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                                                                   Exhibit 10.26
                                                                   -------------
IMPERIAL BANK
Member FDIC


226 Airport Parkway
San Jose,CA  95110                                             
                                                             November 12, 1996

Subject:   Credit Terms and Conditions ("Agreement")    Borrower: DataRace, Inc.

Gentlemen:

To induce you to make loans to the undersigned (herein called "Borrower"),
and in consideration of any loan or loans you, in your sole discretion may make
to Borrower, Borrower warrants and agrees as follows:

A.   Borrower represents and warrants that:

     1.   EXISTENCE AND RIGHTS.
              Borrower is a Texas corporation

Borrower is duly organized and existing and in good standing under the laws of 
the State of Texas and is authorized to do business in the State of Texas.  
Borrower has powers and adequate authority, rights and franchises to own its 
property and to carry on its business as now conducted, and is duly qualified 
and in good standing in each State in which the character of the properties 
owned by it therein or the conduct of its business makes such qualification 
necessary, and Borrower has the power and adequate authority to make and carry 
out this Agreement.  Borrower has no investment in any other business entity.

     2.   AGREEMENT AUTHORIZED.  The execution, delivery and performance of this
Agreement are duly authorized and do not require the consent or approval of any
governmental body or other regulatory authority; are not in contravention of or
in conflict with any law or regulation or any term or provision of Borrower's
articles of incorporation, by-laws, or Articles of Association as the case may
be, and this Agreement is the valid, binding and legally enforceable obligation
of Borrower in accordance with its terms.

     3.   NO CONFLICT.  The execution, delivery and performance of this 
Agreement are not in contravention of or in conflict with any agreement, 
indenture or undertaking to which Borrower is a party or by which it or any of
its property may be bound or affected and do not cause any lien, charge or other
encumbrance to be created or imposed upon any such property by reason thereof.

     4.   LITIGATION.  There is no litigation or other proceeding pending or to 
Borrower's knowledge threatened against or affecting Borrower, and Borrower is 
not in default with respect to any order, writ, injunction, decree or demand of 
any court or other governmental or regulatory authority.

     5.   FINANCIAL CONDITION.  The balance sheet of Borrower as of June 96, and
the related profit and loss statement for the 1 month ended on that date, a copy
of which has heretofore been delivered to you by Borrower, and all other
statements and data submitted in writing by Borrower to you in connection with
this request for credit are true and correct, and said balance sheet and profit
and loss statement truly present the financial condition of Borrower as of the
date thereof and the results of the operations of Borrower for the period
covered thereby, and have been prepared in accordance with generally accepted
accounting principles on a basis consistently maintained. Since such date there
have been no materially adverse changes in the financial condition or business
of Borrower. Borrower has no knowledge of any liabilities, contingent or
otherwise, at such date not reflected in said balance sheet, and Borrower has
not entered into any special commitments or substantial contracts which are not
reflected in said balance sheet, other than in the ordinary and normal course of
its business, which may have a materially adverse effect upon its financial
condition, operations or business as now conducted.

     6.   TITLE TO ASSETS.  Borrower has good title to its assets, and the same 
are not subject to any liens or encumbrances other than those permitted by 
Section C.3 hereof.

     7.   TAX STATUS.  Borrower has no liability for any delinquent state, local
or federal taxes, and if Borrower has contracted with any government agency, 
Borrower has no liability for renegotiation of profits.

     8.   TRADEMARKS, PATENTS.  Borrower, as of the date hereof, possesses all 
necessary trademarks, trade names, copyrights, patents, patent rights, and 
licenses to conduct its business as now operated, without any known conflict 
with the valid trademarks, trade names, copyrights, patents and license rights 
of others.

     9.   REGULATION U.  The proceeds of this loan shall not be used to purchase
or carry margin stock (as defined with Regulation U of the Board of Governors of
the Federal Reserve system).
     
B.   Borrower agrees that so long as it is indebted to you, it will, unless you 
shall otherwise consent in writing:

     1.   RIGHTS AND FACILITIES.  Maintain and preserve all rights, franchises 
and other authority adequate for the conduct of its business; maintain its 
properties, equipment and facilities in good order and repair, conduct its 
business in an orderly manner without voluntary interruption and, if a 
corporation or partnership, maintain and preserve its existence.

