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                                                                   Exhibit 10.26


                      AMERICAN SUPERCONDUCTOR CORPORATION

             AMENDED AND RESTATED 1997 DIRECTOR STOCK OPTION PLAN

1.   Purpose.
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     The purpose of this Amended and Restated 1997 Director Stock Option Plan
(the "Plan") of American Superconductor Corporation (the "Company") is to
encourage stock ownership in the Company by outside directors of the Company
whose continued services are considered essential to the Company's future
success and to provide them with a further incentive to remain as directors of
the Company.

2.   Administration.
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     The Board of Directors shall supervise and administer the Plan.  Grants of
stock options under the Plan and the amount and nature of the options to be
granted shall be automatic in accordance with Section 5.  However, all questions
concerning interpretation of the Plan or any options granted under it shall be
resolved by the Board of Directors and such resolution shall be final and
binding.  No director or person acting pursuant to the authority delegated by
the Board of Directors shall be liable for any action or determination relating
to or under the Plan made in good faith.

3.   Participation in the Plan.
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     Directors of the Company who are not full-time employees of the company or
any subsidiary of the Company ("Outside Directors") shall be eligible to receive
options under the Plan, except that Directors of the Company who are
representatives of an equity holder of the Company shall not be eligible to
receive options under the Plan.

4.   Stock Subject to the Plan.
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     (a)  The maximum number of shares of the Company's Common Stock, par value
$.01 per share ("Common Stock"), which may be issued under the Plan shall be
640,000 shares, subject to adjustment as provided in Section 7.

     (b)  If any outstanding option under the Plan for any reason expires or is
terminated without having been exercised in full, the shares covered by the
unexercised portion of such option shall again become available for issuance
pursuant to the Plan.

     (c)  All options granted under the Plan shall be non-statutory options not
entitled to special tax treatment under Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code").

     (d)  Shares issued under the Plan may consist in whole or in part of
authorized but unissued shares or treasury shares.
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5.   Terms, Conditions and Form of Options.
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     Each option granted under the Plan shall be evidenced by a written
agreement in such form as the President or the Executive Vice President,
Corporate Development, shall from time to time approve, which agreements shall
comply with and be subject to the following terms and conditions:

     (a)  Option Grant Dates and Shares Subject to Option. Options will be
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granted under the Plan as follows:

          (i)    Initial Grants to Current Outside Directors. Provided that any
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stock options previously granted to a person serving as an Outside Director
under another director stock option plan of the Company are vested completely or
that such Outside Director has not yet been granted an option, an option to
purchase 40,000 shares of Common Stock shall be granted automatically to each
person serving as an Outside Director of the Company upon the approval of the
Plan by the stockholders of the Company. For persons serving as Outside
Directors whose stock options previously granted under another director stock
option plan of the Company have not vested completely as of the date of the
approval of the Plan by the stockholders of the Company, an option to purchase
40,000 shares of Common Stock shall be granted automatically on the first
business day following the date that such stock options are vested completely,
provided that such person is serving as an Outside Director as of such date.

          (ii)   Initial Grants to Future Outside Directors. An option to
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purchase 40,000 shares of Common Stock shall be granted automatically to each
Outside Director first elected to the Board of Directors after the date of the
approval of the Plan by the stockholders of the Company, upon the date of his or
her initial election to the Board of Directors.

          (iii)  Subsequent Grants to Current Outside Directors. Provided that
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any stock options previously granted under the Plan pursuant to subsection (i)
above to a person serving as an Outside Director are vested completely, an
option to purchase 40,000 shares of Common Stock shall be granted automatically
to each person serving as an Outside Director of the Company upon approval of
this subsection by the stockholders of the Company. For persons serving as
Outside Directors whose stock options previously granted under the Plan have not
vested completely as of the date of approval of this subsection by the
stockholders of the Company, an option to purchase 40,000 shares of Common Stock
shall be granted automatically on the first business day following the date that
such stock options are vested completely, provided that such person is serving
as an Outside Director as of such date.

     (b)  Option Exercise Price. The option exercise price per share for each
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option granted under the Plan shall be equal to the fair market value per share
of Common Stock on the date of grant, which shall be determined as follows: (i)
if the Common Stock is listed on the Nasdaq National Market or another
nationally recognized exchange or trading system as of the date on which a
determination of fair market value is to be made, the fair market value per
share shall be deemed to be the last reported sale price per share of Common
Stock thereon on such date (or, if no such price is reported on such date, such
price on the nearest preceding date on which such a price is reported); and (ii)
if the Common Stock is not listed on the Nasdaq National Market or another
nationally recognized exchange or trading system as of the date on

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which a determination of fair market value is to be made, the fair market value
per share shall be as determined by the Board of Directors.

