EXHIBIT 2.01
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
-----------------------------------x

In re:

                                   Chapter 11
OCEAN POWER CORPORATION,           Case No. 02-15989 (REG)

                 Debtor.

-----------------------------------x

                        CHAPTER 11 PLAN OF REORGANIZATION
                        ---------------------------------

                                          Halperin Battaglia Raicht, LLP
                                          Attorneys for the Debtor and
                                            Debtor-in-Possession
                                          555 Madison Avenue, 9th Floor
                                          New York, New York 10022
                                          (212)765-9100
                                          Attn: Alan D. Halperin, Esq.
                                                Robert D. Raicht, Esq.

                                          Arent Fox LLP
                                          Attorneys for the Official Committee
                                            of Unsecured Creditors of the Debtor
                                          1675 Broadway
                                          New York, NY 10019
                                          (212) 484-3900
                                          Attn: Schuyler G. Carroll, Esq.
                                                Andrew I. Silfen, Esq.

<PAGE>

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
-----------------------------------x

In re:

                                   Chapter 11
OCEAN POWER CORPORATION,           Case No. 02-15989 (REG)

                 Debtor.

-----------------------------------x

                        CHAPTER 11 PLAN OF REORGANIZATION
                        ---------------------------------

            Ocean Power Corporation,  Inc., the debtor and  debtor-in-possession
herein, and the Official Committee of Unsecured  Creditors of the Debtor jointly
propose the  following  plan of  reorganization  pursuant to Section  1121(a) of
Chapter 11 of Title 11 of the United States Code.

                                    Article I
                                   Definitions
                                   -----------

            1.1  Meaning.  For the  purpose  of the Plan,  each of the terms set
forth herein shall have the meanings  ascribed  below and such meanings shall be
equally applicable to the singular and plural forms of the terms defined. All of
the  definitions  and provisions  contained in this Article I are, and shall be,
regarded as integral, substantive and operative provisions of the Plan.

            1.2 Other  Terms.  A term  that is used in the Plan and not  defined
herein,  but that is defined in the Bankruptcy Code or in the Bankruptcy  Rules,
shall have the meaning set forth therein. Any reference contained in the Plan to
a particular exhibit,  paragraph or article shall be deemed to be a reference to
an exhibit, paragraph or article of the Plan.

            1.3 Rules of  Construction.  The rules of construction  set forth in
Section 102 of the Bankruptcy  Code shall be applicable to all of the provisions
of the Plan. Without in any way limiting the foregoing, as used in the Plan, the
words "includes" and "including" are without limitation.

            1.4 Exhibits and Appendices. All exhibits and appendices to the Plan
are  incorporated  into the Plan by this reference and are a part of the Plan as
if set forth in full herein.

            1.5 Definitions.

            1.5.1  "Administrative  Claim"  shall  mean any cost or  expense  of
administration  of the Case allowed  under  Sections  503(b) or 507(a)(1) of the
Bankruptcy Code, including all

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allowances of compensation or reimbursement of expenses to Professional  Persons
to the extent allowed by the  Bankruptcy  Court only upon entry of a Final Order
under Sections 330 and 331 of the Bankruptcy Code and the Bankruptcy Rules.

            1.5.2  "Allowed" or "Allowed  Amount",  when referring to a Claim or
Interest, shall mean the amount of a Claim or Interest, as applicable,

            a)    as set forth in the Schedules to the extent that the Schedules
                  do  not  list  the   liability   owing  to  such  Claimant  or
                  Interestholder as disputed,  contingent or unliquidated and to
                  which no proof of claim or  interest  has been  filed with the
                  Bankruptcy Court or an objection filed,

            b)    filed with the Bankruptcy  Court on or before the Bar Date and
                  as to which no  objection  to the  allowance  thereof has been
                  interposed within any applicable period of limitation fixed by
                  Final Order or the Plan,

            c)    as to which any objection has been  interposed,  to the extent
                  such Claim or Interest has been allowed by a Final Order, or

            d)    any Claim or Interest  specifically  identified in the Plan as
                  an Allowed Claim or Interest.

            1.5.3  "Amended  Bylaws"  shall  mean the  corporate  bylaws  of the
Reorganized Debtor.

            1.5.4  "Amended  Certificate"  shall mean the Amended  and  Restated
Certificate of Incorporation of the Reorganized Debtor.

            1.5.5  "Assets"  shall mean all assets and property of the Debtor of
any type or description, wherever located and whether acquired prior to or after
the Petition Date.  Notwithstanding the foregoing,  the Assets shall not include
the Retained Assets.

            1.5.6  "Authorized  Officer" shall mean J. Michael  Hopper,  or such
other person as may be designated by the Debtor, who shall have the authority to
bind the Debtor on behalf of the Estate, to undertake the transactions  required
to  effectuate  the  confirmation  of the Plan,  including  without  limitation,
executing a creditor trust agreement and any documents related thereto.

            1.5.7  "Available Cash" shall mean the Cash held by Creditor Trustee
in the Escrow Account, consisting of the proceeds of the Retained Assets and the
Initial Investment, together with interest earned thereon.

            1.5.8 "Ballot" shall mean the form  distributed to holders of Claims
and Interests on which is to be indicated whether such holder accepts or rejects
the Plan.

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            1.5.9  "Bankruptcy  Code"  shall mean  Chapter 11 of Title 11 of the
United States Code, 11 U.S.C. Section 101, et. seq., as amended.

            1.5.10  "Bankruptcy  Court" shall mean the United States  Bankruptcy
Court for the Southern  District of New York,  and any  appellate or other court
that is competent to exercise jurisdiction over any matter or proceeding arising
in or relating to this Case.

            1.5.11 "Bankruptcy Rules" shall mean the Federal Rules of Bankruptcy
Procedure in effect on the date of the Plan.

            1.5.12 "Bar Date"  shall mean March 31,  2006 at 5:00 p.m.  (Eastern
Time), the last day for the assertion of Claims that arose prior to the Petition
Date as well as Claims that arose after the Petition  Date through and including
January 31, 2006 (except for Administrative  Claims of the Professional  Persons
retained in the Case).

            1.5.13  "Business Day" shall mean any day on which  commercial banks
are open for business in New York, New York.

            1.5.14  "Case" shall mean the Debtor's  case under chapter 11 of the
Bankruptcy Code, Case No. 02-15989 (REG), which was commenced by the filing of a
voluntary petition by the Debtor on the Petition Date.

            1.5.15 "Cash" shall mean,  with respect to payments  under the Plan,
lawful  currency of the United States of America (U.S.  dollars),  regular check
backed by good  funds,  certified  check,  bank  check or wire  transfer  from a
domestic bank.

            1.5.16  "Claim"  shall  have  the  meaning  given  to  such  term in
Section 101(5) of the Bankruptcy Code.

            1.5.17 "Claimant" shall mean the holder of a Claim.

            1.5.18  "Class"  shall mean any  category of Claims or  Interests as
specified in Article III of the Plan.

            1.5.19  "Committee"  shall mean the Official  Committee of Unsecured
Creditors  of the  Debtors  appointed  in this Case by the  Office of the United
States Trustee on December 16, 2002.

            1.5.20  "Confirmation Date" shall mean the date the Bankruptcy Court
enters the Confirmation Order.

            1.5.21  "Confirmation  Order" shall mean an order of the  Bankruptcy
Court confirming the Plan in accordance with the Bankruptcy Code.

            1.5.22  "Creditor  Trust" shall mean the trust  created  pursuant to
this Plan on the

                                        4

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Effective Date to hold  Available  Cash;  the Initial  Investment;  the Retained
Assets;  the Assets;  and Cash to pay  administrative  claims that have not been
allowed as of the Effective Date.

            1.5.23  "Creditor  Trust  Agreement"  shall mean the trust agreement
that documents the powers,  duties and responsibilities of the Creditor Trustee,
which agreement shall be in form and substance acceptable to the Committee.

            1.5.24 "Creditor Trustee" shall mean the trustee who will manage the
Creditor  Trust  pursuant  to the  terms  of this  Plan and the  Creditor  Trust
Agreement  and for the purposes  set forth in this Plan and in the  Confirmation
Order.

            1.5.25  "Debtor"  shall mean  Ocean  Power  Corporation,  a Delaware
corporation.

