Document:

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                                                                   Exhibit 10.18

          Confidential Materials omitted and filed separately with the
         Securities and Exchange Commission. Asterisks denote omissions.

                                    AGREEMENT
                                       FOR

                  RENEWABLE ENERGY ECONOMIC DEVELOPMENT GRANTS

                                     BETWEEN

                               STATE OF NEW JERSEY

                      NEW JERSEY BOARD OF PUBLIC UTILITIES

                                       AND

                         OCEAN POWER TECHNOLOGIES, INC.
                                 1590 REED ROAD
                              PENNINGTON, NJ 08534

                                  AWARD NUMBER
                                        2

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TABLE OF CONTENTS

<TABLE>
<S>                                                                           <C>
I.   AGREEMENT COVER SHEET.................................................    1

II.  GENERAL TERMS AND CONDITIONS..........................................    4
     A. PARTIES............................................................    4
     B. ELIGIBILITY........................................................    4
     C. CORPORATE AUTHORITY................................................    4
     D. ENTITLEMENT TO FUNDS...............................................    4
     E. PAYMENT OF FUNDS BY BPU............................................    5
     F. AVAILABILITY OF FUNDS..............................................    5
     G. INTELLECTUAL PROPERTY..............................................    5
     H. PUBLICITY POLICY...................................................    5
     I. COMPLIANCE WITH EXISTING LAWS......................................    5
     J. CONFLICT OF INTEREST...............................................    6
     K. REMEDIES...........................................................    6
     L. HEARINGS, APPEALS..................................................    8
     M. CHANGES TO SCOPE...................................................    8
     N. ASSIGNABILITY......................................................    8
     O. INDEMNIFICATION....................................................    8
     P. ENTIRE AGREEMENT...................................................    8
     Q. JURISDICTION AND CHOICE OF LAW.....................................    9
     R. CONSTRUCTION.......................................................    9
     S. NOTICES............................................................    9

III. POST AWARD REQUIREMENTS...............................................    9
     A. IDENTIFICATION OF KEY PERSONNEL....................................    9
     B. FINANCIAL MANAGEMENT SYSTEM........................................   10
</TABLE>

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<TABLE>
<S>                                                                           <C>
     C. USE OF FUNDS.......................................................   11
     D. MATCHING AND COST SHARING..........................................   11
     E. BUDGET REVISIONS AND MODIFICATIONS.................................   11
     F. MONITORING OF PROGRAM PERFORMANCE..................................   12
     G. ACCOUNTING PRINCIPLES..............................................   13
     H. ACCESS TO RECORDS..................................................   13
     I. INSURANCE..........................................................   13
     J. TAXES, ASSESSMENTS AND GOVERNMENTAL CHARGES........................   13

IV.  AWARD CLOSEOUT........................................................   14
     A. PROCEDURES.........................................................   14
     B. FINANCIAL AND PERFORMANCE REPORTING................................   14
     C. RECORD RETENTION...................................................   15
</TABLE>

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II.  GENERAL TERMS AND CONDITIONS

     A.   PARTIES

          Whereas, Ocean Power Technologies, Inc. (hereinafter "award
          recipient"), with its principal place of business located at 1590 Reed
          Road, Pennington, New Jersey, has been selected by the New Jersey
          Board of Public Utilities (hereinafter "BPU") to receive a grant award
          under the Renewable Energy Economic Development Program (hereinafter
          "REED Program").

          Award recipient and the BPU, intending to be legally bound hereto,
          accept and agree to abide by the following terms and conditions set
          forth in this Agreement and the proposal submitted by award recipient
          under the competitive solicitation entitled Ocean Demonstration of
          Next Generation Powerbuoy (hereinafter referred to as the "proposal").

     B.   ELIGIBILITY

          Award recipient represents and warrants that it is an incorporated
          organization, with its principal place of business located and
          registered to do business in the State of New Jersey on the date of
          execution of this Agreement. Award recipient represents and warrants
          that it is duly organized, validly existing, and in good standing
          under the laws of the State of New Jersey as of the time of execution
          of this agreement. Award recipient agrees that any product development
          or process improvement activities that result from this funding, will
          occur in its majority within New Jersey as outlined in the proposal.
          Award recipient agrees that it will maintain its primary place of
          business and principal operations in New Jersey, during the funding
          period and until all obligations under this agreement have been
          satisfied, unless otherwise agreed by the BPU. Violation of this
          provision without express written approval of the BPU constitutes
          default under this Agreement and may result in penalties pursuant to
          section I.K. herein.

     C.   CORPORATE AUTHORITY

          Award recipient represents and warrants that it has the corporate
          power and authority and legal right to execute and perform its
          obligations under this Agreement and that it has taken all necessary
          corporate action to authorize its execution and performance of
          obligations under this Agreement.

     D.   ENTITLEMENT TO FUNDS

          Upon execution of this Agreement, award recipient shall be entitled to
          receive a total of $[**] in funding (hereinafter "award") from the
          BPU, subject to the terms and conditions stated herein, for the
          purposes set forth in the proposal, Attachment "A".

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     E.   PAYMENT OF FUNDS BY BPU

          Payment of funds for this award shall be made to award recipient upon
          receipt by the BPU of a properly executed copy of this Agreement,
          signed by an authorized officer of the award recipient. The BPU will
          advance funds to award recipient in an amount equal to [**] percent
          ([**]%) of this award, within [**] days of receipt of a properly
          executed agreement. The remaining [**] percent ([**]%) of the award to
          be provided in equal payments during the next [**] providing that
          award recipient continues to perform the work specified in the
          proposal to the satisfaction of the BPU.

          The period of funding shall be from the start date of December 1,
          2003, to the projected date of conclusion of the award supported
          activities (the "ending date"), which shall be May 31, 2005.

     F.   AVAILABILITY OF FUNDS

          The parties recognize and agree that initial and continued funding for
          this award is expressly dependent upon the availability to BPU of
          funds appropriated by or through the New Jersey Clean Energy Program
          or other such funding sources as may be applicable for the REED
          program. The BPU shall not be held liable for any breach of this
          agreement because of the absence of available funding appropriations.

     G.   INTELLECTUAL PROPERTY

          Award recipient warrants and represents that it owns or holds licenses
          for the use of all patents, trademarks, trade names, service marks,
          copyrights, and franchise and marketing rights or rights in any of the
          foregoing, as is necessary to engage in the award related activities.
          Any such patents trademarks, trade names, service marks, copyrights,
          and franchise and marketing rights or rights in any of the foregoing
          which result from the award supported activities shall be the property
          of award recipient.

     H.   PUBLICITY POLICY

          All publications resulting from publicity releases concerning award
          related activities shall acknowledge the support of the BPU and the
          New Jersey Clean Energy Program and award recipient shall coordinate
          all publicity for award related activities through the BPU project
          manager.

     I.   COMPLIANCE WITH EXISTING LAWS

          Award recipient agrees to comply with and require all contractors and
          consultants used by it in relation to the award supported activities
          to comply with all federal, state and municipal laws, rules and
          regulations applicable to all activities performed by award recipient
          in pursuit of and in relation to award supported activities.
          Specifically, and without limitation, award recipient agrees to comply

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          with and require all contractors and consultants used by it in pursuit
          of and in relation to the award supported activities to comply with
          the requirements of N.J.A.C. 17:27 et. seq. (Affirmative Action
          Rules), where applicable, P.L. 1975, c.127 (N.J.S.A 10:5-31 et. seq.)
          (Equal Opportunity in Public Works Contracts), where applicable, and
          all implementing regulations, and the Americans With Disabilities Act
          and implementing regulations and guidelines, where applicable. Failure
          to comply with these or any other applicable laws, rules or
          regulations shall be grounds for termination of this Agreement.

     J.   CONFLICT OF INTEREST

          Award recipient agrees to abide by the provisions of N.J.S.A 52:13D et
          seq.(the New Jersey State Employees Conflict of Interest Law)
          governing activities between award recipient and state officials,
          employees, special state officers and members of the Legislature. The
          provisions of N.J.S.A 52:13D et seq. are incorporated herein in their
          entirety, by reference thereto. Award recipient represents and
          warrants that it has not and will not at any time in the future act in
          violation of said statutory provisions. Any violation of said
          prohibitions shall render award recipient liable to debarment in the
          public interest.

     K.   REMEDIES

     The following definitions shall apply for the purposes of this section:

               Termination -- the termination of an award means the cancellation
               of an award, in whole or in part, at any time prior to the date
               of completion.

               Suspension -- the suspension of an award is an action by the BPU,
               which temporarily suspends funding under the award, pending
               corrective action by award recipient or pending a decision to
               terminate the award by the BPU.

               Disallowed costs -- are those charges to the program which the
               BPU or its representatives determine to be beyond the scope of
               the purpose of the award supported activities or are excessive or
               incurred during a period of suspension or after termination or
               are otherwise unallowable.