     (c)  Transferability of Options. Except as the Board of Directors may
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otherwise determine, options shall not be sold, assigned, transferred, pledged
or otherwise encumbered by the person to whom they are granted, either
voluntarily or by operation of law, except by will or the laws of descent and
distribution, and, during the life of the optionee, shall be exercisable only by
the optionee. References to a optionee, to the extent relevant in the context,
shall include references to authorized transferees, if any.

     (d)  Vesting Period.
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          (i)    General. Each option granted under the Plan shall become
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exercisable in equal annual installments over the four year period following the
date of grant.

          (ii)   Acceleration Upon An Acquisition Event. Notwithstanding the
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foregoing, each outstanding option granted under the Plan shall immediately
become exercisable in full in the event an Acquisition Event (as defined in
Section 8) of the Company occurs.

     (e)  Termination. Each option shall terminate, and may no longer be
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exercised, on the earlier of the (i) the date ten years after the date of grant
or (ii) the date 60 days after the optionee ceases to serve as a director of the
Company for any reason, whether by death, resignation, removal or otherwise.

     (f)  Exercise Procedure. Options may be exercised only by written notice to
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the Company at its principal office accompanied by (i) payment in cash or by
certified or bank check of the full consideration for the shares as to which
they are exercised or (ii) an irrevocable undertaking, in form and substance
satisfactory to the Company, by a broker to deliver promptly to the Company
sufficient funds to pay the exercise price or (iii) delivery of irrevocable
instructions, in form and substance satisfactory to the Company, to a broker to
deliver promptly to the Company cash or a check sufficient to pay the exercise
price.

     (g)  Exercise by Representative Following Death of Director. An optionee,
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by written notice to the Company, may designate one or more persons (and from
time to time change such designation), including his or her legal
representative, who, by reason of the optionee's death, shall acquire the right
to exercise all or a portion of the option. If the person or persons so
designated wish to exercise any portion of the option, they must do so within
the term of the option as provided herein. Any exercise by a representative
shall be subject to the provisions of the Plan.

6.   Limitation of Rights.
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     (a)  No Right to Continue as a Director. Neither the Plan, nor the granting
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of an option nor any other action taken pursuant to the Plan, shall constitute
or be evidence of any agreement or understanding, express or implied, that the
optionee shall be entitled to continue as a director for any period of time.

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     (b)  No Stockholder Rights for Options. An optionee shall have no rights as
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a stockholder with respect to the shares covered by his or her option until the
date of the issuance to him or her of a stock certificate therefor, and no
adjustment will be made for dividends or other rights (except as provided in
Section 7) for which the record date is prior to the date such certificate is
issued. Notwithstanding the foregoing, in the event the Company effects a split
of the Common Stock by means of a stock dividend, and the distribution date
(i.e., the date on which the closing market price of the Common Stock on a stock
exchange or trading system is adjusted to reflect the split) is subsequent to
the record date for such stock dividend, an optionee who exercises an option
between the close of business on such record date and the close of business on
such distribution date shall be entitled to receive the stock dividend with
respect to the shares of Common Stock acquired upon such option exercise,
notwithstanding the fact that such shares were not outstanding as of the close
of business on such record date.

     (c)  Compliance with Securities Laws.  Each option shall be subject to the
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requirement that if, at any time, counsel to the Company shall determine that
the listing, registration or qualification of the shares subject to such option
upon any securities exchange or under any state or federal law, or the consent
or approval of any governmental or regulatory body, or the disclosure of non-
public information or the satisfaction of any other condition is necessary as a
condition to, or in connection with, the issuance or purchase of shares
thereunder, such option may not be exercised, in whole or in part, unless such
listing, registration, qualification, consent or approval, or satisfaction of
such condition shall have been effected or obtained on conditions acceptable to
the Board of Directors.

