<PAGE>
                                                                    Exhibit 10.3

                            Dated 16th October 2002

                                 LOAN AGREEMENT

                                     BETWEEN

                               DIANA TRADING LTD.

                                - the Borrower -

                           OCEANOPERA SHIPPING LIMITED

                           - the Corporate Guarantor -

                                      -AND-

                                  HSBC BANK PLC

                                  - the Bank -

<PAGE>

                                      INDEX

<TABLE>
<CAPTION>
CLAUSE                                                                   PAGE NO
------                                                                   -------
<S>                                                                      <C>
 1. Purpose and Definitions                                                  1
 2. The Loan                                                                 5
 3. Interest and Interest Periods                                            5
 4. Repayments and Prepayments                                               7
 5. Fees and Expenses                                                        9
 6. Payments and Accounts                                                    9
 7. Representations and Warranties                                          10
 8. Undertakings                                                            12
 9. Conditions                                                              16
10. Events of Default                                                       16
11. Indemnities and Expenses                                                18
12. Force Majeure, Unlawfulness, Increased Costs, Alternative Interest
    Rates                                                                   19
13. Set-Off Security                                                        21
14. Assignment and Lending Offices                                          22
15. Guarantee                                                               23
16. Notices                                                                 25
17. Law and Jurisdiction                                                    27
18. Joint and Several Liability                                             27
    Schedule 1                                                              29
    Schedule 2                                                              31
</TABLE>

<PAGE>

                                       1


                                 LOAN AGREEMENT

Dated 16th October 2002

BETWEEN

1. DIANA TRADING LTD., a company incorporated under the laws of the Republic of
the Marshall Islands, whose registered office is at Trust Company Complex,
Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (the
"Borrower")

2. OCEANOPERA SHIPPING LIMITED, a company incorporated under the laws of the
Republic of Cyprus, whose registered office is at Tribune House, 10 Skopa
street, Nicosia, Cyprus (the "Corporate Guarantor")

AND

HSBC BANK PLC, a company duly incorporated under the laws of England, having its
registered office at 27-32 Poultry, London EC2P 2BX acting for the purposes of
this Agreement through its branch at 93 Akti Miaouli, Piraeus, Greece (the
"Bank").

1.   PURPOSE AND DEFINITIONS

1.01 This Agreement sets out the terms and conditions upon which HSBC BANK PLC
will make available to the Borrower a loan up to U.S. Dollars five million nine
hundred thousand (U.S. $ 5,900,000) for a period of six (6) years from the
Drawdown Date of the facility, for the purpose of financing the acquisition
price of m/v "DOOYANG HOPE" presently under Korean flag, which will be purchased
by the Borrower and registered in its ownership under the flag of the Marshall
Islands in the new name "IRINI".

1.02 In this Agreement, unless the context otherwise requires:

"AGREED RATE" means a rate agreed between the Bank and the Borrower on the basis
of which (instead of LIBOR) the interest rate is determined pursuant to Clause
3.01.

"ASSIGNMENT(S)" means the deed(s) of assignment of Insurances, Earnings and
Requisition Compensation of the vessels in favour of the Bank.

"BANK" means HSBC BANK PLC acting through its branch at 93 Akti Miaouli,
Piraeus, Greece, and includes its successors and assignees.

"BANKING DAY" means a day on which in each country or place in or at which any
act is required to be done under this Agreement banks and the relevant foreign
exchange markets are open for the transaction of business of the nature
concerned.

"COMMITMENT" means the total sum of U.S. $ 5,900,000 to be made available by the
Bank to the Borrower, in two tranches in accordance with Clause 2, subject to
the terms and conditions of this Agreement.

<PAGE>

                                        2


"CORPORATE GUARANTEE" means the irrevocable and unconditional guarantee of the
Corporate Guarantor in favour of the Bank contained in Clause 15 hereof.

"CORPORATE OBLIGORS" means the Borrower and the Corporate Guarantor.

"DEED(S) OF COVENANTS" means in relation to a Mortgage, the Deed of Covenants
supplemental thereto in form and substance satisfactory to the Bank.

"DOLLARS" and "$" means the lawful currency of the United States of America.

"DRAWDOWN DATE" means the date on which either of the tranches is advanced to
the Borrower hereunder pursuant to Clause 2.

"DRAWDOWN NOTICE" means a notice substantially in the terms of Schedule 1.

"DRAWDOWN PERIOD" means the period from the date of this Agreement and ending
(a) for the tranche A at 11.00 a.m. (London time) on 31st October 2002 and (b)
for the tranche B at 11.00 a.m. (London time) on the date following the
completion of the Vessel's special survey by 20th December 2002 or, if earlier,
(i) the date on which the relevant tranche is advanced by the Bank to the
Borrower, or (ii) the date on which the obligation of the Bank to make the
Commitment available is terminated or ceases according to Clauses 10.02 or 12.

"EARNINGS" in relation to the vessels, means all hires, freights, pool income
and other sums payable to or for the account of the Owner in respect of these
vessels including (without limitation) all remuneration for salvage and towage
services, demurrage and detention moneys, contributions in general average,
compensation in respect of any requisition for hire and damages (whether awarded
by any court or arbitral tribunal or by agreement or otherwise) for breach or
termination of any contract for the operation, employment or use of these
vessels.

"EARNINGS ACCOUNT" means a bank account to be opened with the Bank in the name
of the Borrower or other person nominated by the Borrower and designated
"EARNINGS ACCOUNT" or with such other designation as the Bank shall approve or
require, to which (inter alia) all Earnings of the Vessels are to be paid.

"ENCUMBRANCE" means any mortgage, charge (whether fixed or floating), pledge,
lien, hypothecation, assignment, security interest, or other encumbrance
securing any obligation of any person.

"EVENT OF DEFAULT" means any of the events or circumstances described in Clause
10.01.

"FINAL MATURITY DATE" means the date falling six (6) years after the Drawdown
Date of the tranche A.

"GUARANTEE(S)" means the Corporate Guarantee incorporated in Clause 15 of this
Agreement and the Personal Guarantee and in the singular means either of them.

<PAGE>

                                        3


"GUARANTOR(S)" means either or both of the Corporate Guarantor and the Personal
Guarantor.

"INDEBTEDNESS" means any obligation for the payment or repayment of money,
whether present or future, actual or contingent.

"INTEREST PAYMENT DATE" means the last day of an Interest Period and in respect
of any Interest Period of more than three (3) months duration the day falling at
successive three (3) monthly intervals after the commencement of such Interest
Period.

"INTEREST PERIOD" means each period for the calculation of interest in respect
of the Loan ascertained in accordance with Clauses 3.02 and 3.03.

"LAW" means any law, statute, treaty, convention, regulation, instrument or
other subordinate legislation or other legislative or quasi-legislative rule or
measure, including the ISM CODE, or any order or degree of any government,
judicial or public or other body or authority.

"LIBOR" means, in relation to a particular period and a particular amount, the
rate per cent per annum at which the Bank is able in accordance with its normal
practices to acquire dollar deposits in amounts comparable with this amount for
that period in the London Interbank Eurocurrency Market at or about 11.00 a.m.
(London time) on the second Banking Day before the beginning of that period.

"LOAN" means the aggregate principal amount owing to the Bank under this
Agreement at any relevant time.

"MARGIN" means one point six (1,6%) per cent per annum.

"MONTH" or "MONTHS" means a period of the required number of calendar months but
ending, subject to the exceptions below, on the day numerically corresponding to
the day of the calendar month on which it started and "monthly" shall be
construed accordingly. The exceptions are that (i) if the period started on the
last Banking Day in a calendar month or if there is no such numerically
corresponding day, it shall end on the last Banking Day in the relevant calendar
month, and (ii) if such numerically corresponding day is not a Banking Day, the
period shall end on the next Banking Day in the same calendar month but if there
is no such Banking Day it shall end on the preceding Banking Day.

"MORTGAGE(S)" means the First Preferred Marshall Islands Mortgage on the vessel
"DOOYANG HOPE" tbr "IRINI" and the Second Priority Cypriot Mortgage and Deed of
Covenants on the vessel "NIKOLAOS P" and in singular means either of them.

"OBLIGORS" means the Corporate Obligors and the Personal Guarantor.

"OWNER(S)" means the owner (whether Borrower or Guarantor) of the Vessels as
specified in the definition of Vessel(s).

<PAGE>

                                        4


"PERMITTED ENCUMBRANCE" means any encumbrance created pursuant to the Security
Documents of permitted to exist pursuant to the terms of this Agreement or the
Security Documents.