          Award recipient warrants and represents that all statements,
          representations and warranties made by award recipient in its
          application and proposal package to the BPU, and any other materials
          furnished in support of the request for funding are true. It is
          specifically understood by award recipient that all such statements,
          representations and warranties shall be deemed to have been relied
          upon by the BPU in its decision to make the award, and that if any
          such statements, representations or warranties were materially false
          at the time they were made or are breached during the term hereof, the
          BPU may, in its sole discretion, consider any such misrepresentation
          or breach an event of default and the BPU may take one or more of the
          following actions, as appropriate in the circumstances.

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     (1)  The BPU may suspend the award, withhold further funding and prohibit
          the award recipient from incurring additional obligations pending
          corrective action by the award recipient and disallow costs incurred
          during suspension.

     (2)  The BPU may terminate the award in whole or in part. The BPU shall
          promptly notify the award recipient, in writing, of the termination
          and the reasons for the termination, together with the effective date
          and, in case of partial termination, the portion to be terminated and
          the recoverable portion, if any. When an award is terminated pursuant
          to this paragraph, payments made to the award recipient shall be
          terminated and any funds already distributed that are determined by
          the BPU to be recoverable shall be returned within [**] days of demand
          thereof by the BPU. Costs incurred after termination shall be
          disallowed.

     (3)  The BPU may disallow any costs.

     (4)  The BPU may demand immediate return of some or all of the award,
          excepting those funds rightfully disbursed by award recipient to third
          party entities.

     (5)  The BPU may pursue other remedies at law or in equity as may be within
          legal right.

          The BPU may also terminate the award at any time, in whole or in part,
          when the BPU determines that the continuation of the project would not
          produce beneficial results commensurate with the further expenditure
          of funds. The BPU shall promptly notify award recipient in writing, of
          the determination to terminate the award, together with the effective
          date and, in case of partial termination, the portion to be
          terminated. Award recipient shall cancel as many outstanding
          obligations as possible. Costs incurred after termination pursuant to
          this paragraph shall be disallowed.

          The costs of award recipient resulting from obligations incurred by it
          during a suspension, or after termination of an award, are not
          allowable unless the BPU expressly authorizes them in the notice of
          suspension or termination or subsequently. Such costs may be allowed
          if they are: (l) necessary and (2) not reasonably avoidable and (3)
          were properly incurred by the award recipient before the effective
          date of suspension or termination and (4) are not in anticipation of
          it and (5) in the case of a termination are non-cancelable and (6) the
          costs would be allowable if the award were not suspended or expired
          normally at the end of the funding period.

          No remedy herein conferred or reserved to the BPU is intended to be
          exclusive of any other available remedy or remedies, but each and
          every such remedy shall be cumulative and shall be in addition to
          every other remedy given under this Agreement or now or hereafter
          existing at law or in equity or by statute. No delay or omission to
          exercise any right or power accruing upon any default shall impair any
          such right or power or shall be construed to be a waiver thereof.

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          Section III of this agreement, award closeout procedures, shall apply
          in all cases of termination.

     L.   HEARINGS, APPEALS

          Upon taking an enforcement action pursuant to section I.K. above, the
          BPU will provide award recipient an opportunity for such hearing,
          appeal, or other administrative proceeding to which award recipient is
          entitled under any statute or regulation applicable to the action
          involved.

     M.   CHANGES TO SCOPE

          The BPU may request changes in the scope of the services to be
          performed hereunder. Such changes, including any increase or decrease
          in the amount of the funds provided herein, shall be mutually agreed
          upon by and between the BPU and award recipient, and must be
          incorporated in written amendments to this Agreement.

     N.   ASSIGNABILITY

          Award recipient shall not subcontract or assign any of the work or
          services to be performed by it in relation to award supported
          activities except as already stated in Attachment "A," without the
          express written approval of the BPU. All terms and provisions herein
          shall apply to all subcontractors or assignees.

     O.   INDEMNIFICATION

          Award recipient shall be solely responsible for and shall keep, save,
          hold harmless and indemnify the BPU and the State of New Jersey from
          and against any and all actions, costs, damages, disbursements,
          expenses including, but not limited to, attorney's fees, judgments,
          liabilities, losses, obligations, penalties, suits, proceedings,
          claims and matters of any kind whatsoever which may at any time be
          imposed on, incurred by, agreed to or asserted against the BPU and the
          State of New Jersey, arising out of any and all activities, acts,
          omissions, services performed and products provided by award
          recipient, including the award supported activities. The BPU and the
          State of New Jersey shall bear no liability in any form to any third
          party for any acts or omissions on the part of award recipient. Award
          recipient's liability under this paragraph shall continue for a
          five-year period after the closeout or termination of this agreement.

     P.   ENTIRE AGREEMENT

          This agreement and the attachments hereto embody the entire agreement
          and understanding between award recipient and the BPU, representing
          the State of New Jersey and supersede all prior agreements and
          understandings, both written and oral, between the parties relating to
          the subject matter herein. All modifications, waivers, and amendments
          hereto must be made in writing by mutual agreement of the parties,
          except as otherwise stated herein.

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     Q.   JURISDICTION AND CHOICE OF LAW

          Jurisdiction of any action hereunder shall lie in a court of competent
          jurisdiction in the State of New Jersey and shall be construed in
          accordance with the laws of the State of New Jersey applicable to
          contracts made and performed in the State of New Jersey.

     R.   CONSTRUCTION

          Whenever possible, each provision of the Agreement shall be
          interpreted in such a manner as to be effective and valid under the
          applicable law, but, if any provision of this Agreement shall be held
          to be prohibited or invalid under such applicable law, such provision
          shall be ineffective only to the extent of such prohibition or
          invalidity without invalidating the remainder of such provision or the
          remaining provisions of the Agreement.

     S.   NOTICES

          Upon request by the BPU, any notices, demands, and communications
          hereunder shall be given by certified or overnight mail and shall be
          addressed to:

          For Award Recipient:

               Charles F. Dunleavy
               Ocean Power Technologies, Inc.
               1590 Reed Road
               Pennington, NJ 08534

          For The State:

               New Jersey Board of Public Utilities
               44 S. Clinton Avenue, P.O. Box 350
               Trenton, NJ 08625-0350

               Any changes or additions to the notice provisions above shall be
               made in writing provided as stated above.

III. POST AWARD REQUIREMENTS

     A.   IDENTIFICATION OF KEY PERSONNEL

          Award recipient shall identify and maintain an individual with the
          principal responsibility for the management of all award related
          activities. This individual, designated the project manager, shall be
          [**].

          Award recipient shall identify and maintain an individual with the
          principal responsibility for maintaining an adequate financial
          management system as

<PAGE>

          described below. This individual, designated the financial manager,
          shall be Charles F. Dunleavy.

     B.   FINANCIAL MANAGEMENT SYSTEM

          The financial manager shall be responsible for maintaining a financial
          management system in compliance with this agreement. The financial
          manager shall notify the BPU immediately if award recipient cannot
          comply with the requirements established herein.

     The financial management system shall provide for:

     (1)  accurate, current and complete records of the financial results of
          this program, in conformity with generally accepted principles of
          accounting, capable of being reported in a format in accordance with
          the financial reporting requirements as described herein; and

     (2)  records that adequately identify the source and application of funds
          for BPU supported activities, containing information pertaining to
          awards and authorizations, obligations, unobligated balances, assets,
          liabilities, outlays or expenditures and income, and be maintained in
          conformity with generally accepted principles of accounting; and

     (3)  effective internal and accounting controls over all funds, property,
          and other assets; and

     (4)  comparison of actual expenditures or outlays with budgeted amounts for
          the award, which shall be related to performance or productivity data;
          and

     (5)  procedures for determining reasonableness, allowableness, and
          allocability of costs, consistent with the provisions of federal and
          state requirements; and

     (6)  source documentation.

          The BPU may review the adequacy of the award recipient's financial
          management system at any time during the period of the award. If the
          BPU determines that the award recipient's system does not meet the
          standards described in this section, additional information may be
          required by the BPU upon written notice to the award recipient. This
          information shall be provided to the BPU until such time as the BPU
          determines that the system meets with BPU approval. If award recipient
          fails to provide such information to the satisfaction of the BPU, or
          if the BPU determines that the award recipient has consistently failed
          to maintain the proper financial management system, the BPU may take
          action pursuant to section I.K, herein.

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     C.   USE OF FUNDS

          The funds provided herein may be used only for allowable costs. Award
          funds may be used for salaries, supplies, travel, purchase of
          services, equipment, and other direct project expenses, plus properly
          allocable indirect costs as set forth in the Proposal, and
          incorporated in the Award Budget. Funds may only be used for costs
          that are directly applicable to the project, not for general and
          administrative costs to the company.

          Award recipient may charge to the award only the costs resulting from
          obligations incurred during the funding period, unless carryover of
          unobligated balances is permitted, in which case the carryover
          balances may be charged for costs resulting from obligations of the
          subsequent program period.

          The award recipient must liquidate all obligations incurred under this
          award not later than [**] days after the end of the funding period,
          unless specific authority to extend this deadline is granted, in
          writing, by the BPU.

