Exhibit 10.1

SETTLEMENT AGREEMENT

This Settlement Agreement (the "Agreement") is made as of this 4th day of April,
2005, by and between TM Capital Corp. ("TM Capital"), a Delaware corporation,
and American Superconductor Corporation ("American Superconductor"), a Delaware
corporation.

WHEREAS, TM Capital and American Superconductor are parties to a letter
agreement dated December 10, 2002 (the "Engagement Agreement") whereby American
Superconductor retained TM Capital as a financial advisor;

WHEREAS, pursuant to the terms of the Engagement Agreement, TM Capital provided
such services as requested by American Superconductor;

WHEREAS, American Superconductor completed a public equity offering of its
common stock in October 2003 (the "Offering");

WHEREAS, pursuant to the terms of the Engagement Agreement, TM Capital has
asserted that it is due a fee and warrants related to the Offering;

WHEREAS, TM Capital filed an action (the "Action") against American
Superconductor, docketed at C.A. No. 022-N, in the Court of Chancery of the
State of Delaware in and for New Castle County (the "Court") seeking recovery of
the fee and warrants due pursuant to the Engagement Agreement as a result of
American Superconductor's completion of the Offering;

WHEREAS, American Superconductor has denied liability to TM Capital in the
Action and has asserted counterclaims against TM Capital; and

WHEREAS, the parties now desire to resolve all claims against each other;

NOW, THERFORE, in consideration of the mutual promises contained herein and for
other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged, and intending to be legally bound hereby, TM Capital and
American Superconductor agree as follows:

