Document:

<PAGE>

                                                                   EXHIBIT 10.16

                           ADDENDUM TO LEASE AGREEMENT

                                     BETWEEN

                   REED ROAD INDUSTRIAL PARK LLC #1, LANDLORD

                                       AND

                     OCEAN POWER TECHNOLOGIES, INC., TENANT

1.   This Addendum to Lease Agreement is executed on the 27th day of January,
     2006, and specifically and expressly is incorporated into the Lease
     Agreement, dated August 30, 2005. In the event of any inconsistency or
     discrepancy, the terms, covenants, conditions and provisions of the within
     Addendum to Lease Agreement shall supersede and prevail over those set
     forth in the said Lease Agreement.

2.   Landlord and Tenant acknowledge that Tenant is desirous of expanding its
     existing demised premises ("Existing Premises") to include adjacent
     premises consisting of 1,100 square feet of office space and 2,000 square
     feet of warehouse space ("Expansion Space"). Tenant shall accept the
     Expansion space in an "AS IS" condition and Landlord shall not be required
     to make any changes, install any improvements or prepare the Leased
     Premises in any way for occupancy in accordance with the terms of the Lease
     Agreement except that Landlord shall, at its sole cost and expense, clean
     the windows, bathrooms, carpeting, light fixtures, etc., replace carpeting
     in front offices (ground level), repaint said offices and complete a punch
     list of repair items as prepared by Tenant and approved by Landlord.

3.   The Term for the Expansion Space shall commence on February 1, 2006
     ("Expansion Commencement Date") and shall terminate on April 30, 2013.

4.   Commencing with the Expansion Commencement Date, the Annual Rental and
     Additional Rental for the Expansion Space shall be as follows:

                                  ANNUAL RENTAL

<TABLE>
<CAPTION>
  SPACE     PER SQUARE FOOT   ANNUAL RENTAL   MONTHLY RENTAL
  -----     ---------------   -------------   --------------
<S>         <C>               <C>             <C>
Office           $15.00         $16,500.00       $1,375.00
Warehouse        $ 6.75         $13,500.00       $1,125.00
                                ----------       ---------
   TOTAL                        $30,000.00       $2,500.00
                                ==========       =========
</TABLE>

                                       -1-

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                                ADDITIONAL RENTAL

        3,100 square feet presently @ $3.48 per square foot = $10,788.00
                               ($899.00 per month)

          (THIS AMOUNT IS SUBJECT TO ANNUAL INCREASES BASED UPON ACTUAL
     TRIPLE NET COSTS, DEFINED IN THE LEASE AGREEMENT AS ADDITIONAL RENTAL)

    TOTAL MONTHLY PAYMENT OF ANNUAL RENTAL AND ADDITIONAL RENTAL = $3,399.00

5.   Upon execution of the within Second Addendum, Tenant shall pay over to
     Landlord the sum of $6,798.00, which sum shall constitute additional
     Security Deposit. In addition, Tenant shall pay to Landlord the sum of
     $3,399.00, constituting the first month's Annual Rental and Additional
     Rental for the Expansion Space.

6.   All remaining terms, covenants, conditions and provisions of the said Lease
     and Addenda/Schedules shall remain in full force and effect.

WITNESS/ATTEST:                         REED ROAD INDUSTRIAL PARK LLC #1
                                        LANDLORD

/s/ (illegible)                         BY: /s/ John Lovero Jr.
-------------------------------------       ------------------------------------
                                            JOHN LOVERO, JR., MANAGING MEMBER

                                        OCEAN POWER TECHNOLOGIES, INC,
                                        TENANT

/s/ Mary P. Mikula                      BY: /s/ Charles F. Dunleavy
-------------------------------------       ------------------------------------
SECRETARY                                   CHARLES F. DUNLEAVY,
                                            VICE PRESIDENT - FINANCE

                                       -2-

<PAGE>

                                 LEASE AGREEMENT

     THIS LEASE AGREEMENT is made this 30 day of August, 2005, but effective as
of May 1, 2005, between REED ROAD INDUSTRIAL PARK LLC #1, with an office at 1580
Reed Road, Pennington, New Jersey 08534 (hereinafter called "Landlord") and
OCEAN POWER TECHNOLOGIES, INC., with an office at 1590 Reed Road, Pennington,
New Jersey 08534 (hereinafter called "Tenant");

     1. The Landlord hereby demises and leases to the Tenant and the Tenant
hereby hires and takes from the Landlord for the term and upon the rentals
hereinafter specified the Demised Premises, as follows:

<TABLE>
<S>                      <C>
          SUITE 101 A:   4,028 square feet of warehouse space
                         3,032 square feet of office space

          SUITE 102 A:   1,500 square feet of warehouse space (old NJA space)
                           500 square feet of office space

          SUITE 103 A:     600 square feet of warehouse space (old Westbrook space)
                         1,400 square feet of office space
                         1,400 square feet of mezzanine space

          SUITE 102B:    1,250 square feet of warehouse space (old Neumed space)
                         2,450 square feet of office space
                           525 square feet of mezzanine space

          SUITE 103B:    3,010 square feet of warehouse space (old Aux space)
                         1,365 square feet of office space
                           300 square feet of mezzanine space
</TABLE>

in the Reed Road Industrial Park located at 1590 Reed Road ("Building"), in the
Township of Hopewell, County of Mercer, and State of New Jersey ("Schedule A"),
to be used as office, research, light assembly, warehousing and light storage
(mezzanine) ("Permitted Uses") for a Term of eight (8) years commencing
effective May 1, 2005 ("Lease Commencement Date") and ending on April 30, 2013
("Lease Termination Date").

     2. A. Tenant shall pay to Landlord an Annual Rental plus Additional Rental
as set forth on Schedule B, annexed hereto and made a part hereof, which Tenant
covenants to pay to the Landlord or its duly authorized agent. At the end of
each lease year, there shall be an accounting and any necessary adjustment made
as well as an estimation of all Additional Rental

                                       -3-

<PAGE>

anticipated for the ensuing lease year and Tenant's monthly payment of
Additional Rental shall be adjusted accordingly. Landlord shall always furnish
Tenant with the prior lease year's total cost of Additional Rental which shall
include reasonable and customary operating expenses, including, but not limited
to, taxes, insurance, snow removal, lawn care, management fees, replacements,
repairs and maintenance. Any and all replacements shall be the financial
responsibility of Tenant and the cost of all replacements which constitute
capital improvements, shall be determined under generally accepted accounting
principles consistently applied and amortized over the useful life of said
capital improvements.

     All payments of Annual Rental and Additional Rental shall be delivered to
Landlord at 1580 Reed Road, Pennington, New Jersey 08534 or to such authorized
agent as the Landlord may from time to time designate, in equal monthly
installments, on the first day of each month, during the said Term in advance.

          B. Notwithstanding the foregoing, the following shall be excluded from
Additional Rental:

               (i)  Income, franchise, transfer, inheritance, excess profit and
                    capital stock taxes;

               (ii) Any real estate taxes attributable to additions to the
                    Building if such construction does not benefit all tenants
                    in the Building in which the Demised Premises is located
                    (unless such addition yields new rentable space);

               (iii) Interest, points, fees and amortization;

               (iv) Depreciation;

               (v)  Principal payments of mortgage and other non-operating debts
                    of Landlord;

               (vi) Costs of correcting defects in the original construction of
                    the Building;

               (vii) Attorney's fees and other costs incurred in leasing space
                    and/or enforcing leases of other tenants;

                                       -4-

<PAGE>

               (viii) Salaries and benefits and other compensation for any
                    executive more senior than the manager of the Building;

               (ix) Financing or refinancing costs;

               (x)  Costs in connection with a transfer or sale of the Building;

               (xi) Preparation of space for other tenants' occupancy, including
                    legal fees and brokerage commissions;

               (xii) Lease concessions, including rental abatements and
                    construction allowances;

               (xiii) Expenses arising out of Landlord's negligence, willful
                    misconduct or breach of any law;

               (xiv) Costs of repairs or restoration incurred by Landlord and
                    covered by the amount of Landlord's insurance, as required
                    under the Lease, and excluding any deductible, condemnation
                    or third parties;

               (xv) Any increase in insurance premiums to the extent that such
                    increase is caused or attributable to the use, occupancy or
                    act of another tenant and any premiums for any insurance
                    carried by Landlord which is not customarily carried by
                    other reasonably prudent landlords in comparable
                    office/warehouse buildings in the area in which the Building
                    is located;

               (xvi) Ground rent or costs in consummating a ground lease;

               (xvii) Organizational expenses associated with the creation and
                    operation of the entity which constitutes Landlord and all
                    general corporate overhead and general administrative
                    expenses not related to the operation of the Building;

               (xviii)All additions to reserves including bad debts and rent
                    loss reserves;

               (xix) The cost of any political or charitable contribution or
                    donation;

               (xx) The cost of purchasing, installing and replacing art work in
                    the Building;

                                       -5-

<PAGE>

               (xxi) All items for which Tenant or any other party compensates
                    Landlord such that no duplication of payment shall occur;

               (xxii) Any cost or expense related to removal, cleaning,
                    abatement or remediation of hazardous substances or asbestos
                    in or about the property on which the Building is erected,
                    to the extent same were placed or caused to be placed there
                    solely by Landlord or other tenants;

               (xxiii)The creation of new parking spaces for the Building.
                    Notwithstanding the foregoing, Landlord makes no
                    representation as to new, additional or relocation of
                    existing parking spaces for Tenant's use.