     2.   INSURANCE.  Maintain public liability, property damage and workers' 
compensation insurance and insurance on all its insurable property against fire
and other hazards with responsible insurance carriers to the extent usually 
maintained by similar businesses.

     3. TAXES AND OTHER LIABILITIES. Pay and discharge, before the same become
delinquent and before penalties accrue thereon, all taxes, assessments and
governmental charges upon or against it or any of its properties, and all its
other liabilities at any time existing, except to the extent and so long as: (a)
The same are being contested in good faith and by appropriate proceedings in
such manners as not to cause any materially adverse effect upon its financial
condition or the loss of any right of redemption from any sale thereunder, and
(b) it shall have set aside on its books reserves (segregated to the extent
required by generally accepted accounting practice) deemed by it adequate with
respect thereto.

     4.   RECORDS AND REPORTS.  Maintain a standard and modern system of 
accounting in accordance with generally accepted accounting principles on a 
basis consistently maintained; permit your representatives to have access to, 
and to examine its properties, books and records in all reasonable times; and 
furnish you:
(a)  As soon as available, and in any event within 25 days after the close of 
each month of each fiscal year of Borrower, commencing with the month next 
ending, a balance sheet, profit and loss statement and reconciliation of 
Borrower's capital accounts as of the close of such period and covering 
operations for the portion of Borrower's fiscal year ending on the last day of 
such period, all in reasonable detail and stating in comparative form the 
figures for the corresponding date and period in the previous fiscal year, 
prepared in accordance with generally accepted accounting principles on a basis 
consistently maintained by Borrower and certified by an appropriate officer of 
Borrower, subject, however, to year-end audit adjustments;
(b)  As soon as available, and in any event within 90 days after the close of 
each fiscal year of Borrower, a report of audit of Company as of the close of 
end for such fiscal year, all in reasonable detail and stating in 
comparative form the figures as of the close of and for the previous fiscal 
year, with the unqualified opinion of accountants satisfactory to you.

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(c) Within 45 days after the close of each quarter of each fiscal year of 
Borrower, a certificate by chief financial officer or partner of Borrower, 
stating that Borrower has performed and observed each and every covenant 
contained in this Letter of Inducement to be performed by it and that no event 
has occurred and no condition then exists which constitutes an event of default 
hereunder or would constitute such an event of default upon the lapse of time or
upon the giving of notice and the lapse of time specified herein, or, if any 
such event has occurred or any such conditions exists, specifying the nature 
thereof;

(d) Promptly after the receipt thereof by Borrower, copies of any detailed 
audit reports submitted to Borrower by independent accountants in connection 
with each annual or interim audit of the accounts of Borrower made by such 
accountants;

(e) Promptly after the same are available, copies of all such proxy statements, 
financial statements and reports as Borrower shall send to its stockholders, if 
any, and copies of all reports which Borrower may file with the Securities and 
Exchange Commission or any governmental authority at any time substituted 
therefor; and

(f) Such other information relating to the affairs of Borrower as you reasonably
may request from time to time.

(g) Notice of Default. Promptly notify the Bank in writing of the occurrence of 
any event of default hereunder or any event which upon notice and lapse of time 
would be an event of default.

C.  Borrower agrees that so long as it is indebted to you, it will not, without 
your written consent:

    1.  TYPE OF BUSINESS; MANAGEMENT.  Make any substantial change in the 
character of its business: or make any change in its executive management.

    2.  OUTSIDE INDEBTEDNESS.  Create, incur, assume or permit to exist any 
indebtedness for borrowed moneys other than loans from you except obligations 
now existing as shown in financial statement dated June 96, excluding those 
being refinanced by your bank; or sell or transfer, either with or without 
recourse, any accounts or notes receivable or any moneys due to become due.

    3.  LIENS AND ENCUMBRANCES.  Create, incur, or assume any mortgage, pledge 
encumbrance, lien or charge of any kind (including the charge upon property at 
any time purchased or acquired under conditional sale or other title retention 
agreement) upon any asset now owned or hereafter acquired by it, other than 
liens for taxes not delinquent and liens in your favor.

