be removed, all the estates, properties, rights, powers,
trusts, duties and obligations of such separate or Co-Trustee, so far as
permitted by law, shall vest in and be exercised by the Trustee until the
appointment of a new Trustee or successor to such separate or Co-Trustee.

                                   ARTICLE XI

                             SUPPLEMENTAL INDENTURES

         11.1 SUPPLEMENTAL INDENTURES; CONSENT OF NOTEHOLDERS.

                  (a) The Issuer and the Trustee may, with notice to all of the
Noteholders and the Rating Agency, enter into an indenture or indentures
supplemental to this Indenture for the following purposes:

                           (i) To specify and determine any matters and things
relative to the Notes which are not contrary to or inconsistent with this
Indenture and which shall not materially adversely affect the interests of the
Noteholders;

                           (ii) To cure any defect, omission, conflict, or
ambiguity in this Indenture or between the terms and provisions hereof and any
other document executed or delivered in connection herewith;

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<PAGE>

                           (iii) To grant to or confer upon the Trustee for the
benefit of the Noteholders any additional rights, remedies, powers, authority,
or security which may lawfully be granted or conferred and which are not
contrary to or inconsistent with this Indenture as theretofore in effect;

                           (iv) To add to the covenants and agreements of the
Issuer in this Indenture other covenants and agreements to be observed by the
Issuer which are not contrary to or inconsistent with this Indenture as
theretofore in effect;

                           (v) To add to the limitations and restrictions in
this Indenture other limitations and restrictions to be observed by the Issuer
which are not contrary to or inconsistent with this Indenture as theretofore in
effect;

                           (vi) To confirm, as further assurance, any pledge
under, and the subjection to any claim, Lien or pledge created or to be created
by this Indenture of the revenues arising from the pledge of any moneys,
securities, funds or other parts of the Trust Estate;

                           (vii) To amend or modify any provisions of this
Indenture required by the Rating Agency to maintain the rating of the Notes;

                           (viii) To amend or modify any provisions of this
Indenture required by the Trustee, DTC or DTC's Nominee to facilitate the book
entry issuance of the Notes or the issuance of Definitive Notes as contemplated
herein; or

                           (ix) To amend or modify any provisions of this
Indenture, so long as such amendment or modification does not materially
adversely affect the interests of the Noteholders (which may be evidenced by an
Opinion of Independent Counsel delivered to the Trustee).

                  (b) The Issuer and the Trustee may, with the written consent
of the Required Noteholders and notice to all of the Noteholders and the Rating
Agency, enter into an indenture or indentures supplemental to this Indenture for
purposes other than those specified in Section 11.1(a); provided, however, that
nothing contained in this Section shall permit, or be construed as permitting,
without the consent of the Holders of all Notes Outstanding, any change of the
Maturity Date or other due date of the principal of or any installment of the
interest on any Note issued hereunder, or a reduction in the principal amount of
any Note or the Applicable Remittance Rate, or a privilege or priority of any
Note or Notes over any other Note or Notes, a reduction in the Outstanding Note
Amount required for consent to such supplemental indenture or for any waiver of
compliance with the provisions of this Indenture or Events of Default and their
consequences, any modification of this Section 11.1(b) or Section 11.1(c) or any
modification of this Indenture that would cause the Rating Agency to downgrade
the ratings of the Notes unless the Noteholders have unanimously consented to
such modification and downgrade.

                  (c) With respect to each supplemental indenture, the Trustee
shall be provided a certificate of an Authorized Officer of the Issuer and, if
requested by the Trustee, an Opinion of Counsel to the effect that the
supplemental indenture is duly authorized under this Article XI and all
conditions to its entry have been satisfied, and the Trustee shall be fully
protected in its

TRUST INDENTURE - Page 46
<PAGE>

execution and delivery of the supplemental indenture in reliance on such
certificate and, if requested, by the Trustee, such opinion. If at any time the
Issuer shall request the Trustee to enter into any such supplemental indenture
for any of the purposes of Section 11.1(b), the Trustee shall, upon being
satisfactorily indemnified with respect to expenses, cause notice of the
proposed execution of such supplemental indenture to be mailed by registered or
certified mail to each Holder of a Note as shown on the list of Noteholders
required by Section 2.9 hereof. Such notice shall briefly set forth the nature
of the proposed supplemental indenture and shall include a copy of the proposed
supplemental indenture. If, within sixty (60) days or such longer period as
shall be prescribed by the Issuer following the final distribution of such
notice, the Required Noteholders at the time of the execution of any such
supplemental indenture shall have consented to and approved the execution
thereof as herein provided (other than where a unanimous consent is required as
described above), no owner of any Note shall have any right to object to any of
the terms and provisions contained herein, or the operation thereof, or in any
manner to question the propriety of the execution thereof, or to enjoin or
restrain the Trustee or the Issuer from executing the same or from taking any
action pursuant to the provisions thereof. Upon the execution of any
supplemental indenture as in this Section permitted and provided, this Indenture
shall be and be deemed to be modified and amended in accordance therewith.

         11.2 COPY OF SUPPLEMENTAL INDENTURES. The Trustee shall provide a copy
of any Supplemental Indenture executed to each of the Servicers, the Supervisory
Servicer, the Noteholders and the Rating Agency.

         11.3 AMENDMENTS TO TRANSACTION DOCUMENTS. The Trustee may not enter
into or consent to an amendment to any other Transaction Document, except as
expressly permitted therein, without the consent of the Required Noteholders.