     3. Landlord and Tenant hereby acknowledge and agree that Tenant previously
paid over to Landlord the total sum of $12,880.86 constituting the requisite
Security Deposit. Said Security Deposit shall continue to be held by Landlord as
security for the faithful performance by Tenant of all conditions to be
performed by Tenant under this Lease. Tenant shall, upon execution of the within
Lease, pay over to Landlord an additional sum of $27,694.02, which sum
constitutes additional Security Deposit, so that the total Security Deposit held
by Landlord shall be equal to two (2) months Annual Rental and estimated
Additional Rental ($40,574.88) as security for the faithful performance and
observance by Tenant of the terms, provisions and conditions of this Lease.
Tenant shall deliver to Landlord a Certificate of Deposit, in the aforesaid
amount of $27,694.02, which Certificate of Deposit shall be in the name of
Landlord with interest accruing thereon to the benefit of Tenant. In the event
that Tenant defaults in respect of any of the terms, provisions and conditions
of this Lease, including without limitation, the payment of Annual Rental and
Additional Rental, Landlord may use, apply or retain the whole or any part of
the Security Deposit to the extent required for the payment of any Annual
Rental, Additional Rental or any other sum as to which Tenant is in default or
for any sum which Landlord may expend or may be required to expend by reason of
Tenant's default in respect of any of the terms, covenants and conditions of
this Lease, including, without limitation, all reasonable attorneys', brokers'
and other professional fees and expenses and any damages or deficiency in
reletting the Demised Premises accrued before or after any summary proceedings

                                       -6-

<PAGE>

or other re-entry by Landlord. Such sum shall be returned to the Tenant within
thirty (30) days after the expiration of the Term of this Lease provided the
Tenant has performed all of the terms, provisions and conditions required
hereunder.

     4. The Landlord covenants that the Tenant, upon paying the said Rental and
performing the covenants and conditions in this Lease contained, shall and may
peaceably and quietly have, hold, and enjoy the Demised Premises for the Term
aforesaid, subject, however, to the terms and conditions set forth in the within
Lease.

     5. Tenant shall not permit any Notice of Unpaid Balance or Construction
Lien to be filed against the Demised Premises by reason of work, labor, services
or materials performed or furnished to Tenant by anyone. If any such Notice or
Lien shall at any time be filed, Landlord may remove said Notice or Lien by
paying the full amount thereof without investigating the validity thereof, and
Tenant, upon demand, as Additional Rental, shall pay to Landlord the amount so
paid by Landlord in connection with the discharge of such Notice or Lien,
together with expenses incurred in connection therewith, including reasonable
attorneys' fees and costs.

     6. Tenant covenants to pay the said Rental punctually without any previous
demand therefor and without any deduction or abatement. At any time during the
Term of this Lease, should the Tenant be in default of any monetary obligation
hereunder, then, and in such event, Landlord may demand from Tenant current
financial statements, by giving Tenant ten (10) days prior written notice of
such demand. Such financial statements shall be prepared in accordance with
generally accepted accounting principles.

     7. This Lease is subject and subordinate to all present or future
mortgages, deeds of trust, ground leases, and other encumbrances affecting the
Demised Premises or the property of which said Demised Premises is a part. The
Tenant agrees to execute, at no expense to the Landlord, any customary
subordination and attornment agreement which may be deemed necessary or
desirable by the Landlord to further effectuate the subordination of this Lease
to any such mortgage, ground lease, deed of trust or encumbrance. In addition,
Tenant shall execute any requested estoppel certificates. The Tenant shall
execute and deliver any such instrument or instruments within ten (10) days
after Landlord's request therefor.

     8. A. The Tenant shall not be permitted to assign the within Lease nor
sublet the Demised Premises, in whole or in part, nor permit or cause any lien,
including, without

                                       -7-

<PAGE>

limitation, any mortgage or lien or security interest arising by operation of
the Uniform Commercial Code, or encumbrance, including, without limitation, any
collateral assignment or any assignment whatsoever with respect to any
institutional or other financing, without the prior written consent of Landlord,
which consent may be withheld in Landlord's sole and absolute discretion. Any
lawful levy or sale or execution or other legal process, or any compulsory
procedure, shall be deemed an impermissible assignment within the meaning of
this Lease.

          B. Notwithstanding the foregoing, Landlord shall not unreasonably
withhold, delay or condition its consent to an assignment of this Lease or
subletting of the Demised Premises, subject to compliance with all of the
conditions enumerated below:

               (i) Intentionally Omitted

               (ii) The operation being conducted in the Demised Premises shall
remain unaffected and any such assignee or other transferee shall use the
Demised Premises only for the Permitted Use; and

               (iii) The assignment or subletting must be all of Tenant's
leasehold interests and of the entire Demised Premises, and shall in the case of
assignment also transfer to the assignee all of the Tenant's rights in, and
interest under, this Lease including the security, if any, deposited hereunder;
and

               (iv) At the time of such assignment or subletting this Lease must
be in full force and effect without any breach or default thereunder on the part
of the Tenant; and

               (v) The assignee or sublessee shall assume, by written recordable
instrument, in form and content satisfactory to Landlord, the due performance of
all of Tenant's obligations under this Lease, including any accrued obligations
at the time of the assignment or subletting; and

                                       -8-

<PAGE>

               (vi) Any such assignee or sublessee shall have had substantial
and adequate business experience and such assignee or sublessee shall be
financially qualified to carry on such business in the Demised Premises; and

               (vii) The proposed assignee/subtenant shall provide financial
statements setting forth its net worth, which shall demonstrate its ability to
perform all of the terms and provisions of the Lease; and

               (viii) A copy of the assignment or sublease and the original
assumption agreement (both in form and content satisfactory to the Landlord)
fully executed and acknowledged by the assignee or sublessee shall be delivered
to the Landlord at least ten (10) days prior to the effective date of such
assignment or subletting; and

               (ix) Such assignment or subletting shall be upon and subject to
all the provisions, terms, covenants and conditions of this Lease and the Tenant
(and any assignee/subtenant) shall continue to be and remain liable thereunder;
and

               (x) Tenant shall reimburse Landlord for Landlord's attorneys'
fees for examination of and/or preparation of any documents in connection with
such assignment or subletting; and

               (xi) Such assignment/subletting shall be at a rental which is
equal to or greater than the rental which Landlord is then asking for other
space within the Building. Landlord shall have the right to recapture from any
consideration paid to Tenant any surplus from any assignment or subletting in
excess of the rental Tenant is obligated to pay Landlord under this Lease; and

                                       -9-

<PAGE>

               (xii) Landlord shall revisit the issue of an increase in Security
Deposit and the necessity of a Guaranty(ies), which shall be determined in
Landlord's reasonable commercial discretion; and

               (xiii) Any such assignment or sublease agreement shall contain an
express and specific prohibition against any additional assignment or subletting
by such assignee or subtenant; and

               (xiv) No assignment or subletting shall be permitted which will
be violative of any exclusive or restrictive rights granted to any present or
future tenant, assignor or subtenant; and

               (xv) If any such assignment or subletting runs to the end of the
initial Term, or to the end of any Renewal Term, then Landlord shall have the
option to recapture said space and such shall be considered to be an offer by
Tenant to Landlord to assign this Lease, as respects the proposed
assigned/sublet area to Landlord; and

               (xvi) Such assignee/subtenant shall not be an affiliate of an
existing tenant of Landlord nor one with whom Landlord, or any of its
affiliates, is (or has, within the preceding nine months) negotiating with for
space; and

               (xvii) Tenant's failure to strictly comply with all the
provisions and conditions of this Section, and all the subsections hereof,
shall, at Landlord's option, render any purported assignment or subletting null
and void and of no force and effect.