            1.5.26 "DIP Facility"  shall mean a  debtor-in-possession  financing
facility,  as amended from time to time,  provided to the Debtor under a certain
Credit Agreement, dated December 1, 2002, as approved by emergency,  interim and
final orders of the Bankruptcy  Court dated December 5, 2002,  December 20, 2002
and April 23, 2003,  pursuant to Sections  105(a),  364(c) and (d) of Bankruptcy
Code and Bankruptcy Rules 2002, 4001 and 9014.

            1.5.27  "Disclosure  Statement"  shall mean the Debtor's  disclosure
statement, as may be amended and modified, with respect to the Plan, as approved
by the Disclosure Statement Order.

            1.5.28  "Disclosure  Statement  Order"  shall  mean  the  Order  (a)
approving  the  Disclosure  Statement  in  accordance  with  Section 1125 of the
Bankruptcy  Code; (b) scheduling  dates and deadlines and fixing  procedures for
the  hearing  to  consider  confirmation  of the Plan;  and (c)  other  relevant
information.

            1.5.29  "Disputed Claim" shall mean a Claim as to which an objection
(a) has been timely  filed and (b) is not the subject of a Final Order  allowing
or disallowing the Claim, or has not been withdrawn.

            1.5.30   "Distribution   Date"   shall   mean   the  date  on  which
Distributions are made.

            1.5.31  "Distribution"  shall mean  Cash,  Available  Cash,  and New
Common Stock that is required under the Plan to be distributed to a holder of an
Allowed Claim or Interest.

            1.5.32  "Effective Date" shall mean the date the Confirmation  Order
becomes a Final Order.

            1.5.33  "Escrow  Account"  shall mean one or more  segregated  trust
accounts or escrow  accounts to be established by the Creditor  Trustee upon the
Effective  Date and held by the  Creditor  Trustee  as agent in trust,  in which
Available Cash is to be deposited and from which all  Distributions to Claimants
shall be paid pursuant to the Plan.

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            1.5.34  "Estate" shall mean the estate  created  pursuant to Section
541 of the Bankruptcy Code as of the Petition Date.

            1.5.35  "Executory  Contracts"  shall mean any contract or unexpired
lease to which the  Debtor is a party,  which is  capable  of being  assumed  or
rejected pursuant to Section 365 of the Bankruptcy Code.

            1.5.36  "Final  Order"  shall  mean  an  order  or  judgment  of the
Bankruptcy  Court or another court of competent  jurisdiction in connection with
the Case,  which  order or judgment  has not been  reversed,  stayed,  modified,
amended  or  vacated,  and (a) the time to  appeal  from,  or to seek  review or
rehearing  of, has expired,  (b) no appeal,  review,  certiorari or rehearing is
pending,  and (c) the order has become  conclusive  of all  matters  adjudicated
therefor and is in full force and effect.

            1.5.37   "Form   W-9"   shall   mean  IRS  Form  W-9  for   Taxpayer
Identification Number and Certification.

            1.5.38  "Initial  Investment"  shall mean the payment of $500,000 by
the Plan Sponsor,  no later than the Confirmation Date, to be held in the Escrow
Account to be held by Creditor  Trustee and  disbursed  in  accordance  with the
provisions of Article IV of this Plan.

            1.5.39 "Interestholder" shall mean a holder of an Interest.

            1.5.40  "Interestholder  New Common  Stock" shall mean 1% of the New
Common Stock to be issued to the holders of Allowed Class 4 Interests  under the
Plan.  In the event the Debtor is required to seek  confirmation  under  Section
1129(b) of the  Bankruptcy  Code,  Allowed  Class 4  Interests  will  receive no
Distribution of New Common Stock under the Plan.

            1.5.41  "Interests"  shall  mean the  rights of owners of issued and
outstanding  shares of stock of the Debtor,  excluding  rights  arising from the
ownership of options and warrants to acquire common stock of the Debtor,  issued
prior to the Petition Date.

            1.5.42 "New Common Stock" shall mean 100% of the  authorized  common
stock of the Reorganized Debtor to be issued under the Plan.

            1.5.43  "Options and Warrants" shall mean all options and warrant to
purchase stock of any class of the Debtor issued prior to the Petition Date.

            1.5.44 "Person" shall mean any individual, corporation, partnership,
limited  liability  corporation,  business  trust,  joint stock company,  trust,
unincorporated association, joint venture or other entity of whatever nature.

            1.5.45  "Petition  Date" shall mean  December  1, 2002,  the date on
which the Debtor filed a voluntary  petition  under Chapter 11 of the Bankruptcy
Code, thereby commencing the Case.

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            1.5.46 "Plan" shall mean this Plan of Reorganization.

            1.5.47 "Plan  Sponsor"  shall mean Trinad  Capital Master Fund Ltd.,
the sponsor of this Plan.

            1.5.48 "Professional Fee Claim" shall mean a Claim of a Professional
for  compensation  for  services  rendered,  and/or  reimbursement  of costs and
expenses  incurred,  after  the  Petition  Date and prior to and  including  the
Confirmation Date.

            1.5.49 "Priority Claim" shall mean any Claim entitled to priority in
accordance  with  Section  507(a)  of  the  Bankruptcy   Code,   other  than  an
Administrative Claim or a Priority Tax Claim.

            1.5.50  "Priority  Tax Claim"  shall mean any tax claim  entitled to
priority under Section 507(a)(8) of the Bankruptcy Code.

            1.5.51 "Pro Rata" shall mean the proportion that an Allowed Claim or
Interest in a particular  Class bears to the  aggregate  amount of all Claims or
Interests (including Disputed Claims until allowed or disallowed) in such Class.

            1.5.52  "Professional  Fees" shall mean all fees, costs and expenses
of Professional  Persons  incurred in the Case up to and including the Effective
Date,  which fees,  costs, and expenses shall be awarded by Final Order pursuant
to Sections 330, 331 or 503(b) of the Bankruptcy Code.

            1.5.53 "Professional Persons" shall mean all attorneys,  accountants
and financial  consultants  (a) retained in the Case or to be  compensated  by a
Final Order  pursuant to  Sections  327,  328,  330,  503(b)  and/or 1103 of the
Bankruptcy  Code;  or (b)  retained  by the  Creditor  Trustee  on or after  the
Effective Date.

            1.5.54 "Record Date" shall mean the date the Bankruptcy Court enters
the Disclosure Statement Order.

            1.5.55  "Reorganized  Debtor"  shall  mean  the  Debtor  as  of  the
Effective Date.

            1.5.56 "Retained  Assets" shall mean the Debtor's Cash on hand as of
the Effective Date.

            1.5.57  "Rights  of  Action"  shall  mean all  choate  and  inchoate
actions, causes of action, suits, rights of action, counterclaims, cross claims,
rights of setoff and recoupment, all debts, sums of money, accounts, reckonings,
bonds, bills,  specialties,  covenants,  contracts,  controversies,  agreements,
promises, variances,  trespasses,  damages or judgments arising under any theory
of law or equity,  and all claims by or against  holders of Claims or Interests,
including Persons having dealings, relationships or transactions with or related
to the Debtor, and by or against any Person named or identified in the Schedules
or any pleadings filed in the Case in

                                        7

<PAGE>

favor of the Debtor or the Estate,  whether or not commenced as of the Effective
Date, and the proceeds thereof.

            1.5.58   "Schedules"   shall  mean  the   Schedules  of  Assets  and
Liabilities  filed by the Debtor with the Bankruptcy Court pursuant to Rule 1007
of the Bankruptcy Rules, as may be amended from time to time.

            1.5.59  "Secured  Claim" shall mean the claim of  Algonquin  Capital
Management, LLC and Hibernia Capital Management,  LLC, evidenced by, among other
things, various promissory notes and a security agreement dated May 30, 2002.

            1.5.60 "Tax Asset Transfer Restrictions" shall mean any restrictions
on the  transfer of the New Common Stock  contained  in the Amended  Certificate
that are  established  to preserve  certain tax  attributes  of the  Reorganized
Debtor.

            1.5.61 "Transfer Agent" shall mean Interstate Transfer Company.

            1.5.62 "SEC" shall mean any and all representatives and employees of
the United States Securities and Exchange Commission.

            1.5.63   "United   States   Trustee"   shall   mean   any   and  all
representatives  and  employees of the Office of the United States  Trustee,  33
Whitehall Street, New York, New York 10004.

            1.5.64  "Unsecured  Claim"  shall mean any Claim that is not a Claim
under the DIP Facility,  the Secured Claim, an Administrative  Claim, a Priority
Tax Claim, or a Priority Claim.

