<PAGE>
 
                                                                    EXHIBIT 10.2

                                DATA RACE, INC.
                                        
                            SUBSCRIPTION AGREEMENT
                            ----------------------
                                        

CONFIDENTIAL
------------

DATA RACE, Inc.
12400 Network Boulevard
San Antonio, Texas 78249
ATTN:  President

1.  SUBSCRIPTION.  Liviakis Financial Communications, Inc. ("LFC") hereby agrees
    ------------                                                                
    to purchase 977,778 shares (the "Shares") of common stock, no par value
    ("Common Stock"), of DATA RACE, Inc., a Texas corporation (the "Company"),
    and 977,778 common stock purchase warrants (the "Warrants") to purchase an
    aggregate of 977,778 shares of Common Stock (the "Warrant Shares"), on the
    terms and conditions described herein. The purchase price for one Share and
    one Warrant is $2.25. LFC agrees to purchase at least $1,100,000 of Shares
    and Warrants on November 16, 1998, and agrees to purchase $1,100,000 of
    additional Shares and Warrants on or before November 20, 1998. The date of
    any respective purchase is referred to herein as the closing date.

2.  ADDITIONAL PURCHASERS.  The Company acknowledges that LFC has identified up
    ---------------------                                                      
    to four other investors interested in participating in the purchase of the
    Shares and Warrants. The Company agrees that, subject to the limitations
    described herein, LFC may assign its right to purchase up to $1,100,000 of
    Shares and Warrants to up to four other investors, provided that each such
    other investor (i) is an "accredited investor" within the meaning of
    Regulation D promulgated pursuant to the Securities Act of 1933, as amended
    (the "Securities Act"), (ii) executes and delivers to the Company a
    subscription agreement substantially in the same form as this Subscription
    Agreement, and (iii) delivers to the Company the aggregate purchase price
    for the Shares and Warrants purchased by such other investor.
    Notwithstanding LFC's right to permit other investors to participate in the
    purchase of the Shares and Warrants, LFC hereby irrevocably commits to
    purchase on or before November 20, 1998, the additional $1,100,000 of Shares
    and Warrants to the extent not purchased by such other investors as provided
    herein.

3.  ADDITIONAL TERMS OF PURCHASE.
    ---------------------------- 
    (a) Except as provided herein, each Warrant shall entitle the holder to
    purchase one Warrant Share at an exercise price of $2.25 per share, at any
    time on or before the second anniversary of the closing date.
    Notwithstanding the foregoing, the Warrants may be exercised only if the
    Company obtains shareholder approval to increase its
<PAGE>
 
    authorized shares of Common Stock (in the manner described in the
    Company's recent proxy statement), failing which approval the Warrants shall
    not be exercisable. Subject to the specific terms described herein, the
    Warrants shall be evidenced by a Warrant Agreement in form similar to that
    delivered to the purchasers in the Company's July 24, 1998 private
    placement, except that the Warrant Agreement shall contain customary anti-
    dilution provisions for stock splits, reverse stock splits and stock
    dividends and shall contain a net cashless exercise provision permitting the
    holder to pay the exercise price using shares of Common Stock otherwise
    issuable upon exercise of the Warrants evidenced by the Warrant Agreement .

    (b) The Company agrees to uses its best efforts to register the Shares and
    the Warrant Shares for resale under the Securities Act by the holders
    thereof on or before the first anniversary of the closing date. If the
    Company files a Form S-3 registration statement under the Securities Act
    covering the resale of other shares of Common Stock of the Company on or
    after the date of the increase in the Company's authorized shares, then the
    Company shall include in such registration statement the Shares and the
    Warrant Shares for resale by the holders thereof.

    (c) LFC agrees to enter into a "lock-up agreement" pursuant to which LFC
    will be prohibited from selling any Shares or Warrant Shares prior to
    January 1, 2000. Any other investor purchasing Shares and Warrants shall
    enter into a "lock-up agreement" pursuant to which such investor will be
    prohibited from selling any Shares or Warrant Shares prior to the first
    anniversary of the closing date. 