     9. Tenant, during the Term hereof, shall keep, and at the expiration hereof
deliver up, the Demised Premises in as good order and condition as the same now
are or may hereafter be put, reasonable wear and tear and damage by unavoidable
casualty being alone excepted. If the Tenant fails to remove any property or
trade fixtures from the Demised Premises at the expiration or earlier
termination of this Lease, said property shall be deemed abandoned and Landlord
may cause the same to be removed or sold, either privately or publicly, without
notice

                                      -10-

<PAGE>

to Tenant, and Landlord may retain all proceeds from any such sale without any
accounting or liability to Tenant. Tenant will not make any alterations,
additions or improvements to the Demised Premises without Landlord's prior
written consent, which consent shall not be unreasonably withheld, delayed nor
conditioned, and all alterations, additions and improvements made by either of
the parties hereto upon the Demised Premises, shall be the property of the
Landlord, excluding Tenant's trade fixtures, furniture, equipment and other
personal property, and shall remain upon and be surrendered with the Demised
Premises at the expiration or earlier termination of this Lease, excepting if
Landlord notifies Tenant that Landlord desires any and all alterations,
additions or improvements be removed by Tenant, which removal, and any and all
damages caused by such removal, shall be at Tenant's sole cost and expense.
Notwithstanding the foregoing, Tenant shall not make any non-structural
alterations, renovations, improvements or other installations in, on or to the
Demised Premises, or any part thereof, (including, without limitation, any
alterations of the signs, structural alterations, or any cutting or drilling
into any part of the Demised Premises or any securing of any fixture, apparatus
or equipment of any kind to any part of the Demised Premises) unless and until
Tenant shall have caused plans and specifications therefor to have been
prepared, at Tenant's expense, by an architect or other duly qualified person
and shall have obtained Landlord's reasonable written approval thereof, which
approval shall not be unreasonably withheld nor delayed. If such approval is
granted, Tenant shall cause the work described in such plans and specifications
to be performed, at its expense, promptly, efficiently and competently by duly
qualified or licensed persons or entities without interference with or
disruption of the operations of tenants or other occupants of the Building. All
such work shall comply with all applicable laws, codes, rules, regulations and
ordinances. In addition, Tenant may not disturb or tamper with Landlord's HVAC,
mechanical, electrical and plumbing equipment that have been installed within
the Demised Premises or Building.

     10. A. The Landlord shall obtain and maintain, during the Term of this
Lease, fire insurance with full extended coverage in an amount equivalent to the
full replacement value of the insurable improvements to the Demised Premises,
including insurance coverage against damage to the building and/or its contents.
Said insurance, in any event, shall not be less than the amount of any bona fide
mortgage which may be placed on the Demised Premises by Landlord and shall be in
such form as any such bona fide mortgagee shall require with an authorized and
recognized fire insurance company authorized to do business in the State of New
Jersey.

                                      -11-

<PAGE>

          B. Tenant covenants and agrees that it shall carry liability
insurance, which said insurance shall be in the minimum amount of One Million
Dollars ($1,000,000.00) per accident for one (1) person, Two Million Dollars
($2,000,000.00) per accident for two (2) or more persons, and a minimum amount
of One Hundred Thousand Dollars ($100,000.00) for property damage, and Tenant
further covenants and agrees that it shall add Landlord as an additional
insured, shall furnish Landlord with a Certificate of said liability insurance
prior to taking possession of Demised Premises and shall, annually, furnish
Landlord with a copy of said Certificate, together with proof of payment. No
such policy shall be cancellable without at least thirty (30) days prior written
notice to Landlord.

          C. Tenant shall not do nor permit anything in the Demised Premises or
bring or keep anything therein that shall, in any way, increase the rate of fire
insurance in the building in which the Demised Premises is located, or on the
property kept therein, or obstruct or interfere with the rights of other
tenants, or in any way injure or annoy them or those having business with them,
or conflict with the regulations of the fire department or the fire laws or with
any insurance policies upon the building in which the Demised Premises is
located, or any part thereof. Tenant shall comply with any and all laws, rules
and ordinances established by the Board of Health or other governmental agencies
or authorities. In the event there is any increase in the fire insurance
premiums as the result of the acts or omissions of the Tenant, its agents,
servants, or employees, Tenant hereby covenants to pay on demand, as Additional
Rental an amount equal to the aforesaid increase in insurance premiums.

          D. All policies of liability insurance to be provided by Tenant or
Landlord pursuant to this Paragraph covering and insuring the Demised Premises,
shall expressly waive any right of subrogation on the part of the insuror
against Landlord or Tenant, as applicable, which right, to the extent not
prohibited or violative of any such policy, is hereby expressly waived by Tenant
against Landlord and waived by Landlord against Tenant. This paragraph and the
waiver of claims/subrogation has priority over any other clause of the Lease
which may be in conflict.

     11. Tenant shall have the right to erect a sign on exterior of the Building
subject to Landlord's consent, and approval of Hopewell Township zoning or
ordinances; and such sign

                                      -12-

<PAGE>

shall be removed at the end of Tenant's leasehold with any damaged repaired by
Tenant. Landlord shall have Tenant's corporate name printed on existing sign on
the Demised Premises.

     12. If, during the Term of this Lease, the building of which the Demised
Premises is a part shall be damaged by fire or other casualty and if such damage
cannot be repaired with one hundred twenty (120) working days of the usual
working hours, the Landlord shall have the right to cancel and terminate this
Lease as of the date of the damage by giving the Tenant written notice thereof
within thirty (30) days after the date of such damage. If such notice is not
given or if the damage can be repaired within one hundred twenty (120) days,
Landlord shall restore such building with reasonable diligence, and if the
Demised Premises is rendered untenantable by such damage, the Rental shall be
proportionately abated until it is restored. In the event Landlord determines
that the damage cannot be repaired within the one hundred twenty (120) working
days set forth above, Landlord shall provide Tenant with written notice thereof.
Within thirty (30) days after Tenant's receipt of said notice from Landlord,
Tenant shall have the right to terminate the within Lease by providing written
notice to Landlord. Furthermore, in the event the damage is not substantially
repaired within the one hundred twenty (120) working days, then Tenant shall be
permitted to provide Landlord with thirty (30) days notice of Tenant's intention
to terminate the Lease. The Lease shall terminate and Tenant shall vacate the
Demised Premises at the expiration of the thirty (30) day notice period unless
prior to such date Landlord has substantially repaired any and all damage.

     13. In the event that the Tenant shall remain in the Demised Premises after
the expiration of the Term of this Lease without having executed a new written
lease with the Landlord, such holding over shall not constitute a renewal or
extension of the Lease. The Landlord may, at its option, elect to treat the
Tenant as one who has not removed at the end of its Term and thereupon be
entitled to all remedies against the Tenant provided by law in that situation,
or the Landlord may elect, at its option, to construe such holding over as a
tenancy from month-to-month and subject to all the terms and conditions of this
Lease, except as to duration thereof. In the event Tenant remains in the Demised
Premises with Landlord's consent, during the first three (3) months of said
holdover period, Tenant shall pay monthly Rental, in advance, at the rate of
125% of the then existing monthly Rental effective during the last month of the
Term. In the event Tenant remains in the Demised Premises without Landlord's
consent, or if Tenant remains beyond the three (3) month period set forth above
with Landlord's consent,

                                      -13-

<PAGE>

then Tenant shall pay monthly Rental in advance at the rate of 150% the then
existing monthly Rental effective during the last month of the Term. Additional
Rental shall continue to be paid as required in this Lease.

     14. It is further agreed that if any installment of Rental or Additional
Rental is not paid within ten (10) days following notice by Landlord to Tenant
after such payment is due, or if Tenant shall breach any of the other terms,
covenants, provisions and conditions of this Lease, or the rules and regulations
hereinafter mentioned, the Tenant shall be in default hereof and Landlord shall
have available all remedies provided by law. Tenant hereby waives any
requirement as to notice hereunder and further waives any and all rights or
claims for redemption of any Rentals or payments or for repossession of the
Demised Premises or any portion thereof. Notwithstanding the foregoing, Landlord
shall provide Tenant with written notice of any non-monetary default and Tenant
shall have thirty (30) days within which to cure said default and such
additional time as may be reasonably necessary providing Tenant is promptly,
continuously and diligently pursuing a cure.

     15. Landlord, its agents or employees, may enter to clean, examine and
exhibit the Demised Premises and may make repairs and improvements therein and
in and to any portion of the building in which the Demised Premises is located,
and for such purpose shall have the right to install pipes and wires and
otherwise utilize the Demised Premises, including the right to break floors,
walls and ceilings, and to move cases, fixtures and floor coverings when
desirable for such purposes, but same is to be done so as to inconvenience not
more than is reasonably necessary.