            1.5.65  "Unsecured  Claim New Common Stock" shall mean 6% of the New
Common  Stock to be issued to the  holders of Allowed  Class 3 Claims  under the
Plan.  In the event the Debtor is required to seek  confirmation  under  Section
1129(b) of the  Bankruptcy  Code,  Allowed Class 3 Claims will receive 4% of the
New Common Stock under the Plan.

                                   Article II
         Provision for the Treatment of the DIP Facility, Administrative
        Claims, Priority Tax Claims and Fees of the United States Trustee
        -----------------------------------------------------------------

            Pursuant to Section  1123(a)(1) of the Bankruptcy Code, Claims under
the DIP  Facility,  Administrative  Claims,  Priority Tax Claims and fees of the
United States Trustee are not classified and are not impaired under the Plan.

            (a) The DIP Facility.  The DIP Facility has been fully satisfied and
nothing further shall be paid by the Debtor or its estate under the DIP Facility
and the lender under the DIP Facility,  in its capacity as  debtor-in-possession
lender, has waived any right to any payment from the Debtor or its estate.

                                        8

<PAGE>

            (b) Administrative  Claims. Except to the extent that a holder of an
Administrative  Claim agrees to a less  favorable  treatment,  each holder of an
Allowed  Administrative  Claim  shall  receive,  in full and  final  settlement,
satisfaction,  discharge and release of its Claim, a  Distribution  of Available
Cash in an amount equal to such Allowed Amount of such  Administrative  Claim on
the later of the Effective Date and the date such  Administrative  Claim becomes
an Allowed  Claim,  or on such  other  date as may be ordered by the  Bankruptcy
Court.

            (c)  Priority  Tax  Claims.  Except to the extent that a holder of a
Priority  Tax Claim  agrees to a less  favorable  treatment,  each  holder of an
Allowed  Priority  Tax  Claim  shall  receive,  in full  and  final  settlement,
satisfaction,  discharge and release of its Claim, a  Distribution  of Available
Cash in an amount equal to such Allowed Amount of such Priority Tax Claim on the
later of the  Effective  Date or the date such  Priority  Tax Claim  becomes  an
Allowed Claim.

            (d) United States Trustee Fees. The Debtor shall pay all outstanding
amounts due to the United States Trustee upon the Confirmation  Date and through
the Effective  Date, and after the Effective  Date,  the Creditor  Trustee shall
establish  and  maintain  an  adequate  reserve  for fees of the  United  States
Trustee,  and shall pay fees of the United States Trustee  pursuant to 28 U.S.C.
Section 1930(a)(6) until the entry of a final decree in this Case.

            (e)  Professional  Fee Claims.  On a date that is no later than five
(5) Business Days after any order allowing such Professional Fee Claim becomes a
Final Order, each Holder of an Allowed Professional Fee Claim shall receive, (x)
Cash equal to the unpaid portion of such Allowed  Professional  Fee Claim or (y)
such other treatment as to which the Debtor and such Holder shall have agreed on
in writing. All final requests for compensation or reimbursement of Professional
Fees pursuant to sections 327, 328, 330, 331, 503(b),  or 1103 of the Bankruptcy
Code for services rendered to the Debtor or the Committee prior to the Effective
Date shall be filed and served so as to be received by the  Authorized  Officer,
the  Creditor  Trustee,  counsel to the  Committee  and counsel to the Debtor no
later than 45 days after the Effective Date.  Holders of Professional Fee Claims
that do not file such  requests  by the  applicable  bar date  shall be  forever
barred from asserting such claims against the Debtor, the Reorganized Debtor, or
its successors, assigns or property.

                                   Article III
                     Classification of Claims and Interests
                     --------------------------------------

            3.1 Classes.  A Claim or Interest is in a  particular  class only to
the extent that the Claim or Interest falls within the description of that Class
and is in a  different  Class to the extent that the  remainder  of the Claim or
Interest falls within the description of such different Class.

                 Class 1-   Secured Claim
                 Class 2-   Priority Claims

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<PAGE>

                 Class 3-   Unsecured Claims
                 Class 4-   Interests
                 Class 5-   Options and Warrants

            3.2 Unimpaired Claims and Interests. Except for the holders of Class
1 and 2 Claims, all classes of Claims and Interests are impaired under the Plan.

                                   Article IV
                  Treatment of Classes of Claims and Interests
                  --------------------------------------------

            4.1 Secured  Claim.  Class 1 Claim  consists  of the Secured  Claim,
which is unimpaired  under the Plan. On the Effective  Date or as soon practical
thereafter,  the  Secured  Claim shall be  satisfied,  settled,  discharged  and
released,  in full, by the  surrender of the  pre-petition  collateral,  if any,
securing  such  Claim to the  holders  thereof.  To the  extent the value of the
collateral  securing the Secured  Claim is  insufficient  to satisfy the Allowed
Amount of the Claim,  any such  deficiency  shall be entitled to  treatment as a
Class 3 Claim  hereunder.  All of the collateral  securing the Class 1 Claim was
sold or otherwise  transferred  pursuant to orders of the Bankruptcy  Court and,
thus, there is no remaining collateral securing the Class 1 Claim.

            4.2  Priority  Claims.  Class 2 Claims  consist of Priority  Claims,
which are unimpaired  under the Plan.  Each holder of an Allowed  Priority Claim
shall be satisfied, settled, discharged and released, in full, by a Distribution
of Available  Cash in an amount equal to such  Allowed  Amount of such  Priority
Claim,  without interest,  on the Effective Date or as soon practical thereafter
or on the date such Claim becomes Allowed.

            4.3 Unsecured  Claims.  Class 3 Claims consist of Unsecured  Claims,
which are  impaired  under the  Plan.  Each  Allowed  Unsecured  Claim  shall be
satisfied,  settled, discharged and released, in full, by Pro Rata Distributions
of (a)  Available  Cash,  after  payment of all Allowed  Administrative  Claims,
Priority  Tax Claims and Class 2 Claims and  appropriate  reserves  for Disputed
Claims are established for the foregoing; and (b) the Unsecured Claim New Common
Stock,  on the Effective Date or as soon as practical  thereafter or on the date
such Claim becomes Allowed.  Any Unsecured Claim that does not become an Allowed
Claim shall not receive any Distribution of Available Cash,  Unsecured Claim New
Common  Stock or any other  Asset and shall be  deemed  satisfied,  settled  and
released in full.

            4.4 Interests.  Class 4 Interests are impaired under the Plan.  Each
holder of an  Allowed  Interest  shall be  satisfied,  settled,  discharged  and
released,  in full, by Pro Rata  Distributions of the  Interestholder New Common
Stock,  provided,  however, that, if the Plan is confirmed under Section 1129(b)
of the Bankruptcy Code, Class 4 Interests will receive no distribution under the
Plan. All Interests shall be deemed  canceled and  extinguished on the Effective
Date.

            4.5 Options and Warrants.  Class 5 Options and Warrants are impaired
under the Plan.  Holders of Options and Warrants shall receive no  Distributions
under the Plan and shall be deemed canceled and extinguished as of the Effective
Date.

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<PAGE>

                                    Article V
                         Means for Execution of the Plan
                         -------------------------------

            5.1 Amendment of Certificate  of  Incorporation  and Bylaws.  On the
Effective Date, the Reorganized Debtor shall present the Amended Certificate and
Amended  Bylaws for filing with the  appropriate  Secretary of State as shall be
necessary and appropriate to permit implementation of this Plan.

            5.2 Adoption of Amended  Certificate  of  Incorporation  and Bylaws.
Confirmation of this Plan shall constitute  adoption of the Amended  Certificate
and  Amended  Bylaws  as of the  Effective  Date  and  approval  thereof  by the
Bankruptcy  Court;  separate  approval  thereof by the Board of Directors of the
Debtor or the Reorganized Debtor shall not be required.

            5.3 Cancellation of Existing  Stock/Issuance of New Common Stock. On
the Effective Date, all existing equity in the Debtor (preferred,  common and/or
any options or warrants in connection therewith) shall be cancelled, and on that
same date, or as soon thereafter as  practicable,  the New Common Stock shall be
issued as follows:  (a) no less than 93% of the New Common Stock shall be issued
to the Plan Sponsor or its designee;  (b) the  Unsecured  Claim New Common Stock
(i.e.,  6% of the New Common  Stock)  shall be issued to the  holders of Allowed
Unsecured Claims;  and (c) the  Interestholder New Common Stock (i.e., 1% of the
New Common Stock) shall be issued to the holders of Interests.  In the event the
Plan is confirmed  under  Section  1129(b) of the  Bankruptcy  Code,  holders of
Unsecured  Claims  will  receive  only 4% of the New Common  Stock and  Interest
holders  will receive no  distribution  under the Plan and 96% of the New Common
Stock will be issued to the Plan Sponsor.