"PERSONAL GUARANTEE" means the irrevocable and unconditional guarantee to be
executed by the Personal Guarantor in favour of the Bank in form and substance
satisfactory to the Bank;

"PERSONAL GUARANTOR" means the person nominated by the Borrower and accepted by
the Bank who will execute the Personal Guarantee;

"REPAYMENT DATES" means each of the dates specified in Clause 4.01 on which the
Repayment Installments shall be payable by the Borrower to the Bank.

"REPAYMENT INSTALLMENT" means each installment of the Loan which becomes due for
repayment by the Borrower to the Bank on a Repayment Date pursuant to Clause
4.01.

"REQUISITION COMPENSATION" in relation to a Vessel, means all compensation or
other money which may from time to time be payable to the Owner as result of
that Vessel being requisitioned for title or in any other way compulsorily
acquired (other than by way of requisition for hire).

"SECURITY DOCUMENTS" means this Agreement, the Guarantees, the Mortgages, the
Deed of Covenants, the Assignments, and any such other documents as may have
been or shall hereafter be executed to secure all, or any of the sums of money
from time to time owing (whether the same shall be due and payable or not) by
the Borrower hereunder.

"TAXES" means all levies, imposts, duties, fees or charges deductions and
withholdings (including any related interest and penalties) and any restrictions
or conditions resulting in any charge, other than taxes on the overall net
income of the Bank, and "TAX" and "TAXATION" shall be interpreted accordingly.

"TOTAL LOSS" in relation to a Vessel means (a) an actual, constructive,
arranged, agreed or compromised total loss of that Vessel or (b) the requisition
for title or compulsory acquisition of that Vessel by or on behalf of any
government or other authority (other than by way of requisition for hire) or (c)
capture, seizure, arrest, detention or confiscation of that Vessel by any
government or by any person acting or purporting to act on behalf of any
government, unless that Vessel is released within sixty (60) days thereafter.

"VESSEL(S)" means m/v "DOOYANG HOPE" tbr "IRINI" to be owned by the Borrower and
m/v "NIKOLAOS P" owned by the Corporate Guarantor and the "Vessel" means either
of them.

1.03 Clause headings are inserted for convenience of reference only and shall be
ignored in the interpretation of this Agreement. In this Agreement, unless the
context otherwise requires, references to Clauses and Schedules are to be
construed as

<PAGE>

                                       5


references to clauses of, and schedules to, this Agreement; references to (or to
any specified provision of) this Agreement or any other document shall be
construed as references to this Agreement, that provision or that document as
amended with the agreement of the relevant parties and the prior written consent
of the Bank and in force at any relevant time; words importing the plural shall
include the singular and vice-versa and references to a person shall be
construed as references to an individual, firm, company, corporation,
unincorporated body of persons or any state or any agency thereof.

2.   THE LOAN

2.01 The Bank, relying upon each of the representations and warranties in Clause
7 agrees to lend to the Borrower upon and subject to the terms of this
Agreement, the principal sum of up to U.S. $ 5,900,000.

2.02 Subject to the terms and conditions of this Agreement, the Loan shall be
advanced to the Borrower by the Bank in two (2) tranches upon receipt by the
Bank from the Borrower of a Drawdown Notice not later than 12.00 noon (Greek
time) on the third Banking Day before the proposed Drawdown Date of each
tranche. The tranche A of U.S. Dollars four million nine hundred thousand ($
4,900,000) will be advanced to the Borrower prior to 31st October 2002 and the
second tranche (tranche B) of U.S. Dollars one million ($ 1,000,000) will be
advanced to the Borrower following the completion of the special survey of the
Vessel "DOOYANG HOPE" tbr "IRINI" by 20th December 2002.

2.03 (a) The relevant tranche shall not be advanced on any day which is not a
Banking Day or after the end of the Drawdown Period.

     (b) A Drawdown Notice shall be effective on actual receipt by the Bank and,
once given, shall, subject as provided in Clause 12, be irrevocable.

2.04 Upon receipt of a Drawdown Notice complying with the terms of this
Agreement the Bank shall, subject to the provisions of Clause 9, on the relevant
date make the amount of the relevant tranche available to the Borrower.

2.05 If the Loan is not drawn down by the end of the Drawdown Period, the
Commitment shall be automatically cancelled.

3.   INTEREST AND INTEREST PERIODS

3.01 The Borrower shall pay interest on the Loan or (as the case may be, each
portion thereof to which a different Interest Period relates) in respect of each
Interest Period (or part thereof) each Interest Payment Date. The interest rate
for the calculation of interest shall be the rate per annum determined by the
Bank to be the aggregate of (i) the Margin and (ii) LIBOR, unless there is an
Agreed Rate in which case the interest rate for the calculation of interest
shall be the rate per annum determined by the Bank to be the aggregate of (i)
the Margin and (ii) the Agreed Rate.

<PAGE>

                                       6


3.02 The Borrower may by notice received by the Bank not later than 12.00 noon
(Greek time) on the second Banking Day before the beginning of each Interest
Period specify whether that Interest Period shall have a duration of 1, 2, 3, 6,
9 or 12 months or any other Period which the Bank may agree.

3.03 Every Interest Period shall be subject to market availability to be
conclusively determined by the Bank of the duration specified by the Borrower
pursuant to Clause 3.02 but so that:

     (a) the initial Interest Period shall end on the date falling 1, 2, 3, 6, 9
or 12 (as specified by the Borrower pursuant to Clause 3.02) months after the
Drawdown Date.

     (b) each subsequent Interest Period in respect of the Loan will commence
forthwith upon the expiry of the previous Interest Period relative thereto.

     (c) if any Interest Period would otherwise overrun a Repayment Date, then,
in the case of the last Repayment Date, that Interest Period shall end on such
Repayment Date, and in the case of any other Repayment Date, the Loan shall be
divided into two parts, one in the amount of the repayment installment falling
due on such Repayment Date and having a separate Interest Period expiring on the
relevant Repayment Date and the other in the amount of the balance of the Loan
having an Interest Period ascertained in accordance with Clause 3.02 and the
other provisions of this Clause 3.03; and

     (d) if the Borrower fails to specify the duration of an Interest Period in
accordance with the provisions of Clause 3.02 and 3.03, that Interest Period
shall have a duration of 3 months or other period complying with this Clause
3.03.

3.04 If the Borrower fails to pay any sum on its due date for payment under this
Agreement, the Borrower shall pay interest on such sum on demand from that date
up to the date of actual payment (as well after as before judgment) and
compounded at the end of each of the periods determined by the Bank under this
Clause 3.04. Such interest shall be calculated at a rate determined by the Bank
to be two per cent (2%) per annum above the aggregate of the Margin and the
LIBOR for such period not exceeding 3 months as the Bank may determine from time
to time in amounts comparable with the sum not paid. Such interest shall be due
and payable on the last day of each such period as determined by the Bank and
each such day shall for the purposes of this Agreement, be treated as an
Interest Payment Date, provided that if such unpaid sum is of principal which
became due and payable on a date other than an Interest Payment Date relating
thereto, the first such period selected by the Bank shall be of a duration equal
to the period between the due date of such principal sum and such Interest
Payment Date and interest shall be payable on such principal sum during such
period at a rate two per cent (2%) above the rate applicable thereto immediately
before it fell due.

If, for the reasons specified in Clause 12.03, the Bank is unable to determine a
rate in accordance with the foregoing provisions of this Clause 3.04, interest
shall be calculated at a rate determined by the Bank to be two per cent (2%) per
annum above the aggregate of the Margin and costs of funds to the Bank as
conclusively determined by the Bank, save for manifest error.

<PAGE>

                                       7


3.05 The Bank shall notify the Borrower promptly of the duration of each
Interest Period and of each rate of interest determined by it under this Clause
3.

3.06 All payments of interest in respect of the Loan shall be made in U.S.
Dollars. All interest and other payments of an annual nature under this
Agreement shall accrue from day to day and be calculated on the basis of actual
days elapsed and a 360 day year. The certificate of the Bank as to any rate of
interest or any rate of exchange determined by it pursuant to this Agreement
shall be conclusive in the absence of manifest error.

4.   REPAYMENTS AND PREPAYMENTS

4.01 The Borrower shall repay the Loan by (i) twenty four (24) consecutive,
quarterly Repayment Installments of an amount of U.S. Dollars two hundred twenty
thousand ($ 220,000) each, to be repaid on each of the Repayment Dates so that
the first be repaid three (3) months after the Drawdown Date of tranche A and
each of the subsequent ones consecutively on each of the dates falling three (3)
months after the immediately preceding Repayment Date and (ii) one (1) Balloon
Installment of an amount of U.S. Dollars six hundred twenty thousand (U.S. $
620,000) which shall be repaid together with the last Repayment Installment,
provided that (a) if the last Repayment Installment would otherwise fall after
the Final Maturity Date, the final Repayment Installment shall be the Final
Maturity Date and (b) there shall be no Repayment Dates after the Final Maturity
Date. In the event that the Commitment is not drawn in full the Loan shall be
repaid in such proportionate lesser amounts as shall suffice to repay the Loan
over the same period.

