Exhibit 10.26
                                                                   20 July, 2001


SIDE LETTER


The parties to this Side Letter are as follows:

(1)      Balantum Oy ("Newco"),  a company organised and existing under the laws
         of Finland  (Business ID 1646698-0)  having its registered  domicile in
         the City of Helsinki and its registered address at c/o Asianajotoimisto
         Waselius & Wist Oy, Etelaesplanadi 24 A, 00130 Helsinki, Finland;

(2)      Aquamax (International) Holding B.V., ("Aquamax"),  a company organised
         and existing  under the laws of the  Netherlands  having its registered
         domicile  in the  City of  Amsterdam  and  its  registered  address  at
         Locatellikade 1, Parnassustoren, 1076 AZ Amsterdam, P.O. Box 7215, 1070
         AE Amsterdam, the Netherlands;

(3)      Keeran  Corporation N.V.  ("Keeran"),  a company organised and existing
         under  the  laws of the  Netherlands  Antilles  having  its  registered
         domicile in the City of Willemstad and its registered  address at World
         Trade Center  Curacao,  Unit  BC.II.01-04,  Piscadera Bay,  Willemstad,
         Curacao, the Netherlands Antilles;

(4)      Hadwaco Ltd Oy ("Hadwaco"),  a company organised and existing under the
         laws of Finland, having its registered domicile in the City of Helsinki
         and its registered  address at Hameentie 135, 00560  Helsinki,  Finland
         and

(5)      Ocean  Power  Corporation,  a Delaware  corporation  having a principal
         place of business at 5000 Robert J. Mathews  Parkway,  El Dorado Hills,
         California 95762, United States of America ("Ocean Power")

         WHEREAS,   Newco,  Aquamax  and  Keeran  have  today  signed  a  Patent
         Assignment Agreement (The "Agreement"); and

         WHEREAS,  Newco,  Aquamax,  and  Keeran  have  today  signed a  License
         Agreement (The "License Agreement"); and

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         WHEREAS, Newco, Aquamax and Keeran have today signed a Co-Operation and
         Sales Agreement (The "Co-Operation and Sales Agreement"); and

         WHEREAS,  Aquamax,  Keeran and Ocean  Power have today  signed a Mutual
         Release (The "Mutual Release"); and

         WHEREAS,  Aquamax and Hadwaco have today signed a Settlement  Agreement
         (The "Settlement Agreement")

         Each of the  parties  are  hereinafter  referred  to as a  "Party"  and
         together as the "Parties".  The Agreement,  the License Agreement,  the
         Co-Operation and Sales Agreement, the Mutual Release and the Settlement
         Agreement are hereinafter referred collectively as the "Agreements".

         NOW, THEREFORE,  for good and valuable  consideration,  the receipt and
         suffiiceny of which are hereby acknowledged by the Parties, the Parties
         have agreed as follows:

1.       In the event that the  transactions  contemplated  by the Agreements do
         not close on or before 31 August,  2001, as agreed between the Parties,
         all the Agreements shall  thenceforth be null and void, and none of the
         Parties  shall be bound by any of the terms or provisions of any of the
         Agreements  or be entitled to enforce any  obligations  or rights under
         any of the Agreements.  Without limiting the foregoing, it is expressly
         agreed by and between the Parties that the transaction  contemplated by
         the Agreement  cannot and shall not close until and unless  Aquamax and
         Keeran have  completed  Schedule "A" attached to said  Agreement to the
         satifaction of Newco. If Newco does not present any claims on or before
         17 August, 2001, Schedule "A" shall be considered as accepted.

2.       Notwithstanding any provision in any of the Agreements to the contrary,
         including  but not limited to section  11.9 of the  Agreement,  section
         9.15 of the License  Agreement and section 22.1 of the Co-operation and
         Sales  Agreement,  this  Side  Letter  shall be  incorporated  into the
         Agreements and shall  supersede,  modify and amend any and all terms or
         provisions of any of the  Agreements  which  conflict with the terms of
         this Side Letter.

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3.       Notwithstanding  section  11.2.  of  the  Agreement,  section  8 of the
         License  Agreement  and  section  17  of  the  Co-operation  and  Sales
         Agreement,  if the  Agreements  become  null and void by  operation  of
         paragraph 1 of this Side Letter, they shall become so automatically and
         without any notice to any Party.

4.       In the event that the Agreements shall become null and void as provided
         herein the  Licensing  Agreement  fully  executed on September 21, 2000
         between Ocean Power,  Aquamax,  and Keeran (the  "Original  Agreement")
         shall remain fully valid and the validity of the Original Agreement has
         not been interrupted at any stage.

5.       This  Side  Letter  modifies  and  amends  the  Agreements,  is made in
         consideration  of the same obligations and promises as specified in the
         Agreements,  and is intended by the Parties to  consititue  an integral
         part of each of the Agreements,  notwithstanding  any provisions in any
         of the Agreements to the contrary.

6.       Notwithstanding  section  11.3  of the  Agreement,  section  9.7 of the
         License  Agreement  and  section  26  of  the  Co-operation  and  Sales
         Agreement, any dispute,  difference or claim arising beween the Parties
         in respect of any of the terms and conditions of this Side Letter or of
         performance  thereof  by any of the  Parties,  which  cannot be settled
         amicably by means of  negotiation,  shall be subject to  arbitration by
         three (3) arbitrators, unless otherwise agreed by the Parties under the
         laws of  Finland.  The  place  of  arbitration  shall  be in  Helsinki,
         Finland,  and the proceedings shall be conducted in English or Finnish,
         as the Parties might agree.

                NEWCO                       AQUAMAX (INTERNATIONAL)
                                            HOLDING B.V.

                By   /s/ Juhani Kujala      By  /s/ Rainer Sjostrum
                Name     Juhani Kujala      Name    Rainer Sjostrum
                Title_________________      Title__________________
                Date     20 July 2001       Date    20 July 2001

               KEERAN CORPORATION N.V.     HADWACO LTD OY

                By   /s/ Rainer Sjostrum     By_____________________
                Name___________________     Name___________________
                Title__________________     Title__________________
                Date     20 July 2001       Date___________________


                OCEAN POWER CORPORATION

                By   /s/ Philip Johnson
                Name________________________
                Title_______________________
                Date     20 July 2001


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