            5.4 Fractional Shares. No fractional shares of New Common Stock will
be issued under this Plan. All fractional  shares will be rounded up to the next
whole share.

            5.5 Voting and Notice  Rights.  All shares of New Common Stock to be
issued  under  this  Plan  shall be  deemed  issued  as of the  Effective  Date,
regardless of the dates on which  certificates  are delivered to their  holders,
and the holders thereof shall be entitled,  commencing on the Effective Date, to
vote on all matters  submitted  to a vote of  shareholders  and to notice of all
matters  of  which   shareholders   are  entitled  to  notice  under  applicable
non-bankruptcy law.

            5.6  Transferability  of New Common Stock. To the extent provided in
Section  1145 of the  Bankruptcy  Code,  the New Common  Stock issued under this
Plan, shall be exempt from the  registration  requirements of the Securities Act
of 1933, as amended,  and any state or local laws requiring the registration for
offer  or  sale  of a  security  or  registration  or  licensing  of an  issuer,
underwriter or dealer. Notwithstanding the foregoing, the New Common Stock shall
be subject to the Tax Asset Transfer Restrictions.

            5.7 Exemption from Certain  Transfer  Taxes.  Pursuant to and to the
fullest

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<PAGE>

extent  permitted by Section  1146(a) of the Bankruptcy  Code, (a) the issuance,
transfer or exchange  of any  securities,  instruments,  or  documents,  (b) the
creation of any other lien, mortgage,  deed of trust or other security interest,
or (c) the making or  assignment  of any lease or the making or  delivery of any
deed or other instrument of transfer under, pursuant to, in furtherance of or in
connection with the Plan or the  Confirmation  Order shall not be subject to any
stamp tax, transfer tax, intangible tax, recording fee or similar tax, charge or
expense.

            5.8 Release of Liens.  On or before the Effective  Date,  holders of
the  Secured  Claim  shall  file such  notice or other  public  statement  as is
necessary or appropriate  to evidence the  termination of the lien formerly held
by such party.  In  addition,  the  Reorganized  Debtor is hereby  appointed  as
attorney-in-fact  for each party whose lien treated or created under the Plan is
hereafter terminated, with full power and authority to execute on behalf of such
holder any  notices or other  public  statements  necessary  or  appropriate  to
evidence the  termination  of such party's lien,  including,  those set forth in
section 10.12 hereof.

            5.9  Appointment  of  Directors.  As  of  the  Effective  Date,  the
individuals whose names are set forth in the Confirmation Order shall constitute
the Board of Directors of the Reorganized Debtor. Thereafter, directors shall be
elected by the  holders  of New  Common  Stock in  accordance  with the  Amended
Certificate and Amended Bylaws.

            5.10  Effect  of  Confirmation.  The  Confirmation  Order  (and  any
subsequent Final Orders) shall be a final  determination as to the rights of all
Claimants and  Interestholders  to  participate in the  Distributions  under the
Plan,  whether or not (a) a proof of claim or interest is filed or deemed  filed
under Section 501 of the Bankruptcy Code, (b) such Claim or Interest is Allowed,
or (c) the holder of such Claim or Interest has accepted the Plan.

            5.11 Distribution  Schedules. On the Effective Date, the Debtor will
transmit  Distribution  Schedules  which shall state a  creditor's  name,  claim
number (where applicable),  whether the creditor's claim is allowed or disputed,
the  scheduled  and/or filed claim  amount and the allowed  amount of the claims
(where  applicable) to the Creditor  Trustee with respect to (a) Unsecured Claim
New Common  Stock to be received  by holders of Class 3 Claims,  and to (b) each
Class of Claims to receive  Available Cash under the Plan. The Creditor  Trustee
shall have the right to  conclusively  rely on the records of the Transfer Agent
with respect to the holders of Interests.

            5.12 Effect of the Record  Date.  Distributions  shall be made based
upon the Distribution Schedules,  Claims/Interests  registry and docket, as well
as the records of stock  ownership as the Transfer Agent, as of the Record Date.
The Creditor Trustee and the Transfer Agent and all Professionals shall have the
absolute  right to rely upon such records as of the Record Date,  and shall bear
no liability for any errors in such records, or Distributions made on account of
such records.

                                       12

<PAGE>

            5.13  Objections  to Claims.  The  Creditor  Trustee  shall have the
right,  within the first 180 days  following the Effective  Date, or during such
additional  time  requested for cause shown and  authorized  by Final Order,  to
object to any and all Claims.  Unless otherwise ordered by the Bankruptcy Court,
or agreed to by written  stipulation  approved  by a Final  Order,  or until the
objection thereto is withdrawn,  the Creditor Trustee may litigate the merits of
each  Disputed  Claim until  determined  by Final Order.  Any Claim for which no
objection has been filed within the  above-referenced  time fixed therefor shall
be deemed an  Allowed  Claim as defined in Section  1.5.2  above.  The  Creditor
Trustee and the holder of any Disputed Claim may enter into a written settlement
agreement to compromise such Claim,  which agreement shall become effective upon
entry of a Final Order approving the terms thereof.

            5.14 Claims Filed After the Confirmation Date. Any Claim filed after
the Confirmation  Date, other than Claims for Professional Fees, fees payable to
the United States  Trustee or rejection  damage claims that were not required to
be filed prior to the  Confirmation  Date,  is deemed  disallowed  and  expunged
without  any  action  on  the  part  of  the   Creditor   Trustee,   unless  the
post-Confirmation  Date filing of such Claim has been  authorized by Final Order
and  the  filing  is  in  compliance   with  such  order.  In  the  event  of  a
post-Confirmation  Date filing that is duly authorized and timely,  the Creditor
Trustee  shall have until (a) the date set in the Final Order for  objecting  to
such Claim,  (b) the later of 180 days  following the Effective  Date or 45 days
following  the filing of the Claim,  or (c) such later date as may be  requested
for cause shown and authorized by Final Order, to object to such Claim.

            5.15  Withholding  Taxes. The Creditor Trustee shall be entitled but
shall have no obligation to deduct any federal, state or local withholding taxes
from any  Distribution  made as  reasonably  appropriate.  All entities  holding
Allowed  Claims or  Interests  shall be  required  to  provide  any  information
reasonably  requested to effect the withholding of such taxes,  and the Creditor
Trustee may withhold any  distribution  absent the provision of such information
or further Order of the Bankruptcy Court.

            5.16 Compliance with Tax Requirements. To the extent applicable, the
Creditor Trustee in making  Distributions  under this Plan shall comply with all
tax withholding  and reporting  requirements  imposed on it by any  governmental
unit,  and all  Distributions  pursuant  to this Plan  shall be  subject to such
withholding and reporting  requirements.  The Creditor  Trustee may withhold the
entire  Distribution  due to any holder of an Allowed  Claim  until such time as
such holder provides to the Creditor Trustee the necessary information to comply
with any  withholding  requirements  of any  governmental  unit. Any property so
withheld will then be paid by the Creditor Trustee to the appropriate authority.
If the holder of an Allowed Claim fails to provide the Creditor Trustee with any
information  necessary  to  comply  with  any  withholding  requirement  of  any
governmental unit within sixty days after the date of first  notification by the
Creditor  Trustee  to the  holder  of the need for  such  information,  then the
holder's  Distribution  shall  be  treated  as  an  unclaimed   Distribution  in
accordance  with section 5.18  hereof.  The Creditor  Trustee may be required to
identify,  by tax identification  number, each holder of a Claim that receives a
Distribution pursuant to the Plan. To ensure that the Creditor

                                       13

<PAGE>

Trustee has a tax  identification  number for each holder of a Claim,  Claimants
will be sent a Form W-9 (or may download  one at  www.irs.com).  Claimants  must
return  the  completed  and  signed  Form  W-9 to the  Creditor  Trustee  at the
following address, postage pre-paid:

Creditor Trustee of Ocean Power Corporation
c/o its Attorneys
Arent Fox LLP
1675 Broadway
New York, NY 10019
Telephone: (212) 484-3900
Facsimile: (212) 484-3990
Attn: Tax Identification - Ocean Power Corporation

If a Claimant  does not return the completed  Form W-9 to the Creditor  Trustee,
the Creditor Trustee is allowed to retain  Distributions to Allowed Claims until
the  appropriate  tax  identification  information is provided.  If the Creditor
Trustee requests a tax identification  number from a Claimant,  and the Claimant
does not  respond  by  providing  it within 60 days of the first  request by the
Creditor  Trustee,  the Claimant  shall lose the right to receive a Distribution
pursuant to the Plan.

