Exhibit 10.32

AMENDMENT NO. 1 TO AGREEMENT

(SUBCONTRACT NO. USN-001.01)

THIS AMENDMENT NO. 1 TO AGREEMENT (“Amendment”) is made effective on the 7th day
of March, 2006 (“Effective Date”), by and between Hoku Scientific, Inc., a
Delaware corporation, having its offices at 1075 Opakapaka Street, Kapolei,
Hawaii 96707 (“Hoku”), and IdaTech LLC, a majority-owned subsidiary of IDACORP,
Inc., having its offices at 63065 NE 18th Street, Bend, Oregon 97701
(“IdaTech”).

BACKGROUND & PURPOSE

WHEREAS, Hoku and IdaTech are parties that certain Agreement (Subcontract No.
USN-001) dated April 7, 2005 (the “Agreement”) pursuant to which IdaTech is
providing certain products and services to Hoku as a subcontractor on Hoku’s
Contract No. N68936-05-R-0010 (“Prime Contract”) with the United States Navy,
NAWCWD (“Customer”); and

WHEREAS, Hoku and IdaTech have completed Phase I through Phase V described on
Attachment A to the Agreement (the “Statement of Work”), and intend through this
Amendment to revise the scope of work, allocation of responsibilities and costs
for the Options in the Statement of Work, and to make the other amendments to
the Agreement described herein:

NOW, THEREFORE, in consideration of the covenants and obligations contained
herein, the parties hereby agree as follows:

AGREEMENT

1. DEFINITIONS. Each capitalized term not otherwise defined in this Amendment
shall have the meaning set forth in the Agreement.

2. AMENDED STATEMENT OF WORK. Hoku and IdaTech acknowledge and agree that their
respective deliverables described in Phase I through Phase V on the Statement of
Work have been substantially completed as of the Effective Date of this
Amendment. The requirements of Option I and Option II described in the Statement
of Work are amended and restated as set forth on Attachment A to this Amendment
(“Amended Statement of Work”). Hoku shall have primary responsibility for
performing work pursuant to the Prime Contract. IdaTech shall provide the
necessary personnel, facilities, equipment, materials, data, supplies and
services to perform its portion of the work set forth in the Amended Statement
of Work and incorporated herein.

3. AMENDED CONTRACT COST. In light of the revised allocation of responsibilities
between the parties pursuant to the Amended Statement of Work, Hoku and IdaTech
agree that the firm fixed price payable to IdaTech upon the completion of Option
I is reduced to $462,500.

4. PRODUCT OWNERSHIP. Section 14 of the Agreement is amended and restated in its
entirety as follows:

“14. PRODUCT OWNERSHIP.

“(a) Hoku shall retain all rights, privileges, title and interest in and to all

 

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IdaTech Initials & Date

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products, work products and reports pursuant to this Agreement, and shall flow
to Customer the appropriate rights to the work products and reports, based upon
the Prime Contract. Notwithstanding the foregoing, Hoku does not acquire any
right, title or interest in the patents, trademarks and copyrights of IdaTech,
or the trade secrets, know-how or other intellectual property rights of IdaTech
that are described in writing by IdaTech and identified as IdaTech’s
intellectual property, pursuant to this Agreement. IdaTech, as recipient of
Hoku’s proprietary membrane and membrane electrode assemblies pursuant to this
Agreement, does not acquire any right, title or interest in the patents,
trademarks, copyrights, trade secrets, know-how or other intellectual property
rights of Hoku. All Hoku products delivered to IdaTech shall be used solely for
the purposes of this Agreement. All IdaTech products delivered to Hoku shall be
used solely for the purposes of this Agreement. Any Hoku products not
incorporated into a Power Plant pursuant to this Agreement shall be returned to
Hoku immediately upon Hoku’s request to IdaTech. Any IdaTech products not
incorporated into a Power Plant or a fuel cell stack being tested in Hoku’s
facility pursuant to this Agreement shall be returned to IdaTech immediately
upon IdaTech’s request to Hoku.

“(b) Unless approved in writing, Hoku agrees not to use any of the registered
patents, trademarks and copyrights of IdaTech, or the trade secrets, know-how or
other intellectual property rights of IdaTech that are described in writing by
IdaTech and identified as IdaTech’s intellectual property, for the production of
fuel cell stacks outside of the deliverables for this Agreement.”

5. NO ANALYSIS. Section 15 of the Agreement is amended and restated in its
entirety as follows:

“15. NO ANALYSIS. IdaTech agrees not to make or have made any analysis,
observation of the chemical composition and/or physical characteristics or to
perform any experiment on any Hoku products, except as provided in the Statement
of Work.