    4.  LOANS, INVESTMENTS, SECONDARY LIABILITIES.  Make any loans or advances 
to any person or other entity other than in the ordinary and normal course of 
its business as now conducted or make any investment in securities other than 
United States Government Treasuries or Agencies, Imperial Bank sponsored paper, 
or the Monarch Money Market Funds; or guarantee or otherwise become liable upon 
the obligations of any person or other entity, except by endorsement of 
negotiable instruments for deposit or collection in the ordinary and normal 
course of its business.

     5.  ACQUISITION OR SALE OF BUSINESS; MERGER OR CONSOLIDATION.  Purchase or 
otherwise acquire the assets or business of any person or other entity; or 
liquidate, dissolve, merge or consolidate, or commence any proceedings 
therefor: or sell any assets except in the ordinary and normal course of
business as now conducted: or sell, lease, assign, or transfer any substantial
part of its business or fixed assets, or any property or other assets necessary
for the continuance of its business as now conducted including without
limitation the selling of any property or other asset accompanied by the leasing
back of the same.

     6.  DIVIDENDS, STOCK PAYMENTS.  If a corporation, declare or pay any 
dividend (other than dividends payable in common stock of Borrower) or make any 
other distribution on any of its capital stock now outstanding or hereafter 
issued or purchase, redeem or retire any of such stock.

D.   The occurrence of any one of the following events of default shall, at your
option, terminate your commitment to lend and make all sums of principal and 
interest then remaining unpaid on all Borrower's indebtedness to you due and 
payable, within 10 days, all without demand, presentment or notice, all of which
are hereby expressly waived:

     1.  FAILURE TO PAY NOTE. Failure to pay any installment of principal or of
interest on any indebtedness of Borrower to you.

     2.  BREACH OF COVENANT.  Failure of Borrower to perform any other term or 
condition of this Agreement binding upon Borrower.

     3.  BREACH OF WARRANTY.  Any of Borrower's representations or warranties 
made herein or any statement or certificate at any time given in writing 
pursuant hereto or in connection herewith shall be false or misleading in any 
material respect.

     4.  INSOLVENCY; RECEIVER OR TRUSTEE.  Borrower shall become insolvent; or 
admit its inability to pay its debts as they mature; or make an assignment for 
the benefit of creditors; or apply for or consent to the appointment of a 
receiver or trustee for it or for a substantial part of its property or 
business.

     5.  JUDGEMENTS, ATTACHMENTS.  Any money judgement, writ or warrant of 
attachment, or similar process shall be entered or filed against Borrower or any
of its assets and shall remain unvacated unbonded or unstayed for a period of 10
days or in any event later than five days prior to the date of any proposed sale
thereunder.

     6.  BANKRUPTCY.  Bankruptcy, insolvency, reorganization or liquidation 
proceedings or other proceedings for relief under any bankruptcy law or any law 
for the relief of debtors shall be instituted by or against Borrower and, if 
instituted against it, shall be consented to.

E.   MISCELLANEOUS PROVISIONS.

     1.  FAILURE OR INDULGENCE NOT WAIVER.  No failure or delay on the part of 
your Bank or any holder of Notes issued hereunder, in the exercise of any power,
right or privilege hereunder shall operate as a waiver thereof, nor shall any 
single or partial exercise of any such power, right or privilege preclude other
or further exercise thereof or of any other right, power or privilege.  All 
rights and remedies existing under this agreement or any note issued in 
connection with a loan that your Bank may make hereunder, are cumulative to, and
not exclusive of, any rights or remedies, otherwise available.


The Commitment Letter dated October 3, 1996, is attached hereto and incorporated
herein by this reference for additional terms.  In the event of a conflict 
between this Agreement and the Letter, the terms in the Letter shall take 
precedence.



DataRace, Inc.


BY /s/  GREGORY T. SKALLA
  ----------------------------
  (Authorized Signature)


BY  Gregory T. Skalla
  ----------------------------
  (Print Name)

BY  CFO
  ----------------------------
  (Title)