Exhibit 10.1


 


PROMISSORY NOTE


(Revolving Loan)


 


	
  $700,000.00

  	
   

  	
  Effective
  January 30, 2008

  



 


FOR VALUE RECEIVED, on or before December 31,
2008 (“Maturity Date”), INTRUSION INC., a Delaware corporation (“Borrower”),
promises to pay to the order of G. WARD PAXTON, of Richardson, TX(“Payee”),
at 1101 E. Arapaho Road, Suite 200, the principal amount of SEVEN HUNDRED
THOUSAND AND NO/100 DOLLARS ($700,000.00), or such lesser amount as may have
been advanced by Payee to Borrower pursuant to this Promissory Note (“Note”),
together with interest on the unpaid principal balance of this Note from time
to time outstanding at a floating rate per annum equal to one percent (1%)
above the Prime Rate (as hereinafter defined), calculated on the basis of
actual days elapsed but computed as if each year consisted of 360 days.  As used herein, the term “Prime Rate”
shall mean the most recently announced “prime rate” of Silicon Valley Bank,
even if it is not such bank’s lowest rate. 
Changes to the interest rate on this Note based upon changes in the
Prime Rate shall be effective on the effective date of any changes to the Prime
Rate and to the extent of any such change.


 


The outstanding principal balance of this Note,
together with all accrued but unpaid interest, shall be due and payable in full
on the Maturity Date.


 


Subject to the terms and conditions of this Note,
Payee has agreed to make advances during the period beginning on the date of
this Note and ending on the Maturity Date in an aggregate principal amount of
up to $700,000 outstanding at any date upon three (3) Business Days prior
written notice.  Payee is authorized to
endorse on the schedule annexed hereto and made a part hereof amounts advanced
to Borrower through the Maturity Date. 
Borrower and Payee have agreed that Payee shall be obligated to make
such advances to Borrower only so long as of the date of each such advance, no
Event of Default (as hereinafter defined) exists or would occur by reason of
the making of such advance.  Subject to
the foregoing, amounts repaid may be reborrowed by Borrower.


 


Borrower may from time to time prepay all or any
portion of the principal of this Note without premium or penalty.  Unless otherwise agreed to in writing, or
otherwise required by applicable law, payments will be applied first to unpaid
accrued interest, then to principal, and any remaining amount to any unpaid
collection costs; provided, however, upon delinquency or other Event of
Default, Payee reserves the right to apply payments among principal, interest
and collection cost, at its discretion. 
All prepayments shall be applied to the indebtedness owing hereunder in
such order and manner as Payee may from time to time determine in its sole
discretion.   All payments and
prepayments of principal of or interest on this Note shall be made in lawful
money of the United States of America in immediately available funds, at the
address of Payee indicated above, or such other place as the holder of this
Note shall designate in writing to Borrower. 
If any payment of principal of or interest on this Note shall become due
on a day which is not a Business Day (as hereinafter defined), such payment
shall be made on the next succeeding Business Day and any such extension of
time shall be included in computing interest in connection with such
payment.  As used herein, the term “Business
Day” shall mean any day other than a Saturday, Sunday or any other day on
which national banking associations are authorized to be closed.


 


Borrower represents and warrants to Payee as follows:


 


(a)           This Note is the
legal, valid and binding obligation of Borrower, enforceable against it in
accordance with its terms.


 


(b)           The approval,
execution, delivery and performance of, and compliance by Borrower with the
terms of this Note, will not cause Borrower to be in violation of any
applicable law or regulation, or of any order or regulation applicable to it.
The approval, execution, delivery and performance of, and compliance by
Borrower with the terms of, this Note will not conflict with or result in a
breach of any of the terms of any material agreement or instrument to which
Borrower is a party or by which it is bound, or constitute a default
thereunder.


 


 


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Borrower agrees that upon
the occurrence of any one or more of the following events of default (“Event
of Default”):


 


(a)           failure
of Borrower to pay any installment of principal of or interest on this Note or
on any other indebtedness of Borrower to Payee when due; or


 


(b)           any
representation or warranty made by Borrower in this Note shall be untrue in any
material respect when made; or


 


(c)           the
bankruptcy or insolvency of, the assignment for the benefit of creditors by, or
the appointment of a receiver for any of the property of, or the liquidation,
termination, dissolution or death or legal incapacity of, any party liable for
the payment of this Note, whether as maker, endorser, guarantor, surety or
otherwise;


 


the holder of this Note may,
at its option, without further notice or demand, (i) declare the outstanding
principal balance of and accrued but unpaid interest on this Note at once due
and payable, (ii) refuse to advance any additional amounts under this
Note, (iii) pursue any and all other rights, remedies and recourses
available to the holder hereof, including but not limited to any such rights,
remedies or recourses at law or in equity, or (iv) pursue any combination
of the foregoing.


 


The failure to exercise the option to accelerate the
maturity of this Note or any other right, remedy or recourse available to the
holder hereof upon the occurrence of an Event of Default hereunder shall not
constitute a waiver of the right of the holder of this Note to exercise the
same at that time or at any subsequent time with respect to such Event of
Default or any other Event of Default. 
The rights, remedies and recourses of the holder hereof, as provided in
this Note, shall be cumulative and concurrent and may be pursued separately,
successively or together as often as occasion therefore shall arise, at the
sole discretion of the holder hereof. 
The acceptance by the holder hereof of any payment under this Note which
is less than the payment in full of all amounts due and payable at the time of
such payment shall not (i) constitute a waiver of or impair, reduce, release
or extinguish any right, remedy or recourse of the holder hereof, or nullify
any prior exercise of any such right, remedy or recourse, or (ii) impair,
reduce, release or extinguish the obligations of any party liable under this
Note as originally provided herein.


 


Notwithstanding anything herein to the contrary, if at
any time the interest rate set forth above, together with all fees, charges and
other amounts which are treated as interest on the indebtedness evidenced by
this Note under applicable law (collectively the “Charges”), shall
exceed the maximum lawful rate (the “Maximum Rate”) which may be
contracted for, charged, taken, received or reserved by Payee in accordance
with applicable law, the rate of interest payable hereunder in respect of such
indebtedness, together with all Charges payable in respect thereof, shall be
limited to the Maximum Rate.


 


If this Note is placed in the hands of an attorney for
collection, or is collected in whole or in part by suit or through probate,
bankruptcy or other legal proceedings of any kind, Borrower agrees to pay, in
addition to all other sums payable hereunder, all costs and expenses of
collection, including but not limited to reasonable attorneys’ fees.


 


Borrower and any and all endorsers and guarantors of this
Note severally waive presentment for payment, notice of nonpayment, protest,
demand, notice of protest, notice of intent to accelerate, notice of
acceleration and dishonor, diligence in enforcement and indulgences of every
kind and without further notice hereby agree to renewals, extensions, exchanges
or releases of collateral, taking of additional collateral, indulgences or
partial payments, either before or after maturity.


 


THIS NOTE HAS BEEN EXECUTED UNDER, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.


 


[Signature
Page Follows]


 


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  BORROWER:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   INTRUSION INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael L. Paxton

  	
   

  
	
   

  	
  Name:

  	
  Michael L. Paxton

  	
   

  
	
   

  	
  Title:

  	
  Vice President and Chief
  Financial Officer

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ACKNOWLEDGED AND AGREED:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ G. Ward Paxton

  	
   

  	
   

  	
   

  	
   

  
	
  G. WARD PAXTON

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
						



 


 


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SCHEDULE TO NOTE


 


	
  Advance
  Date

  	
  Principal
  Amount of Advance

  	
  Aggregate
  Principal Balance of Note

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  



 


 


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