**IRVINE SENSORS CORPORATION****EXECUTIVE SALARY CONTINUATION PROGRAM**Amendedand Restated Effective December 26, 2007.**RECITALS**     This Irvine Sensors Corporation Executive Salary Continuation Program (the “Plan”) wasestablished for the benefit of certain of its executive employees. The purpose of the Plan is toprovide those employees with an opportunity for income upon separation from service based generallyon their age at termination and length of service with the Employer as well as certain othercorporate events. The Plan is intended to be a “top-hat” plan (i.e., an unfunded deferredcompensation plan maintained for a select group of management or highly compensated employees)under Section 201(2), 301(a)(3), and 401(a)(1) of the Employee Retirement Income Security Act of1974 (“ERISA”). The Plan was initially adopted by Irvine Sensors Corporation (the “Employer”)effective January 1, 1995, and is hereby amended and restatedeffective as of December 26, 2007.     The terms of this Restatement shall apply to: (i) deferred compensation that relates all orin part to services performed on or after January 1, 2005 (*i.e*., deferred compensation which issubject to Code Section 409A), and (ii) deferred compensation that relates entirely to servicesperformed on or before December 31, 2004 (*i.e*., deferred compensation which is not subject to CodeSection 409A) if such deferred amounts were not yet paid from the Plan as of the adoption of thisRestatement. The terms of this Restatement are generally effective December 26, 2007, with theexception that the $137,000 annual benefit limitation described in Section 3.2, the rules regardingcommencement at age sixty-two (62) described in Section 3.4, the benefit reduction described inSection 3.4, and the rules regarding retired directors in Section 7.8 were effective on February26, 1998.     Accordingly, the following Restatement is adopted:**ARTICLE I**     1. **ACCRUED SALARY CONTINUATION AMOUNT**means the salary continuation percentage (which may bestated as a monthly dollar amount payable for a Participant’s life) accrued on behalf of aParticipant under the terms of this Plan determined as of a date of reference.
 

 
     2. **AGE and SERVICE**mean, for purposes of computing the Accrued Salary Continuation Amount, theattained age or length of service (in whole years measured from his or her date of birth and dateof hire with the Employer respectively) determined as of his or her most recent proceeding birthdayor employment anniversary date.     3. **CODE**means the Internal Revenue Code of 1986 and the regulations thereunder, as amendedfrom time to time.     4. **COMPENSATION**for this purpose means the average of the base salary of the Participant(i.e., total taxable salary and wages minus bonuses) paid by the Employer from the thirty-six (36)consecutive months preceding the Participant’s Separation from Service.     5. **EFFECTIVE DATE**means the effective date of the Plan, which shall be January 1, 1995 (asauthorized in Board resolutions adopted September 16, 1994).     6. **ELIGIBLE EMPLOYEE**means, for any Plan Year (or applicable portion thereof), a personemployed by the Employer who is determined by the Employer to be a member of a select group ofmanagement or highly compensated employees under ERISA and who, when so designated by the Employer,will be a Participant under the Plan.     7. **EMPLOYER**means Irvine Sensors Corporation, a Delaware Corporation, and its successors andassigns unless otherwise herein provided, or any other corporation or business organization which,with the consent of Irvine Sensors Corporation, or its successors or assigns, assumes theemployer’s obligations hereunder, or any other corporation or business organization which agrees,with the consent of Irvine Sensors Corporation, to become a party to the Plan.     8. **ENTRY DATE**with respect to an individual means the first day of the pay period followingthe date on which the individual first becomes a Participant.     9. **PARTICIPANT**means any person so designated in accordance with the provisions of Article II,including, where appropriate according to the context of the Plan, any former employee who is ormay become eligible to receive a benefit under the Plan.     10. **PARTICIPATION ENROLLMENT PACKAGE**means the materials provided to a Participant upondesignation to participate which includes at least a Participant notification letter, a copy of thePlan, and an Acceptance of Terms form on which a Participant accepts participation hereunder.     11. **PLAN**means this Irvine Sensors Corporation Executive Salary Continuation Program, as itmay be amended from time to time.     12. **PLAN YEAR**means the twelve (12) month period ending on the December 31 of each year duringwhich the Plan is in effect.     13. **RESTATEMENTDATE**means December 26, 2007.     14. **SALARY CONTINUATION BENEFITS**means any benefits to which the Participant is entitled underthe terms of this Plan.
 