     16. Tenant covenants and agrees that the following rules, regulations and
stipulations and such other and further rules and regulations as the Landlord
may make, being in the Landlord's judgment needful for the safety, care and
cleanliness of the building and the Demised Premises, shall be considered a part
of this Lease and shall be faithfully kept, observed and performed by the Tenant
and by its employees, agents, contractors and visitors of the Tenant unless
waived in writing by the Landlord:

          A. Tenant shall not obstruct sidewalks, entries, passages and
staircases or use same for any other purposes than ingress and egress. Tenant
shall not cover nor obstruct the

                                      -14-

<PAGE>

windows, glass doors and any lights that reflect or admit light into the halls
or other places of the building of which the Demised Premises is a part.

          B. Tenant shall not have the right to block any driveway to the access
areas of the building of which the Demised Premises is a part. Adequate parking
shall be made available in office parking area.

          C. Except for the purpose of performing any duties under this Lease,
the Tenant shall not mark, paint, drill into or in any way deface the walls,
ceilings, or partitions, floors, wood, stone or iron work. Notwithstanding the
foregoing, Tenant may hang decorative pictures provided Tenant properly repairs
any holes or other damage made by said hangings at the end of the Term.

          D. Tenant shall not make any use of the Demised Premises nor install
any equipment therein which would create a hazardous condition or cause an
overloading of the presently installed electrical services.

          E. Gas, electric and water shall be paid for by Tenant.

          F. Tenant's equipment shall be delivered to the building only at
reasonable times. Tenant shall not overload, damage, suffer or permit the
Demised Premises to be overloaded or damaged.

          G. Keys pertaining to Demised Premises or the building in which the
Demised Premises is located, held by the Tenant shall be delivered to the
Landlord at the termination of the tenancy.

          H. Nothing shall be thrown by Tenant, its employees, agents,
contractors or visitors, out of the windows or doors or down passages of the
building in which the Demised Premises is located.

     17. A. Tenant shall, at Tenant's own expense, comply with the Industrial
Site Recovery Act, N.J.S.A. 13:lK-6, et seq. and the regulations promulgated
thereunder ("ISRA"). Tenant shall not, however, have any obligation or liability
whatsoever in respect of any spill or discharge of hazardous substances or
wastes or any other non-compliance with ISRA, which is caused by any person
other than Tenant. Tenant shall, at Tenant's own cost and expense, make all
submissions to, provide all information to, and comply with all requirements of,
the Industrial

                                      -15-

<PAGE>

Site Evaluation Element ("The Element") of the New Jersey Department of
Environmental Protection ("NJDEP"). Should the Element or any other division of
NJDEP determine that a clean up plan be prepared and that a clean up be
undertaken because of any spills or discharges of hazardous substances or wastes
at the Demised Premises occurring or arising from Tenant's use and occupancy,
then Tenant shall, at Tenant's own expense, prepare and submit the required
plans and financial assurances, and carry out the approved plans. Tenant's
obligations under this paragraph shall arise if there is any closing,
terminating or transferring of Tenant's operation at the Demised Premises
pursuant to ISRA or other triggering event by Tenant. At no expense to Landlord,
Tenant shall promptly provide all information reasonably requested by Landlord
for preparation of non-applicability affidavits, de minimis quantity exemption
application, or other required submissions, and shall promptly sign such
affidavits when reasonably requested by Landlord. Tenant shall indemnify, defend
and save harmless Landlord from all fines, suits, procedures, claims and actions
of any kind arising out of or in any way connected with any spills or discharges
or hazardous substances or wastes at the Demised Premises occurring or arising
from Tenant's use and occupancy, and from all fines, suits, procedures, claims
and actions of any kind arising out of Tenant's failure to comply with this
Paragraph. Tenant's obligations and liabilities under this Paragraph shall
continue so long as Landlord remains responsible for any spills or discharges of
hazardous substances or wastes by Tenant at the Demised Premises occurring or
arising from Tenant's use and occupancy. Tenant's failure to abide by the terms
of this Paragraph shall be restrainable by injunction.

          B. Landlord shall, at Landlord's own expense, comply with ISRA in all
instances beyond Tenant's responsibility as set forth above. To the extent the
Element or any other Division of NJDEP requires information from Landlord,
Landlord shall promptly provide all information requested. Should the Element or
any other Division of NJDEP determine that a clean up plan be prepared and that
a clean up be undertaken because of any spills or discharges of hazardous
substances or waste at the Demised Premises, by any party other than Tenant,
then and in such case, Tenant shall not be responsible and the party who is
responsible, Landlord, other tenant or other party, shall, at its own expense
prepare and submit required plans and financial assurances and carry out the
approved plans. Landlord shall indemnify, defend and save harmless Tenant from
all fines, suits, procedures, claims and actions of any kind arising out of or
any way connected with any spillages, discharges of hazardous substances or
waste or other

                                      -16-

<PAGE>

action by Landlord at the Demised Premises and not occurring or arising from
Tenant's use and occupancy, and from all fines, suits, procedures, claims and
actions of any kind arising out of Landlord's failure to comply with this
Paragraph. Landlord's obligations under this Paragraph shall survive the
expiration or termination of this Lease. Landlord's failure to abide by the
terms of this Paragraph shall be restrainable by injunction.

          C. In the event the provisions of Subsection A above have not been
complied with, then and in such event, Tenant shall be responsible to continue
to pay monthly Annual Rental and all Additional Rental until said NJDEP approval
is delivered to Landlord, notwithstanding Tenant may not be in possession. The
monthly Annual Rental Tenant shall be required to pay hereunder shall be 125%
the Annual Rental for the last month of the Term.

          D. In the event that Landlord shall require from Tenant information
and evidence of Tenant's Standard Industrial Classification number, the nature
of Tenant's business being operated upon the Demised Premises, the use Tenant
made of the Demised Premises or like information to be submitted to NJDEP or any
successor governmental department or agency in connection with a proposed sale,
leasing, exchange, financing, refinancing or other disposition of the Demised
Premises, or of any part thereof, or of the building in which or land upon which
the Demised Premises is located, or any part thereof, then Tenant shall upon
written request of Landlord furnish such information and evidence in Affidavit
or other form required by NJDEP without unreasonable delay.

          E. Tenant shall commence its ISRA submission in anticipation of the
end of its Lease Term at least six (6) months prior to the expiration of the
Term.

     18. All notices or other communications required or permitted hereby shall
be effective only if the same are in writing and are signed by the party giving
the notice or by an agent or other person authorized in writing to so act on
behalf of such party. Notices to Tenant may be given either by delivery to
Tenant at the Demised Premises or by registered or certified mail, return
receipt requested; or by delivery by a nationally recognized courier; and
notices to Landlord may be given either by delivery to Landlord at the address
stated above or by registered or certified mail, return receipt requested, or by
delivery by a nationally recognized courier, with copies to Stuart B. Dember,
Esquire, Saul Ewing LLP, 750 College Road East, Suite 100, Princeton, New Jersey
08540. All notices shall be deemed given unless specified herein, on the

                                      -17-
<PAGE>

date when the same are delivered, if delivered, or five (5) business days after
the date when the same are deposited in the mail if given by certified mail, or
on the business day following the day same are deposited with such national
overnight courier.

     19. A. Tenant agrees to defend, indemnify, save, hold and keep Landlord and
Landlord's agents harmless from all losses, costs, liabilities, claims, damages
and expenses, including reasonable attorneys' and other professional fees,
penalties and fines, incurred in connection with or arising from (i) any default
by Tenant in the observance or performance of any of the terms, covenants or
conditions of this Lease on Tenant's part to be observed or performed, or (ii)
the use, occupancy, control or management, or manner of use, occupancy, control
or management of the Demised Premises or the building in which the Demised
Premises is located by Tenant or any person claiming through or under Tenant, or
contractors, agents, servants, employees, visitors, invitees, licensees and the
like, of Tenant or any such person, in or about the Demised Premises or the
building in which the Demised Premises is located, either prior to, during, or
after the expiration of, the Term including any acts, omissions or negligence in
the making or performing of any improvements.

     Subject to the limitations set forth in Section E below, Landlord agrees to
defend, indemnify, save, hold and keep Tenant and Tenant's agents harmless from
all losses, costs, liabilities, claims, damages and expenses, including
reasonable attorneys' and other professional fees, penalties and fines, incurred
in connection with or arising from Landlord's control or management of the
Common Areas. ("Common Areas" means those areas which may be furnished by
Landlord in or near the Reed Road Industrial Park for the non-exclusive general
common use of tenants and other occupants of the Reed Road Industrial Park).

          B. Tenant shall pay to Landlord, as Additional Rental, within
forty-five (45) days next following receipt by Tenant of bills or statements
therefor, sums equal to all losses, costs, liabilities, claims, damages and
expenses referred to in this Paragraph and Tenant's obligations under this
Paragraph shall survive the termination of the Term.