     D.   MATCHING AND COST SHARING

          Award recipient shall be required to account for, to the satisfaction
          of the BPU, the matching and cost-sharing requirements as stated
          herein. The BPU requires that any funds it commits to support award
          related activities shall be matched as outlined in the proposal with
          non-state support. Non-state support may include cash and/or in kind
          support. In kind support includes the salary costs of the research
          team, use of company equipment, materials, and other resources devoted
          to the project by the company, its consultants, subcontractors,
          vendors, or other participating partners. Cash support includes third
          party equity investments or loans, funding from federal grants,
          foundations, and universities, cash commitments from distributors to
          support marketing, sales promotion, and/or customer service,
          investments by company principals, payments to outside vendors,
          consultants, or contractors for work performed related to the project.
          The matching support may include contributions by the sponsoring
          company for the expenses of the project, and contributions by
          individuals and/or organizations collaborating with the company. To
          qualify as cost sharing, all support must be available for expenditure
          during the funding period.

     E.   BUDGET REVISIONS AND MODIFICATIONS

          The "award budget" as used in this section means the agreed financial
          plan approved by the BPU that will be utilized to implement
          award-related activities. The award budget is appended as Attachment
          "A" hereto. Line item variances in the award budget, in amounts up to
          [**] dollars ($[**]) or [**] percent ([**]%) of the total amount of
          the award, whichever is less, do not require the prior approval of the
          BPU but may be initiated by award recipient and reported in the
          financial reports. In the event that the financial reports indicate
          line item variances in excess of this amount (either under or over
          expenditure) and have not received

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          BPU pre-approval, the BPU may require that the amount of the variance
          over [**] dollars ($[**]) or [**] percent ([**]%) of the total award
          be refunded to the State of New Jersey.

          All other budget revisions and modifications to the award budget in
          amounts in excess of [**] dollars or [**] percent ([**]%) of the total
          amount of the award, must be approved in advance, in writing, by the
          BPU. Before any obligation is incurred which would result in any line
          item variance in excess of the variances permitted above, the award
          recipient must obtain an award budget amendment, in writing, from the
          BPU. The award recipient must also obtain prior written approval when
          a revision or modification will be necessary for any of the following
          reasons:

     (1)  changes in the scope, objective, or timing of the project or program;

     (2)  the need for additional funding, or to extend the period of
          availability of funds;

     (3)  the award recipient plans to transfer funds that would cause part of
          the award, or part thereof, to be used for purposes other than those
          originally indicated.

          If the award recipient is making program expenditures or providing
          grant services at a rate, which in the judgment of the BPU, will
          result in substantial failure to expend the award amount or provide
          services, the BPU shall so notify the award recipient. If, within [**]
          days of such notice, the award recipient is unable to develop, to the
          satisfaction of the BPU, a plan to rectify its low level of program
          expenditures or services, the BPU may, upon a [**] day notice, reduce
          the award amount so that the revised award amount fairly projects
          program expenditures over the award period. This reduction shall take
          into account the award recipient's fixed costs and shall establish the
          committed level of activity for each program element of activity at
          the reduced amount.

     F.   MONITORING OF PROGRAM PERFORMANCE

          The award recipient, shall continually monitor the performance of
          award supported activities to assure that time schedules are being
          met, projected work units by time periods are being accomplished, and
          other performance goals are being achieved, as applicable, and as
          defined by the proposal, Attachment "A" hereto.

          The award recipient shall inform the BPU of the following types of
          conditions, which affect program objectives and performance as soon as
          they become known:

     (1)  problems, delays or adverse conditions which will materially impair
          the ability to attain program objectives, prevent the meeting of time
          schedules and goals, or preclude the attainment of project work units
          by established time periods, accompanied by a statement of the action
          taken, or contemplated, and any BPU assistance needed to resolve the
          situation; and

<PAGE>

     (2)  favorable developments or events which enable meeting time schedules
          and goals sooner than anticipated or at less cost, or producing more
          beneficial results than originally planned.

          The BPU may at its discretion make site visits to review program
          accomplishments and management control systems and to provide
          technical assistance as the BPU determines may be required.

     G.   ACCOUNTING PRINCIPLES

          Compliance with any provision of this Agreement relating to financial
          or accounting computation or reporting shall be determined in
          accordance with generally accepted principles of accounting.

     H.   ACCESS TO RECORDS

          The award recipient agrees to make available to the BPU, and any state
          or federal agency whose funds are expended in the course of this
          program, or any of their duly authorized representatives, pertinent
          accounting records, books, documents, electronic files, and other
          items as may be necessary to monitor and audit operations and
          finances. All visitations, inspections and audits, including visits
          and requests for documentation in discharge of the BPU's
          responsibilities, shall as a general rule provide for prior notice
          when reasonable and practical to do so. However, the BPU retains the
          right to make unannounced visitations, inspections, and audits as
          deemed necessary. The BPU reserves the right to have access to all
          work papers available to the award recipient in connection with audits
          made by the award recipient or by independent certified public
          accountants, registered municipal accountants, or licensed public
          accountants hired by the award recipient to perform such audits.

     I.   INSURANCE

          Award recipient agrees to carry general liability insurance and other
          such insurance against loss, damage and liability as is customary
          within its industry, to be held with insurance companies licensed to
          do business in New Jersey.

     J.   TAXES, ASSESSMENTS AND GOVERNMENTAL CHARGES

          Award recipient warrants and represents that all tax returns and
          reports of award recipient required by law to be filed have been duly
          filed and all taxes, assessments, fees and other governmental charges
          upon the award recipient or upon any of its respective properties,
          assets, income or franchises which are due and payable pursuant to
          such returns and reports, or pursuant to any assessment received by
          the award recipient have been paid other than those which may be
          presently payable without penalty or interest.

          Award recipient agrees to pay as they become due, all taxes,
          assessments and governmental charges, which may be required by law or
          contract to be paid by the

<PAGE>

          award recipient. Award recipient may in good faith contest such taxes
          and governmental charges and such taxes and charges may remain unpaid
          during the period of such contest.

IV.  AWARD CLOSEOUT

     A.   PROCEDURES

          The BPU shall close out the award provided herein when it determines
          that all applicable administrative action and all required work
          pertaining to the award have been completed by the award recipient.

          The date of completion of this program shall be when all activities
          related to the award are completed, the funding period has expired, or
          the BPU terminates the award, whichever occurs earliest.

          The award recipient shall submit a final report pursuant to section
          IV.B below upon the date of completion or termination of the award.
          The BPU may permit extensions when requested in advance, in writing,
          by the award recipient.

          Upon the date of completion, or termination of the award by the BPU,
          the award recipient will, together with the submission of the final
          report, refund to the BPU any unexpended funds or unobligated
          (unencumbered) cash advanced, except such sums that have been
          otherwise authorized in writing by the BPU to be retained.

          Award recipient must liquidate all obligations incurred under this
          award not later than [**] days after date of completion or termination
          of the award, unless specific authority to extend this deadline is
          granted, in writing, by the BPU.

          Within the limits of the award amount, the BPU may make a settlement
          for any upward or downward adjustment of costs after these reports are
          received.

          In the event a final audit has not been performed prior to the
          closeout of the award, the BPU retains the right to recover any
          appropriate amount after fully considering the recommendations on
          disallowed costs resulting from the final audit.

          The award recipient shall account for any property acquired with award
          funds or received from the BPU.

     B.   FINANCIAL AND PERFORMANCE REPORTING

     (1)  Monthly reports will be sent to the BPU program manager with updates
          on each of the tasks outlined in the proposal and an expenditures for
          that month and cumulative to the project. A final report will also be
          provided to the BPU program manager.

<PAGE>

     (2)  If applicable, the award recipient shall provide to the BPU,
          concurrently with the furnishings thereof, copies of all reports sent
          to award recipient's shareholders, the Securities and Exchange
          Commission, or any securities exchange.

     C.   RECORD RETENTION

          Except as otherwise noted below, financial and program records,
          supporting documents, statistical records, and all other records
          pertinent to this award shall be retained for a period of [**] years,
          starring from the date of "submission of the final expenditure report,
          unless federal or state funding statutes require a longer period.

          If any litigation, claim, negotiation, action or audit involving the
          records is started before the expiration of the [**] year period, the
          records must be retained until completion of the action and resolution
          of all issues which arise from it, or until the end of the regular
          [**] year period, whichever is later.

          Records for nonexpendable property acquired with BPU funds shall be
          retained for [**] years after final disposition of the property.

          The retention period for real property and equipment records starts
          from the date of the disposition, replacement or transfer of the real
          property or equipment.

          The BPU may request transfer of certain records to its custody from
          the award recipient when it determines that the records possess
          long-term retention value and will make arrangements with the award
          recipient to retain any records that are continuously needed for joint
          use.

<PAGE>

IN WITNESS WHEREOF, the parties, duly authorized and intending to be legally
bound hereto, execute this agreement, as of the date last written below.