    (d) LFC agrees to enter into an agreement with the Company extending its
    consulting agreement with the Company to January 1, 2000, in consideration
    for the Company's issuance of 200,000 shares of Common Stock (such issuance
    being subject to the increase in the Company's authorized shares). LFC
    agrees that the lock-up on its original consulting agreement shares and the
    additional consulting compensation shares shall be extended to January 1,
    2000.

4.  CERTAIN INVESTMENT RISKS.  LFC acknowledges that an investment in the
    -------------------------                                            
    Company involves a high degree of risk which may result in the loss of the
    entire amount of its investment. LFC acknowledges that there are numerous
    risks associated with an investment in the Company, including, but not
    limited to, those set forth in the Company's filings with the Securities and
    Exchange Commission during the last 12 months (the "SEC Filings"). LFC
    acknowledges that LFC has had full opportunity to review the Company's SEC
    Filings, including, but not limited to, the Company's 10-K filed September
    28, 1998, the Company's definitive proxy statement filed October 14, 1998
    and the Company's Form S-3 Registration Statement filed November 6, 1998,
    and LFC has reviewed the Company's quarterly earnings release for September
    30, 1998. Without limiting the foregoing, LFC acknowledges that the Company
    is not currently in compliance with the Nasdaq National Market net tangible
    assets requirement and LFC acknowledges receipt of a copy of Nasdaq's letter
    to the Company, dated November 4, 1998, notifying the Company of such non-
    compliance. LFC further acknowledges that the issuance of the Shares
    hereunder will require substantially all remaining authorized, but unissued
    shares of Common Stock, and
<PAGE>
 
    there can be no assurance that the Company will receive requisite
    shareholder approval to increase its authorized shares.

5.  INVESTOR REPRESENTATIONS AND WARRANTIES.  LFC represents and warrants to the
    ---------------------------------------                                     
    Company that:

    (a)  The undersigned is an "accredited investor" within the meaning of
Regulation D promulgated pursuant to the Securities Act (insofar as LFC is a
Company, not formed for the specific purpose of acquiring the securities
offered, with total assets in excess of $5,000,000). The undersigned has such
knowledge and experience in financial and business matters that the undersigned
is capable of evaluating the merits and risks of an investment in the Company.
The undersigned has made other investments and, by reason of its business and
financial experience, and skill in investments, the undersigned has the capacity
to protect its own interest in investments of this nature. The undersigned has
carefully evaluated its financial resources and investment position, and the
risks associated with this investment and acknowledges that it is able to bear
the economic risks of this investment. The undersigned represents and warrants
that the investment being made does not exceed 20% of its net worth.

    (b)  All documents, records and books pertaining to the undersigned's
proposed undersigned and its advisors. The undersigned has had an opportunity to
ask questions of and receive satisfactory answers from the Company concerning
the Company and its business and the terms and conditions of an investment in
the Company, and all such questions have been answered to the undersigned's full
satisfaction.

    (c)  The undersigned is not acting on the basis of any promotional sales
materials, or representations and warranties by any person or contained in any
document, except for this document and the SEC Filings and any other documents
or information furnished by the Company upon request by the undersigned. The
undersigned has had full opportunity to be represented by its own legal and tax
counsel.

    (d)  The securities for which the undersigned is subscribing will be 
acquired for its own account for investment purposes only and not with a view
to, or for resale in connection with, any distribution of securities within the
meaning of the Securities Act, and the undersigned does not now have any reason
to anticipate any change in circumstances or other particular occasion or event
which would cause the undersigned to sell or transfer such securities.

    (e)  The address and Social Security number (or, if a Company, partnership
or other form of business, the federal employer identification number) set forth
herein are true and correct. The undersigned is presently a bona fide resident
of the state set forth on the signature page hereof and has no present intention
of becoming a resident of any other state or jurisdiction. If a Company,
partnership, trust or other form of business, the undersigned represents and
warrants that its principal place of business is
<PAGE>
 
within such state. The securities subscribed for have been offered and will be
purchased in such state.