    Settlement Payment
    : Upon execution of this Agreement, American Superconductor shall deliver by
    wire transfer to counsel for TM Capital a settlement payment in immediately
    available funds in the amount of $1,700,000 (the "Settlement Payment") in
    cash.
    Warrants
    : Upon execution of this Agreement, American Superconductor shall deliver to
    counsel for TM Capital five year Stock Purchase Warrants to purchase 200,000
    shares of common stock of American Superconductor at an exercise price of
    $9.50 per share (the "Warrants") issued to the persons and in the amounts
    indicated in, and in the form attached hereto as, Exhibit A. American
    Superconductor shall undertake to register the common stock underlying the
    Warrants with the United States Securities and Exchange Commission
    immediately, subject to the terms and conditions of that certain
    Registration Rights Agreement of even date herewith, in the form attached
    hereto as Exhibit B (the "Registration Rights Agreement"). The provisions of
    the Registration Rights Agreement and the Warrants are incorporated herein
    and made a part of this Agreement, and the parties agree to execute each, as
    appropriate, simultaneously with execution of this Agreement.
    Dismissal of the Action
    : Following execution of this Agreement and the Registration Rights
    Agreement and the delivery of the Settlement Payment and the Warrants, the
    parties will cooperate to file a stipulation of discontinuance to dismiss
    the Action with prejudice and without costs to either party.
    Release of TM Capital
    : Except for those obligations arising out of this Agreement, the
    Registration Rights Agreement and the Warrants, American Superconductor,
    together with each of its current and former parent companies, subsidiaries,
    and affiliates, and the current and former shareholders, officers,
    directors, predecessors, trustees, advisors, partners, employees, agents,
    consultants, representatives and attorneys for each of the foregoing, and
    each of their administrators, successors, assigns, heirs, spouses and
    executors and anyone claiming through them or on their behalf (collectively,
    the "American Superconductor Releasing Parties"), hereby remise, release and
    forever discharge TM Capital, together with its current and former parent
    corporations, subsidiaries and affiliates, and the current and former
    shareholders, officers, directors, predecessors, trustees, advisors,
    members, partners, employees, agents, consultants, representatives,
    attorneys, administrators, successors, heirs, spouses, executors and assigns
    of each of the foregoing (collectively, the "TM Capital Released Parties"),
    from and against all manner of action or actions and causes of action,
    complaints, suits, dues, accounts, bonds, covenants, contracts, agreements,
    invoices, promises, guarantees, warranties, representations, liens,
    judgments, liabilities, obligations, damages, debts, claims or demands
    whatsoever, in law or in equity, that the American Superconductor Releasing
    Parties now have, ever had or may ever have against the TM Capital Released
    Parties or any of them, singularly or in any combination, on account of,
    arising out of, or in connection with any thing, cause, matter, transaction,
    act or omission of any nature whatsoever relating to the Engagement
    Agreement, the Offering, and the Action, from the beginning of time to the
    date of the Agreement.
 1. Release of American Superconductor: Except for those obligations arising out
    of this Agreement, the Registration Rights Agreement and the Warrants, TM
    Capital, together with each of its current and former parent companies,
    subsidiaries, and affiliates, and the current and former shareholders,
    officers, directors, predecessors, trustees, advisors, partners, employees,
    agents, consultants, representatives and attorneys for each of the
    foregoing, and each of their administrators, successors, assigns, heirs,
    spouses and executors and anyone claiming through them or on their behalf
    (collectively, the "TM Capital Releasing Parties"), hereby remise, release
    and forever discharge American Superconductor, together with its current and
    former parent corporations, subsidiaries, and affiliates, and the current
    and former shareholders, officers, directors, predecessors, trustees,
    advisors, members, partners, employees, agents, consultants,
    representatives, attorneys, administrators, heirs, spouses, executors,
    successors and assigns of each of the foregoing (collectively, the "American
    Superconductor Released Parties"), from and against all manner of action or
    actions and causes of action, complaints, suits, dues, accounts, bonds,
    covenants, contracts, agreements, invoices, promises, guarantees,
    warranties, representations, liens, judgments, liabilities, obligations,
    damages, debts, claims or demands whatsoever, in law or in equity, that the
    TM Capital Releasing Parties now have, ever had or may ever have against the
    American Superconductor Released Parties or any of them, singularly or in
    any combination, on account of, arising out of, or in connection with any
    thing, cause, matter, transaction, act or omission of any nature whatsoever
    relating to the Engagement Agreement, the Offering, and the Action, from the
    beginning of time to the date of the Agreement. Notwithstanding anything set
    forth in this paragraph or otherwise in this Agreement, it is not the intent
    of the parties, and this Agreement shall not be deemed, to release claims of
    the TM Capital Releasing Parties for indemnification pursuant to the
    Engagement Agreement for claims against or expenses incurred by the TM
    Capital Releasing Parties as a result of any act or action by a person or
    entity other than a party to this Agreement.
    Non-disparagement
    : Each party hereby agrees that it shall not disparage the other party to
    any other person or entity and shall not make any statement, whether written
    or oral, to any other person or entity that would tend to lower the
    reputation of the other party in any respect in the eyes of another person
    or entity.
    Entire Agreement
    : This Agreement, the Registration Rights Agreement and the Warrants
    constitute the entire understanding and agreement between the parties hereto
    and supersede all prior and contemporaneous agreements, whether written or
    oral, of the parties. Each party represents and warrants to the other that
    it has relied on no representation or promise, written or oral, made by the
    other party, except as expressly set forth herein.
    Titles and Captions
    : The titles and captions of the paragraphs of this Agreement are for the
    convenience of the parties only and shall not effect, enlarge or modify the
    terms or conditions of this Agreement, nor shall they be considered in any
    manner whatsoever in the interpretation, intent or meaning of this
    Agreement.
    Binding Agreement
    : This Agreement shall be binding upon and inure to the benefit of the
    parties hereto, as well as to their respective heirs, personal
    representatives, successors and assigns.
    No Assignment
    : No party may assign its obligations under this Agreement.
    Written Waiver or Modification
    : Any party to this Agreement may waive any of the terms or conditions of
    this Agreement, or agree to an amendment or modification of this Agreement,
    only by an agreement in writing executed in the same manner (but not
    necessarily by the same persons) as this Agreement. No amendment or
    modification of this Agreement shall be binding unless in writing and
    executed by the party amending or waiving such term or condition of this
    Agreement. No waiver of any of the provisions of this Agreement shall be
    deemed or shall constitute a waiver of any other provision hereof, whether
    or not similar, nor shall any waiver constitute a continuing waiver unless
    expressly provided therein.
    Governing Law and Venue
    : This Agreement shall be governed by and construed in accordance with the
    laws of the State of Delaware, without regard to conflicts of laws
    principles. The parties agree that all disputes regarding or arising out of
    this Agreement, the Registration Rights Agreement and the Warrants shall be
    submitted to the Court or, if it lacks subject matter jurisdiction, to the
    U.S. District Court for the District of Delaware or, if it lacks subject
    matter jurisdiction, to the Superior Court of the State of Delaware in and
    for New Castle County.
    Representations and Warranties
    : Each party represents and warrants that:
     a. It is authorized to enter into this Agreement;
     b. It has received the advice of counsel of its choosing in connection with
        the preparation and execution of this Agreement;
     c. It has carefully read the terms of this Agreement and knows the contents
        of this Agreement;
     d. It fully knows the meaning and effect of this Agreement;
     e. Its entering into and execution of this Agreement is its own free and
        voluntary act and deed, without compulsion of any kind;
     f. Except as expressly stated herein, it is not relying on any statement or
        representation of any person, and no inducement except as herein
        expressed, was made to it;
     g. The discovery by it, subsequent to the execution of this Agreement, of
        any fact(s) not heretofore known to it, or discovery that the fact(s) or
        law upon which it relied in executing this Agreement was not as it
        believed it to be, shall not constitute grounds for declaring this
        Agreement void, avoidable or otherwise unenforceable. This paragraph is
        intended by the parties to preclude any claim that any party was
        fraudulently induced to enter into this Agreement or was induced to
        enter into this Agreement by mistake of fact or law;
     h. It has made such investigation as it deemed necessary or desirable of
        the matters contained in or relating to this Agreement and the Action;
        and
     i. the claims that are the subject matter of the Action and this Agreement
        have not been assigned or transferred to any third party.