4.02 The Borrower shall have the right, upon giving the Bank not less than ten
(10) Banking Days' notice in writing to prepay without penalty part or all of
the Loan in each case together with all unpaid interest accrued thereon and all
other sums of money whatsoever due and owing from the Borrower to the Bank
hereunder or pursuant to the other Security Documents and all interest accrued
thereon, provided that:

     (a) The giving of such notice by the Borrower will irrevocably commit the
Borrower to prepay such amount as stated in such notice;

     (b) Such prepayment may take place only on the last day of an Interest
Period relating to the whole of the Loan provided, however, that if the Borrower
shall request consent to make such prepayment on another day and the Bank shall
accede to such request (it being in the sole discretion of the Bank to decide
whether or not to do so) the Borrower will pay in addition to the amount to be
prepaid, any such sum as may be payable to the Bank pursuant to Clause 11.01;

     (c) Each partial prepayment shall be equal to U.S. Dollars two hundred
twenty thousand ($ 220,000) or a multiple thereof or the balance of the Loan;

<PAGE>

                                       8


     (d) Any prepayment of less than the whole of the Loan will be applied
towards the Balloon Installment and then towards Repayment Installments in
inverse order of their due dates of payment;

     (e) Every notice of prepayment shall be effective only on actual receipt by
the Bank, shall be irrevocable and shall oblige the Borrower to make such
prepayment on the date specified;

     (f) No amount prepaid may be re-borrowed, and

     (g) The Borrower may not prepay the Loan or any part thereof save as
expressly provided in this Agreement.

4.03 Unless the Bank agrees to accept substitute security in form and substance
satisfactory to the Bank, the Borrower shall, within one hundred and twenty
(120) days of either of the Vessels becoming a Total Loss, prepay the Loan
together with accrued interest to the date of prepayment and all other sums
payable by the Borrower to the Bank pursuant to this Agreement and the other
Security Documents (and if any portion of the Commitment has not been drawn yet,
the Commitment shall be reduced to zero), provided that:

     (a) an actual total loss of a Vessel shall be deemed to have occurred at
the actual date and time such Vessel was lost but in the event of the date of
the loss being unknown then the actual total loss shall be deemed to have
occurred on the date on which such Vessel was last reported.

     (b) a constructive total loss shall be deemed to have occurred at the date
and time notice of abandonment of a Vessel is given to the insurers of such
Vessel for the time being. If the insurers of the Vessels will not admit the
claim for total loss, the Borrower shall prepay the Loan within 180 days from
the time of notice of abandonment is given to the insurers.

     (c) a compromised or arranged total loss shall be deemed to have occured on
the date on which a binding agreement as to such compromised or arranged total
loss has been entered into by the insurers of a Vessel.

     (d) requisition for title or other compulsory acquisition of a vessel shall
be deemed to have occurred on the date upon which the relevant requisition for
title or other compulsory acquisition occurs

     (e) capture, seizure, detention, arrest or confiscation of a vessel by any
government or by any person acting or purporting to act on behalf of any
government, which deprives the owner of the relevant vessel of the use of the
Vessel for more than ninety (90) days shall be deemed to occur upon the expiry
of the period of ninety (90) days after the date upon which the relevant
capture, seizure, detention, arrest or confiscation occurred.

4.04 If subject to the provisions of Clause 8.02 (viii) any of the Vessels is
sold, the Borrower shall prepay to the Bank the Loan together with the accrued
interest.

<PAGE>

                                       9


5.   FEES AND EXPENSES

The Obligors shall pay to the Bank on demand all expenses (including legal,
printing and out-of-pocket expenses) inclusive of Value Added Tax if any,
incurred by the Bank in connection with the negotiation, preparation and
execution of this Agreement and the Security Documents and of any amendment or
extension thereof and all reasonable expenses (including legal and out-of-pocket
expenses) inclusive of Value Added Tax if any, incurred by the Bank in
contemplation of or otherwise in connection with the enforcement of, or
preservation of any rights under, any of this Agreement and the Security
Documents, or otherwise in respect of the monies owing under any of this
Agreement and the Security Documents.

6.   PAYMENTS AND ACCOUNTS

6.01 All payments to be made by the Obligors under or in respect of any Security
Document shall be made in full in the currency in which the same is due, without
any set-off or counterclaim whatsoever and, subject as provided in Clause 6.03,
free and clear of any deductions or withholdings, by not later than 10.00 a.m.
(local time in the place of payment) on the due date in immediately available
funds to the account of the Bank at HSBC BANK U.S.A. New York (Account Number
000-04779-1) or at such other bank in such other place as the Bank may have
notified to the Borrower. All interest and any other payments hereunder of an
annual nature shall accrue from day to day and be calculated on the basis of 360
day year.

6.02 When any payment would otherwise be due under this Agreement on a day which
is not a Banking Day, the due date for payment shall be extended to the next
following Banking Day unless such Banking Day falls in the next calendar month
in which case payment shall be made on the immediately preceding Banking Day.

6.03 If at any time any applicable law, regulation or regulatory requirement or
any governmental authority, monetary agency or central bank requires the
Obligors to make any deduction or withholding in respect of Taxes from any
payment due under this Agreement, the sum due from the Obligors in respect of
such payment shall be increased to the extent necessary to ensure that, after
the making of such deduction or withholding, the Bank receives a net sum equal
to the sum which it would have received had no such deduction or withholding
been required to be made and the Obligors shall indemnify the Bank against any
losses or costs incurred by it by reason of any failure of the Obligors to make
any such deduction or withholding. The Obligors shall promptly deliver to the
Bank any receipts, certificates or other proof evidencing the amounts (if any)
paid or payable in respect of any deduction or withholding as aforesaid.

6.04 If it shall at any time become unlawful in any jurisdiction or impossible
for the Obligors to make payment of any sum hereunder to the accounts referred
to in Clause 6.01 or in the currency in which such sum is due (the "Currency of
Obligation") the Obligors may agree with the Bank alternative arrangements for
payment of such sum in the Currency of Obligation or in another freely
transferable and convertible currency. If it shall be agreed that payment may be
made in a currency other than the

<PAGE>

                                       10


Currency of Obligation such payment shall only satisfy the obligations of the
Obligors to the Bank hereunder to the extent of the amount in the Currency of
Obligation which can be purchased with the sum so paid at the spot buying rate
of the Bank in the London Foreign Exchange market for the Currency of Obligation
with the currency in which payment was made, and the Obligors shall be liable to
pay to the Bank the balance of the sum in the Currency of Obligation which the
Bank would have received if payment had been made in accordance with the other
provisions of this Agreement.

6.05 All sums advanced by the Bank to the Borrower under this Agreement and all
interest accrued thereon and all other amounts due under this Agreement from
time to time and all repayments and/or payments thereof shall be debited and
credited respectively to a separate loan account maintained by the Bank in the
name of the Borrower. The Bank may, however, in accordance with its usual
practices or for its accounting needs, maintain more than one accounts,
consolidate or separate them but all such accounts shall be considered parts of
one single loan account maintained under this Agreement. In case that a ship
mortgage in the form of Account Current is granted as security under this
Agreement, the account(s) referred to in this Clause shall be the Account
Current referred to in the mortgage.

7.   REPRESENTATIONS AND WARRANTIES

7.01 Each of the Obligors hereby represents and warrants to the Bank as at the
date hereof that:

     (a) each Corporate Obligor is duly incorporated and validly existing in
good standing under the laws of its country of incorporation as a limited
liability company, has power to carry on its business as it is now being
conducted and to own its property and other assets;

     (b) each Corporate Obligor has power to execute, deliver and perform its
obligations under this Agreement and the other Security Documents; all necessary
corporate, shareholder and other action has been taken to authorise the
execution, delivery and performance of the same and no limitation on the powers
of the Obligors to borrow will be exceeded as a result of borrowings hereunder;

     (c) this Agreement constitutes and the Security Documents as and when they
are respectively executed by the Obligors will constitute valid and legally
binding obligations of the Obligors;

     (d) the execution and delivery of, the performance of their obligations
under, and compliance with the provisions of, this Agreement and the Security
Documents by the Obligors will not (i) contravene any existing applicable law,
statute, rule or regulation or any judgment, decree or permit to which the
Obligors are subject, (ii) conflict with, or result in any breach of any of the
terms of, or constitute a default under, any agreement or other instrument to
which the Obligors are parties or are subject or by which they or any of their
property is bound except the loan of the Corporate Guarantor dated 11th June
2001, (iii) contravene or conflict with any provision of the Corporate Obligors'
By-Laws or (iv) result in the creation or

<PAGE>

                                       11


imposition of or oblige the Obligors to create any encumbrance (other than a
Permitted Encumbrance) on any of the Obligors' assets, rights or revenues;

     (e) no litigation, arbitration or administrative proceeding is taking
place, pending or, to the knowledge of the officers of the Corporate Obligors,
threatened against the Obligors which would have a material adverse effect on
the business, assets or financial condition of the Obligors;

     (f) the accounts and the financial statements of the Obligors which have
been delivered to the Bank prior to the signing of this Agreement are true and
accurate in every material respect and represent fairly the financial condition
of each of them as at the date such accounts and financial statements were
prepared and since that date there has been no material adverse change in such
financial condition, and

     (g) no event or circumstance which constitutes or which with the giving of
notice or lapse of time or both would constitute an Event of Default has
occurred and is continuing.