“Except for the stack and system testing pursuant to the Agreement, Hoku agrees
not to make or have made any analysis, observation of composition and/or
physical characteristics, or perform any experiment on any IdaTech components or
products, including but not limited to fuel cell stack components other than
Hoku MEAs. Furthermore, Hoku will not photograph or otherwise reproduce any such
IdaTech components or products (except overall system photos) without prior
written approval from IdaTech; provided, however that Hoku may photograph
IdaTech components and products if such photographs are reasonably required for
any report submitted by Hoku to the Customer pursuant to the Prime Contract and
if such photographs are identified as “IdaTech proprietary and confidential.”

6. REVISED SCHEDULE. The scheduled delivery date for each deliverable under
Option I and Option II set forth in the Amended Statement of Work shall be as
set forth on Attachment B (“Amended Master Program Schedule”).

7. NOTICES. The addresses provided in Section 25 of the Agreement are amended as
follows:

 

To Hoku:

 

Hoku Scientific, Inc.

     

To IdaTech:

 

IdaTech LLC

 

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1075 Opakapaka Street

Kapolei, Hawaii 96707

  

63065 NE 18th Street

Bend, Oregon 97701

Fax:    (808) 682-7807    Fax:    (541) 383-3439 Phone:    (808) 682-7800   
Phone:    (541) 383-3390 Attn:   

Scott Paul,

VP of Business Development

& General Counsel

   Attn:   

Harol Koyama,

Senior Vice President

of Sales and Marketing

8. INDEMNIFICATION. Section 21 of the Agreement shall be amended by adding the
following paragraph after the first paragraph of Section 21:

“Hoku releases IdaTech from any Additional Expense resulting from the failure of
IdaTech’s fuel cell stacks produced, repaired, or otherwise assembled by Hoku or
as a result of Hoku testing or assembly, and further agrees to defend, indemnify
and hold harmless IdaTech against any Additional Expense resulting from a third
party claim against IdaTech if such claim arises from failures of the fuel cell
stack or performance problems related thereto, where such failure or performance
problems of the fuel cell stack are not related to the fuel cell system,
defective parts supplied by IdaTech, or the result of IdaTech’s negligent,
reckless or willful action or inaction.

9. EFFECT OF AMENDMENT; SURVIVAL OF AGREEMENT. Except for the specific
amendments provided herein, the terms of the Agreement shall survive the
execution and effectiveness of this Amendment.

(Signature page immediately follows.)

 

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IN WITNESS WHEREOF, the Parties have executed this Amendment No. 1 as of the
date first set forth above.

 

IDATECH:

 

IDATECH, LLC

 

  

HOKU:

 

HOKU SCIENTIFIC, INC.

 

By:    /s/ Harol Koyama    By:    /s/ Scott B. Paul Name:    Harol Koyama   
Name:    Scott B. Paul Title:   

Senior Vice President

of Sales and Marketing

   Title:   

VP Business Development

& General Counsel

Authorized Signatory    Authorized Signatory

 

SIGNATURE PAGE TO AMENDMENT NO. 1

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ATTACHMENT A

AMENDED STATEMENT OF WORK

1. [Refer to Statement of Work]

2. [Refer to Statement of Work]

3 - 3.8 [Refer to Statement of Work]

OPTION I

3.9 IdaTech shall construct 11 1-kilowatt (minimum) fuel cell power plants
incorporating a stack assembled with MEA from IdaTech’s commercial MEA supplier.
The prototype demonstrated pursuant to item 3.8 above shall be retrofitted for
demonstration readiness, and will be a 12th system. IdaTech shall ship all
non-MEA stack hardware to Hoku for assembly of stacks incorporating Hoku MEA,
and all fuel cell stacks incorporating Hoku MEA shall be assembled, conditioned
and tested by Hoku at Hoku’s facility. Hoku is responsible for ensuring that all
fuel cell stacks will be manufactured using best practices in part procurement,
inventory management, and work direction using a manufacturing control plan and
will pass a factory acceptance test at Hoku’s facility in IdaTech’s system.
IdaTech is responsible for ensuring that the fuel cell systems, less the fuel
cell stack assembled by Hoku will be manufactured using best practices in part
procurement, inventory management, and work direction using a manufacturing
control plan and will pass a factory acceptance test at IdaTech’s facility. Hoku
may be present for the factory acceptance test. Following factory acceptance
using a standard commercial IdaTech fuel cell stack, the commercial fuel cell
stack will be removed and the unit will be shipped by IdaTech via air freight to
Hoku. Following training by IdaTech, Hoku will integrate the stack incorporating
Hoku MEA into each IdaTech unit, which will pass a final acceptance test at
Hoku’s facility with representatives of Navy, including representatives of
NAWCWD China Lake, invited to witness testing. IdaTech may, at its discretion,
participate in the stack assembly, conditioning, testing and final system
integration at Hoku’s facility, and may choose to be present for the final
factory acceptance test at Hoku’s facility. IdaTech shall also prepare
operational manuals, spare part kits, maintenance schedules and procedures, and
shall update and deliver final versions of all paperwork required by Phase IV
and Phase V. Success will be determined by successfully manufacturing the power
plants and delivering the paperwork. The firm fixed price for Option I is
$462,500. Any parts or supplies additional to the standard supply for stack
assembly, including but not limited to replacement plates and supplies for
damages from production or operation, shall be purchased from IdaTech by Hoku
over and above the above fixed price. For the avoidance of doubt, IdaTech shall
be responsible for replacing any defective non-MEA stack components supplied to
Hoku by IdaTech.

