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                                                                    EXHIBIT 10.1

                         DREXLER TECHNOLOGY CORPORATION
                             1991 STOCK OPTION PLAN

        1. Purposes. Drexler Technology Corporation (hereinafter called the
"Company") has adopted this 1991 Stock Option Plan (this "Plan") to enhance the
concern of the Company's key employees, officers, directors and consultants in
the success of the Company by giving them an ownership interest in the Company,
and to give them an incentive to continue their service to the Company.

   
        2. Stock Subject to Plan. The Company shall reserve 2,370,000 shares of
its $0.01 par value Common Stock (hereinafter called the "Shares") to be issued
upon exercise of the options which may be granted from time to time under this
Plan. In addition, those of the shares reserved for issuance under the Company's
1986 Stock Option Plan on March 1, 1991, (i) which were not then subject to
outstanding options or (ii) which were then subject to outstanding options which
subsequently lapse, shall also be reserved for issuance pursuant to the exercise
of options granted from time to time under this Plan. As it may from time to
time determine, the Board of Directors of the Company (hereinafter called the
"Board") may authorize that the Shares may be comprised, in whole or in part, of
authorized but unissued shares of the Common Stock of the Company or of issued
shares which have been reacquired. If options granted under this Plan terminate
or expire before being exercised in whole or in part, the Shares subject to
those options which have not been issued may be subjected to subsequent options
granted under this Plan.
    

   
        3. Administration of this Plan. The Board shall appoint a Stock Option
Committee (hereinafter called the "Committee") which shall consist of not less
than two (2) members of the Board, and, at the election of the Board or if the
Board consists of less than two directors, may consist of the entire Board, to
administer this Plan. Subject to the express provisions of this Plan and
guidelines which may be adopted from time to time by the Board, the Committee
shall have plenary authority in its discretion (a) to determine the individuals
to whom, and the time at which, options are granted, and the number and purchase
price of the Shares subject to each option; (b) to determine whether the options
granted shall be "incentive stock options" within the meaning of Section 422A of
the Internal Revenue Code of 1986, as amended (hereinafter called the "Code"),
or non-statutory stock options, or both; (c) to interpret this Plan and
prescribe, amend and rescind rules and regulations relating to it; (d) to
determine the terms and provisions (and amendments thereof) of the respective
option agreements subject to Section 6 of this Plan, which need not be
identical, including, if the Committee shall determine that a particular option
is to be an incentive stock option, such terms and provisions (and amendments
thereof) as the Committee deems necessary to provide for an incentive stock
option or to conform to any change in any law, regulation, ruling or
interpretation applicable to incentive stock options; and (e) to make any and
all determinations which the Committee deems necessary or advisable in
administering this Plan. The Committee's determination on the foregoing matters
shall be conclusive. The Committee may delegate any of the foregoing authority
to the Chief Executive Officer with respect to options granted to or which are
held by persons who are neither officers nor directors of the Company.
    


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        4. Persons Eligible. The Committee may grant incentive stock options to
key employees of the Company or its subsidiaries (including officers and
directors) and non-statutory stock options to key employees or consultants
(including officers and directors) of the Company or its subsidiaries. For this
purpose, "employee" shall conform to the requirements of Section 422A of the
Code, and "subsidiary" means subsidiary corporations as defined in Section 425
of the Code.

           The aggregate fair market value (determined as of the time the
option is granted) of the Shares with respect to which incentive stock options
are exercisable for the first time during any calendar year (under all incentive
stock option plans of the Company or its parent or subsidiaries) shall not
exceed $100,000.