(Cassandra Kling)
Witness

                                        Ocean Power Technologies, Inc.
                                        Charles F. Dunleavy
                                        Chief Financial Officer

                                        Date 3 November 2003

                                        /s/ Charles F. Dunleavy
                                        ----------------------------------------

                                        New Jersey Board of Public Utilities

                                        /s/ Jeanne M. Fox
-------------------------------------   ----------------------------------------
Witness                                 Jeanne M. Fox
                                        President

                                        Date
                                             -----------------------------------

                                        APPROVED AS TO FORM:

                                        ATTORNEY GENERAL OF NEW JERSEY

11-03-03                                By: Brian Lipman
Date                                    Deputy Attorney General

                                        /s/ Brian Lipman
                                        ----------------------------------------

<PAGE>

                                  ATTACHMENT A

                                    AGREEMENT

                                     between

                               STATE OF NEW JERSEY

                      NEW JERSEY BOARD OF PUBLIC UTILITIES

                                       and

                         Ocean Power Technologies, Inc.

                                       (2)

       Proposal "Ocean Demonstration of Next Generation Powerbuoy," dated
                                 March 31, 2003

<PAGE>

                                  ATTACHMENT B

                                    AGREEMENT

                                     between

                               STATE OF NEW JERSEY

                      NEW JERSEY BOARD OF PUBLIC UTILITIES

                                       and

                         Ocean Power Technologies, Inc.

                                       (2)

                       FINAL PERFORMANCE REPORT GUIDELINES

     The Final Performance Report, which is required under terms of the BPU's
award agreements with Renewable Energy Economic Development Program award
recipients, is intended to provide recipients with a consistent means of
reporting their achievements resulting from BPU support. The Final Report should
be concise, yet sufficiently detailed to provide a comprehensive overview of the
activities, results and achievements of the funded project, relative to the
proposal. Variances from the proposal should be identified and explained.

     The Final Performance Report should be provided in the following format:

I.   Executive Summary (one page)

II.  Technical Report

     A.   Technical achievements of the grant period (compared explicitly
          against outcomes projected in grant proposal).

     B.   Unanticipated technical stumbling blocks.

     C.   Additional technical work likely to be required prior to commercial
          exploitation of the research by the New Jersey industrial partner.

III. Partnership Report

     A.   Nature of the matching contribution actually received from the New
          Jersey industrial partner.

     B.   Nature of the substantive collaboration evidenced by or accompanying
          the match.

     C.   Nature of the arrangements made for ownership/disposition of
          intellectual property (i.e., was there a research agreement
          executed?).

     D.   Assessment by the industrial partner of the commercial or strategic
          importance of the project outcomes (cite an individual by name who can
          be contacted for verification by the BPU).

<PAGE>

     E.   The industrial partner's future plans for knowledge developed during
          the project, whether owned by the university or the partner (e.g., any
          licensing and/or manufacturing plans). Be specific as to geographic
          locus of these activities.

IV.  Institutional Report (as applicable)

     A.   Assessment by the principal investigator of the impact which the
          project has had on the future research capacity of the sponsoring
          academic institution.

     B.   Plans for further development funding of the research, assuming that
          full commercialization has not been achieved during the grant period.

     C.   Publications resulting (include reprints with credit to BPU).

     D.   Patent applications/awards resulting (specify stage reached as of
          final report).

     E.   Licenses issued/issuing (specify stage reached as of final report).

     F.   Jobs created (direct and indirect)

     G.   Additional funding leveraged by BPU award.<PAGE>

                                                                   Exhibit 10.19

          Confidential Materials omitted and filed separately with the
         Securities and Exchange Commission. Asterisks denote omissions.

                  CONTRACT FOR THE DEVELOPMENT AND APPLICATION
                OF A SEA WAVE ENERGY GENERATION SYSTEM IN FRANCE

This contract for the development of the application of a wave energy generation
system in France (hereinafter: "the Agreement") is signed as of June 17, 2005 by
and between:

IBERDROLA ENERGIAS RENOVABLES II, S.A. SOCIEDAD UNIPERSONAL (hereinafter:
"IBERENOVA"), a company existing and organised under the Spanish law, with Tax
Registration Number A-83028035, having its registered office located at Tomas
Redondo, 1, Madrid, Spain, represented by Ms ANA ISABEL BUITRAGO MONTORO with
National Identity Document No. 79.305.185-N and Mr. MIGUEL MARTIN SAEZ, with
National Identity Document No. 12.158.285-W, acting in their capacity as joint
and several representatives by virtue of the deed of power of attorney executed
on 29 May 2002 before the Notary Public of Bilbao, Mr. Arriola Arana, under
number 1.039 of his records.

                                       And

TOTAL ENERGIE DEVELOPPEMENT SA (hereinafter: "TED"), a company existing and
organised under the French law, having its registered office located in France,
92078 Paris la Defense Cedex, 2, Place de la Coupole, La Defense 6, represented
by Mr. GILLES COCHEVELOU acting in his capacity as President.

                                       And

OCEAN POWER TECHNOLOGIES LTD. (hereinafter: "OPT"), a company, wholly-owned by
OPT Inc. existing and organised under the laws of England and Wales having its
registered office located at Warwick Innovation Centre, Gallows Hill, CV34 6UW
Warwick, England, United Kingdom, represented by Mr. MARK DRAPER acting in his
capacity as Chief Executive.

                                       And

OCEAN POWER TECHNOLOGIES INC, (hereinafter: "OPT Inc") a company existing and
organised under the laws of United States of America having its registered
office located at Pennington, New Jersey, United States of America, represented
by Dr. George W. Taylor, acting as Chief Executive officer of the company.

IBERENOVA, TED and OPT being hereinafter individually referred to as a (Party)
and collectively referred to as the (Parties).

<PAGE>

                                    WHEREAS:

A.   OPT represents that it has all rights to (i) use the industrial and
     intellectual property rights of the technology for the generation of
     electrical power using energy from sea waves, registered under the name
     PowerBuoyTM System (hereinafter: together with any developments,
     improvements or derivatives thereof, the "Technology"), (ii) sell the
     PowerBuoys stations, and (iii) operate and maintain them.

B.   IBERENOVA is strongly active in the renewable energy sector.

C.   IBERENOVA and OPT Inc., inter alia, have entered into a Collaboration
     Agreement dated July 2, 2004 (hereinafter: the "Cantabria Agreement")
     whereby they are participating in the evaluation and possible development
     of a pilot project for a sea wave energy generation electricity power
     station with an initial power of 1.25 MW on the North coast of Spain
     (hereinafter: the "Cantabria Project") using the Technology. As of the date
     hereof, TOTAL EOLICA, S.A has joined the Cantabria Agreement in writing,
     with the remaining partners' prior consent.

D.   IBERENOVA and OPT, assuming that the [**], wish to develop a new project
     for a sea wave energy generation electricity power station using the
     Technology on the coast of France, in collaboration with an industrial
     company being active in the renewable energy sector in France.

E.   TED (a company of the TOTAL Group which is active world-wide in the energy
     sector) is conducting its business in the renewable energy sector
     especially in France and is interested in participating in generation
     electricity projects using sea wave energy both in France and in other
     countries including Spain.

F.   TOTAL EOLICA, S.A (a company of the TOTAL Group which is active in the
     energy sector) is conducting its business in the renewable energy sector in
     Spain and is interested in participating in generation electricity projects
     using sea wave energy in Spain.

G.   The Parties, based on the complementary nature of their skills, experience
     and resources, wish to enter into a collaboration to study and assess the
     technical and economical possibility to develop on the coast of France, one
     sea wave energy generation electricity power station with a capacity of
     around 2 to 5 MW (the exact number of MWs to be decided by the Steering
     Committee as provided below) using the Technology (hereinafter: the
     "Project").

H.   The Parties acknowledge that the French Authorities have enabled the
     development of Renewable Energy Projects through [**]. The Parties
     acknowledge that the Project will not be a Demonstration Project (with
     little or no return on capital) and that the intention of this Agreement is
     to develop a project which will be submitted to the [**].

I.   The Parties wish to set forth certain rules to regulate more precisely
     their collaboration and, in this regard, have entered into this Agreement.

<PAGE>

                       NOW IT IS HEREBY AGREED AS FOLLOWS.

1.   PURPOSE.

     Under the terms and subject to the conditions set forth in this Agreement,
     the Parties shall actively and closely co-operate in good faith to study
     and assess the feasibility of the Project. Such feasibility study shall
     include the research of potential sites on the coast of France whereon one
     sea wave energy generation electricity power station (hereinafter: the
     "Power Station") may be installed and shall concern all other aspects
     relating to the Project including but not limited to its economical,
     technical, legal, administrative, environmental, marketing and operational
     constraints, aspects and perspectives.

     Should the Parties conclude that the Project is feasible, they shall meet
     and discuss in good faith as to whether the Project should be implemented
     or not and, if the Parties decide to implement the Project, shall define
     the scheme for any such development and operation of the Project.

     For the purposes of this Agreement the Parties agree that "France" shall
     mean all French territories excluding the following: "Nouvelle-Caledonie",
     "Polynesie-Francaise", "Wallis et Futuna", and the "Terres australes et
     antarctiques francaises" (TAAF).

2.   RELATIONSHIP BETWEEN THE PARTIES.

2.1  Pursuant to the provisions of this Agreement, the interests, rights,
     duties, obligations and liabilities of the Parties shall be several and not
     joint, but without limitation to what is provided in section 10 below.

