Contract for up to $81 Million Is Awarded to Drexler Technology For LaserCard Optical Memory Cards.

Government and Business Editors, Technology Writers

MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)--June 7, 2000

Drexler Technology Corporation (Nasdaq:DRXR) announced today that the U.S. government, through a prime contractor, has awarded Drexler a subcontract with an authorized maximum of $81 million over a period of up to five years. Under the subcontract, Drexler will supply up to 24 million LaserCard(R) optical memory cards at an average selling price of about $3.40 per card.

The contract for 24 million optical memory cards, the largest in Drexler Technology's history, provides that each order release to Drexler will be for quantities of not less than one million cards per order, under an initial one-year contract period and four additional one-year contract options.

These Drexler digital optical memory cards are slated for use as U.S. Department of State (DoS) "Laser Visa" cards for frequent visitors from Mexico and as U.S. Immigration and Naturalization Service (INS) Permanent Resident "Green Cards" conferring the right to live and work in the United States.

Company president, Richard M. Haddock, commented that "this follow-on contract for Green Cards and Laser Visas solidifies Drexler Technology's role as a world-class manufacturer of the most advanced digital data cards for national ID cards, resident immigrant cards, border crossing cards, and travel document cards."

Headquartered in Mountain View, Drexler Technology Corporation (www.lasercard.com) is the world's leading manufacturer of credit-card sized optical memory cards that store up to 4 megabytes of data and PC-like hybrid smart cards that store over 1 megabyte of optical data plus semiconductor memory. Drexler's wholly owned subsidiary, LaserCard Systems Corporation, manufactures the reader/writer drives used with optical memory cards and develops and markets LaserCard(R) optical memory card systems and related software. Drexler Technology has been issued more than 50 United States Patents related to optical memory cards, systems, and optical storage media plus a total of about 70 foreign counterpart patents granted in a dozen countries. Drexler Technology has approximately 9.8 million shares outstanding and reported net income of $5,360,000 for the fiscal year ended March 31, 2000.

Forward-Looking Statements: Certain statements made above relating to plans, objectives, and economic performance go beyond historical information and may provide an indication of future results. To that extent, they are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and each is subject to factors that could cause actual results to differ from those in the forward-looking statement. Such factors are described in the Drexler Technology Corporation Report on Form 10-K and other documents filed by the Company from time to time with the Securities and Exchange Commission. The Company's business plan depends upon the initiation and growth of new programs utilizing the Company's card products and is subject to adverse economic and technological developments. Card delivery rates depend upon the issuance of corresponding order releases by the U.S. government, which reserves the right to withhold order releases, to reduce the quantities released, and to extend delivery dates. The results of operations for the fiscal year ended March 31, 2000, reported on May 1, 2000, are not necessarily indicative of results for subsequent years.

Note to Editors: LaserCard is a trademark of Drexler Technology Corporation.