          C. Tenant has examined the Demised Premises and accepts it in its
present "AS IS" condition, excepting for Landlord's Work as set forth on
Schedule C.

          D. It is expressly understood and agreed by and between the parties to
this Lease that Tenant shall assume all risk of damage and casualty to its
property, equipment and

                                      -18-

<PAGE>

fixtures occurring in or about the Demised Premises, whatever the cause of such
damage or casualty. It is further understood and agreed that, in any event,
Landlord, in its capacity as Landlord, and, if applicable, as builder,
architect, designer or general contractor of the Demised Premises and the
building in which the Demised Premises is located, and Landlord's agents,
servants, employees, contractors, invitees and the like shall not be liable to
Tenant, Tenant's agents, servants, employees, contractors, invitees and the
like, for any damage or injury to person or property or for any inconvenience or
annoyance to Tenant or any other occupant of the Demised Premises or injury to
or interruption of Tenant's or such other occupant's business, arising out of or
attributable to (i) the design and construction of the Demised Premises and the
building of which the Demised Premises is a part; (ii) any maintenance, repairs,
replacements, additions, alterations, substitutions and installations made to
the Demised Premises and the building of which the Demised Premises is a part;
(iii) the failure of Landlord or others to perform any such maintenance or to
make any such repairs, replacements, additions, alterations, substitutions and
installations to the Demised Premises and the building of which the Demised
Premises is a part or to provide any utilities or services; (iv) the acts or
omissions of any tenant or other occupants of any space adjacent to or adjoining
the Demised Premises; and (v) steam, electricity, gas, water, rain, ice or snow,
or any leak or flow from or into the Demised Premises and the building of which
the Demised Premises is a part. Specifically excluded herefrom is Landlord's
negligence or willful misconduct.

          E. Landlord shall not be responsible or liable to Tenant, or to those
claiming by, through or under Tenant, for any loss or damage which may be
occasioned by or through the acts or omissions of persons occupying space
adjoining the Demised Premises or any other part of the building, or otherwise,
or for any loss or damage incurred by Tenant, or those claiming by, through or
under Tenant, or its or their property, from the breaking, bursting, stoppage,
overflowing or leaking of electrical cable or wires, water, gas, sewer or steam
pipes. To the maximum extent permitted by law, Tenant agrees to use and occupy
the Demised Premises, and to use such other portions of the common areas as
Tenant is herein given the right to use, at Tenant's own risk as specified in
this Section. In no event shall Landlord have any responsibility to Tenant,
under any of the Lease provisions contained herein or elsewhere in this Lease,
for any special, consequential, indirect or punitive damages.

                                      -19-

<PAGE>

          F. Notwithstanding anything to the contrary provided in this Lease,
each and every term, covenant, condition and provision of this Lease is hereby
made specifically subject to the provisions of this Paragraph. It is expressly
understood and agreed that there shall be no personal liability whatsoever on
the part of the Landlord or any successor in interest of Landlord (or on the
part of the officers, directors and shareholders of any corporation or the
managers, members of any firm, limited liability company, partnership or joint
venture which may be the Landlord or any successor in interest of the Landlord
at any time or from time to time) with respect to any of the terms, covenants,
conditions and provisions of this Lease, and Tenant shall look solely to the
equity of Landlord or such successor in interest in the fee estate of Landlord
in the Demised Premises for the satisfaction of each and every remedy of Tenant
in the event of any breach by Landlord or by any such successor in interest of
any of the terms, covenants, conditions and provisions of this Lease to be
performed by Landlord, such exculpation of corporate and/or personal liability
to be absolute and without any exception whatsoever.

     20. In the event that the Demised Premises, or any part thereof, are taken
or condemned for a public or quasi-public use, this Lease shall, as to the part
so taken, terminate as of the date title shall vest in the condemnor and rent
reserved shall abate proportionately as to the part so taken or shall cease if
the entire Demised Premises be so taken, and the Tenant shall have no claim or
interest in or to any aware of damages for such taking.

     21. In the event that the Demised Premises is not ready for occupancy on
the Lease Commencement Date because of any alterations to be made by the
Landlord to the Demised Premises, or because of the failure of the occupant of
the Demised Premises to vacate and surrender same, this Lease shall not be
affected thereby nor shall Tenant have any claim against the Landlord by reason
thereof, but no Rental shall be due hereunder until the Landlord shall send ten
(10) days notice by mail to the Tenant, addressed to the Tenant's last known
address, that the Demised Premises is ready for occupancy. Notwithstanding the
foregoing, both Landlord and Tenant shall have the right to terminate the within
Lease as to Suites 102B and 103B in the event those Suites are not delivered
pursuant to the terms of this Lease to Tenant by December 14, 2004. However,
Tenant shall not have the right to terminate on said date if failure to deliver
the Suites is caused by any delay, in whole or in part, by Tenant.

                                      -20-

<PAGE>

     22. A. Landlord, at its expense, will make, or cause to be made structural
repairs to exterior walls, structural columns and structural floors which
collectively enclose the Demised Premises (excluding, however, all doors, door
frames, windows and glass), sewage, water pipes, power lines and facilities
relating to the immediate foregoing items and the roof over the Demised
Premises; provided Tenant shall give Landlord notice of the necessity for such
repairs and provided that the necessity for such repairs shall not have arisen
from nor shall have been caused by Tenant's use or the negligence or willful
acts of Tenant, its agents, officers, employees, licensees, invitees or
contractors, and the like.

          B. All repairs to the Demised Premises or any installations, equipment
or facilities therein, other than those repairs required to be made by Landlord,
shall be made by Tenant at its expense. (Landlord shall cause certain repairs
and maintenance to be done, on Tenant's behalf and as Tenant's agent, for which
Tenant shall remain responsible and for which Tenant shall pay, such as capital
improvements which are to be amortized and those due to Tenant's or its agents
negligence, the latter of which remain the sole responsibility of Tenant).
Without limiting the generality of the foregoing, Tenant shall keep the interior
of the Demised Premises, together with all electrical, plumbing and other
mechanical installations therein, in good order and repair and shall make all
replacements from time to time required thereto at its expense; Tenant will not
overload the electrical wiring serving the Demised Premises or within the
Demised Premises, and will install at its expense, any additional electrical
wiring which may be required in connection with Tenant's apparatus. Any damage
or injury sustained by any person because of mechanical, electrical, plumbing or
any other equipment or installations whose maintenance, repair or cost shall be
the responsibility of Tenant, shall be paid for by Tenant, and Tenant shall
indemnify and hold Landlord harmless from and against all claims, actions,
damages and liability in connection therewith, including but not limited to,
attorneys' and other professional fees, and any other costs which Landlord might
reasonably incur (as Additional Rental).

          C. Tenant shall repair promptly, at its expense, any damage to the
Demised Premises, and, upon demand, shall reimburse Landlord (as Additional
Rental) for the cost of the repair of any damage elsewhere in the building in
which the Demised Premises is located, caused by bringing into the Demised
Premises any property for Tenant's use, or by the installation or removal of
such property regardless of fault or by whom such damage shall be caused (unless

                                      -21-

<PAGE>

caused solely by Landlord, its agents, employees or contractors), and in default
of such repairs by Tenant, at the expiration of five (5) days after notice to
Tenant, Landlord may make or cause the same to be made and Tenant agrees to pay
to Landlord promptly upon Landlord's demand, as Additional Rental, the cost
thereof.

          D. Tenant shall be responsible for and shall pay to Landlord, upon
demand and as Additional Rental, all reasonable attorneys', architectural,
engineering and other professional fees and expenses incurred with respect to
any and all review and approval regarding Tenant's repairs to the Demised
Premises.

          E. Subject to the limitations set forth elsewhere in this Lease,
excepting for Landlord's negligence or willful misconduct, Landlord shall not be
liable by reason of any injury to or interference with Tenant's business arising
from the making of any repairs, alterations, additions or improvements in or to
the Demised Premises or the building in which the Demised Premises is located,
or to any appurtenances or equipment therein. There shall be no abatement of
Rental because of such repairs, alterations, additions or improvements.

     23. Tenant, at its sole cost and expense, shall comply with and shall cause
the Demised Premises to comply with (i) all federal, state, county, municipal
and other governmental statutes, laws, rules, orders, regulations and ordinances
affecting the Demised Premises, or any part thereof, or the use thereof,
including those which require the making of any structural, unforeseen or
extraordinary changes, whether or not any such statutes, laws, rules, orders,
regulations or ordinances which may hereafter be enacted involve a change of
policy on the part of the governmental body enacting the same; and (ii) all
rules, orders and regulations of the National Board of Fire Underwriters of
Landlord's fire insurance rating organization or other bodies exercising similar
functions in connection with the prevention of fire or the correction of
hazardous conditions which apply to the Demised Premises. Landlord, at its sole
cost and expense, shall comply with all federal, state, county, municipal and
other governmental statutes, laws, rules, orders, regulations and ordinances
affecting the Common Areas.