2.2  Nothing in this Agreement shall be construed as creating a partnership,
     association, joint venture or any other legal entity between the Parties.
     The Parties agree that their entering into any further agreements or their
     decision to proceed with the implementation of the Project (phase 2) are
     subject to the prior corporate approval by their respective Board of
     Directors (or equivalent) and, with respect to TED and IBERENOVA, to the
     prior approval by the Executive Committee of TOTAL S.A. and of the Steering
     Committee (Comite Operativo) and the Executive Committee of IBERDROLA, S.A.
     respectively. Nothing in this Agreement is intended to bind the Parties
     neither to enter into any further agreement nor to proceed with the
     implementation of the Project.

2.3  From the effective date of this Agreement, each Party shall not enter into
     any commitment or incur any liabilities or obligations for or on behalf of
     any other Party towards third parties in connection with the Project
     without the prior written consent of the relevant Party. In this regard, no
     Party shall be deemed to be a representative, agent, employee of any other
     Party for any purpose whatsoever.

2.4  During the duration of the Feasibility of Studies (phase 1 of this
     Agreement) including any written extension thereof, and until [**], OPT
     shall not, directly or indirectly, within France: (i) develop any power
     plant based on the Technology or any improvements or developments thereof;
     (ii) build and/or supply any equipment based on the PowerBuoy System other
     than as provided for in this Agreement.

<PAGE>

3.   FEASIBILITY STUDIES (PHASE 1)

     During an initial period of eighteen (18) months from the execution date of
     this Agreement, the Parties will jointly conduct studies (the "Feasibility
     Studies") in respect of the following aspects of the Project :

     (a)  Determination of the wave energy potential of the coast of France
          obtainable with the Technology;

     (b)  Establishment and development of a design and installation programme
          of the corresponding Power Station with a capacity of around 2 to 5
          MW, the exact capacity to be agreed to by the Steering Committee;

     (c)  Negotiation with the French authorities of the conditions and
          agreement required to implement the Project, including without
          limitation public marine domain concession, building consent,
          connection agreement and power purchase agreement;

     (d)  Obtaining all other necessary consents and permits;

     (e)  Assessment of the required engineering procurement and construction
          contract and related agreements;

     The Parties shall prepare a work program (including a project plan) and a
     budget in respect of the Feasibility Studies for approval by the Steering
     Committee.

     The Parties shall use reasonable efforts to complete the Feasibility
     Studies in accordance with the work program. If the Parties do not have
     sufficient information eighteen (18) months after signing this Agreement to
     make the decision contemplated in this section regarding the development of
     the Project, the Parties, through the Steering Committee, agree to extend
     the initial phase up to a maximum of further six (6) months.

     During this phase 1, IBERENOVA shall be the leader for promoting the
     Project and negotiating with the French authorities all necessary
     authorisations. However, IBERENOVA shall keep the other Parties informed of
     the content of its discussions with French Officials (including but not
     limited to: representatives of the French government, ministries, local and
     central administration, elected people etc...) regarding the Project.

     When the Feasibility Studies are completed, and if the Parties unanimously
     conclude that the Project would be economically, technically and
     financially feasible, the Parties will meet to discuss and decide in
     writing whether and how they will jointly develop such Project. The Party
     or Parties not agreeing in writing to develop the Project before the said
     90-day from completion of the Feasibility Studies will be considered, for
     all the purposes of this Agreement, as a Withdrawing Party and thus subject
     (without limitation) to Clauses 8.3.(b) and 8.3.(c) below. For the purposes
     herein, the Feasibilities Studies will be deemed to have been completed
     when so agreed to by the Steering Committee, but without limitation to
     Clause 8.2.(a) below.

<PAGE>

     The Parties shall exchange all relevant information necessary to perform
     the Feasibility Studies, provided that none of the Parties shall be
     required to furnish the others with non-proprietary data subject to
     confidentiality agreements vis-a-vis third parties until they obtain such
     third party's prior consent, provided that OPT will not be entitled to
     claim third parties' rights over the "Technology" to restrain the other
     Parties from having access thereto.

     Each Party shall be entitled to use the Feasibility Studies only pursuant
     to the terms of this Agreement and in accordance with the provisions of
     Exhibit 1 ("Confidential Information, Inventions and Trade Secrets
     Agreement") to this Agreement.

4.   PARTICIPATING INTERESTS IN THE PROJECT.

     At the time of execution of this Agreement, the undivided interest of each
     Party in the rights, benefits and obligations pursuant to this Agreement
     and in the Project (hereinafter: the "Participating Interest") shall be :

<TABLE>
<CAPTION>
PARTY       PARTICIPATING INTEREST
-----       ----------------------
<S>         <C>
IBERENOVA            [**]
TED                  [**]
OPT                  [**]
</TABLE>

5.   COSTS AND EXPENSES.

     All costs and expenses incurred directly by the PARTIES in connection with
     the study and assessment of the Project, together with all other costs and
     expenses from external advisors for the purpose of carrying out the work
     contemplated by the PHASE 1 shall be shared between the PARTIES as per
     their respective PARTICIPATING INTEREST in the Project, provided they have
     been previously approved by the STEERING COMMITTEE and regardless of
     whether or not the PROJECT finally goes ahead and even if one or several of
     the PARTIES hereto decide not to go into the PROJECT, in which case section
     8.3 (b) shall apply.

     In that sense, an economic fund (hereinafter the "FUND") will be
     established and shall be payable by the PARTIES in the proportions of their
     PARTICIPATING INTEREST. The FUND will be managed by the STEERING COMMITTEE
     which will detail the contributions to be made by each of the PARTIES to
     the FUND, and the budget of expenses of each PARTY to be paid by the FUND,
     in the PHASE 1.

     The Steering Committee shall decide which of the Parties or a third party
     shall carry out the various aspects of work contemplated by this Agreement.

     The Fund shall be managed by IBERENOVA who also shall be the formal
     addressee of the invoices from the Parties. The invoices shall be paid
     within [**] days.

     If the decision to implement the Project is taken, said payments to the
     Fund by each Party shall be recoverable from the Special Purpose Company
     that may be created by the

<PAGE>

     Parties for the development and operation of the Project or shall be
     capitalised in this Special Purpose Company as appropriate.

     Each Party shall retain evidence, including supporting documentation such
     as invoices and timesheets, of all costs for inspection upon request. All
     costs to be incurred in accordance with this Agreement, shall be budgeted,
     presented and approved by the Steering Committee.

6.   STEERING COMMITTEE.

6.1  Upon execution of this Agreement, the Parties shall set up a Steering
     Committee (hereinafter: the "Steering Committee") composed of the following
     three (3) members (1 representative appointed by each Party):

     TED representative: [**]
     IBERENOVA representative: [**]
     OPT representative: [**]

     The representative appointed by [**] shall be the chairman of the Steering
     Committee. The Steering Committee shall have ultimate overall control and
     decision-making powers with regard to the activities under Phase 1 of this
     Agreement. A Party may change its representative or designate an alternate
     (who will need to be an employee of the appointing Party or of any company
     of its group of companies subject to the confidentiality obligations
     provided herein), subject to give prior written notice to the other
     Parties.

6.2  The Steering Committee shall meet as often as necessary, but at least [**].
     Any Party shall have the right to submit a proposal for consideration by
     the Steering Committee.

6.3  The meetings will be held alternately in Madrid and Paris (at the
     head-offices of IBERENOVA and TED) or at such other place as may be agreed
     from time to time by the Parties. The presence of all representatives of
     the Parties shall be required to constitute a quorum for any meeting of the
     Steering Committee. Each Party shall use its reasonable efforts to ensure
     the existence of a quorum at any duly called meeting of the Steering
     Committee.

6.4  The Parties intend that the members of the Steering Committee shall attend
     the meetings of the Steering Committee in person, but recognise that
     members may from time to time be prevented from doing so. Therefore,
     members of the Steering Committee may participate in a meeting of the
     Steering Committee by means of telephone or video conference or similar
     communications equipment by means of which all persons participating in the
     meeting can hear each other, and such participation shall constitute
     presence in person at such meeting. Each Party may also designate by
     written notice to the other Parties an alternate representative, who will
     need to be an employee of the appointing Party or of any company of its
     group companies subject to the confidentiality obligations provided herein,
     to act in the absence of a member unable to attend a meeting of the
     Steering Committee. Any action required or permitted to be taken at a
     meeting of

<PAGE>

     the Steering Committee may be taken without a meeting if a written consent,
     setting forth the action so taken, is signed by all members of the Steering
     Committee.

6.5  The Steering Committee shall be responsible for the following activities:

          -    reviewing, modifying and approving the budget for all costs and
               expenses to be incurred in accordance with clause 5 in connection
               with the Project;

          -    monitoring Project progress and adherence to the budget;

          -    engagement and termination of any external accountants,
               engineers, environmental consultants, financial advisors or legal
               counsel and all other external advisors providing services for
               the Project;

          -    approving the distribution or payment of any amount to any Party
               except pursuant to the approved budget;

          -    approving the selection of the site whereon Power Station may be
               installed;

          -    analysis of the conclusions of the Feasibility Studies and
               recommendation to the Parties as to the possible implementation
               of the Project;

          -    deciding that the Feasibility Studies of the Project are ended;

          -    extending the duration of the Feasibility Studies phase;

          -    approving a time schedule for the possible implementation of the
               Project;

          -    approving public announcements to be made in connection with the
               Project.