    Construction and Interpretation
    : This Agreement has been negotiated at arms length and shall be construed
    as having been drafted jointly by the parties.
    Authority
    : All persons signing this Agreement on behalf of an entity possess the
    requisite authority to bind the entity on whose behalf he or she is signing.
    Enforceability
    : If any portion of this Agreement is held legally invalid or unenforceable,
    such event shall not render invalid or unenforceable any other portion of
    this Agreement and the remainder of this Agreement shall be read as though
    the invalid or unenforceable portion were omitted, provided that such
    reading shall not materially frustrate the intent of the parties, as
    evidenced in this Agreement. It is the intent of the parties that this
    Agreement be carried out to the fullest extent permitted.
    Remedies
    : If either party shall breach any provision of this Agreement, the
    Registration Rights Agreement or the Warrants, and the non-breaching party
    incurs any damages, costs or expenses, including, but not limited to,
    reasonable attorney's fees and other legal expenses, to enforce the
    provisions of this Agreement, the Registration Rights Agreement, or the
    Warrants, in addition to all other legal and equitable remedies available to
    the non-breaching party, the breaching party shall pay to the non-breaching
    party all such damages, costs or expenses incurred.
    No Admission
    : This Agreement is the result of a negotiated compromise of claims and
    shall not be construed as an admission of liability by any party. The
    parties hereby agree that neither this Agreement, nor any of its provisions,
    the communications leading up to this Agreement or communications or actions
    taken in furtherance of this Agreement, may be used or construed as an
    admission by or against any party to the Action, nor offered by any party as
    evidence in this Action or any other proceeding, other than to enforce the
    terms of this Agreement.
    Counterparts
    : This Agreement may be executed in two counterparts and delivered by
    facsimile and shall be binding upon the parties hereto as if all signatures
    had been affixed on a single original hereof.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement, as of the
date first written above.

TM CAPITAL CORP.

 

 

By: /s/ W. Gregory Robertson_________

Its: President

 

 

AMERICAN SUPERCONDUCTOR
CORPORATION

 

 

By:___/s/ Kevin Bisson ________________

Its: Senior V.P. and CFO