     24. It is understood and agreed that the Tenant shall provide its own
janitorial service for the Demised Premises.

     25. Tenant represents that in the negotiation of this Lease it dealt with
no real estate broker or salesman except NONE. Tenant hereby agrees to indemnify
Landlord and hold

                                      -22-

<PAGE>

it harmless from any and all losses, damages and expenses arising out of any
inaccuracy or alleged inaccuracy of the above representation, including court
costs and attorneys' fees. Landlord shall have no liability for brokerage
commissions arising out of a sublease by Tenant and Tenant shall and does hereby
indemnify Landlord and hold Landlord harmless from any and all liability for
brokerage commissions arising out of any such sublease. Landlord shall pay the
commissions of N/A pursuant to separate agreement.

     26. No rights are to be conferred upon the Tenant until this Lease has been
signed by the Landlord and an executed copy of the Lease has been delivered to
the Tenant.

     27. The foregoing rights and remedies are not intended to be exclusive, but
as additional to all rights and remedies the Landlord would otherwise have by
law.

     28. All of the terms, covenants and conditions of this Lease shall inure to
the benefit of and be binding upon the respective heirs, executors,
administrators and assigns of the parties hereto.

     29. Tenant and Landlord agree that any failure of the other to insist upon
strict observance of any term, condition or covenant of this Lease in any one or
more instances, shall not constitute nor be deemed a waiver at that time or
thereafter of such or any other term, condition or covenant in this Lease.

     30. This Lease and obligation of Tenant to pay rent hereunder and perform
all of the other covenants and agreements hereunder on part of Tenant to be
performed shall in nowise be affected, impaired or excused because Landlord is
unable to supply or is delayed in supplying any service, utility, equipment or
fixtures if Landlord is prevented or delayed from so doing by reason of
governmental pre-emption in connection with any national emergency declared by
the President of the United States or in connection with any rules, orders or
regulations of any department or sub-division thereof of the conditions of
supply and demand which have been or are affected by such national emergency.

     31. This Lease and the rights and obligations of the parties hereunder
shall be construed in accordance with the internal laws of the State of New
Jersey applicable to leases made and to be performed in the State of New Jersey
without regard to principles of conflict of law.

                                      -23-

<PAGE>

     32. The authorization of the Permitted Use of the Demised Premises for the
purposes set forth herein does not constitute a representation or warranty by
Landlord that any particular use of the Demised Premises is now or shall
continue to be permitted under applicable laws or regulations.

     33. Tenant has requested that Landlord perform certain work at the Demised
Premises ("Landlord's Work"), which work is set forth on Schedule C annexed
hereto and made a part hereof (Schedule C consists of the pertinent portions of
Landlord's letter of May 9, 2005) for which Landlord has received from the
Township of Hopewell a Certificate of Approval dated April 13, 2005. The cost of
Landlord's Work to date totals $63,326.17 ("Landlord's Work Cost"). Tenant shall
pay the sum of $20,000.00 to Landlord upon execution of the within Lease. The
balance of $43,326.17 plus interest at six (6%) percent per annum shall be paid
by Tenant to Landlord in thirty-six (36) equal monthly installments of $1,275.72
commencing with Tenant's first monthly installment of Rental hereunder. In the
event Tenant is in default under the Lease, whether monetary or non-monetary,
then and in such event, the total remaining balance of Landlord's Work Cost
shall immediately become due, owing and payable to Landlord and shall constitute
Additional Rental hereunder.

     34. RIGHT OF FIRST REFUSAL:

          In the event Landlord intends to sell the building in which the
Demised Premises is located to a third party, Tenant shall be granted a
continuous Right of First Refusal for the purchase of the building, such Right
of First Refusal subject to and conditioned upon Tenant being in actual
occupancy of the Demised Premises and Tenant not being in default of any
monetary or non-monetary terms, covenants, conditions and provisions of this
Lease. Tenant shall execute and deliver to Landlord a written exercise of the
Right of First Refusal, which must be delivered within seven (7) calendar days
of receipt of Landlord's written notice of the proposed sale of the building,
time specifically and expressly hereby being made of the essence for Landlord
receipt of Tenant's written exercise of the Right of First Refusal. The notice
of Right of First Refusal to Tenant shall contain the purchase price and such
other terms Landlord is

                                      -24-

<PAGE>

requiring of such third party. Tenant's failure to timely respond to Landlord's
notice shall conclusively deemed to be a waiver by Tenant of its Right of First
Refusal for said transaction. Any transaction consummated by Landlord shall be
upon substantially the same terms and conditions as set forth in Landlord's
notice. Specifically excluded from this Right of First Refusal is any
intra-family transfer or any transfer to an affiliate of the Landlord.

     35. This Lease shall be construed without regard to any presumption or
other rule requiring construction against the party causing this Lease to be
drafted.

     36. This writing is intended by the parties as a final expression of their
agreement and as a complete and exclusive statement of the terms thereof; all
negotiations, considerations and representations between the parties have been
incorporated herein. No course of prior dealings between the parties or their
officers, employees, agents or affiliates shall be relevant or admissible to
supplement, explain, or vary any of the terms of this Lease. Acceptance of, or
acquiescence in, a course of performance rendered under this or any prior
agreement between the parties or their affiliates shall not be relevant or
admissible to determine the meaning of any of the terms of this Lease. No
representations, understandings, or agreements have been made or relied upon in
the making of this Lease other than those specifically set forth herein. This
Lease can be modified only by a writing signed by the party against whom the
modification is enforceable.

     37. Concurrent with the execution of the within Lease, Tenant's leasehold
under a certain Lease Agreement, dated September 15, 2004, shall terminate.

                                      -25-

<PAGE>

     IN WITNESS WHEREOF, the said parties have hereto set their hands and seals
the day and year first above written.

WITNESS/ATTEST:                         REED ROAD INDUSTRIAL PARK, LLC #1

/s/ (illegible)                         /s/ John Lovero Jr.
-------------------------------------   ----------------------------------------
                                        JOHN LOVERO, JR., MANAGER

                                        OCEAN POWER TECHNOLOGIES, INC.

/s/ Charles F. Dunleavy                 BY: /s/ George W. Taylor
-------------------------------------       ------------------------------------
SECRETARY                                   PRESIDENT

                                      -26-

<PAGE>

                                   ADDENDUM A

     Total leased area: 8,747 square feet office

                        10,388 square feet warehouse

                        2,225 square feet mezzanine

     Measurements are included to center of walls when adjacent to other
Tenants; when outside walls, measurements shall be taken from outside walls.

     The following are conditions that Landlord and Tenant shall abide by:

     The installation and replacement of any carpets, vinyl, or any other floor
coverings, as well as shades or blinds, shall be supplied and installed at
Tenant's cost;

     After the installation of heating and cooling equipment, Tenant shall have
units serviced as required (suggest a service policy by mechanical installer);

     If, at the expiration of three (3) years, Tenant shall require any interior
painting or repairs, Landlord shall provide Tenant with a work order sheet
reflecting the cost for such painting or repairs, and Tenant shall pay to
Landlord the cost thereof upon completion;

     Any light bulbs, additional lighting receptacles or switches, if required,
shall be billed to Tenant;

     A dumpster shall be supplied and paid for by Tenant, the container shall
never be overfilled and no debris shall be left loose. The Demised Premises
shall be kept clean at all times.

     Landlord shall provide Tenant with one (1) set of keys; Tenant shall obtain
additional keys, at its sole cost and expense, if needed;

     Tenant shall provide his own janitorial services for the Demised Premises;

     Tenant shall not have the right to have any vehicles parked outside of
building after business hours except to park opposite its own door or inside
that leased area. No vehicle other than their business cars or trucks shall be
parked inside or around premises. No personal cars, trailers, motorcycles,
bicycles, etc., shall be left in or on premises;

     Any additional work required by Tenant shall first be approved with a work
order sheet, executed by both Landlord and Tenant, with payment in full by
Tenant to landlord upon completion of such additional work;

<PAGE>

     Landlord is not responsible for any excessive loads stored on mezzanine.
The recommended load would be 70 pounds per sq. ft. The Architectural Plans
denote that the recommended load for concrete flooring equals 3,000 pounds per
square foot.

WITNESS/ATTEST:                         REED ROAD INDUSTRIAL PARK, LLC #1

/s/ (illegible)                         /s/ John Lovero Jr.
------------------------------------    ----------------------------------------
                                        JOHN LOVERO, JR., MANAGER

                                        OCEAN POWER TECHNOLOGIES, INC.