6.6  Decisions of the Steering Committee shall be made by unanimous approval of
     the representatives of the Parties (principle of consensus), it being
     understood that the representative of each Party shall have one (1) vote.
     If the Steering Committee is unable to reach agreement on any matter within
     its competence, at the request of either Party, a second meeting of the
     Steering Committee shall be convened to be held within [**] weeks from the
     date of the first meeting at which the Steering Committee failed to reach
     agreement. At this second meeting, the Steering Committee shall apply all
     possible means to resolve the disagreement.

6.7  All decisions taken during a meeting by the Steering Committee shall be
     recorded in minutes. Minutes of the meetings of the Steering Committee
     shall be drafted in English by the Chairman and a draft shall be sent to
     the Parties within [**] working days of the meeting. The minutes shall be
     deemed approved by the Parties if no comment is made within [**] working
     days from the sending of the draft to the Parties. All the important
     decisions taken during a meeting shall be recorded and signed upon at the
     end of the meeting.

<PAGE>

6.8  Relations with French media will be managed by TED as per the decision
     taken by the Steering Committee. Similar arrangements will be implemented
     for phase 2.

7.   IMPLEMENTATION OF THE PROJECT (PHASE 2).

     Provided that the Parties agree in writing that the Project should be
     implemented, they shall identify an optimal legal structure and in
     connection therewith, they (or any of their Affiliated Companies) shall
     incorporate a "Societe Anonyme"(S.A) or a "Societe par Actions Simplifiees"
     (S.A.S) under French law (or other legal vehicle as may be agreed by the
     Parties) for the implementation of the Project (hereinafter: the "Special
     Purpose Company" or the "SPC"). For the purpose of this Agreement,
     "Affiliated Company" shall mean any company or legal entity which (i)
     controls either directly or indirectly a Party, or (ii) which is controlled
     directly or indirectly by such Party, or (iii) is directly or indirectly
     controlled by a company or entity which directly or indirectly controls
     such Party. "Control" means the right to exercise one hundred percent
     (100%) of the voting rights.

     The Parties shall use their reasonable commercial efforts to negotiate in
     good faith and enter into the bylaws and shareholders agreement, and to
     incorporate the SPC no later than [**] months after a final decision (if
     any) is taken in writing to implement the Project.

     The Parties hereby agree on the following basic principles that shall
     govern the ownership and management of the SPC and the business
     relationships between the SPC and each Party (or its Affiliated Companies):

     (a)  The head-office of the SPC shall be located in the region of Paris,
          France.

     (b)  Share in the capital of the SPC shall be distributed between the
          Parties (or any Affiliated Company of each Party) as follows:

<TABLE>
<CAPTION>
PARTY       SHARE CAPITAL PERCENTAGE
-----       ------------------------
<S>         <C>
IBERENOVA             [**]
TED                   [**]
OPT                   [**]
</TABLE>

          The shares shall be indivisible and shall give rise each to equal
          rights of participation in the collective decisions and in the annual
          income as well.

     (c)  The share capital of the SPC shall be in an amount sufficient so that
          external funding does not require sureties or guarantees of the
          Parties. Each Party shall contribute to the equity of the SPC in
          proportion to its percentage of share in the capital;

     (d)  The General Manager ("Directeur General" in a S.A. or "President" in a
          S.A.S. under French law), the Chairman and the Company Secretary shall
          be appointed amongst candidate(s) proposed by [**]. Subject to the
          overall supervision and control of the Board of Directors (or any
          equivalent corporate decision body in

<PAGE>

          the S.A.S.), the General Manager shall be responsible for the
          day-to-day management of the SPC;

     (e)  The Board of Directors shall be composed of [**] members of whom [**]
          shall be appointed by [**] by [**] and [**] by [**] provided that the
          initial capital stake of each Party is in accordance with Clause 4
          above. In case of change of the distribution of the share capital
          among the shareholders, the Board composition will be amended to
          reflect broadly the respective percentage held by each Party; in any
          case, each Party will have the right to appoint at least [**] member
          of the Board of Directors. Except for the decisions mentioned below,
          all resolutions of the Board of Directors shall be adopted by a simple
          majority of the directors present or represented at the meeting;

     (f)  No action shall be taken by or on behalf of the SPC by the General
          Manager or any other person on any of the following matters, except by
          a resolution of the Board of Directors (or the general assembly of the
          shareholders as appropriate) adopted by not less than a [**]% majority
          of the voting powers of the directors (i.e. for the foreseen initial
          composition of the Board, [**] out of [**] directors vote favourably)
          (or [**]% of the share capital, as the case may be):

          -    approval of the SPC's business plans, which shall include the
               investments to be carried out for implementing the Project and
               amendments to said investments exceeding [**] Euros;

          -    investment or divestitures other than in the ordinary course of
               business of the SPC or except expressly authorized in the
               business plan or in duly approved amendments thereto, including
               without limitation operation and maintenance investments directly
               addressed to enlarge the useful life or increase the production
               of the original Project;

          -    making of loans or borrowing by the SPC other than those
               addressed to financing the investments included in the SPC's
               business plans or its duly approved amendments or otherwise
               previously approved pursuant this Section (f);

          -    entering into, terminating or modifying any contract between the
               SPC and (i) any Party (or its Affiliated Companies), or (ii) any
               company or entity in which any Party has a direct or indirect
               interest, or (iii) any manager or director of the SPC;

          -    conversion, transformation, merger, split, dissolution and
               liquidation, save in the compulsory cases contemplated by law;

          -    establishment, closing down or winding up of branches and
               subsidiaries;

<PAGE>

          -    modification of the share capital, except those share capital
               increases required so that external financing of the Project does
               not entail personal guarantees by the Parties;

          -    elimination of the preferential subscription right in capital
               increases;

          -    issues of convertible debentures and execution of any loan
               agreement with rights to conversion to capital.

     (g)  The shareholder agreement shall contain "deadlock" provisions that may
          apply in the case at any decision listed in sub-paragraph (f) above is
          not approved by a vote satisfying the required supermajority;

     (h)  Bylaws and the shareholders agreement shall contain provisions
          granting the Parties pre-emption rights for the case of transfer of
          the SPC shares to third parties (other than to the transferring
          Party's Affiliated Companies).

          In any case, (i) OPT's prior written approval shall be required when
          the potential transferees is a competitor to OPT, (ii) TED's prior
          written approval shall be required when the potential transferee is an
          oil and gas company, (iii) IBERENOVA's prior written approval shall be
          required when the potential transferee is a utility.

     (i)  The SPC shall submit each year its financial statements for auditing
          by an independent accounting firm that will be chosen among the four
          top auditing firms in France.

     (j)  OPT shall supply and install the equipment based on the Technology,
          and provide the SPC with assistance and information, including
          operation and maintenance services, with the sufficient scope and
          extension so that the SPC may operate the Project, and any further
          projects as per Section 9 below, pursuant to state-of-the art
          standards during all its useful life (the "Supply"). Such Supply
          obligations [**];

     (k)  In the design and construction phases, the SPC shall arrange with
          IBERENOVA or TED (or any of their Affiliated Companies), whichever
          company submits the best proposal in market conditions, a contract for
          the provision of promotion, management, direction, control,
          administrative and representation services. The SPC may decide to
          split this contract between IBERENOVA and TED.

     (l)  For the operation phase, the SPC shall have the minimum team necessary
          to perform the tasks that are required and to the extent feasible
          shall subcontract the other functions. Alternatively, the SPC may
          decide that the Parties will perform these tasks on its behalf.

     (m)  The SPC shall be responsible for the acquisition of all necessary
          supplies and services for the installation, start-up and operation of
          the Power Stations.
<PAGE>

          In that sense, on market conditions, the SPC shall contract with OPT
          for the supply and installation of the Power Stations. [**].

          Additionally, an Operation and Maintenance agreement shall be awarded
          to OPT, on market conditions, for the Power Stations over the first
          [**] years of the projects' lifetime.

8.   EFFECTIVENESS / TERMINATION.

8.1  After its execution by the Parties, this Agreement shall become effective
     as from the day and year first above written.

8.2  This Agreement shall terminate upon the earliest to occur of the following
     events:

     (a)  27 months after the date of execution of this Agreement without a
          written decision having been passed to implement the Project (phase
          2), except if the Parties agree in writing on a time-extension of the
          Feasibility Studies, in which case this Agreement shall terminate 90
          days after the date of completion of the Feasibility Studies without
          such a written decision having been passed;

     (b)  at any time if the Parties jointly decide not to implement the Project
          (phase 2)

     (c)  on such other date as the Parties may mutually agree;

     (d)  following a material breach by a Party (the "Defaulting Party") of any
          material provision of this Agreement which has not been remedied
          within [**] days from the receipt by such Defaulting Party of a notice
          of default sent by the other Parties, the decision of such other
          Parties to terminate this Agreement;

     (e)  the decision by the Parties to enter into a new agreement which
          explicitly supersedes this Agreement;

8.3  Withdrawal of any Party.

     (a)  At any time following the date of this Agreement, any Party (the
          "Withdrawing Party") may withdraw from the Project in its sole
          discretion provided it gives 15 days prior written notice of its
          withdrawal to the other Parties (the "Non-Withdrawing Parties")
          indicating the date as from which such withdrawal shall be effective.