 
**ARTICLE II — ELIGIBILITY AND PARTICIPATION**     1. **REQUIREMENTS**. Every Eligible Employee shall be eligible to become a Participant upon beingdesignated as such by, the Employer. Any eligible Employee so designated on the Effective Datehereof shall become a Participant as of that date of the entire Plan Year which includes theEffective Date and each Plan Year thereafter until benefits are paid in full or the Plan isspecifically terminated with respect to that Employee by action of the Employer. Any eligibleEmployee after the Effective Date may become a Participant only when so designated by the Employer,provided that no individual shall become a Participant if he or she is not an Eligible Employee onhis or her Entry Date.     2. **ACCEPTANCE**. Participation in the Plan is voluntary. In order to participate, an otherwiseeligible Employee must make a written acceptance in such manner as may be required by Section 3.1and by the Employer and must agree to all the terms hereof as provided in Article III.     3. **RE-EMPLOYMENT**. If a Participant who has a Separation from Service with the Employer issubsequently re-employed as an Eligible Employee, whether or not payments have begun under thePlan, he or she shall again become a Participant in accordance with the provisions of Section 2.1.(See Section 5.3 regarding the effect of a Participant’s re-employment.)     4. **CHANGE OF EMPLOYMENT CATEGORY**. During any period in which a Participant remains in theemploy of the Employer, but ceases to be an Eligible Employee, he or she shall accrue no increasesin his or her Accrued Salary Continuation Amounts but shall have no previously Accrued SalaryContinuation Amounts reduced by virtue of said change in employment category. If it is determinedthat any Participant is not part of a select group of management or highly compensated employees asdescribed under ERISA Sections 201(2), 301(a)(3), and 401(a)(1), the Participant may no longerparticipate in the Plan, with the result that his benefit will be paid out immediately.**ARTICLE III — BENEFITS**     1. **COMMENCEMENT OF PARTICIPATION**. In accordance with rules established by the Employer, inorder to be a Participant, an Eligible Employee must first be so designated and then must acceptsuch designation on forms provided and in the manner prescribed by the Employer.
 

 
     2. **COMPUTATION OF SALARY CONTINUATION BENEFITS**. At the time benefits are to be paid, eachParticipant shall be entitled to Salary Continuation Benefits equal to his or her Accrued SalaryContinuation Amount. The Participant’s Accrued Salary Continuation Amount shall be a percentage ofCompensation determined based on the following schedule:   Where the Sum of The Percentage of CompensationAge and Service Equal: Will Be:less than 78 0%   78 50%   80 55%   82 60%   84 70%   86 80%   88 or more 81%Notwithstanding the foregoing, the Participant’s Salary Continuation Benefits will be reduced inaccordance with Section 3.4 below (if applicable).Notwithstanding the foregoing, no Participant’s Salary Continuation Benefits shall exceed $137,000per year.     3. **NO FRACTIONAL COMPUTATIONS**. All benefits hereunder shall be computed in whole years andwhole percentages based on the schedule in 3.2 above. There shall be no fractional accrual ofadditional benefits for attainment of less than whole years of age or service.
 

 
     4. **TIMING OF BENEFITS**. A Participant shall become entitled to payment of Salary ContinuationBenefits hereunder based on the sum of age and service upon his or her Separation from Service onor after attainment of age sixty-two (62) as an Eligible Employee. Depending upon theParticipant’s age at the time Salary Continuation Benefits commence, the Participant’s SalaryContinuation Benefits will be reduced in accordance with the following schedule:     The Participant’s Salary  Continuation Benefits Shall EqualWhen the Participant’s Age at  the Following Percentage of theSeparation from Service Equals: Amount Calculated in Section 3.2:Under 62 Not Eligible for Salary