        5. Changes in Capital Structure.

           a. Effect on this Plan. In the event of changes in the
outstanding capital stock of the Company by reason of any stock dividend, stock
split or reverse split, reclassification, recapitalization, merger or
consolidation, acquisition of 80 percent or more of its gross assets or stock,
reorganization or liquidation, the Committee and/or the Board shall make such
adjustments in the aggregate number and class of shares available under this
Plan as it deems appropriate, and such determination shall be final, binding and
conclusive.

           b. In Outstanding Options. Should a stock dividend, stock split,
reverse stock split, reclassification, or recapitalization occur, then the
Committee and/or the Board shall make such adjustments in (i) the number and
class of shares to which optionees will thereafter be entitled upon exercise of
their options and (ii) the price which optionees shall be required to pay upon
such exercise as it in its sole discretion in good faith deems appropriate, and
such determination shall be final, binding, and conclusive. Notwithstanding the
foregoing, such adjustment shall have the result that an optionee exercising an
option subsequent to such occurrence would pay the same aggregate exercise price
to exercise the entire option and would then hold the same class and aggregate
number of shares as if such optionee would have exercised the outstanding option
immediately prior to such occurrence.

           c. In the event of any merger or consolidation of the Company
(except with a subsidiary) or any acquisition of 80 percent or more of its gross
assets or stock, or any reorganization or liquidation of the Company (an
"Event"), the Board shall make arrangements (the "Arrangements") which shall be
binding upon the holders of unexpired options then outstanding under this Plan
as the Board, in its sole discretion, in good faith determines to be in the best
interests of the Company, which determination shall be final, binding, and
conclusive. The possible arrangements include, but are not limited to, the
substitution of new options for any portion of such unexpired options, the
assumption of any portion of such unexpired options by any successor to the
Company, the acceleration of the expiration date of any portion of such
unexpired options to a date not earlier than thirty (30) days after notice to
the optionee, or the cancellation of such portion in exchange for the payment by
any successor to the Corporation of deferred compensation to the optionee, in an
amount equal to the difference between the fair market value of the Shares
subject to such unexpired portion and the aggregate exercise price of the Shares
under the terms of such unexpired portion on the date of the Event, in
installments which correspond to the vesting schedule of the unexpired option.
The Board shall not be obligated to arrange such substitution or assumption to
comply with Section 425(a) of the Code or to accelerate the exercisability of a
portion of an option when it accelerates the expiration date of such portion.
The Board or Committee may from time to time issue guidelines as to what
Arrangements it deems appropriate should an Event occur. The guidelines
currently issued by the Board of Directors are attached hereto as Attachment A.
These guidelines may be changed at any time without notice. Accordingly,
optionees



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have no vested right with respect to the Arrangements which may be made upon the
occurrence of an Event.

        6. Terms and Conditions of Options. Each option granted under this Plan
shall be evidenced by a stock option agreement (hereinafter called "Agreement")
which is not inconsistent with this Plan, and the form of which the Committee
and/or Board may from time to time determine, provided that the Agreement shall
contain the substance of the following:

            a. Option Price. The option price shall be not less than 100% of
the fair market value of the Shares at the time the option is granted, which
shall be the date the Committee and/or Board, or its delegate, awards the grant.
If the optionee, at the time the option is granted, owns stock possessing more
than ten percent (10%) of the total combined voting power of all the classes of
stock of the Company or of its parent or subsidiaries (a "Principal
Shareholder"), the option price of incentive stock options granted such
Principal Shareholder shall be not less than 110% of the fair market value of
the Shares at the time the option is granted. The fair market value of the
Shares shall be determined and the option price of the Shares set by the
Committee and/or Board or its delegate in accordance with the valuation methods
described in Section 20.2031-2 of the Treasury Regulations.