          The Non-Withdrawing Party or Parties shall be entitled to use the
          rights over the Feasibility Studies together with, any document or
          information prepared by the Withdrawing Party in connection with the
          Project which use will be free of charge. The Non-Withdrawing Party or
          Parties shall be entitled to complete the implementation of the
          Project exclusive of the Withdrawing Party.

     (b)  Upon its withdrawal from the Project, the Withdrawing Party shall be
          relieved from any obligations and liabilities to the Non-Withdrawing
          Party(ies) arising out

<PAGE>

          or in connection with such withdrawal. Therefore, except otherwise
          provided for in this Agreement, the Withdrawing Party will not be
          bound by the Agreement from the date of its withdrawal from the
          Project. However OPT shall remain bound by the Supply obligations
          under Section 7.(j) above. Furthermore, each Party shall remain bound
          by the confidentiality provisions stated in this Agreement and in the
          Confidential Information, Inventions and Trade Secrets Agreement
          attached to this Agreement as Exhibit 1, but without prejudice to the
          right of the Non-Withdrawing Parties to use the information disclosed
          hereunder by the Withdrawing Party for the purposes of the Project and
          enlarged collaboration set forth herein.

          However, the Withdrawing Party shall be obligated to pay on or prior
          to the date of effectiveness of withdrawal its Participating Interest
          share of External Costs for which it has become obligated to fund
          hereunder. For purposes hereof, External Costs shall include all such
          costs committed by the Steering Committee in accordance with this
          Agreement as of the date of the Non-Withdrawing Parties' actual
          receipt of the written notice of withdrawal and anticipated to be
          incurred within [**] days, whether or not actually incurred as of the
          date of the effectiveness of withdrawal.

          In addition, should OPT withdraw from this Agreement while IBERENOVA
          and/or TED decide to implement the Project, OPT shall nevertheless
          comply with its Supply Obligations toward the SPC or, in case only
          either IBERENOVA or TED decide to implement the Project, to the
          Non-Withdrawing Party. This Supply will be exclusive during a period
          expiring on December 31, 2008 and will be granted pursuant to the
          remaining terms and conditions provided for under Section 7(j) above.

     (c)  The Non-Withdrawing Party or Parties shall not have any cause of
          action against the Withdrawing Party acting in good faith and without
          breach of this Agreement or any other fault, for damages and losses
          which could directly or indirectly result from such withdrawal.
          However, if the Agreement is terminated pursuant to clause 8.2(e)
          (material breach), the non-defaulting Party (or Parties) may pursue
          any and all remedies that may be available against the Defaulting
          Party.

     (d)  The foregoing provisions, and specially 8.3(c) shall apply, mutatis
          mutandi, in case of termination of Agreement under section 8.2(d)
          (references to Withdrawing Party being understood made to the
          Defaulting Party and references to the Non-withdrawing Parties to the
          Non-defaulting Parties, respectively).

9.   ENLARGEMENT OF THE COLLABORATION.

     If either the Parties or IBERENOVA and TED decide in writing to enlarge
     their collaboration under this Agreement to the study and possible
     development of additional wave energy project(s) using the Technology on
     the coast of France up to [**], it is acknowledged that it should be
     beneficial for the Project that TED and IBERENOVA assumes, on an
     alternative basis, the leadership in the conduct of the operations relating

<PAGE>

     to the Phases 1 and 2 of each such additional projects. Furthermore, the
     Parties agree that the current Participating Interests of IBERENOVA and TED
     in the Project (as mentioned in article 4) [**].

     In accordance with the above mentioned, OPT agrees to supply and install
     the equipment based on the PowerBuoy System and its further improvements to
     the SPC(s) created between the Parties for the implementation of these
     additional Project(s), and provide the SPC(s) with assistance and
     information, including operation and maintenance services, with the
     sufficient scope and extension so that the SPC(s) may operate the
     Project(s) as per state-of-the art standards during all its useful life
     (the "Supply"). Such Supply obligations [**].

10.  WARRANTY

10.1 OPT Inc hereby warrants the fulfilment by OPT of OPT's obligations under
     this Agreement, so that OPT Inc undertakes to fulfil all OPT's obligations
     under the Agreement, in the case that OPT does not fulfil them, immediately
     upon Iberenova and/or Total's demand, being able to oppose only the
     exceptions that OPT would be entitled to under this Agreement.

     In particular, and for OPT's obligations of payment under the Agreement,
     the Parties agrees that the guarantee will be governed by articles 2021 et
     seq of the Civil Code. OPT Inc. expressly waives the benefice de discussion
     and benefice de division (OPT Inc.'s rights to limit its liability and to
     require execution to be first directed against OPT) as provided in articles
     2021 and 2026 of the Civil Code.

     Furthermore, OPT Inc undertakes not to liquidate OPT and not to allow OPT
     to become bankrupt or insolvent or otherwise unable to meet its obligations
     hereunder.

11.  GOVERNING LAW & ARBITRATION

11.1 This Agreement shall be governed by and construed in accordance with the
     French law.

11.2 Any dispute arising out of or in connection with this Agreement shall be
     exclusively and finally settled under the Rules of Arbitration of the
     International Chamber of Commerce then in effect (the (ICC Rules)) by
     three (3) arbitrators appointed in accordance with the ICC Rules. The place
     of arbitration shall be Paris (France) and the language of arbitration
     shall be English.

12.  LIABILITY.

12.1 No Party shall be liable to the other Party for any special, indirect or
     consequential losses or damages, including but not limited to loss of
     profits, revenues, contracts, opportunities, goodwill or business, arising
     out of or in connection with this Agreement.

12.2 In case of a third party claim arising out of or in connection with this
     Agreement, each Party shall be liable in proportion to its Participating
     Interest in the Project.

<PAGE>

13.  NOTICES.

     Any notice which may be or is required to be given pursuant to this
     Agreement shall be in writing and may be delivered, by hand, or sent by
     registered post or fax to the relevant address set out below:

     TED

     2 place de la Coupole -- La Defense 6
     92400 Courbevoie, France
     Phone       (33-1) 01.47.44.30.96
     Fax         (33-1) 01.47.44.31.13
     E-mail      gilles.cochevelou@total.com
     Attention   Mr. Gilles Cochevelou

     IBERENOVA
     Tomas Redondo, 1
     28033 Madrid, Espana
     Phone       (34) 91 577 65 00
     Fax         (34) 91 784 37 03
     E-mail      roberto.legaz@iberdrola.es
     Attention   Mr. Roberto Legaz

     OPT
     Warwick Innovation Centre
     Gallows Hill
     Warwick
     CV34 6UW
     UK
     Phone       (44) 01926623371
     Fax         (44) 01926408190
     E-mail      mdraper@oceanpowertech.com
     Attention   Mr. Mark Draper

     OPT INC
     1590 Reed Road
     Pennington,
     New Jersey 08534
     USA
     Phone       6097300400
     Fax         6097300404
     E-mail      gtaylor@oceanpowertech.com
     Attention   Dr. George W. Taylor

14.  ASSIGNMENT.

14.1 The assignment by a Party of all or part of its Participating Interest
     under this Agreement to a third party requires the prior written approval
     of the other Parties.

<PAGE>

14.2 Notwithstanding the provisions of clause 14.1 hereabove, each Party may,
     without the prior written approval of the other Party, assign all or part
     of its Participating Interest under this Agreement to any of its Affiliated
     Companies subject however to first give written notice thereof to the other
     Parties, and provided the assignee is actually in a position to fulfill all
     assignor's obligations under this Agreement. Otherwise, the assignor's
     guaranty shall be required.

15.  INSTITUTIONAL COMMUNICATION.

     If any Party within the frame of its institutional communication, wishes to
     issue any public announcement or statement regarding this Agreement and/or
     in connection with the Project, it shall not do so without the prior
     written approval of the Steering Committee, except if it is necessary to do
     so in order to comply with applicable laws, decrees, rules or regulations
     of any government legal proceedings, or stock exchange, having jurisdiction
     over such Party.

16.  CONFIDENTIALITY.

16.1 The Parties shall keep confidential all information and data acquired,
     developed or disclosed in the course of implementation of this Agreement
     (hereinafter referred to as the (Confidential Information)) and shall not
     disclose it to third parties or use it for other purposes other than as
     provided herein except to the extent that such information and data:

     (i)  is, at the time of its disclosure, in the public domain; or

     (ii) becomes generally available to third parties by publication or
          otherwise after its disclosure, through no breach of this Agreement;
          or

     (iii) was lawfully in the possession of the receiving Party prior to its
          disclosure, as evidenced by the written records of such Party, and
          which was not acquired directly or indirectly from the other Party; or

     (iv) is disclosed independently by a third party that warrants to a
          good-faith Party that such disclosure does not infringe
          confidentiality obligations; or

     (v)  is subject to any legal or judiciary obligation to disclose.

