Irvine Sensors Corporation (NASDAQ:IRSND) announced today that it has executed a binding Memorandum of Understanding ("MOU") with its senior lenders, Longview Fund, LP and Alpha Capital Anstalt, for a workout plan intended to retire the debt held by those lenders, which constitutes substantially all of the Company's long-term debt. The workout plan involves the UCC sale of the assets of Irvine's wholly owned subsidiary, Optex Systems, Inc. ("Optex"), for which the senior lenders have committed to credit bid a minimum of $15 million. Following the consummation of such a sale, Irvine's obligations for principal and deferred interest owed to the senior lenders are expected to be less than $4 million. The senior lenders have agreed to exchange these residual obligations for a new class of non-voting convertible preferred stock of Irvine Sensors upon the Company's closing of anticipated debt or equity financings. The MOU also contemplates an orderly transition of Optex's operations to maintain its on-going business and a possible future relationship between Optex and Irvine Sensors, in which Optex may act as a contract manufacturer for Irvine Sensors.

John Carson, CEO of Irvine Sensors said, "We are excited about this amicable workout, as it allows us to eliminate our heavy debt burden and concentrate on exploiting our proprietary technology to pursue a growing number of opportunities in our core markets."

Irvine Sensors Corporation (http://www.irvine-sensors.com/ [1]), headquartered in Costa Mesa, California, is a vision systems company engaged in the development and sale of miniaturized infrared and electro-optical cameras, image processors and stacked chip assemblies and research and development related to high density electronics, miniaturized sensors, optical interconnection technology, high speed network security, image processing and low-power analog and mixed-signal integrated circuits for diverse systems applications.