            b. Method of Exercise. At the time of purchase, Shares purchased
under options shall be paid for in full either (i) in cash, (ii) at the
discretion of the Board, with a promissory note secured by the Shares purchased,
(iii) at the discretion of the Committee and/or Board, with outstanding stock of
the Company at such value as the Board shall determine in its sole discretion to
be the fair market value of such stock on the date of exercise in accordance
with the valuation methods discussed in Section 20.2031-2 of the Treasury
Regulations, or (iv) a combination of promissory note (if permitted pursuant to
(ii) above), stock (if permitted pursuant to (iii) above), and/or cash. If
outstanding stock is used as payment and such stock was acquired upon prior
exercise of an option granted under this Plan or the Company's 575,000 share
1986 Stock Option Plan, then such stock must have been held by the optionee for
at least one year subsequent to such prior exercise and two years subsequent to
the grant of the prior exercised option. To the extent that the right to
purchase Shares has accrued under an option, the optionee may exercise said
option from time to time by giving written notice to the Company stating the
number of Shares with respect to which the optionee is exercising the option,
and submitting with said notice payment of the full purchase price of said
Shares either in cash or, at the discretion of the Board and/or Committee as
described above, with a promissory note, outstanding stock of the Company, or a
combination of cash, promissory note, and/or such stock. As soon as practicable
after receiving such notice and payment, the Company shall issue, without
transfer or issue tax to the optionee (or other person entitled to exercise the
option), and at the main office of the Company or such other place as shall be
mutually acceptable, a certificate or certificates representing such Shares out
of authorized but unissued Shares or reacquired Shares of its capital stock, as
the Board and/or Committee, or its delegate, may elect, for the number of Shares
to be delivered. The time of such delivery may be postponed by the Company for
such period as may be required for it with reasonable diligence to comply with
such procedures as may, in the opinion of counsel to the Company, be desirable
in view of federal and state laws, including corporate securities laws and
revenue and taxation laws. If the optionee (or other person entitled to exercise
the option) fails to accept delivery of any or all of the number of Shares
specified in such notice upon tender of delivery of the certificates
representing them, the right to exercise the option with respect to such
undelivered Shares may be terminated.

            c. Option Term. The Committee and/or Board or its delegate may
grant options for any term, but shall not grant any options for a term longer
than ten (10) years from the date the option is granted (except in the case of
an incentive stock option granted to a Principal Shareholder in which



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case the term shall be no longer than five (5) years from the date the option is
granted). Each option shall be subject to earlier termination as provided in
this section 6 of this Plan.

            d. Exercise of Options. Each option granted under this Plan shall
be exercisable on such date or dates, upon or after the occurrence of certain
events, or upon or after the achievement of certain performance milestones
(which dates may be accelerated or which occurrences or achievements may be
waived in whole or in part or extended at the discretion of the Committee and/or
Board or its delegate) and during such period and for such number of Shares as
shall be determined by the Committee and/or Board or its delegate. An incentive
option granted to a non-officer may not be exercised at any time unless the
optionee shall have continuously served, to the extent determined by the
Committee and/or Board or its delegate, as an employee of the Company or its
subsidiary throughout a period commencing at the date an option is granted and
ending no more than three (3) months and no less than thirty (30) days before an
attempted exercise of the option, and, if applicable, unless the Committee
and/or Board or its delegate shall determine and notify the optionee in writing
that certain events have occurred or certain performance milestones have been
achieved.

            e. Nonassignability of Option Rights. No option shall be assignable
or transferable by the optionee except by will or by the laws of descent and
distribution. During the life of an optionee, the option shall be exercisable
only by the optionee.

            f. Effect of Termination of Employment or Death or Disability. In
the event the optionee's employment with the Company and/or its subsidiaries
ceases, as determined by the Committee, during the optionee's lifetime for any
reason, including retirement, any incentive option or unexercised portion
thereof granted to a non-officer optionee which is otherwise exercisable shall
terminate unless exercised within a period not to exceed three (3) months nor to
be less than thirty (30) days of the date on which such employment ceased but
not later than the date of expiration of the option period. In the event of the
death or disability (as defined in Code Section 22(e)(3)) of the optionee while
employed or within a period not to exceed three months nor to be less than
thirty (30) days of the date on which such employment ceases, any option or
unexercised portion thereof granted to the optionee, if otherwise exercisable by
the optionee at the date of death or disability, may be exercised by the
optionee (or by the optionee's personal representatives, heirs or legatees) at
any time prior to the expiration of one year from the date of death or
disability of the optionee but not later than ten (10) years from the date of
grant of such option except that, in the case of an incentive option granted to
a Principal Shareholder, not later than five (5) years from the date of grant of
such option.

            g. Rights of Optionee. The optionees shall have no rights as a
stockholder with respect to any Shares subject to an option until the date of
issuance of a stock certificate to the optionee for such Shares. No adjustment
shall be made for dividends or other rights of which the record date is prior to
the date such stock certificate is issued. Neither this Plan, nor any action or
agreement thereunder, shall confer any rights of employment, any rights to
election or retention as an officer or director, or any rights to serve as a
consultant.