/s/ Charles F. Dunleavy                 BY: /s/ George W. Taylor
-------------------------------------       ------------------------------------
SECRETARY                                   PRESIDENT

                                       -2-

<PAGE>

                                   ADDENDUM B

                                Sprinkler System

     Tenant shall be responsible for providing adequate heating and constant
insulation in all areas of its space to protect the wet pipe fire sprinkler
system from freezing or damage from extreme low temperatures, and/or physical
damage.

     Tenant must obtain insurance to cover the total value of all material,
supplies, and equipment; and shall file a Certificate of Insurance for the
amount of coverage on all personal or corporate materials, supplies, and
equipment in Tenant's areas for fire, vandalism, theft, and any damage from
sprinkler system (water damage) if sprinklers are activated due to fire,
freezing or any other reason.

     Notwithstanding anything to the contrary in this Lease, Landlord shall
replace, when and if necessary, at its expense, the wet pipe fire sprinkler
system; provided the replacement is not due to Tenant's negligence, fit-out,
improvements or Tenant's use. Any and all maintenance and repairs shall remain
the sole responsibility of Tenant.

WITNESS/ATTEST:                         REED ROAD INDUSTRIAL PARK, LLC #1

/s/ (illegible)                         /s/ John Lovero Jr.
-------------------------------------   ----------------------------------------
                                        JOHN LOVERO, JR., MANAGER

                                        OCEAN POWER TECHNOLOGIES, INC.

/s/ Charles F. Dunleavy                 BY: /s/ George W. Taylor
-------------------------------------       ------------------------------------
SECRETARY                                   PRESIDENT

                                       -3-

<PAGE>

                                   SCHEDULE A

                                DEMISED PREMISES

                                       -4-
<PAGE>

                                   SCHEDULE B

                                     RENTAL

<TABLE>
<CAPTION>
            OFFICE SQUARE   WAREHOUSE SQUARE   MEZZANINE SQUARE
SUITE NO.      FOOTAGE           FOOTAGE           FOOTAGE
---------   -------------   ----------------   ----------------
<S>         <C>             <C>                <C>
  101A          3,032             4,028                  0
  102A            500             1,500                  0
  103A          1,400               600              1,400
  102B          2,450             1,250                525
  103B          1,365             3,010                300
                -----            ------              -----
  TOTAL         8,747            10,388              2,225
                =====            ======              =====
</TABLE>

     The Annual Rental for the First through and including the Fourth Lease Year
shall be as set forth below, commencing effective May 1, 2005:

               OFFICE RENTAL CALCULATED AT $12.50 PER SQUARE FOOT
              WAREHOUSE RENTAL CALCULATED AT $6.50 PER SQUARE FOOT
 NO RENTAL ON MEZZANINE SPACE (PROVIDED USED SOLELY FOR LIGHT STORAGE SUBJECT TO
 MUNICIPAL ZONING CODE AS A PERMITTED USE; IF NOT, WILL BE ABANDONED BY TENANT.
                           TENANT SHALL NOT OVERLOAD.)

<TABLE>
<S>                    <C>
OFFICE RENTAL:         $109,337.50
WAREHOUSE RENTAL:      $ 67,522.00
                       -----------
TOTAL ANNUAL RENTAL:   $176,859.50 ($14,738.29 PER MONTH)
</TABLE>

                                ADDITIONAL RENTAL

        19,135 SQUARE FEET ESTIMATED @ $3.48 PER SQUARE FOOT = $66,589.80
  ($5,549.15 PER MONTH) (THIS AMOUNT IS SUBJECT TO ANNUAL INCREASES BASED UPON
          ACTUAL TRIPLE NET COSTS, DEFINED HEREIN AS ADDITIONAL RENTAL)

Tenant's proportionate share of Additional Rental is defined as that fraction,
the numerator of which is the rentable area of the Demised Premises and the
denominator of which is the total rentable area in the Building known as Reed
Road Industrial Park, Township of Hopewell, County of Mercer, State of New
Jersey. Tenant's present proportionate share is 87%.

    TOTAL MONTHLY PAYMENT OF ANNUAL RENTAL AND ADDITIONAL RENTAL = $20,287.44

     The Annual Rental for the Fifth Lease Year shall be the greater of (a)
$203,921.00 ($15.00 per square foot for office space and $7.00 per square foot
for warehouse area), or (b) the Annual Rental in effect at the expiration of the
Fourth Lease Year ($176,859.50) plus the percentage of increase, if any, in the
Consumer Price Index, computed as follows:

                                       -5-

<PAGE>

     A.   There shall be compared the Consumer Price Index for All Urban
          Consumers, New York, N.Y. - Northeastern New Jersey Local Area, All
          Items, published by the Bureau of Labor Statistics, Revised Consumer
          Price Index, effective January, 1987 (1982-84 = 100) (the Index) for
          the first month of the Fifth Lease Year with the first month of the
          First Lease Year. The percentage of increase in such Index for the
          first month of the Fifth Lease Year over the first month of the First
          Lease Year shall be the percentage of increase in the Index for the
          purpose of determining the increase in the Annual Rental payable
          during the Fifth Lease Year of this Lease.

     B.   It is understood and agreed that in the event the Index figure
          required to make the foregoing comparison shall not be published for
          the particular month when the same shall be applicable, then the like
          Index figure published in any preceding month shall be used provided
          such figure is published within three (3) months of the month required
          in accordance with the foregoing. In the event that the applicable
          Index figure is not published within three (3) months of the required
          month or if such figure or the entire Index shall become unavailable
          by reason of discontinuance of publication or any other reason, then
          in any such event, the parties shall agree on an equivalent and
          substituted Consumer Price Index to be applied in the same manner as
          herein provided.

     C.   The parties covenant and agree that as soon as the Index figure for
          the first month of the Fifth Lease Year of this Lease is published
          they will set forth such figure in writing signed by both parties; and
          thereafter, when the figure is published for any succeeding month to
          be used for comparison as hereinabove provided, they will likewise set
          forth such figure in writing signed by both parties. The failure to
          set forth such figures in writing shall not diminish Tenant's
          obligations hereunder.

     D.   The Annual Rental for the Sixth, Seventh and Eighth Lease Years shall
          be the Annual Rental in effect at the expiration of the prior Lease
          Year plus the percentage of increase, if any, in the Consumer Price
          Index, computed as set forth above using the applicable Lease Years.
          In no event shall the Annual Rental be less than that in effect for
          the prior Lease Year.

                                       -6-

<PAGE>

                                   SCHEDULE C

                                 LANDLORD'S WORK

Architectural Drawings:

Because of the extensive nature of design time and electrical lay-out, the cost
of architectural work exceeded normal allowance: (HVAC design work supplied by
HVAC contractor);

<TABLE>
<S>                                           <C>             <C>
Allowance                                     $    1,500.00

   Actual: client meetings
           initial design drawings
           research International
           Building Codes;
           drawing revisions, final
           corrections and plot drawings;
           construction drawings for
           permit;                                 4,132.00
                                              -------------
           Additional cost                    $    2,632.00
           15% overhead & profit                     394.80
                                              -------------
Total Extra                                                   $  3,026.80

NOTE: original field data work and existing
   "as-built" drawing is by Landlord and is
   not part of these figures;

HVAC Extras:
Basic HVAC for new office areas
   by Landlord;
Additional work by Tenant includes:
   Two-zone system to separate new
      conference/lecture room (#3), and
      cubicle area with thermostat,
      dampers, control board, etc.;           $    2,290.00
300 cfm exhaust fan in Conference Room
   #3 with duct and speed control;                   625.00
Re-do existing warehouse #3 (Old
   Neumed) air conditioning system
   including cutting, relocating and
   extending duct work to unit #2
   (Old Auxiliary warehouse);                      2,690.00
                                              -------------
Additional cost                               $    5,600.00
15% overhead & profit                                840.00
                                              -------------
   Total Extra                                                $  6,440.00
</TABLE>

                                       -7-

<PAGE>

<TABLE>
<S>                                           <C>             <C>
Conference Room #3 Extras:
   Wood floor:
      2x4 pressure-treated joists;
         3/4" tongue & groove sturd-i-floor
         plywood;                             $    1,735.00

New window:
Remove existing steel door and frame;
   Re-frame for new window;
   Exterior stucco work and sill;
   New Andersen vinyl-clad window;
   (Insulation, sheetrock, trim, and paint
   by Landlord);                                   1,647.00

Kitchenette:
   Frame walls and ceiling; Sheetrock;
      Door and trim - 4/8 x 6/8 birch
      veneer double door unit with
      hardware;