OPTION II

3.10 IdaTech shall provide technical support to Hoku during a twelve (12) month
field demonstration of 10 of the 11 power plants produced under Option I. The
prototype constructed in Phase V, and one additional unit, shall be retained by
Hoku and IdaTech (one each) as demonstration-ready replacement systems in the
event that a demonstration system requires extensive maintenance, service or
repair during the duration of the demonstration. Hoku and IdaTech shall develop
a Site Agreement Plan detailing the business arrangements, responsibilities,
maintenance intervals and emergency response procedures. This may include use of
IdaTech web interactive software for the viewing and collection of process
parameter data. Hoku and IdaTech will install and commission the first
demonstration power plant, and IdaTech will submit a summary report to Hoku. The
remaining 9 demonstration power plants will be installed and commissioned by
Hoku, with IdaTech providing technical support remotely as required. Throughout
the

 

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ATTACHMENT A-1 TO

AMENDMENT NO. 1

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demonstration period, Hoku may service, repair or replace the fuel cell stacks
at Hoku’s discretion. All service, repair and/or replacement of stacks must be
documented by Hoku and documentation sent to IdaTech. Any stack parts remaining
from this program and/or repairs and/or replacements other than the Hoku MEAs,
must be returned to IdaTech. Any additional stack hardware ordered from IdaTech
shall be separately priced and is not included in the Option II price set forth
below. The Option II price below includes any non-stack related maintenance or
service by IdaTech of the power plants, and IdaTech’s replacement of any
defective or damaged parts not included in the fuel cell stack with Hoku MEA.
For the avoidance of doubt, IdaTech shall be responsible for replacing any
defective non-MEA stack components supplied to Hoku by IdaTech. Success will be
determined by successfully installing the power plants at the test site and
completing the testing period. Option II price is $125,439.

4. Deliverables to Hoku. IdaTech shall deliver the following items to Hoku:

4.1 Final design for this program for a 1 kilowatt (minimum) power plant,
including drawings, bills of materials, interface drawings, and Process &
Instrumentation Diagrams.

4.3 Design definition and test planning updated based on engineering test
results of initial prototype.

4.4 Test reports including test plans and final test report. (IdaTech and Hoku)

4.5 Operational manuals, spare part kits, maintenance schedules and procedures.

4.6 Twelve operational 1 kilowatt (minimum) fuel cell power plants (including
the prototype located at IdaTech and the reserve unit located at Hoku) and
associated stack hardware, less MEAs.

4.7 Site Acceptance Plan.

5. Applicable documents shall be as stated in Section 2 of the Statement of Work
attached to the Agreement, and shall conform to the applicable Data Item
Descriptions described elsewhere in the Agreement.

 

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ATTACHMENT A-2 TO

AMENDMENT NO. 1

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ATTACHMENT B

MASTER PROGRAM SCHEDULE

 

 

    Systems 1-2         Systems 3-5         Systems 6-8         Systems 9-10   
     System 11         Location             Location             Location     
       Location             Location

RECEIVE STACK

  20-Mar   HOKU       19-Apr   HOKU       10-May   HOKU       26-May   HOKU   
   5-Jun   HOKU

SYSTEM FAT

  3-Apr   IDATECH       1-May   IDATECH       22-May   IDATECH       6-Jun  
IDATECH       19-Jun   IDATECH

SHIP

  6-Apr   IDATECH       2-May   IDATECH       23-May   IDATECH       7-Jun  
IDATECH       20-Jun   IDATECH

SYSTEM RECEIVED

  7-Apr   HOKU       3-May   HOKU       24-May   HOKU       9-Jun   HOKU      
21-Jun   HOKU

INSTALLATION

  15-May   PEARL HARBOR       1-Jun   PEARL HARBOR       1-Jun   PEARL HARBOR   
   15-Jun   PEARL HARBOR        

 

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ATTACHMENT B-1 TO

AMENDMENT NO. 1