                                  ARTICLE XII

                                  MISCELLANEOUS

         12.1 CONSENTS, ETC., OF NOTEHOLDERS. Any consent, request, direction,
approval, objection or other instrument required by this Indenture to be signed
and executed by the Noteholders may be in any number of concurrent writings of
similar tenor and may be signed or executed by such Noteholders in person or by
agent thereof appointed in writing. Proof of the execution of any such consent,
request, direction, approval, objection or other instrument or of the writing
appointing any such agent and of the ownership of Notes, if made in the
following manner, shall be sufficient for any of the purposes of this Indenture,
and shall be conclusive in favor of the Trustee and any Paying Agent with regard
to any action taken by it under such request or other instrument, namely:

                  (a) The fact and date of the execution by any person of any
such writing may be proved by the certificate of any officer in any jurisdiction
who by law has power to take acknowledgments within such jurisdiction that the
person signing such writing acknowledged before him the execution thereof, or by
an affidavit of any witness to such execution.

TRUST INDENTURE - Page 47
<PAGE>

                  (b) The fact of ownership of Notes and the amount or amounts,
numbers and other identification of Notes, and the date of holding the same
shall be proved by the registration books of the Issuer maintained by the
Trustee pursuant to Section 2.9 hereof.

         12.2 LIMITATION OF RIGHTS; NON-RECOURSE OBLIGATIONS. With the exception
of rights herein expressly conferred, nothing expressed or mentioned in or to be
implied from this Indenture or the Notes is intended or shall be construed to
give to any Person other than the parties hereto, and the Holders of the Notes,
any legal or equitable right, remedy or claim under or in respect to this
Indenture or any covenants, conditions and provisions herein contained; this
Indenture and all of the covenants, conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of the parties
hereto and the Holders of the Notes as herein provided. THE NOTES ARE
NON-RECOURSE OBLIGATIONS OF THE ISSUER AND NEITHER THE TRUSTEE NOR THE
NOTEHOLDERS SHALL HAVE ANY RIGHTS TO ENFORCE THE PAYMENT OR PERFORMANCE OF THE
ISSUER'S OBLIGATIONS HEREUNDER OR UNDER THE TRANSACTION DOCUMENTS AGAINST THE
PARTNERS OR AFFILIATES OF THE ISSUER OR THEIR RESPECTIVE ASSETS. NO OFFICER,
AGENT OR EMPLOYEE OF THE ISSUER OR OF ANY AFFILIATE OF THE ISSUER, SHALL IN ANY
EVENT BE SUBJECT TO ANY PERSONAL LIABILITY FOR ANY PAYMENTS OR OTHER AMOUNTS DUE
IN RESPECT OF THE NOTES OR IN RESPECT OF ANY OBLIGATIONS OF THE PARTIES UNDER
ANY OF THE TRANSACTION DOCUMENTS.

         12.3 SEVERABILITY. If any one or more of the covenants, agreements,
provisions or terms of this Indenture shall be held invalid for any reason
whatsoever, then such covenants, agreements, provisions or terms shall be deemed
severable from the remaining covenants, agreements, provisions or terms of this
Indenture and shall in no way affect the validity or enforceability of the other
covenants, agreements, provisions or terms of this Indenture. The parties hereto
further agree that the holding by any court of competent jurisdiction that any
remedy pursued by the Trustee hereunder is unavailable or unenforceable shall
not affect in any way the ability of the Trustee to pursue any other remedy
available to it.

         12.4 NOTICES. Any notice, request, complaint, demand, communication or
other paper shall be in writing and sufficiently given if addressed to the
appropriate Notice Address and delivered by hand delivery or sent by nationally
recognized express courier, or mailed by registered mail, postage prepaid, or
transmitted by telecopy and shall be effective upon receipt, except when
telecopied, in which case, any such communication shall be effective upon
telecopy against receipt of answer back or written confirmation thereof. The
Issuer and the Trustee may, by notice given hereunder, designate any further or
different addresses to which subsequent notices, certificates or other
communications shall be sent.

         12.5 PAYMENTS DUE ON SATURDAYS, SUNDAYS AND HOLIDAYS. In any case where
the due date of interest on or principal of the Notes or the date fixed for
redemption of any Note shall be other than a Business Day, then payment of
interest or principal may be made on the next Business Day with the same force
and effect as if made on the due date or the date fixed for redemption.

         12.6 COUNTERPARTS. This Indenture may be simultaneously executed in
several counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.

TRUST INDENTURE - Page 48
<PAGE>

         12.7 APPLICABLE PROVISIONS OF LAW. THIS INDENTURE SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.

         12.8 CAPTIONS. The captions or headings in this Indenture are for
convenience only and in no way define, limit or describe the scope or intent of
any provisions or Sections of this Indenture.

               [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]

TRUST INDENTURE - Page 49
<PAGE>

         IN WITNESS WHEREOF, the Issuer has caused this Indenture to be executed
on its behalf by its General Partner and the Trustee, to evidence its acceptance
of the trusts created hereunder, has caused this Indenture to be executed as of
the date first written above.

                                              PMC JOINT VENTURE, L.P. 2003-1

                                              By: PMC Joint Venture LLC 2003-1,
                                                  its General Partner

                                              By: /s/ Jan F. Salit
                                                  ------------------------------
                                                  Jan F. Salit, Executive Vice
                                                  President

                                              THE BANK OF NEW YORK,
                                                 as Trustee

                                              By: /s/ Eric A. Lindahl
                                                  ------------------------------
                                              Name: /s/ Eric A. Lindahl
                                                    ----------------------------
                                              Title: Agent
                                                     ---------------------------

TRUST INDENTURE - Page 50

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