Cabinets:
One 24" sink base;
   One 12" drawer base;
   One 24" open refrigerator space;
   One 12" x 15" x 36" wall cabinet;
   One 12" x 30" x 24" wall cabinet;
   Refrigerator supplied and installed;       $    1,810.00
Conceal septic emergency equipment
   including framing, sheetrock, access
   panel and paint (prime only);                     345.00

Electric:
Two hi-hat fixtures and one switch;
   One GFCI outlet;
   One refrigerator circuit;                         450.00
Four floor outlets located by Tenant
   with conduit supplied for computer,
   security, telephone, etc. people to use;        1,400.00
Room lighting allowance -eight 2x4
   prismatic lights replaced with six 2x4
   parabolic lense units 12 hi-hat units;          1,368.00
Four three-way dimmers, and additional
   three outlets above normal                        252.00

Plumbing:
Drill through existing block wall into
   old kitchen cabinet and tie into waste
   and water lines as needed for new bar
   sink; New bar sink with faucets;                  640.00

Crown mold:
</TABLE>

                                       -8-

<PAGE>

<TABLE>
<S>                                           <C>             <C>
Three piece stained to match existing
   Conference Room;                                1,275.00
                                              -------------
Additional cost                               $   10,907.00
15% overhead & profit                              1,636.00
                                              -------------
Total Extra                                                   $ 12,543.00

Existing Cable Bracing:
Remove existing steel cable bracing and
   install in new location to allow for
   future access opening from original OPT
   space to new warehouse #2;                                      865.00
Enlarge existing access from warehouse
   #1 to warehouse #2 including cutting
   out block wall and install triple
   concrete lintel; demolition of block
   work, 2x pressure-treated jambs; new
   concrete ramp; clean and remove all
   debris from site;                                             1,495.00
Cut back already existing wood Handicap
   ramp into new cubicle area;                                     175.00

Conference Room #1:
New window: Remove existing steel entry
   door and frame; Re-frame wall for new
   window; Stucco exterior of wall and set
   sill;
   New Andersen window;
   Patch insulation, sheetrock and trim to
   match existing;                            $    1,650.00
Frame around existing electrical panel
   and septic safety equipment and
   fabricate and install access panel;
   painting includes only prime coat on
   all new work;                                     345.00
   Total Extra                                                   2,295.00

Doors #2 and #6:
Openings cut, framed and doors
   installed; and ramp installed as per
   plan;                                                      By Landlord

Door #9:
Cut, framed, and door installed
   complete;                                                  By Landlord
</TABLE>

                                       -9-

<PAGE>

<TABLE>
<S>                                           <C>             <C>
Four vision panels supplied, installed
   and painted in interior doors, and one
   10" x 10" vision panel installed in
   Conference Room door;                                      $    818.00

Carpeting:
New offices:
Allowance - 225 yds. at $20/yd.               $    4,500.00
Actual cost                                        5,384.80
                                              -------------
   Extra                                             884.80
Original OPT front office in 4/04
   carpeting replaced; demo and removal by
   Landlord; new carpet allowance - 27
   yds. at $20/yd.;                           $      540.00
Actual cost                                          899.52
                                              -------------
   Extra                                             359.99
VCT to replace carpet in hall way
   leading from warehouse #4 to Conference
   Room #1:
   Allowance for carpet - 20 yds. at
   $20/yd.;                                   $      400.00
VCT cost;                                            500.00
                                              -------------
   Extra                                             100.00
   Total                                      $    1,343.80
   15% overhead & profit                             201.57
                                              -------------
   Total Extra                                                   1,545.37

Demolition:
Demo of existing full height tenant
   separation wall and two existing work
   rooms including electric and HVAC demo
   as needed; and removal of all debris
   from site (floor and wall clean up by
   Landlord);                                                 $  3,220.00

Electrical Extras:
New 200 amp. Outlet as per letter dated
   December 22, 2004, less credit for
   repair work as work was less than
   anticipated (NOTE: 15% overhead &
   profit included in this number);           $   22,750.00
</TABLE>

                                      -10-

<PAGE>

<TABLE>
<S>                                           <C>             <C>
Temporary and final hook-up for fork
   lift charger;                              AT LATER DATE
Four 20 amp./ 208 volt, three-phase
   unfused disc switch;                              600.00
One 200 amp., 208 volt, three- phase
   circuit breaker panel with 100 amp.,
   208 volt, three- phase outlet instead
   of 200 amp. Outlet;                             1,500.00
One ceiling outlet in warehouse #3;                  150.00
One stairwell fixture with switch;                   370.00
Four paddle fans installed;                        1,400.00
Building sign circuit with timer from
   Owner's panel;                                    650.00
Additional 20 amp., 120 volt
   outlets in:
Warehouse #1-5
Warehouse #2-8
Warehouse #3-4                                     1,700.00
Additional outlets and switches (above
   standard allowance) for cubicle area;
   Six outlets; 5 switches, 2 GFCI
   outlets;                                          720.00
                                              -------------
                                              $    7,090.00
                                              -------------
15% overhead & profit                         $    1,063.00
                                              -------------
   Total Extra                                                $ 30,903.00
                                                              -----------
Total Extras                                                  $ 63,326.17
</TABLE>

                                      -11-<PAGE>

                                                                   EXHIBIT 10.17

                             DATED __________ 2005

        (1) UNIVERSITY OF WARWICK SCIENCE PARK INNOVATION CENTRE LIMITED

                                       and

                      (2) OCEAN POWER TECHNOLOGIES LIMITED

                                   ----------

                                     LEASE

                                   relating to
                                   Unit No. 21
                     Warwick Science Park Innovation Centre
                             Warwick Technology Park
                                  Gallows Hill
                                     Warwick

                                   ----------

TERM BEGINS      : _____________________________________________________________

DURATION OF TERM : 3 Years

TERM ENDS        : (Subject to prior determination renewal or continuation)

RENT             : L14,365.00 per annum (exclusive)

PAYABLE            Quarterly in Advance

NOTE             : This Lease is excluded from the security of tenure provisions
                   of the Landlord & Tenant Act 1954 (as amended)

                                   shoosmiths

                                   Lock House
                               Castle Meadow Road
                                   Nottingham
                                     NG2 1AG
                           Tel: +44 (0) 08700 865 000
                           Fax: +44 (0) 08700 865 5001
                           nottingham@shoosmiths co.uk
                                     Rel. AL

<PAGE>

                               SUBJECT TO CONTRACT

                                 HEADS OF TERMS

                            WARWICK INNOVATION CENTRE
              PROPOSED LETTING TO OCEAN POWER TECHNOLOGIES LIMITED

<TABLE>
<S>                            <C>
1) LANDLORD                    University of Warwick Science Park Limited
                               Barclays Venture Centre
                               Sir William Lyons Road
                               Coventry
                               CV4 7EZ

2) PROPERTY                    Unit 21
                               Warwick Innovation Centre
                               Warwick Technology Park
                               Gallows Hill
                               Warwick

                               UNIT 21 has a net internal area of 845 sq ft

3) TENANT                      Ocean Power Technologies Limited

4) LEASE TERMS                 The tenant will take a 3 year lease which will be
                               excluded from the security of tenure provisions
                               of the Landlord & Tenant legislation. The lease
                               will incorporate a tenant option to break
                               operable by the giving of 3 months prior written
                               notice at a point 18 months into the lease term.

5) RENTAL                      Unit 21 is L14,365 per annum exclusive of
                               business rates, service charge and VAT.

6) SERVICE CHARGE              The current budgeted service charge for Warwick
                               Innovation Centre is L5 psf per annum
                               exclusive of VAT.

7) REPAIRS, MAINTENANCE AND    The Tenant will be responsible for the repair,
   DECORATION                  maintenance and decoration of the interior of the
                               demised unit.

8) ASSIGNMENT/UNDERLETTING     The lessee will not be permitted to assign,
                               charge, underlet or part with possession of the
                               demised unit or any part thereof.
</TABLE>

<PAGE>

<TABLE>
<S>                            <C>
9) INNOVATION CENTRE - RULES   The Tenant is to observe the rules and
   AND REGULATIONS             regulations made by the Director of UWSP to
                               maintain the administration and management of the
                               Innovation Centre.

10) RIGHT OF ENTRY AND         The Landlord will reserve the right to enter into
    INSPECTION                 the demised unit at all reasonable times for the
                               purposes of viewing its state of repair or
                               execution works to neighbouring units.

11) LEGAL COSTS                The Tenant will be responsible for meeting the
                               Landlord's legal costs.
</TABLE>

I agree to these heads of terms with the alteration in clause 4.

                                        /s/ Mark Draper
                                        M.R. Draper
                                        on behalf of OPT Ltd.
                                        4 December 2004.

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