7.02 The Obligors further represent and warrant to the Bank that:

     (a) every consent, authorisation, licence or approval of or registration
with or declaration to governmental or public bodies or authorities or courts
required by the Obligors to authorise, or required by the Obligors in connection
with, the execution, delivery, validity or enforceability of this Agreement and
each of the Security Documents or the performance by the Obligors of their
obligations hereunder or thereunder has been obtained or made;

     (b) the obligations of the Obligors under this Agreement are direct,
general and unconditional obligations of the Obligors and rank at least pari
passu with all other present and future unsecured and unsubordinated obligations
(including contingent obligations) of the Obligors (with the exemption of such
obligations as are mandatorily preferred by law and not by contract);

     (c) the Obligors are not (nor with the giving of notice or lapse of time or
both) in breach of or in default under any agreement relating to Indebtedness to
which they are parties or by which they may be bound;

     (d) the information, exhibits and reports furnished by the Obligors to the
Bank in connection with the negotiation and preparation of this Agreement and
each of the Security Documents are true and accurate in all material respects
and not misleading, do not omit material facts and all reasonable enquiries have
been made to verify the facts contained therein; there are no other facts the
omission of which would make any fact or statement therein misleading in any
material respect;

     (e) no Taxes are imposed by withholding or otherwise on any payment to be
made by the Obligors under this Agreement or are imposed on or by virtue of the
execution or delivery by the Obligors of this Agreement or any document or
instrument to be executed or delivered hereunder;

<PAGE>

                                       12


     (f) the choice by the Obligors of English law to govern this Agreement and
the submission by the Obligors to the non-exclusive jurisdiction of the courts
of England are valid and binding;

     (g) it is not necessary to ensure the legality, validity, enforceability or
admissibility in evidence of this Agreement that it or any other instrument be
filed, recorded, registered or enrolled in any court, public office or elsewhere
in England or Greece. This Agreement is in proper form for its enforcement in
the courts of England or Greece.

7.03 The representations and warranties in Clause 7 shall be deemed to be
repeated by the Obligors on and as of the date of the Drawdown Notice, and of
each Interest Payment Date as if made with reference to the facts and
circumstances existing at such date.

8.   UNDERTAKINGS

8.01 Each of the Obligors undertakes with the Bank that, from the date of this
Agreement and so long as any monies are owing under this Agreement, it will:

     (a) promptly inform the Bank of any occurrence of which it becomes aware
which might materially adversely affect its ability to perform its obligations
under this Agreement and/or any of the Security Documents and, without limiting
the generality of the foregoing, will inform the Bank of any Event of Default or
any event which with the giving of notice or lapse of time or both would
constitute an Event of Default forthwith upon becoming aware thereof;

     (b) without prejudice to Clause 7.02 and 9, obtain or cause to be obtained,
maintain in full force and effect and comply in all material respects with the
conditions and restrictions (if any) imposed in connection with, every consent,
authorisation, licence or approval of governmental or public bodies or
authorities and do, or cause to be done, all other acts and things, which may
from time to time be necessary or desirable under applicable law for the
continued due performance of all its obligations under this Agreement and each
of the Security Documents;

     (c) use the Loan exclusively for the purpose specified in Clause 1.01;

     (d) ensure that its obligations under this Agreement shall, subject to the
operation of Clause 8.02, at all times rank at least pari passu with all its
other present and future unsecured and unsubordinated obligations (including
contingent obligations);

     (e) cause to be prepared in each financial year, financial statements in a
form consistent with generally accepted accounting principles and practices in
Greece consistently applied;

     (f) send to the Bank as many copies as the Bank may reasonably require of
the annual balance sheets and income statements and every balance sheet, profit
and loss account, report, notice or like document issued by it to its
shareholders within 150 days of the close of their fiscal year;

<PAGE>

                                       13


     (g) provide the Bank with such financial information concerning the
Obligors and related companies and their affairs, commitments and operations, as
the Bank may from time to time reasonably require;

     (h) duly and punctually perform each of its obligations under the Security
Documents.

8.02 Each of the Obligors undertakes with the Bank that, from the date of this
Agreement and so long as any monies are owing under this Agreement, it will not,
without the prior written consent (such consent not to be unreasonably withheld)
of the Bank permit:

     (i) any encumbrance other than Permitted Encumbrances by the Obligors to
subsist, arise or be created or extended to secure any present or future
Indebtedness of the Obligors or any other person;

     (ii) any Indebtedness of the Obligors to be guaranteed or otherwise assured
against financial loss by any person other than the Obligors;

     (iii) the Indebtedness of the Obligors to be subordinated in priority of
payment to any other present or future Indebtedness of the Obligors;

     (iv) to conduct any business or activity other than the ownership,
chartering, operation and management of Vessels;

     (v) the Obligors to declare or pay any dividend or make any other
distribution of their assets or profits to any stockholder;

     (vi) to incur or agree to incur any Indebtedness or material liability
(whether by way of loan, credit facilities or otherwise) nor make any
commitments other than those occurring in the ordinary course of the trading of
the Vessels;

     (vii) to issue or agree to issue any guarantee in favour of any persons or
legal entities other than in connection with the ordinary trading and operation
of the Vessels;

     (viii) to sell, assign, transfer or otherwise dispose of or abandon the
Vessels.

8.3 The Obligors undertake that none of the documents defining their
constitution shall be altered in any manner whatsoever and will not change their
beneficial ownership and control from that advised to the Bank or the nature,
organisation and conduct of their business as Owners of the Vessel(s) or as
manager of Vessels, as the case may be and will not change the present managers
of the Vessels or substantially change the terms and conditions of the
management of the Vessels (including the management fees) without prior
consultation with the Bank and then only if such terms and conditions as the
Bank shall approve in writing, such approval not to be unreasonably withheld.

8.4 The Obligors will not operate, or permit the operation of the Vessels in any
manner (i) which would violate the laws of the flag of the Vessels the laws of
the

<PAGE>

                                       14


owning company or the laws of the nationality of the officers and crew of the
Vessels or any other applicable jurisdiction, or (ii) which would render the
Loan or the Bank's security in the Vessels, its insurances and earnings illegal
under the laws of any applicable jurisdiction.

8.05 The Obligors undertake that:

     (i) if at any time the market value of the Vessels (as determined in
accordance with sub-clause (ii) below) together with the value of any additional
security for the Loan constituted pursuant to the provisions of this Clause 8.05
all as certified by the Bank (whose certificate in that respect shall be binding
upon the Obligors) such sum as so certified by the Bank being for the purposes
of this Clause 8.05 referred to as "the Security Value", shall be less than one
hundred and thirty per cent (130%) of the outstanding amount of the loan (such
130% of outstanding amount of the loan being for the purposes of this Clause
8.05 referred to as "the Specified Amount") then the Obligors shall either:

(1) prepay within sixty days of the date of receipt by the Borrower of the
Bank's said certificate, or on the next Interest Payment Date if the same shall
occur within such thirty day period, such sum in Dollars as is equal to the
amount by which the Specified Amount exceeds the Security Value and in the event
that any such prepayment of part of the Loan shall be made otherwise than on the
expiry of an Interest Period in respect of the Loan the Borrower shall be
obliged forthwith to pay to the Bank such amount (if any) that shall be
determined by the Bank to be necessary to compensate the Bank for any loss
(including loss of profits) incurred by it in liquidating or re-employing fixed
deposits from third parties acquired to effect or maintain the Loan or any part
thereof until the expiry of the then current Interest Periods in respect of the
Loan. Any prepayment made pursuant to this Clause 8.05 (i) (1) shall be applied
in reducing the remaining repayment installments as provided in Clause 4.01;

(2) within 21 days of the date of receipt by the Borrower of the Bank's said
certificate constitute to the satisfaction of the Bank such additional security
for the Loan, as shall be acceptable to the Bank having a value for security
purposes (as determined by the Bank in its absolute discretion) at the date upon
which such additional security shall be constituted which when added to the
Security Value so certified by the Bank shall not be less than the Specified
Amount. Such additional security shall be constituted by:

(a) Pledged cash deposits in favour of the Bank in an amount equal to such
shortfall with the Bank and in an account and manner to be determined by the
Bank, and/or

(b) any other security acceptable to the Bank to be provided in a manner
determined by the Bank.