16.2 Notwithstanding the provisions of clause 16.1, the Parties shall be
     entitled to disclose such Confidential Information (i) to their employees,
     officers and directors and to those of their Affiliates (ii) to any
     professional consultant or bank who requires these information and data for
     the evaluation and implementation of the Project, subject however to the
     prior execution by such consultant or bank of a confidentiality
     undertaking.

16.3 The disclosure of Confidential Information by any Party does not vest the
     other Party with a right of ownership on the said Confidential Information,
     which is and shall remain the property of the Party who disclosed it.

<PAGE>

16.4 The provisions of this clause 16 shall apply for the duration of this
     Agreement, and for a period of [**] years after the termination of this
     Agreement, howsoever caused.

16.5 With respect to the Confidential Information of technical nature disclosed
     by OPT to any of the other Parties to this Agreement, the PARTIES agree to
     sign the Confidential Information, Inventions and Trade Secrets Agreement
     attached to this Agreement as Exhibit 1. To the extent of any conflict
     between the terms of this Agreement and the terms of the Confidential
     Information, Inventions and Trade Secrets Agreement, the terms of the
     Confidential Information, Inventions and Trade Secrets Agreement shall
     prevail.

17.  MISCELLANEOUS.

17.1 No waiver by any Party of any one or more defaults by another Party in the
     performance of this Agreement shall operate or be construed as a waiver of
     any future defaults by the same Party, whether of a like or of a different
     character. Except as expressly provided for in this Agreement, no Party
     shall be deemed to have waived, released or modified any of its rights
     under this Agreement.

17.2 No amendments, changes or modifications to this Agreement shall be valid
     except if they are in writing and approved by the Parties.

17.3 Each of the Parties agrees to comply with, and to procure that each of
     their subcontractors complies with (i) the Total and IBERDROLA HSE Policies
     and (ii) the Total and IBERDROLA Codes of Conduct attached hereto.

This Agreement has been executed in four (4) originals by the duly authorised
representatives of each Party on the day and year first above written.

<PAGE>

FOR TED                                 FOR IBERENOVA

/s/ Gilles Cochevelou                   /s/ Ana Buitrago
-------------------------------------   ----------------------------------------
Signature
Name Gilles Cochevelou
                                        /s/ Miguel Martin
                                        ----------------------------------------
                                        Signature
                                        Name Ana Buitrago
                                             Miguel Martin

FOR OPT                                 FOR OPT, INC

/s/ Mark Draper                         /s/ George W. Taylor
-------------------------------------   ----------------------------------------
Signature                               Signature
Name Mr. Mark Draper                    Name Dr. George W. Taylor

<PAGE>

                                    EXHIBIT 1

             CONFIDENTIAL INFORMATION, INVENTIONS AND TRADE SECRETS
                                    AGREEMENT

     WHEREAS representatives of Ocean Power Technologies, Limited having its
offices in Warwick, UK, or Ocean Power Technologies, Inc, having an office at
Pennington, New Jersey, USA, ("OPT" or, the "Company" hereinafter) are about to
enter into discussions with Total Energie Development SA (hereinafter "TED") a
company existing and organized under French law, having its registered office
located in France, 2, Place de la Coupole, 92078 Paris la Defense Cedex, and
with Iberdrola Energias Renovables II, S.A., Sociedad Unipersonal (hereinafter
"IBERENOVA"), a company existing and organised under the Spanish law, with Tax
Registration Number A-83028035, having its registered office located at [ ],
(TED, and IBERENOVA, hereinafter, the "PARTIES"), concerning the use of certain
electrical power generation technology owned by OPT for the potential
construction and operation of power generation plant(s) based on the sea waves
energy in the coast of France (hereinafter, the "Power Plant"), and

     WHEREAS it is anticipated that the discussions will be mutually beneficial
to signatories hereto, and

     WHEREAS during the course of such discussions it is expected that
representatives of PARTIES will receive or have access to specifications,
designs, plans, drawings, data, prototypes, marketing plans or other technical
or business information belonging to OPT and which OPT considers to be
proprietary (hereinafter "INFORMATION"); the term INFORMATION also shall be
deemed to include all notes, analyses, compilations, studies, interpretations or
other documents prepared by PARTIES which contain, reflect or are based upon the
INFORMATION but expressly excluding those parts of such notes, analyses,
compilations, studies, interpretations or other documents or information
prepared by or on behalf of PARTIES relating to or in connection with the
analysis of waves resources, marine and coastal dynamics, performance
assessment, power output, stability of the system, environmental issues and any
other similar information furnished or obtained by the Parties in the course of
the development of the Power Plant.

     WHEREAS during the course of the discussions PARTIES may develop certain
inventions, improvements or discoveries based on the INFORMATION.

     NOW THEREFORE, in consideration of the mutual benefits to be derived from
the above discussions and other good and valuable consideration, receipt of
which is acknowledged, it is agreed by and between the parties hereto as
follows:

1.   PARTIES shall

     a.   Restrict disclosure of the INFORMATION solely to those of its
          employees (and those of Total SA) and consultants with a need to know
          and not disclose such INFORMATION to third parties; and

<PAGE>

     b.   Advise employees (including those of Total SA) and consultants who
          receive the INFORMATION of the obligation of confidentiality hereunder
          and take steps, which may include the execution of confidentiality
          contracts, in order to mitigate the risk of employees and consultants
          breaching this Confidential Information, Inventions and Trade Secrets
          Agreement (hereinafter "Agreement"), and

     c.   Use and require employees and consultants to use the same degree of
          care to protect the INFORMATION as is used with PARTIES' own
          proprietary INFORMATION, and

     d.   Use INFORMATION solely for the development by OPT of OPT wave power
          projects in France.

2.   Notwithstanding anything to the contrary herein, PARTIES shall have no
     obligation to preserve the confidentiality of any INFORMATION as set forth
     in clause 16.1 of the accompanying Contract for the Develoment and
     Application of a Sea Wave Energy Generation System in France.

3.   PARTIES and OPT agree that any company of the group of companies of each of
     the PARTIES, including any which are directly or indirectly controlled by
     such companies, and any employee and consultant of such companies, will be
     considered as third party for the purposes of the confidentiality
     obligations above-stated. Therefore, disclosure of INFORMATION to the third
     parties before-mentioned will require the approval of OPT. However,
     INFORMATION could be disclosed to Total SA pursuant to this Agreement.

4.   Upon termination of this Agreement, PARTIES will exercise reasonable
     efforts to return all INFORMATION received in tangible form and all copies
     thereof to OPT.

5.   Nothing contained in this Agreement shall be construed as granting or
     conferring any rights by license or otherwise in any INFORMATION disclosed
     or limiting the rights and obligations of the parties under the Contract.

6.   For the avoidance of doubt, nothing in this Agreement shall entitle any of
     the PARTIES or third parties to make or use, or have made or have used by
     any third parties, any invention derived from INFORMATION.

7.   Nothing in this Agreement shall prevent the PARTIES and/or third parties
     from using in any way they see fit, their general knowledge, skills and
     experience and any tools, skills and techniques acquired or used by them
     (together "PARTIES' GENERAL KNOWLEDGE") in the performance of this
     Agreement. Such PARTIES' GENERAL KNOWLEDGE shall not include INFORMATION or
     any tools, skills and techniques derived from INFORMATION.

8.   This Agreement shall be governed and construed in accordance with French
     Law. Any disputes between OPT and the Parties in connection with this
     Agreement and, in particular, concerning its interpretation, validity,
     compliance and termination (including the validity and compliance with this
     Clause) shall be submitted to arbitration of law, that shall be settled by
     three arbitrators pursuant to the Arbitration Regulations of the

<PAGE>

     International Chamber of Commerce. The arbitration proceedings will be held
     in Paris, in English. The nominating authority will be the Chairman of the
     ICC. The Parties agree to comply the arbitration award as soon as it is
     issued.

9.   In the event of a breach of this Agreement by PARTIES, PARTIES understands
     and agrees that OPT may suffer irreparable harm and will therefore be
     entitled to injunctive relief to enforce this Agreement.

10   This Agreement shall become effective on the date of execution and shall be
     in force for a period of five years from the date of execution.

/s/ Gilles Cochevelou
-------------------------------------
TOTAL ENERGIE DEVELOPMENT

/s/ Ana Isabel Buitrago Montoro
-------------------------------------

/s/ Miguel Martin Saez
-------------------------------------
IBERENOVA
Represented by
Mrs. Ana Isabel Buitrago Montoro and
Mr. Miguel Martin Saez

/s/ Mark Draper
-------------------------------------
Ocean Power Technologies Limited
Represented by Mark Draper

/s/ George W. Taylor
-------------------------------------
Ocean Power Technologies, Inc.
Represented by Dr. George W. Taylor

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