7.   Adjustment to Common Stock. In the event of any stock split, stock
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dividend, recapitalization, reorganization, merger, consolidation, combination,
exchange of shares, liquidation, spin-off or other similar change in
capitalization or event, or any distribution to holders of Common Stock other
than a normal cash dividend, (i) the number and class of securities available
under this Plan and (ii) the number and class of security and exercise price per
share subject to each outstanding option shall be appropriately adjusted by the
Company to the extent the Board shall determine, in good faith, that such an
adjustment is necessary and appropriate. No fractional shares will be issued
under the Plan on account of any such adjustments. If this Section 7 applies and
Section 8 also applies to any event, Section 8 shall be applicable to such event
and this Section 7 shall not be applicable.

     Notwithstanding the foregoing, in the event the Company effects a split of
the Common Stock by means of a stock dividend, and the distribution date (i.e.,
the date on which the closing market price of the Common Stock on a stock
exchange or trading system is adjusted to reflect the split) is subsequent to
the record date for such stock dividend, an optionee who exercises an option
between the close of business on such record date and the close of business on
such distribution date shall be entitled to receive the stock dividend with
respect to the shares of Common Stock acquired upon such option exercise,
notwithstanding the fact that such shares were not outstanding as of the close
of business on such record date.

8.   Acquisition Events.
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     Consequences of Acquisition Events.  Upon the occurrence of an Acquisition
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Event (as defined below), or the execution by the Company of any agreement with
respect to an

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Acquisition Event, the Board shall take any one or more of the following actions
with respect to then outstanding options: (i) provide that outstanding options
shall be assumed, or equivalent options shall be substituted, by the acquiring
or succeeding corporation (or an affiliate thereof), provided that any such
options substituted for such options shall satisfy, in the determination of the
Board, the requirements of Section 424(a) of the Internal Revenue Code of 1986,
as amended; (ii) upon written notice to the optionees, provide that all then
unexercised options will become exercisable in full as of a specified time (the
"Acceleration Time") prior to the Acquisition Event and will terminate
immediately prior to the consummation of such Acquisition Event, except to the
extent exercised by the optionees between the Acceleration Time and the
consummation of such Acquisition Event; and (iii) in the event of an Acquisition
Event under the terms of which holders of Common Stock will receive upon
consummation thereof a cash payment for each share of Common Stock surrendered
pursuant to such Acquisition Event (the "Acquisition Price"), provide that all
outstanding options shall terminate upon consummation of such Acquisition Event
and each optionee shall receive, in exchange therefor, a cash payment equal to
the amount (if any) by which (A) the Acquisition Price multiplied by the number
of shares of Common Stock subject to such outstanding options (whether or not
then exercisable), exceeds (B) the aggregate exercise price of such options.

     An "Acquisition Event" shall mean: (x) any merger or consolidation which
results in the voting securities of the Company outstanding immediately prior
thereto representing immediately thereafter (either by remaining outstanding or
by being converted into voting securities of the surviving or acquiring entity)
less than 50% of the combined voting power of the voting securities of the
Company or such surviving or acquiring entity outstanding immediately after such
merger or consolidation; (y) any sale of all or substantially all of the assets
of the Company; or (z) the complete liquidation of the Company.

9.   Modification, Extension and Renewal of Options.
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     The Board of Directors shall have the power to modify or amend outstanding
options; provided, however, that no modification or amendment may (i) have the
effect of altering or impairing any rights or obligations of any option
previously granted without the consent of the optionee, or (ii) modify the
number of shares of Common Stock subject to the option (except as provided in
Section 7).

10.  Termination and Amendment of the Plan.
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     The Board of Directors may suspend, terminate or discontinue the Plan or
amend it in any respect whatsoever; provided, however, that without approval of
the stockholders of the Company, no amendment may (i) increase the number of
shares subject to the Plan (except as provided in Section 7), or (ii) effect any
action which requires approval of the stockholders pursuant to the rules or
requirements of the Nasdaq National Market or any other exchange on which the
Common Stock of the Company is listed.

11.  Notice.
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     Any written notice to the Company required by any of the provisions of the
Plan shall be addressed to the Treasurer of the Company and shall become
effective when it is received.

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12.  Governing Law.
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     The Plan and all determinations made and actions taken pursuant hereto
shall be governed by the laws of the State of Delaware.

13.  Stockholder Approval.
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     The Plan is conditional upon stockholder approval of the Plan within one
year from its date of adoption by the Board of Directors, and no option may be
granted under the Plan until such stockholder approval is obtained.

                                    First adopted by the Board of Directors on
                                    July 24, 1997 and approved by the
                                    shareholders on September 5, 1997. First
                                    amendment adopted by the Board of Directors
                                    on May 2, 2000 and by the stockholders on
                                    July 28, 2000.

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