     (ii) The said market value of the Vessels shall be determined for the
purposes of sub-clause (i) above and when the Bank shall require by two
shipbrokers appointed by the Bank who shall value the Vessels on the basis of a
sale between a willing buyer and a willing seller free of any charter. The
average of the two valuations of such

<PAGE>

                                       15


Shipbrokers shall constitute the market value of the Vessels for the purposes of
sub-clause (i) above and shall be binding upon the parties hereto.

     (iii) All reasonable costs in connection with the Bank obtaining any
valuation of the Vessels referred to in sub-clause (ii) above and any valuation
either of any additional security for the purposes of ascertaining the Security
Value at any time or necessitated by the Borrower electing to constitute
additional security pursuant to sub-clause (i) (2) above (including without
prejudice to the generality of the foregoing costs of the shipbrokers appointed
to value the Vessel) shall be borne by the Borrower.

8.06 The Corporate Obligors shall establish with the Bank the Earnings Account
of the Vessels. All payments related to the operation of the Vessels shall be
made through this account.

8.07 The Obligors shall permit any surveyors or other persons appointed by the
Bank to board the Vessels at all reasonable times for the purpose of inspecting
the condition of the Vessels or for the purpose of satisfying themselves in
regard to proposed or executed repairs recommended by the Vessel's
Classification Society and to afford all proper facilities for such inspection.
The Obligors shall pay the costs and expenses of the Bank and its surveyors for
one yearly inspection, if made.

8.08 The Obligors undertake that, from the date of this Agreement and as long as
any money is due and/or outstanding under this Agreement or any other Security
Documents, the Obligors shall:

     (a) at all times comply and be responsible for compliance by themselves and
the Vessels and the Manager, with the ISM Code;

     (b) at all times ensure that:

          (i) the Vessels have a valid Safety Management Certificate,

          (ii) the Vessels are subject to a safety management system which
     complies with the ISM Code; and

          (iii) the Manager of the Vessels has a valid Document of Compliance

     (c) promptly notify the Bank of any actual or threatened withdrawal of an
applicable Safety Management Certificate or Document of Compliance;

     (d) promptly notify the Bank of the identity of the person ashore
designated for the purpose of paragraph 4 of the ISM Code and of any change in
the identity of that person; and

     (e) promptly upon becoming aware of the same notify the Bank of the
occurrence of any accident or major non-conformity requiring action under the
ISM Code.

<PAGE>

                                       16


9.   CONDITIONS

9.01 The obligation of the Bank to make the Commitment available shall be
subject to the condition that the Bank, or its duly authorised representative,
shall have received before the day on which the Loan is intended to be advanced,
the documents and evidence specified in Part 1 of Schedule 2 in form and
substance satisfactory to the Bank.

9.02 The obligation of the Bank to advance the Loan shall be subject to the
condition that the Bank, or its duly authorised representative, shall have
received on or prior to the Drawdown Date the documents and evidence specified
in Part 2 of Schedule 2 in form and substance satisfactory to the Bank.

9.03 The obligation of the Bank to advance the Loan is subject to the further
conditions that at the time of the giving of the Drawdown Notice for, and at the
time of the advance of the Loan.

     (a) the representations and warranties set out in Clause 7 are true and
correct on and as of each such time as if each was made with respect to the
facts and circumstances existing at such time; and

     (b) no event or circumstance which constitutes or which with the giving of
notice or lapse of time or both would constitute an Event of Default shall have
occurred and be continuing or would result from the advancing of the Loan.

     (c) the Bank shall be satisfied that there is no a material adverse change
in the financial condition and operation of the Borrower and/or the Guarantors
or a material adverse change of circumstances.

10.  EVENTS OF DEFAULT

10.01 There shall be an Event of Default if:

     (a) any of the Obligors fail to pay any sum payable by them under this
Agreement and/or any of the Security Documents when due; or

     (b) any of the Obligors commit any breach of or omit to observe any of
their obligations or undertakings under this Agreement and/or any of the
Security Documents (other than failure to pay any sum when due) and, in respect
of any such breach or omission which in the opinion of the Bank is capable of
remedy, such action as the Bank may require shall not have been taken within
(14) days of the Bank notifying the Obligors of such default and of such
required action; or

     (c) any representation or warranty made or deemed to be made or repeated by
or in respect of the Obligors or any other party (other than the Bank) in or
pursuant to this Agreement and/or any of the Security Documents or in any
notice, certificate or statement referred to in or delivered under this
Agreement and/or any of the Security Documents is or proves to have been
incorrect in any material respect; or

<PAGE>

                                       17


     (d) any Indebtedness of the Obligors is not paid when due or by reason of
breach or default under the terms of any instrument evidencing or guaranteeing
the same on the part of the Obligors becomes due (or capable of being declared
due) prior to the date when it would otherwise have become due or any guarantee
or indemnity given by the Obligors in respect of Indebtedness is not honoured
when due and called upon; or

     (e) any consent, authorisation, licence or approval of or registration with
or declaration to governmental or public bodies or authorities or courts
required by the Obligors or any other party (other than the Bank) to authorise,
or required by the Obligors or any other party (other than the Bank) in
connection with the execution, delivery, validity or enforceability of this
Agreement and/or any of the Security Documents or the performance by the
Obligors or any such party of its obligations hereunder or thereunder is
modified in a manner unacceptable to the Bank or is not granted or is revoked or
terminated or expires and is not renewed or otherwise ceases to be in full force
and effect; or

     (f) an encumbrancer takes possession or a receiver or similar officer is
appointed of the whole or any part of the assets, rights or revenues of any of
the Obligors or a distress, execution, sequestration or other process is levied
or enforced upon or sued out against any of the assets, rights or revenues of
any of the Obligors and is not discharged within thirty days; or

     (g) any of the Obligors suspends payment of their debts or is unable to or
admits inability to pay its debts as they fall due or proposes or enters into
any composition or other arrangement for the benefit of its creditors generally
or proceedings are commenced in relation to the Obligors under any law,
regulation or procedure relating to reconstruction or readjustment of debts; or

     (h) any of the Obligors is adjudicated or found bankrupt or insolvent or
any order is made by any competent court or resolution passed by any Corporate
Obligor for the winding-up or dissolution of such Corporate Obligor or for the
appointment of a liquidator, trustee or conservator of the whole or any part of
its assets, rights or revenues; or

     (i) any event occurs or proceeding is taken with respect to the Obligors in
any jurisdiction to which it is subject which has an effect equivalent or
similar to any of the events mentioned in Clause 10.01 (f), (g) or (h); or

     (j) any of the Obligors suspends or ceases or threatens to suspend or
ceases to carry on their business; or

     (k) all or a material part of the assets, rights or revenues of any of the
Obligors are seized, nationalised, expropriated or compulsorily acquired by or
under the authority of any government; or

     (l) there shall occur, in the opinion of the Bank, a material adverse
change in the financial condition of the Obligors by reference to the financial
statements referred to in Clause 7.01 (f); or

<PAGE>

                                       18


     (m) any other event occurs or circumstances arise which, in the reasonable
opinion of the Bank, is likely materially and adversely to affect the ability
of the Obligors or any other party (other than the Bank) to perform all or any
of their obligations under or otherwise to comply with the terms of this
Agreement and/or of the Security Documents.

10.02 The Bank may, without prejudice to any other rights of the Bank, at any
time after the happening of an Event of Default (so long as the same is
continuing) by notice to the Obligors declare that:

     (a) the obligation of the Bank to make the Commitment or any part of the
Commitment available shall be terminated, whereupon the Commitment shall be
terminated forthwith; and/or

     (b) the Loan and all interest and commitment commission accrued and all
other sums payable under this Agreement have become due and payable, whereupon
the same shall immediately or in accordance with such notice, become due and
payable.