        7. Use of Proceeds. The proceeds from the sale of stock pursuant to
options granted under this Plan shall constitute general funds of the Company.

        8. Amendment of Plan. The Board of Directors may at any time amend this
Plan, provided that no amendment may affect any then outstanding options or any
unexercised portions thereof absent the optionee's consent, and provided further
that any such amendment materially increasing the number of Shares reserved
under this Plan, materially altering the persons or class of persons eligible to
be granted



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stock options under this Plan, causing options granted to employees and intended
to be incentive options under this Plan not to qualify as "incentive stock
options" under Section 422A of the Code, or amending this Section 8 shall be
subject to shareholder approval. Any amendment to this Plan which would cause
the acquisition or disposition of an option granted under this Plan by an
officer or director of the Company not to be exempt from the operation of
Section 16(b) of the Securities Exchange Act of 1934 pursuant to rules and
regulations promulgated pursuant to such Section, case law or SEC releases or
no-action letters interpreting such Section, or new Federal statute or
amendments to such Section, shall also be subject to shareholder approval.

   
        9. Effective Date and Termination of Plan. This Plan was adopted by the
Board of Directors on November 30, 1990, and was approved by the shareholders on
March 1, 1991. This Plan was most recently amended by the board of directors on
May 12, 1997, which amendment was approved by the shareholders on September 26,
1997. The Board may terminate this Plan at any time. If not earlier terminated,
this Plan shall terminate November 30, 2000. Termination of this Plan will not
affect rights and obligations theretofore granted and then in effect.
    

            This Plan, the granting of any option hereunder, and the issuance of
stock upon the exercise of any option, shall be subject to such approval or
other conditions as may be required or imposed by any regulatory authority
having jurisdiction to issue regulations or rules with respect thereto,
including the securities laws of various governmental entities.

        10. Automatic Option Grants to Directors. Subject to registration and
qualification under federal and state securities laws as is advised by counsel,
the Company's current and future directors are hereby granted options under this
Plan as follows: (i) on the date of the Company's Annual Meeting of
Shareholders, each of the Company's directors who serves as a member of the
Stock Option Committee, who is re-elected at such meeting to another term as a
director, and who has served the Company as a director for the immediately
preceding nine-month period, shall automatically and without any further action
by the Board be granted a Non-Statutory Stock Option to purchase 6,000 shares of
the Company's Common Stock; and (ii) on the date any person first becomes a
director, whether through election by the Company's shareholders or appointment
by the Board of Directors to fill a vacancy, each such person shall
automatically and without further action by the Board be granted a Non-Statutory
Stock Option to purchase 15,000 shares of the Company's Common Stock.

            The exercise price for such options shall be equal to the trading
price of the Company's stock on the date of grant in the over-the-counter market
calculated pursuant to subparagraphs (b) and (c) of Section 20.2031-2 of the
Treasury Regulations. The date of grant of an option shall, for all purposes, be
the date determined in accordance with the terms of this Section 10. The
foregoing options shall be for a term of five years and are to be exercisable as
follows: (i) the 6,000 option share grants to re-elected directors shall be
immediately exercisable in full; and (ii) the 15,000 option share grants to
newly elected or appointed directors shall be exercisable in cumulative
increments of one-third each at the end of 24 months, 36 months, and 48 months
if the optionee is still a director of the Company or its subsidiaries. Upon the
occurrence of an event described in Section 5(b) of this Plan, the number of
option shares which a director shall be granted pursuant to the foregoing
formula, and the class of stock which is the subject of such option grant, shall
be automatically adjusted such that directors receiving an automatic option
grant subsequent to the occurrence of such event shall receive the same
aggregate number of option shares, and would then hold the same class of stock,
as if such director had been granted the option prior to the occurrence of such
event.