            5.17 De Minimis  Distributions.  Notwithstanding any other provision
of the Plan,  the  Confirmation  Order or the Creditor  Trustee  Agreement,  the
Creditor  Trustee shall have no obligation to make a Distribution  on account of
an Allowed  Claim to a specific  holder of an Allowed  Claim if the amount to be
distributed to that holder (a) does not constitute a final  Distribution to such
holder and (b) is valued at less than $1,000. Any undistributed  amount shall be
held over to the next  subsequent  Distribution  Date and,  if the  amount to be
distributed  to the holder would never exceed a value of $50,  such holder shall
be excluded from receiving a  Distribution.  In addition,  the Creditor  Trustee
reserves the right to request  subsequent  relief from the  Bankruptcy  Court to
exclude  holders from the final  Distribution  under the Plan to the extent that
the amounts  otherwise  distributable  to such Claimants in connection with such
final Distribution would be de minimis or create undue administrative expense.

            5.18 Unclaimed  Distributions.  Unclaimed  Distributions  (including
Distributions  of  Available  Cash made by checks  which  fail to be  negotiated
and/or  Distributions of New Common Stock which are returned as undeliverable to
the  Transfer  Agent)  shall be retained by the  Creditor  Trustee (or  Transfer
Agent, as appropriate)  and held in trust for the beneficial  holders of Allowed
Claims or  Interests,  as the case may be,  entitled  thereto for a period of 90
days after the Distribution Date. Any Distribution  remaining  unclaimed 90 days
after the  Distribution  Date  shall be  canceled  (by a stop  payment  order or
otherwise),  the Claim(s) or Interest(s) relating to such Distributions(s) shall
be deemed  forfeited and expunged and the holder of such Claim or Interest shall
be removed from the Distribution  Schedule or Transfer Agent's records and shall
receive  no  further  Distributions  under  this  Plan.  Any  and  all  canceled
Distributions shall be redistributed in accordance with Article IV of this Plan.
In the  case of a

                                       14

<PAGE>

final  distribution,  the  Creditor  Trustee  may direct the  Transfer  Agent to
escheat unclaimed distributions in accordance with applicable law.

            5.19 Mailing of Distributions.  All  Distributions  shall be made to
the holders of Allowed Claims at the address listed on their  respective  proofs
of claim  filed  with the  Bankruptcy  Court or, if no proof of claim was filed,
addresses  listed by the Debtor on the Schedules or at its last address known to
the Debtor or Transfer  Agent.  The  Creditor  Trustee  shall not be required to
ascertain the current address of the holder of any Claims whose  Distribution is
returned as undeliverable by the United States Postal Service.

            5.20 The Transfer Agent shall make all  Distributions  of New Common
Stock in a manner  consistent  with its duties as Transfer  Agent.  The Transfer
Agent shall act at the direction of the Creditor Trustee when directed to make a
Distribution by the Creditor Trustee and the Reorganized  Debtor shall cooperate
with the Creditor  Trustee in furtherance of the Creditor  Trustee's  duties and
responsibilities.

            5.21  Post-Confirmation   Professional  Services.  The  Professional
Persons may,  from time to time,  provide  professional  services  following the
Confirmation Date until the Effective Date. Such Post-Confirmation services that
are performed  prior to the Effective Date shall be paid from the Escrow Account
within  five  (5)  Business  Days  after  submission  of a bill to the  Creditor
Trustee,  with a copy to the Authorized  Officer on behalf of the Debtor and the
Committee,  as provided in section 10.4  hereof,  without the need for filing an
application or providing any other or further notice, provided that no objection
to the payment is asserted  within such period.  If an objection is asserted and
remains  unresolved,  the  Professional  Person  may  file  an  application  for
allowance with the  Bankruptcy  Court and such fees will be paid as may be fixed
by  the  Bankruptcy  Court.  Professional  Persons  shall  not be  eligible  for
compensation for services  provided after the Effective Date unless the Creditor
Trustee has consented and the  Professional  Persons have executed an engagement
agreement.

            5.22 Validity of Corporate  Actions.  Confirmation  shall constitute
due   authorization   required  for  the  full  validity,   enforceability   and
effectiveness of all transactions provided for in this Plan, notwithstanding any
provisions  of  law  which  would   otherwise   require  the  approval  of  such
transactions  by the Debtor's or the  Reorganized  Debtor's  board of directors,
shareholders or other constituents.  Confirmation shall constitute authorization
for the Debtor's officers and directors to take all actions and execute, deliver
and file all agreements,  certificates,  notices and other documents which (s)he
deems  necessary or appropriate to consummate the  transactions  provided for in
this Plan.

            5.23 Release of the Initial Investment. On the Effective Date, or as
soon thereafter as practicable, but in no event more than five (5) Business Days
after the  Confirmation  Order  becomes a Final  Order,  the Initial  Investment
(i.e.,  $500,000)  shall be  released  from escrow by the  Debtor's  counsel and
transferred  to the  Creditor  Trustee  for  distribution  to holders of Allowed
Claims in accordance with this Plan.

                                       15

<PAGE>

            5.24  Restrictions on New Common Stock Issued to Plan Sponsor.  Upon
the issuance of the New Common Stock to the Plan Sponsor (or its designee),  the
Plan Sponsor (or its  designee)  shall be  prohibited  from selling or otherwise
transferring any of the New Common Stock it receives under the Plan for a period
of ninety (90) days following the occurrence of all of the following events: (a)
a  transaction  between  the  Reorganized  Debtor and a merger  partner has been
consummated, (b) a Form 8K has been filed by the Reorganized Debtor with the SEC
setting forth the terms of the merger,  acquisition or other  transaction,  with
disclosures to be made on  substantially  the same terms as would be required by
an  entity  filing  a  registration  statement  with the  SEC,  and (c)  audited
financials of the merger partner have been filed with the SEC.

            5.25  Transfer  of  Retained  Assets  to  Creditor  Trustee  on  the
Effective Date. On the Effective Date, or as soon thereafter as practicable, but
in no event  more than five (5)  Business  Days  after  the  Confirmation  Order
becomes  a Final  Order,  the  Retained  Assets  and  Available  Cash  shall  be
transferred to and be held by the Creditor Trustee,  for distribution to holders
of  Allowed  Claims in  accordance  with  this  Plan.  Notwithstanding  anything
contained herein to the contrary, no portion of the Retained Assets shall become
property of the  Reorganized  Debtor.  Any such Retained  Assets received by the
Reorganized  Debtor shall be deemed  received in trust for the Creditor  Trustee
and shall be immediately transferred to the Creditor Trustee.

                                   Article VI
                              The Creditor Trustee
                              --------------------

            6.1 Creditor Trustee. The Debtor and the Estate shall have authority
to enter into a Creditor Trustee Agreement on the Effective Date to be signed by
the Authorized Officer. The Creditor Trustee shall be "the representative of the
estate" as contemplated  by Section  1123(b)(3)(B)  of the Bankruptcy  Code, and
shall,  in  addition,  have those  powers and duties set forth in Sections  323,
704(1),  704(2),  704(5),  704(9),  1106(a)(6)  and 1106(a)(7) of the Bankruptcy
Code. The powers,  rights,  and  responsibilities  of the Creditor Trustee shall
include the  authority  and  responsibility  to: (a)  receive,  manage,  invest,
supervise,  and protect the  Retained  Assets,  the Initial  Investment  and the
Available Cash; (b) calculate and implement distributions of the Available Cash,
Unsecured Claim New Common Stock and the  Interestholder  New Common Stock;  (c)
prosecute,  compromise, and settle all Rights of Action and objections to Claims
and Interests;  and (d) pay Professional  Fees of professionals  retained in the
Case and Allowed  pursuant to any order of the  Bankruptcy  Court,  whether such
Professional  Fees  were  incurred  before  or after  the  Effective  Date.  The
Available Cash shall, as of the Effective Date, be transferred by the Debtor and
the Plan Sponsor to the Creditor Trustee.