11.  INDEMNITIES AND EXPENSES

11.01 The Obligors shall indemnify the Bank, without prejudice to any of the
Bank's other rights hereunder, against any loss or expense which the Bank shall
certify as sustained or incurred by it as a consequence of (i) any default in
payment by the Obligors of any sum under this Agreement when due, (ii) any Event
of Default, (iii) any prepayment of the Loan or part thereof being made under
Clauses 4.02, 4.03, 12.01, 12.02 or 12.03 otherwise than on an Interest Payment
Date or (iv) the Loan not being made for any reason (including failure to fulfil
any of the conditions precedent set out in Schedule 2 but excluding any default
by the Bank) after a Drawdown Notice has been given, including, in any such
case, but not limited to, any loss or expenses sustained or incurred in
maintaining or funding the Commitment or any part thereof or in liquidating or
re-employing deposits from third parties acquired to effect or maintain the Loan
or any part thereof.

11.02 No payment to the Bank under this Agreement pursuant to any judgment or
order of any court or otherwise shall operate to discharge the obligations of
the Obligors in respect of which it was made unless and until payment in full
shall have been received in the currency in which the relevant sum is payable
hereunder ("the Relevant Currency") and to the extent that the amount of any
such payment shall on actual conversion into the Relevant Currency fall short of
the amount of the relevant obligation expressed in the Relevant Currency the
Bank shall have a further separate cause of action against the Obligors for the
recovery of such sum as shall after conversion into the Relevant Currency be
equal to the amount of the shortfall.

11.03 The Obligors shall pay all stamp, documentary, registration or other like
duties (including any duties payable by the Bank) imposed on or in connection
with this Agreement and/or any of the Security Documents or the Loan and shall
indemnify the Bank against any liability arising by reason of any delay or
omission by the Obligors to pay such duties.

<PAGE>

                                       19


11.04 The obligation of the Obligors to pay any amount pursuant to this Clause
11 shall constitute a separate and independent obligation of the Obligors from
their other obligations hereunder and shall not be affected by any indulgence
granted by the Bank or by judgment being obtained for any other sums due under
this Agreement and/or any of the Security Documents, and no proof or evidence of
any actual loss shall be required by the Obligors.

12.  FORCE MAJEURE, UNLAWFULNESS, INCREASED COSTS, ALTERNATIVE INTEREST RATES

12.01 The Bank shall not be liable for any failure to perform the whole or any
part of this Agreement and/or any of the Security Documents resulting directly
or indirectly from the action or inaction of any governmental or local authority
or any strike, lock-out, boycott or blockade effected by or upon the Bank or its
employees, or from any act of God or war, whether declared or not.

12.02 If any law, regulation or regulatory requirement or any judgment, order or
direction of any court, tribunal or authority binding upon the Bank in the
jurisdiction in which it is formed or has its principal office or in which any
action is required to be performed for the purposes of this Agreement, renders
it unlawful for the Bank to advance, maintain or fund the Loan the Bank shall
promptly inform the Obligors. If it shall so be unlawful for the Bank to
maintain or fund the Loan the Bank shall give notice to the Obligors requiring
the Obligors to prepay the Loan either (i) forthwith or (ii) on a future
specified date and the Obligors will prepay the Loan in accordance with and
subject to such notice and the provisions of Clause 12.04 and 12.05. Without
prejudice to the obligation of the Obligors to make such prepayment the Obligors
and the Bank shall negotiate for a period not exceeding 30 days with a view to
the Bank making available its Commitment and/or maintaining the Loan in whole or
part in a manner which is not unlawful.

12.03 If any law, regulation or any directive, request or requirement (whether
or not knowing the force of law) of any central bank, government, fiscal or
other authority, or any judgment, order or direction of any court, tribunal or
authority binding upon the Bank in the jurisdiction in which it is formed or has
its principal office or in which any action is required to be performed for the
purposes of this Agreement taking effect after the date of this Agreement or if
compliance by the Bank with any direction, request or requirement (whether or
not having the force of law) of any competent governmental or other authority
shall:

     (a) subject the Bank to Taxes or change the basis of Taxation of the Bank
with respect to any payment under this Agreement (other than Taxes or Taxation
on the overall net income of the Bank imposed in the jurisdiction in which its
principal office or lending office hereunder is located); or

     (b) impose, modify or deem applicable any reserve requirements or require
the making of any special deposits against or in respect of any assets or
liabilities of, deposits with or for the account of or loans by, the Bank; or

<PAGE>

                                       20


     (c) impose on the Bank any other condition with respect to this Agreement
or its obligations hereunder, and, as a result of any of the foregoing, the cost
to the Bank of making or keeping the Commitment available for advance or
maintaining or funding the Loan is increased or the amount payable or the
effective return to the Bank under this Agreement is reduced or the Bank makes a
payment or forgoes a return on or calculated by reference to any amount payable
to it under this Agreement, then and in each such case:

          (i) on demand, the Obligors shall pay to the Bank the amount which the
Bank specifies (in a certificate setting forth the basis of the computation of
such amount, which certificate, save for manifest error, shall be conclusive and
binding on the Obligors) to be required to compensate the Bank for such
increased cost, reduction, payment or forgone return; and

          (ii) the Obligors may, at any time after receipt of such demand and
certificate notify the Bank that they will prepay all (but not part only) of the
Loan whereupon the Obligors shall prepay the Loan to the Bank in accordance with
and subject to the provisions of Clause 12.05

Any demand under Clause 12.03 (i) may be made at any time before or within 12
months after the end of any Interest Period to which such demand relates whether
or not the Loan has been repaid.

12.04 (a) If and whenever, at any time prior to the commencement of any Interest
Period the Bank shall have determined (which determination shall, in the absence
of manifest error, be conclusive) that:

     (1) adequate and fair means do not exist for ascertaining the rate of
interest during such Interest Period pursuant to Clause 3.01; or

     (2) deposits in Dollars are not available to the Bank in the London
Interbank Eurocurrency market in sufficient amounts in the ordinary course of
business for such Interest Period; or

     (3) by reason of circumstances affecting the London Interbank Eurocurrency
market generally it is impracticable for the Bank to fund or continue to fund
the Loan during such Interest Period;

the Bank shall forthwith give notice of such determination to the Obligors.

     (b) During the period of 14 days after any notice has been given by the
Bank under Clause 12.04 (a), the Bank shall certify (having consulted with the
Obligors) an alternative basis (the "Substitute Basis") for the continuance of
the Loan. The Substitute Basis may (without limitation) include alternative
interest periods, alternative currencies or alternative rates of interest but
shall include a margin above the cost of funds to the Bank or equivalent to the
Margin. The Substitute Basis shall be binding upon the Obligors and shall be
retroactive to and take effect in accordance with its terms from the date
specified in the notice given by the Bank. During the period when a Substitute
Basis is in force the Obligors and the Bank shall consult not

<PAGE>

                                       21


less frequently than once every 30 days with a view to reverting to the normal
provisions of this Agreement as soon as practicable.

     (c) If the Obligors determine within 14 days of receipt of such certificate
that they do not wish to continue to borrow the Loan they shall forthwith notify
the Bank whereupon the Obligors shall forthwith prepay the Loan in accordance
with and subject to the provisions of Clauses 12.04 and 12.05 together with
accrued interest to the date of prepayment, calculated from the date specified
in the notice given by the Bank at a rate per annum equal to the rate certified
by the Bank to be an interest rate equivalent to the cost to the Bank of funding
the Loan during the period commencing on the date specified in the notice given
by the Bank and ending on the date of prepayment plus the Margin.

12.05 When the Loan is to be prepaid by the Obligors pursuant to this Clause 12,
the Obligors shall, at the time of such prepayment, pay to the Bank accrued
interest thereon to the date of actual payment, any additional amount payable
under Clause 12.03 and all other sums payable by the Obligors to the Bank
pursuant to this Agreement, including, without limitation, any amounts payable
under Clause 11.

13.  SET-OFF SECURITY

13.01 All monies received by the Bank under or pursuant to any of the Security
Documents and expressed to be applicable in accordance with the provisions of
this Clause 13.01 shall be applied by the Bank in the following manner:

     (a) first in or towards payment of all sums other than principal or
interest which may be owing to the Bank under this Agreement and the Security
Documents or any of them.

     (b) secondly in or towards any arrears of interest owing in respect of the
Loan or any part thereof.

     (c) thirdly in or towards repayment of the Loan.

     (d) fourthly the surplus (if any) shall be paid to the Obligors or to
whomsoever else may be entitled to receive such surplus.

13.02 The Obligors hereby authorise the Bank without prejudice to any of the
Bank's rights at law, in equity or otherwise, at any time in the Event of
Default and without notice to the Obligors:

     (a) to apply any credit balance standing upon any account of the Obligors
with any branch of the Bank and in whatever currency in or towards satisfaction
of any sum due to the Bank under this Agreement and/or any of the Security
Documents;

     (b) in the name of the Obligors and/or the Bank to do all such acts and
execute all such documents as may be necessary or expedient to effect such
application; and

<PAGE>

                                       22


     (c) to combine and/or consolidate all or any accounts in the name of the
Obligors with the Bank.