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            In the event an automatic option grant(s) pursuant to this Section
10 would result in option shares having been granted in excess of the number of
option shares then remaining available for grant under this Plan, then such
option grant(s) shall be made contingent upon a proper amendment to this Plan to
accommodate such grants.

            Notwithstanding Section 8 of this Plan, the foregoing automatic
option grant formula may not be amended more than once every six months, other
than to comport with changes to the Internal Revenue Code, the Employee
Retirement Income Security Act, or the rules thereunder.

        11. Limited Authority to Alter Terms of Options. Within the parameters
of Section 6 of this Plan, the Board of Directors may, at their discretion,
alter the terms of options to be granted pursuant to Section 10 hereof, or which
were previously granted pursuant to Section 10 hereof, except insofar as a term
relates to (a) the persons eligible to participate in the automatic option grant
program, or (b) the timing, pricing, or amount of an option granted or to be
granted pursuant to such Section 10.

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Attachment


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                                  ATTACHMENT A
                            TO 1991 STOCK OPTION PLAN


                         DREXLER TECHNOLOGY CORPORATION
                             COMPENSATION COMMITTEE
                POLICY GUIDELINE FOR ADJUSTMENT OF STOCK OPTIONS
                         IN THE EVENT OF AN ACQUISITION

                                November 30, 1990


Background

        The Company's 1991 Stock Option Plan (the "Plan") presently provides
that in the event of a merger or other recapitalization, this Committee or the
Board of Directors shall make appropriate adjustments to the terms of the
outstanding options. The Plan gives only minor guidance as to what adjustments
would be considered "appropriate."

Policy

        (1)    In the event of the acquisition of all or substantially all of
               the Company's assets or capital stock, adjustments are deemed
               "appropriate" if:

               (a)    The vested portion of options may be exercised prior to
                      the acquisition on not less than 30 days' notice; and

               (b)    Arrangements are made so that subject to continued
                      employment of the optionee with the successor corporation,
                      the unvested portion of options will receive one of the
                      following benefits:

                      (i)    A replacement option that can be exercised on the
                             same vesting schedule at the same total exercise
                             price to purchase the stock or other securities of
                             the successor corporation that would have been
                             received had the unvested option shares been
                             outstanding at the time of the acquisition; or

                      (ii)   A cash payment made with respect to each option
                             share at the time of vesting equal to the excess of
                             the per-share value paid for the acquisition
                             (whether in cash or in securities of the successor
                             corporation) over the option exercise price.



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        (2)    In the event the employment relationship between the employee and
               the successor corporation is terminated within one year of the
               date of the sale of the Company, it is intended that 100% of the
               remaining unvested portion of all options held by such employee
               on the date of the sale of the Company would vest and remain
               exercisable for at least 90 days after the termination, provided
               that:

               (a)    The employee had been employed by the Company continuously
                      (except for approved leaves of absence) for at least two
                      years prior to the date of the sale of the Company; and

               (b)    The employment relationship of the successor corporation
                      and the employee was not terminated by either:

                      (i)    Resignation by the employee; or

                      (ii)   By the successor corporation due to acts of moral
                             turpitude on the part of the employee such as
                             theft, embezzlement, fraud, dishonesty,
                             misappropriation or conversion of funds committed
                             against the Company or successor corporation, or
                             due to the employee's material breach of an
                             agreement with the Company or successor corporation
                             concerning disclosure and ownership of inventions,
                             conflict of interest, or confidentiality of
                             information.

        In the event the successor corporation had not assumed outstanding
Company options but rather was paying deferred compensation whenever Company
options vested, then the successor corporation would pay the employee the amount
corresponding to such accelerated vesting.

Effect

        This policy guideline may be changed at any time by this Committee or
the Company's Board of Directors. It does not constitute a part of this Plan.
The right of the Company or its successors to terminate the employment of an
optionee, with or without cause, shall not be affected by this guideline.



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