            6.2 Creditor  Trustee's  Pursuit of Rights of Action and Objections.
In accordance  with this Plan,  the Creditor  Trustee  shall be  authorized  and
empowered  to object to Claims and to pursue and  prosecute,  to settle (on five
days' notice to parties who have requested  notice in this Case),  or to decline
to pursue  such  objections  or Rights of Action.  The  Creditor

                                       16

<PAGE>

Trust shall be substituted as the real  party-in-interest  in any such action or
objection  commenced  by the Debtor or the  Committee  whether or not  commenced
prior to the  Effective  Date.  The  Creditor  Trustee  may pursue or decline to
pursue such objections to Claims or Rights of Action.  The Creditor  Trustee may
settle,  release, sell, decline to pursue,  assign,  transfer or compromise such
objections to Claims or Rights of Action without Bankruptcy Court approval.  The
Creditor  Trustee  shall be under no duty to conduct an  investigation  into any
facts on Claims or Rights of Action.

            6.3 Distributions by Creditor Trustee.  The Reorganized Debtor shall
authorize and issue the Unsecured Claim New Common Stock and the  Interestholder
New Common Stock in accordance  with the terms of this Plan.  The Transfer Agent
shall  make  distributions  of the  Unsecured  Claim  New  Common  Stock and the
Interestholder  New Common  Stock on account  of  Allowed  Claims and  Interests
within five (5) Business Days of receiving notice by the Creditor  Trustee.  The
notice from the Creditor  Trustee shall include the  creditor's  name,  Pro Rata
share  (which  shall be  calculated  by the  Transfer  Agent  using  information
provided in the Distribution Schedules subject to any adjustment by the Creditor
Trustee),   whether  an  objection  is  pending,  ultimate  disposition  of  the
creditor's  claim, and whether the distribution was claimed or unclaimed (in the
case of New  Common  Stock  issued to holders  of  Allowed  Class 3 Claims,  the
Transfer Agent shall notify the Creditor  Trustee as to whether the distribution
of stock was  claimed  or  unclaimed  within  ten (10)  business  days of such a
request  by  the  Creditor  Trustee.  With  the  exception  of  all  duties  and
obligations related to making  Distributions of Unsecured Claim New Common Stock
and the  Interestholder  New Common Stock,  which is the  responsibility  of the
Transfer Agent, the Creditor Trustee shall effect all Cash  Distributions  under
the Plan and may direct the  Transfer  Agent with  respect to  Distributions  of
Unsecured  Claim New Common  Stock,  and may utilize the  assistance  of outside
parties to effect Distributions under this Plan to the extent he/she deems it to
be  necessary  or  desirable  to do so. The  Distributions  and other  treatment
afforded  holders  of Claims  and  Interests  under  this Plan shall be the only
payments received by the holders of Claims and Interests against the Debtor. The
Creditor  Trustee (a) shall be  exculpated  from any liability for any errors or
omissions made in discharging his/her duties hereunder,  including the making of
Distributions  under this Plan,  except for  errors or  omissions  arising  from
his/her  own gross  negligence  or  willful  misconduct,  and (b) may resign its
position on 30 days  notice.  The  Creditor  Trustee  will select a successor to
fulfill  his/her  responsibilities  under the Plan.  The  Creditor  Trustee,  if
required by the United States  Trustee and if  practicable,  shall be bonded for
the funds held in the Escrow  Account.  Such bond shall be cancelable on 30 days
notice to the United  States  Trustee and all costs and expenses  related to the
bond shall be reimbursed to the Creditor Trustee.

            6.4 Creditor Trustee Reports. As of the Effective Date, the Creditor
Trustee shall be responsible for filing all  post-Confirmation  reports with the
Bankruptcy  Court and the United States  Trustee,  regarding the  liquidation or
other  administration  of  property  subject  to  his/her  ownership  or control
pursuant to the Plan,  Distributions made by him/her, and other matters required
to be included in such  report and shall pay fees of the United  States  Trustee
under 28 U.S.C. Section 1930(a)(6) as provided herein.

                                       17

<PAGE>

            6.5 The Transfer Agent shall prepare a certificate  of  distribution
(certifying that New Common Stock has been issued and/or  distributed on account
of allowed  claims) and transmit  same to the Creditor  Trustee  within five (5)
business  days after a  distribution  has been made by the Transfer  Agent.  The
certification will also provide sufficient detail such that the Creditor Trustee
will  be  able  to  determine  how  much  New  Common  Stock  is  available  for
Distribution to holders of Allowed Class 3 Claims.  Within  ninety-one (91) days
following a  Distribution  of New Common Stock,  the Transfer Agent shall notify
the  Creditor  Trustee in  writing of any  returned  distribution  or  unclaimed
distribution  of New  Common  Stock.  No  later  than ten (10)  days  after  the
Effective  Date,  the Transfer  Agent shall  notify the Creditor  Trustee of the
numbers of shares  available  to be  distributed  to holders of Allowed  Class 3
Claims.

            6.6 Employment of  Professionals by Creditor  Trustee.  The Creditor
Trustee may employ, without further order of the Bankruptcy Court, professionals
and/or  consultants  (including   Professional  Persons,   notwithstanding  such
Professional  Person's  prior  engagement)  to assist  him/her in  carrying  out
his/her duties  hereunder and may compensate and reimburse the expenses of those
professionals and consultants without further order of the Bankruptcy Court.

            6.7 Compensation to Creditor Trustee.  The Creditor Trustee shall be
compensated  as set forth in the  Creditor  Trustee  Agreement  and shall not be
required  to file a fee  application  to  receive  compensation.  Subject to the
provisions  of the Creditor  Trustee  Agreement,  the Creditor  Trustee shall be
entitled  to hire  and  engage  such  professionals  and/or  consultants  as the
Creditor  Trustee  deems  necessary  to assist in carrying out the duties of the
Creditor  Trustee with the  reasonable  fees and expenses of such  professionals
and/or  consultants  to be paid from the Available  Cash in the Escrow  Account.
Pursuant  to the  terms of this Plan and the  Creditor  Trustee  Agreement,  the
Creditor  Trustee  may pay from  the  Escrow  Account  all  reasonable  fees and
expenses  incurred in  connection  with the duties and  actions of the  Creditor
Trustee,  including, but not limited to, fees and expenses to pay insurance, any
bond,  taxes and other expenses  arising in the ordinary  course of the business
maintaining,  liquidating,  disposing of and the  distribution  of the Available
Cash compensation to the Creditor Trustee. The Creditor Trustee may pay all such
reasonable fees and expenses  without  Bankruptcy  Court approval.  Any disputes
concerning the  administration  of the Escrow Account or  implementation  of the
distribution  of Available  Cash as provided in this Plan may be brought  before
the Bankruptcy Court for resolution.

            6.8 Upon  entry of the final  decree  in this Case and as  otherwise
provided in the Creditor Trust Agreement, the Creditor Trust shall be terminated
and dissolved without further action by the Creditor Trustee. In connection with
the Available Cash; the Initial  Investment;  the Retained Assets; and any other
Cash,  any and all rights,  claims,  defenses,  causes of action,  objections or
Rights  of  Action,  any  attorney-client  or  similar  privilege,  work-product
privilege, or other communications (written or oral) transferred to the Creditor
Trust shall vest with the Creditor Trustee and its representatives.

                                       18

<PAGE>

            6.9 The Creditor Trust shall be established  for the sole purpose of
liquidating and  distributing  assets,  in accordance  with Treasury  Regulation
Section 301.7701-4(d), with no objective to continue or engage in the conduct of
a trade or business.

            6.10 For federal income tax purposes, all parties including, without
limitation,  the Debtor,  the Reorganized  Debtor,  the Creditor Trustee and the
holders of Allowed Class 3 Claims who are  beneficiaries  of the Creditor Trust,
shall treat the transfer of assets to the Creditor Trust, in accordance with the
terms of this  Plan and the  Creditor  Trust  Agreement,  as a  transfer  to the
holders of Allowed Class 3 Claims in full satisfaction of such Claims,  followed
by a transfer by such holders to the Creditor Trust,  and the  beneficiaries  of
the Creditor Trust shall be treated as the grantors and owners thereof.