13.03 The Obligors hereby covenant and undertake that the Security Documents
shall both at the date of execution and delivery thereof and so long as any
monies are owing under this Agreement or thereunder be valid and binding
obligations of the respective parties thereto and rights of the Bank enforceable
in accordance with their respective terms and that they will, at their expense,
execute, perfect and do any and every such further assurance, document, act or
thing as in the reasonable opinion of the Bank may be necessary or desirable
for perfecting the security contemplated or constituted by the Security
Documents.

14.  ASSIGNMENT AND LENDING OFFICES

14.01 This Agreement shall be binding upon, and enure for the benefit of, the
Bank and the Obligors and their respective successors.

14.02 The Obligors may not assign or transfer any of their rights or obligations
under this Agreement.

14.03 The Bank may assign or transfer all or any part of its rights, benefits or
obligations under this Agreement to any one or more banks or other financial
institutions (each of which is called an "Assignee" for the purposes of this
Clause 14).

Provided that any assignment or transfer of all or part of the Bank's rights or
benefits under this Agreement shall not cause the Obligors to be required to pay
any additional amounts under the provisions of Clause 6.03 as at the date of
such assignment or transfer except where any such payment had already, or would
already have, become due to the Bank under such provisions as at such date.

Any assignment or transfer of all or part of the Bank's rights or benefits under
this Agreement may only be effected with the prior written consent of the
Obligors such consent not to be unreasonably withheld unless the assignee or the
transferee shall be a subsidiary or the holding company of the Bank or a
subsidiary of such holding company in which case no such consent shall be
required but written notice of such assignment or transfer shall be given to the
Obligors.

14.04 If the Bank assigns or transfers its rights, benefits or obligations as
provided in Clause 14.03 all relevant references in this Agreement to the Bank
shall thereafter be construed as a reference to the Bank and/or its assignee(s)
and/or its transferee(s) to the extent of their respective interests and, in the
case of an assignment or transfer of all or part of the Bank's obligations, the
Obligors shall thereafter look only to the assignee or transferee in respect of
that proportion of the Bank's obligations hereunder as corresponds to the
obligations assumed by such assignee or transferee.

14.05 The Bank shall lend initially through its office at Piraeus and
subsequently through any other office of the Bank selected from time to time by
it through which the Bank wishes to lend for the purposes of this Agreement. If
the office through which the Bank is lending is changed pursuant to this Clause
14.05, the Bank shall notify the Obligors promptly of such change.

<PAGE>

                                       23


14.06 The Bank may disclose to a potential assignee, transferee or to any other
person who may propose entering into contractual relations with the Bank in
relation to this Agreement such information about the Obligors as the Bank shall
consider appropriate, such information to be treated as confidential.

15. GUARANTEE

15.01 GUARANTEE

In consideration of the Bank making or continuing the Loan to the Borrower and
for other sufficient consideration (receipt whereof the Guarantor hereby
acknowledges), the Guarantor hereby irrevocably and unconditionally:

     (a) guarantees to the Bank, as principal obligor and not merely as surety,
and waiving all rights and objections granted by the Law to the Guarantor due
and prompt performance by the Borrower of all its obligations under this
Agreement and the Security Documents and the payment of all sums payable now or
in the future to the Bank by the Borrower thereunder or in connection therewith
when and as the same shall become due, and

     (b) undertakes with the Bank that if and whenever the Borrower shall be in
default in the payment of any sum whatsoever under the Security Documents or in
connection therewith, the Guarantor will on demand pay such sum as if the
Guarantor instead of the Borrower were expressed to be the primary obligor,
together with interest thereon at the rate per annum from time to time payable
by the Borrower on such sum from the date when such sum becomes payable by the
Guarantor hereunder until payment of such sum in full.

15.02 CONTINUING GUARANTEE

This guarantee is a continuing guarantee and shall extend to the ultimate
balance of all sums payable by the Borrower under the Security Documents.

15.03 REINSTATEMENT

Where any discharge (whether in respect of the obligations of the Borrower or
any security therefor or otherwise) is made in whole or in part or any
arrangement is made on the faith of any payment, security or other disposition
which is avoided or must be repaid on bankruptcy, liquidation or otherwise
without limitation, the liability of the Guarantor under this guarantee shall
continue as if there had been no such discharge or arrangement. The Bank shall
be entitled to concede or compromise any claim that any such payment, security
or other disposition is liable to avoidance or repayment.

<PAGE>

                                       24


15.04 WAIVER OF DEFENCES

The obligations of the Guarantor hereunder shall not be affected by any act,
omission, matter or thing which but for this provision might operate to release
or otherwise exonerate the Guarantor from its obligations hereunder in whole
or in part, including without limitation and whether or not known to the
Guarantor of the Bank:

     (a) any time or waiver granted to or composition with the Borrower, another
Guarantor or any other person.

     (b) the taking, variation, compromise, renewal or release of or refusal or
neglect to perfect or enforce any rights, remedies or securities against the
Borrower another Guarantor or any other person.

     (c) any legal limitation, disability incapacity or other circumstances
relating to the Borrower, another Guarantor or any other person.

     (d) any variation or any Security Document or any other document or
security so that references to these conditions in this guarantee shall include
each such variation.

     (e) any unenforceability, invalidity or frustration of any obligation of
the Borrower or any other person under the Security Documents or any other
document or security, to the intent that each Guarantor's obligations hereunder
shall remain in full force and this guarantee be construed accordingly as if
there were no such unenforceability, invalidity or frustration.

15.05 IMMEDIATE RECOURSE

The Guarantor waives any right it may have of first requiring the Bank to
proceed against or enforce any other rights or security of or claim payment from
Borrower or any other person before claiming from the Guarantor hereunder.

15.06 NON-COMPETITION

Until all amounts which may be or become payable by the Borrower under this
Agreement and the Security Documents or in connection therewith have been
irrevocably paid in full, the Guarantor shall not, in any event of default:

     (a) be subrogated to any rights, security or moneys held, received or
receivable by the Bank or be entitled to any right of contribution in respect of
any payment made or moneys received on account of the Guarantor's liability
hereunder.

     (b) be entitled and shall not claim to rank as creditor against the estate
or in the bankrupcy or liquidation of the Borrower in competition with the Bank.

<PAGE>

                                       25


     (c) receive, claim or have the benefit of any payment, distribution or
security from or on account of the Borrower or exercise any right of set-off as
against the Borrower.

The Guarantor shall forthwith pay to the Bank an amount equal to any such
set-off in fact exercised by it and shall hold in trust for and forthwith pay or
transfer, as the case may be, to the Bank any such payment or distribution or
benefit of security in fact received by it.

15.07 CONFIRMATION

The Guarantor confirms that the giving of this guaranteed by the Guarantor is to
the commercial benefit of the Guarantor in that the Guarantor has close
financial cooperation and mutual assistance with the Borrower.

15.08 ADDITIONAL SECURITY

This guarantee shall be in addition to and shall not in any way be prejudiced by
any other security now or hereafter held by the Bank as security for the
obligations of the Borrower.

15.09 CERTIFICATE

A certificate of the Bank as to any amount owing from the Borrower under the
Security Documents shall be conclusive evidence (save of manifest error) of such
amount as against the Guarantor.

16. NOTICES AND OTHER MATTERS

16.01 Every notice, request, demand or other communication under this Agreement
shall be in writing delivered personally or by registered letter, fax or telex
(confirmed in the case of a telex by registered letter sent within twenty four
hours of its despatch). Every notice, request, demand or communication shall,
subject as otherwise provided in this Agreement, be deemed to have been
received, in the case of a fax or telex at the time of despatch thereof
(provided that if the date of despatch is not a Business Day in the country of
the addressee it shall be deemed to have been received at the opening of
business on the next such Business Day) and in the case of a letter when
delivered personally or 3 days after it has been put in to the post.

16.02 Every notice, request, demand or other communication shall be sent:

<PAGE>

                                       26


     (1)  to the Obligors at:
          c/o Eurobulk Ltd
          Aethrion Center
          40, Ag. Konstantinou Ave.
          151 24 Maroussi, Greece
          Fax: +30 10 610 5110
          Tel.: +30 10 610 5111

     (2)  to the Bank at:
          93 Akti Miaouli
          185 38 Piraeus, Greece
          Attention: the Manager
          Telephone: +30 10 4290 120
          Fax: +30 10 4290 506

or such other address or telex number as is notified by one party to the other
party hereunder.

16.03 Process Agent.

Mr. Ioannis Vekris, resident of 3-5, Ilission street, Athens, Greece, is hereby
appointed by the Obligors as agent to accept service (hereinafter "Process
Agent") upon whom any judicial process may be served and any notice, request,
demand or other communication under this Agreement or any of the Security
Documents. In the event that the Process Agent (or any substitute process agent
notified to the Bank in accordance with the foregoing) cannot be found at the
address specified above (or, as the case may be notified to the Bank), which
will be conclusively proved by a deed of a process server to the effect that the
Process Agent was not found to that address, any process notice, request, demand
or other communication to be sent to any Security Party may be validly effected
upon the District Attorney of the First Instance Court of Piraeus.

16.04 No failure or delay on the part of the Bank to exercise any power, right
or remedy under this Agreement and/or any of the Security Documents shall
operate as a waiver thereof, nor shall any single or partial exercise by the
Bank of any power, right or remedy preclude any other or further exercise
thereof or the exercise of any other power, right or remedy. The remedies
provided herein and in the Security Documents are cumulative and are not
exclusive of any remedies provided by law.

16.05 All certificates, instruments and other documents to be delivered under or
supplied in connection with this Agreement shall be in the English language or
shall attach a certified English translation thereof, which translation shall be
the governing version.

16.06 Any provision of this Agreement prohibited by or unlawful or unenforceable
under any applicable law actually applied by any court of competent jurisdiction
shall,

<PAGE>

                                       27


to the extent required by such law, be severed from this Agreement and rendered
ineffective so far as is possible without modifying the remaining provisions of
this Agreement. Where however the provisions of any such applicable law may be
waived, they are hereby waived by the parties hereto to the full extent
permitted by such law to the end that this Agreement shall be a valid and
binding agreement enforceable in accordance with its terms.

17.  LAW AND JURISDICTION

17.01 This Agreement shall be governed by and construed in accordance with the
laws of England.

17.02 For the exclusive benefit of the Bank, each of the Obligors hereby
irrevocably submits to the non-exclusive jurisdiction of the High Court of
Justice in London, England. Further, the Obligors agree that any summons, writ
or other legal process issued against them in England shall be served upon
Messrs. HILL TAYLOR DICKINSON, currently located at Irongate House, Duke's
Place, London EC3A 7LP, United Kingdom (tel.: 0044207-2839033, fax: 0044207-
2831144) or their successors, who are hereby authorised to accept such service
which shall be deemed to be good service on the Obligors.

17.03 The Obligors further irrevocably agree that the Courts of Piraeus, Greece,
shall have jurisdiction over any proceedings arising hereunder and each Obligor
hereby irrevocably submits to the jurisdiction of such courts for such purpose.

17.04 Nothing herein shall limit the right of the Bank to take proceedings
against the Obligors in any other court of competent jurisdiction, whether
concurrently or not.

17.05 To the extent that each Obligor or any of its property may in any
jurisdiction enjoy or be entitled to exemption or immunity from any legal
process (including without limitation any relief or execution) each Obligor
hereby irrevocably agrees not to claim or invoke and hereby irrevocably waives
such exemption or immunity to the full extent permitted by the law of such
jurisdiction.

18.  JOINT AND SEVERAL LIABILITY

Each of the Obligors' obligations under this Agreement are joint and several. No
Obligors' obligations shall in any way be avoided, discharged or released or
otherwise adversely affected if for any reason whatsoever (i) any other Obligor
does not become a party to this Agreement or any Security Document or is at any
time not effectively bound by the terms of this Agreement or any Security
Document or (ii) this Agreement or any Security Document or the liabilities of
any other Obligor are at any time in any way or to any extent avoided
invalidated discharged released or otherwise adversely affected. For the purpose
of this Agreement and the Security Documents the Agreement by one Obligor with
the Bank to any matter or thing shall be deemed to be Agreement of all the
Obligors who shall be bound accordingly.

<PAGE>

                                       28


IN WITNESS WHEREOF the parties hereto have caused this Agreement to be duly
executed the day and year first above written.


Signed by                               /s/ Ioannis Vekris
Ioannis Vekris                          ----------------------------------------
for and on behalf of
DIANA TRADING LTD.
in the presence of:


/s/ LIDA TSOLKA
-------------------------------------
LIDA TSOLKA
ATTORNEY - AT - LAW
19 SKOUZE STR. - 18535 PIRAEUS - GREECE
TEL.: (30.1) 4180742 -
FAX: (30.1) 4519676


Signed by                               /s/ Ioannis Vekris
Ioannis Vekris                          ----------------------------------------
for and on behalf of
OCEANOPERA SHIPPING LIMITED
in the presence of:


/s/ LIDA TSOLKA
-------------------------------------
LIDA TSOLKA
ATTORNEY - AT - LAW
19 SKOUZE STR. - 18535 PIRAEUS - GREECE
TEL.: (30.1) 4180742 -
FAX: (30.1) 4519676


Signed by                               /s/ Nikolaos Karellis
Nikolaos Karellis                       ----------------------------------------
for and on behalf of
HSBC BANK PLC
in the presence of:


/s/ LIDA TSOLKA
-------------------------------------
LIDA TSOLKA
ATTORNEY - AT - LAW
19 SKOUZE STR. - 18535 PIRAEUS - GREECE
TEL.: (30.1) 4180742 -
FAX: (30.1) 4519676

<PAGE>

                                       29


                                   SCHEDULE 1

                             FORM OF DRAWDOWN NOTICE
                          (referred to in Clause 2.02)

To HSBC BANK PLC.

                       U.S. $ 5,900,000 Floating Rate Loan
                      Loan Agreement dated ___ October 2002

We refer to the above Loan Agreement and hereby:

     (1) give you notice that we wish you to advance tranche ____ of U.S.
$________ to us on _________________ and select a first Interest Period in
respect thereof of months, the first Interest Period to expire on _________

The above amount to be credited to the Account: ________________

     (2) confirm that

          (i) no event or circumstance has occurred and is continuing which
constitutes or which with the giving of notice or lapse of time or both would
constitute an Event of Default under the Loan Agreement.

          (ii) the representations and warranties contained in Clause 7 of the
Loan Agreement are true and correct at the date hereof as if made with respect
to the fact and circumstances existing at such date.

          (iii) the borrowing to be effected by such advance will be within our
corporate powers has been validity authorized by appropriate corporate action
and will not cause any limit on our borrowing (whether imposed by statue,
regulation, agreement or otherwise) to be exceeded.

<PAGE>

                                       30


          (iv) there has been no material adverse change in our financial
position.


SIGNED by
for and on behalf of


/s/ Ioannis Vekris
-------------------------------------
DIANA TRADING LTD.

<PAGE>

                                       31


                                   SCHEDULE 2

                         DOCUMENTS AND EVIDENCE REQUIRED
                             AS CONDITIONS PRECEDENT

                                     PART 1

(a) copy of all documents which contain or establish or relate to the
constitution of the Corporate Obligors including transfer of shares and election
of Board of Directors.

(b) Resolutions duly passed at meeting(s) of the Board of Directors and
Shareholders of the Corporate Obligors duly convened and held approving the Loan
Agreement and the Security Documents and authorising their signature, delivery
and performance.

(c) an opinion of the Law Office of Roger Constantinides special legal advisers
in Greece to the Bank and an opinion of the Obligors' Lawyer.

(d) there has been no material adverse change in the financial conditions and/or
operations of the Borrower and/or the Corporate Guarantor.

                                     PART 2

(a) evidence that each Vessel:

     (i) is registered in the name of the relevant Borrower or the Corporate
     Guarantor free of encumbrances other than Permitted Encumbrances.

     (ii) is classed highest with its respective Classification Society, such
     Classification Society to be acceptable to the Bank.

     (iii) is insured in accordance with the provisions of each Mortgage, the
     Deed of Covenants and the Assignment and all requirements of each Mortgage,
     the Deed of Covenants and the Assignment in respect of such Insurances have
     been complied with.

(b) the following security Documents duly executed:

     (i) Personal Guarantee duly executed by the Personal Guarantor.

     (ii) First Preferred Marshall Island Mortgage on the Vessel "DOOYANG HOPE"
     tbr "IRINI" including Assignment of Insurances, Earnings and any
     Requisition Compensation of the Vessel.

<PAGE>

                                       32


     (iii) Second Priority Statutory Cypriot Mortgage on the Vessel "NIKOLAOS P"
     and Deed of Covenants including Assignment of Insurances, Earnings and any
     Requisition Compensation of the Vessel.

     (iv) evidence that each Mortgage has been registered against each Vessel.