            6.11 The  beneficial  interests in the  Creditor  Trust shall not be
certificated  and are not  transferable  (except as  otherwise  provided  in the
Creditor Trust Agreement).

                                   Article VII
              Procedures for Resolving and Treating Disputed Claims
              -----------------------------------------------------

            7.1  Establishment of Escrow Accounts.  Upon the Effective Date, the
Creditor  Trustee  shall  open  either  a  segregated  custodial  account  or an
interest-bearing,  federally  insured deposit account and designate such account
as the Escrow  Account.  Such Escrow Account shall be used solely for deposit of
funds on account of the Available Cash,  including reserves for Disputed Claims.
No other funds shall be deposited into such account,  and  withdrawals  shall be
made therefrom only in accordance with the Plan, the Confirmation  Order and any
Final Order resolving a Disputed Claim.

            7.2 Reserve for Disputed Claims. When any Distribution is to be made
to holders of Claims  entitled to a Distribution of Available Cash or New Common
Stock,  the Creditor  Trustee or the  Transfer  Agent,  at the  direction of the
Creditor Trustee,  shall hold, to the extent  applicable,  reserves for Disputed
Claims.  The amount of Cash  and/or New Common  Stock  withheld  shall be (a) an
amount the Creditor Trustee,  any objecting party and the holder of the Disputed
Claim agree should be withheld,  (b) if no such agreement is reached, the amount
that  would  have been  distributed  on the basis of the  amount  claimed by the
holder in its proof of claim or deemed  filed in the Case if such proof of claim
or interest  asserts a fixed  liquidated  sum, (c) if neither  clause (a) or (b)
applies,  the amount that would have been distributed on the basis of the amount
shown in the Schedules if such amount is a fixed, liquidated sum and no proof of
claim is filed or (d) in the case of a contingent  or  unliquidated  claim,  the
amount  estimated by the Bankruptcy Court upon a motion brought on not less than
five days notice (which may be submitted on presentment) to the affected parties
and an opportunity for a hearing under  Bankruptcy Rule 9014-1(b).  The Transfer
Agent shall  create a direct  registration  position in the name of the Creditor
Trustee on behalf of the shares held for the Disputed Claims.

            7.3 Distributions on Disputed Claims. No Distributions shall be made
on account of a Disputed  Claim.  As soon as practicable  after a Disputed Claim
becomes an

                                       19

<PAGE>

Allowed Claim, the Creditor Trustee shall adjust the Distribution  Schedules and
make the Distributions on such Allowed Claim from the appropriate Escrow Account
or direct  that the  Transfer  Agent  issue New Common  Stock.  Any funds in the
Escrow  Account   maintained  by  the  Creditor  Trustee  or  New  Common  Stock
attributable  to such Disputed Claim to the extent not Allowed shall be returned
to the Escrow  Account or shall be  distributed by the Transfer Agent on account
of Allowed Claims until such New Common Stock is fully issued.

                                  Article VIII
                               Executory Contracts
                               -------------------

            8.1 Assumption/Rejection of Executory Contracts. Pursuant to Section
365 of the  Bankruptcy  Code,  all  Executory  Contracts  that (a) have not been
assumed and assigned by the Debtor, (b) have not been rejected by the Debtor, or
(c) are not currently the subject of a motion to assume such Executory Contract,
shall be deemed rejected as of the Confirmation Date.

            8.2 Filing of Claims Under Rejected Contracts.  Each entity who is a
party to any Executory  Contract rejected pursuant to this Article VIII shall be
entitled  to file with the  Bankruptcy  Court,  no later than  thirty  (30) days
following the Confirmation  Date, a proof of claim for damages,  if any, alleged
to arise from the rejection of such Executory  Contract.  A copy of the proof of
claim must also be delivered to the Creditor Trustee. The failure of such entity
to file or deliver to the  Creditor  Trustee a proof of claim  within the period
prescribed  shall  forever bar such entity from  asserting any Claim for damages
arising from the rejection of such  Executory  Contract.  The filing of any such
proof of Claim  shall be without  prejudice  to any and all rights the  Creditor
Trustee may have to object to the allowance thereof.

                                   Article IX
                            Discharge and Injunction
                            ------------------------

            9.1 Discharge  From Debts Arising Prior to  Confirmation.  As of the
Confirmation Date, the Reorganized Debtor shall be discharged from any debt that
arose  prior  to the  Confirmation  Date,  or any  debt of a kind  specified  in
Sections 502(g), 502(h), or 502(i) of the Bankruptcy Code, whether or not:

                  a)    a proof of Claim  based on such  debt is filed or deemed
                        filed under  Sections  501 or 1111(a) of the  Bankruptcy
                        Code,

                  b)    such  Claim  is  allowed   under   Section  502  of  the
                        Bankruptcy Code, or

                  c)    the holder of such Claim has accepted the Plan.

            9.2 Injunction Against  Interference With the Plan. All entities who
are bound by this Plan,  including  entities with Claims or Interests not listed
on the  Schedules,  or listed on

                                       20

<PAGE>

the Schedules as disputed, unliquidated or contingent, which did not file proofs
of claim by the Bar Date, are hereby  enjoined and prevented from  commencing or
continuing any judicial or administrative proceeding or employing any process to
interfere  with  the  consummation  or  implementation  of  this  Plan,  or  the
Distributions  of Available  Cash and/or New Common Stock to be made  hereunder,
including commencing or continuing any judicial or administrative  proceeding or
employing  any process  against the Debtor,  the  Reorganized  Debtor,  the Plan
Sponsor or the Creditor Trustee.

            9.3  Revesting  Of  Property.  Except as  otherwise  provided in the
Confirmation  Order,  confirmation  of the Plan vests in the Creditor  Trust all
Assets;  property of the Estate;  Available  Cash; the Initial  Investment;  the
Retained  Assets;  and any other Cash, free and clear of all Claims,  subject to
the  Distributions  to be made by the Creditor  Trustee in  accordance  with the
provisions of the Plan.

            9.4 Exculpation.  The Debtor, the Committee, the Authorized Officer,
the Creditor Trustee,  the Plan Sponsor and the Professional Persons retained by
them shall be exculpated  from any liability to any person or entity for any act
or  omission  taken  in  good  faith  in  connection  with  or  related  to  the
negotiation,   formulation,  preparation  and  confirmation  of  the  Plan,  the
consummation and administration of the Plan, the Disclosure Statement, the Case,
or the property distributed under the Plan. This exculpation does not affect any
liability resulting from fraud, gross negligence or willful misconduct.

            9.5 Successor Liability. Upon entry of the Confirmation Order, there
shall be no successor  liability for claims against the Debtor. No holder of any
claim, lien or debt, whether secured, priority tax, non-priority unsecured claim
or any  interest  against  such  entities  will have any  rights or claims  that
survive  confirmation.  In addition,  any and all claims against Debtor shall be
subject to the Plan and the Injunction and Release  provisions set forth herein.
Accordingly, holders of claims against Debtor including without limitation state
and  federal  taxing  authorities,  shall  be  permanently  enjoined  as of  the
Effective Date from proceeding against the Debtor,  its stockholders,  officers,
directors, responsible parties or any company into which the Debtor is merged or
which merges into the Debtor on or after the Effective Date of the Plan.

                                    Article X
                            Miscellaneous Provisions
                            ------------------------

            10.1 Entire Agreement. The Plan, including any exhibits to the Plan,
sets forth the entire  agreement  and  understanding  among the  parties  hereto
relating to the subject matter hereof and supersedes all prior  discussions  and
documents.  No  party  shall be bound  by any  terms,  conditions,  definitions,
warrants,  understandings or representations with respect to the Plan other than
as are  expressly  provided  for  herein.  Should any  provision  in the Plan be
determined to be unenforceable by a Bankruptcy Court of competent  jurisdiction,
such  determination  shall in no way  limit or  affect  the  enforceability  and
operative effect of any and all

                                       21

<PAGE>

other  provisions of the Plan. The duties,  rights and obligations of any person
or entity named or referred to in the Plan shall be binding  upon,  inure to the
benefit of and shall be the  responsibility  of, the  successors  and assigns of
such person or entity.

            10.2 Satisfaction of Claims and Interests.  Upon confirmation of the
Plan, the Debtor,  the  Reorganized  Debtor and the Estate shall be conclusively
determined  to have no liability to the holder of a Claim or Interest  except to
the extent  expressly  provided  for in the Plan.  This  provision  shall not be
construed as a release of any claims any creditor may have against a third party
on account of its Claim.

            10.3 Headings. The headings of the Articles, paragraphs and sections
of the Plan  are  inserted  for  convenience  only  and  shall  not  affect  the
interpretation  hereof.  The Plan,  including any exhibits and other attachments
hereto,  shall constitute the entire Plan,  subject to amendment or modification
solely as provided herein.  Article I of the Plan is and shall be regarded as an
integral, substantive and operative part of the Plan.

            10.4 Notice. Any notice described in or required by the terms of the
Plan shall be deemed to have been  properly  given (a) if mailed,  five (5) days
after  the  date of  mailing,  (b) if sent  via  facsimile,  on the  date of the
transmission confirmation, (c) if sent by overnight mail carrier service, on the
date of receipt, or (d) if sent by electronic mail, on the date sent, to:

                 The Debtor
                 c/o its Attorneys,
                 Halperin Battaglia Raicht, LLP
                 555 Madison Avenue, 9th Floor
                 New York, New York 10022
                 Telephone:  (212) 765-9100
                 Facsimile:  (212) 765-0964
                 Attn: Alan D. Halperin, Esq. (ahalperin@halperinlaw.net)
                       Robert D. Raicht, Esq. (rraicht@halperinlaw.net)

                 Authorized Officer
                 c/o Halperin Battaglia Raicht, LLP
                 555 Madison Avenue, 9th Floor
                 New York, New York 10022
                 Telephone:  (212) 765-9100
                 Facsimile:  (212) 765-0964
                 Attn: Alan D. Halperin, Esq. (ahalperin@halperinlaw.net)
                       Robert D. Raicht, Esq. (rraicht@halperinlaw.net)

                                       22

<PAGE>

                 The Official Committee of Unsecured Creditors
                 c/o its Attorneys
                 Arent Fox LLP
                 1675 Broadway
                 New York, NY 10019
                 Telephone: (212) 484-3900
                 Facsimile: (212) 484-3990
                 Attn: Schuyler G. Carroll, Esq. (carroll.schuyler@arentfox.com)
                       Andrew I. Silfen, Esq. (silfen.andrew@arentfox.com)

                 The Creditor Trustee
                 c/o its Attorneys
                 Arent Fox LLP
                 1675 Broadway
                 New York, NY 10019
                 Telephone: (212) 484-3900
                 Facsimile: (212) 484-3990
                 Attn: Schuyler G. Carroll, Esq. (carroll.schuyler@arentfox.com)
                       Andrew I. Silfen, Esq. (silfen.andrew@arentfox.com)

                 The Plan Sponsor
                 Trinad Capital Master Fund, Ltd.
                 2121 Avenue of the Stars, Suite 1650
                 Los Angeles, CA 90067
                 Attn: Jay Wolf (jwolf@trinadcapital.com)
                       Charles Bentz (cbentz@trinadcapial.com)

or to such other address as the recipient may give written  notice in accordance
with the provisions of this section of the Plan.

            10.5 Revocation.  The Debtor and the Committee  reserve the right to
revoke and withdraw the Plan at any time prior to the Confirmation  Date. If the
Plan is  revoked or  withdrawn,  it shall be deemed  null and void,  and in such
event,  nothing  contained  herein  shall be  deemed to  constitute  a waiver or
release  of any  claim by or  against  the  Estate or any  other  entity,  or to
prejudice  in any manner,  the rights of the Estate or any entity in any further
proceeding involving the Debtor and/or the Estate.

            10.6  Substitution  of  Plan  Sponsor.  At  any  time  prior  to the
Effective Date, the Debtor and the Committee reserve the right to substitute the
Plan Sponsor with another  person or entity  offering to purchase the New Common
Stock  under the Plan on such terms and  conditions  as may be agreed to between
the Estate and such person or entity,  including  terms and conditions  that are
not the same,  or as  economically  favorable to the Estate,  as those are being
offered by the Plan  Sponsor.  In the event any  substitute  to the Plan Sponsor
does not enable the Estate to provide a Distribution  to existing  shareholders,
the Debtor and/or the  Committee  may seek to invoke the cram-down  provision of
Section 1129(b) of the Bankruptcy Code.

                                       23

<PAGE>

            10.7 Substantial Consummation. The Plan will be deemed substantially
consummated, as such term is used in Section 1101(2) of the Bankruptcy Code upon
the  commencement of Distributions to the holders of a Class of Claims under the
Plan.

            10.8  Cramdown.  If any  impaired  Class fails to accept the Plan in
accordance  with Section  1129(a) of the Bankruptcy  Code, the Debtor and/or the
Committee  reserve the right to request the Bankruptcy Court to confirm the Plan
in accordance with the provisions of Section 1129(b) of the Bankruptcy Code.

            10.9 Reservation of Rights; No Admission. In the event that the Plan
is not  confirmed or that the Effective  Date does not occur,  the rights of all
parties in interest in the Case shall be reserved in full and nothing  contained
herein or in the Disclosure Statement shall be deemed an admission.

            10.10  Authorizations.  The Debtor and the Committee are authorized,
empowered  and  directed to execute  such  documents  and take any and all other
action as may be necessary or required in order to  effectuate  the terms of the
Plan.

            10.11  Transaction  on Business  Days. If the Effective  Date or any
other date on which a transaction or Distribution may occur hereunder shall fall
on a day that is not a Business  Day,  the  transaction  or  Distribution  shall
instead take place on the next Business Day.

            10.12  Surrender  of Notes.  On or before the  Effective  Date,  all
entities  holding  Secured Claim will cancel and surrender all promissory  notes
issued by the  Debtor to the  extent  they  have not  already  done so and shall
execute releases and termination of any financing statements relating to any and
all  security  interests  in  the  Assets  of the  Estate  consistent  with  the
provisions of the Plan.

                                   Article XI
                            Retention of Jurisdiction
                            -------------------------

            The Bankruptcy  Court shall retain  jurisdiction  of this proceeding
under the  provisions of the Bankruptcy  Code,  including,  without  limitation,
Section  1142(b)  thereof and of the Bankruptcy  Rules to ensure that the intent
and the purpose of the Plan is carried out and given effect.  Without limitation
by reason of specification,  the Bankruptcy Court shall retain  jurisdiction for
the following purposes:

            a)    To issue such orders in aid of confirmation,  consummation and
                  execution of this Plan;

                                       24

<PAGE>

            b)    To consider any  modification of the Plan pursuant to Sections
                  105(a) and 1127 of the Bankruptcy Code and/or any modification
                  of the Plan after substantial consummation thereof,

            c)    To hear and to determine:

               i) all controversies, matters, suits and disputes, if any, as may
                  arise in connection  with, or affecting,  the  interpretation,
                  implementation,  consummation,  execution,  administration  or
                  enforcement of the Plan and any of its own orders,

              ii) all controversies, matters, suits and disputes, if any, as may
                  arise  between  or among the  holders of any Class of Claim or
                  Interests and the Estate,

             iii) all objections to Claims or Interests;

              iv) all causes of action,  including  Rights of Action,  which may
                  exist on behalf of the Estate,

               v) applications  for allowance of compensation  and objections to
                  Claim  or  Interests,  which  have  been  timely  asserted  in
                  accordance with orders of this Bankruptcy Court, and

              vi) any and all  applications,  adversary  proceedings,  contested
                  matters and litigated  matters  pending on the Effective Date,
                  and

             vii) any other matters not inconsistent with the Bankruptcy Code.

Dated: New York, New York
       January 14, 2008

                                        OCEAN POWER CORPORATION
                                        Debtor and Debtor-in-Possession

                                        By: /s/ J. Michael Hopper
                                            --------------------------------
                                                 J. Michael Hopper,
                                                 Authorized Officer

Dated: New York, New York
       January 14, 2008

                                        OFFICIAL COMMITTEE OF UNSECURED
                                        CREDITORS OF OCEAN POWER CORPORATION

                                        By: /s/ Arthur Rosenberg
                                            --------------------------------
                                                 Arthur Rosenberg,
                                                 Its Chairman

                                       25

<PAGE>

TRINAD CAPITAL MASTER FUND, LTD.

(as and for its  agreement to fund
the Initial Investment only subject
to the terms of a letter agreement,
dated as of October 13, 2006, only)

By: /s/ Charles Bentz
    ------------------------------------
        Name: Charles Benz
        Title: CFO Trinad Management
               on behalf of Trinad Capital Master Fund, LTD.

                                       26