   (f)  The undersigned understands that the undersigned must bear the economic
risk of an investment in the Shares and Warrant Shares for an indefinite period
of time because neither the Shares nor the Warrant Shares have been registered
under any securities laws and therefore cannot be sold without registration
under applicable securities laws or an exemption from such registration is
available.

   (g)  The execution and delivery of this Subscription Agreement and the
purchase of the securities of the Company hereunder is within the undersigned's
power and authority, and have been duly authorized by all necessary action.
Assuming due execution and delivery by the Company, this Subscription Agreement
constitutes a valid and binding obligation, enforceable against the undersigned.

   (h)  The information provided to the Company herein is true and correct in
all respects as of the date hereof. The undersigned agrees to notify the Company
immediately if any of the statements made herein shall become untrue.

        6.  RESTRICTIONS ON TRANSFER.  The undersigned understands that it
            ------------------------        
must bear the economic risk of the purchase of the Shares and Warrant Shares for
an indefinite period of time, because (a) the securities have not been
registered under the Securities Act or applicable state securities laws; (b) the
Shares and Warrant Shares may therefore not be sold, transferred, pledged or
otherwise disposed of unless the shares are subsequently so registered or, in
the opinion of counsel for or satisfactory to the Company, registration under
the Securities Act or any applicable state securities laws is not required; and
(c) the Company is under no obligation to perfect any exemption for resale of
the Common Stock. The Shares, the Warrants and the Warrant Shares will bear
appropriate legends setting forth such restrictions on transfer.

        7.  GENERAL.  This Agreement sets forth the entire understanding
            -------                      
between the parties hereto concerning the subject matter contained herein.
Provisions of this Agreement may be amended or waived only by written instrument
executed by the party against whom enforcement is sought. This Agreement shall
be binding upon the parties and the respective successors and assigns. The
parties agree to execute such additional documents and take such additional
actions as may be reasonably necessary to give effect to the purposes and intent
of this Agreement. This Agreement may be executed in one or more counterparts,
any of which shall be deemed to be an original, all of which taken together
shall constitute one and the same instrument. In the event any provision of this
Agreement is held to be unenforceable or invalid by any court of competent
jurisdiction, the validity and enforceability of the remaining provisions shall
not be affected thereby. This Agreement shall be governed by the laws of the
State of Texas without regard to conflicts of law rules.
<PAGE>
 
THE SECURITIES SUBSCRIBED FOR HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES ACT AND MAY NOT BE
SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF ABSENT SUCH REGISTRATION OR AN
EXEMPTION THEREFROM.

THIS SIGNATURE PAGE SHOULD BE DULY EXECUTED BY THE PURCHASER AND THE ENTIRE
EXECUTED SUBSCRIPTION AGREEMENT SHOULD BE DELIVERED TO DATA RACE, INC., ATTN:
PRESIDENT, AT 12400 NETWORK BOULEVARD, SAN ANTONIO, TEXAS 78216.

================================================================================

     The undersigned hereby irrevocably subscribes for 977,778 Shares and
977,778 Warrants (as defined in the Subscription Agreement), at an aggregate
price of $2,200,000.

     The undersigned represents that the undersigned has read the above
Subscription Agreement and the representations therein made by me are true and
correct.

     IN WITNESS WHEREOF, this Subscription Agreement has been executed by the
undersigned as of November 15, 1998.


                            LIVIAKIS FINANCIAL COMMUNICATIONS, INC.

                            By:  /s/ John Liviakis
                               ___________________________
                            Name: John Liviakis
                                  ------------------------
                            Title: President
                                   _______________________
 
                            Address: 2420 K Street, Suite 200
                                     Sacramento, California 95816

 
 
 

SUBSCRIPTION ACCEPTED:

DATA RACE, INC.

By: /s/ Dr. W. B. Barker
    ------------------------------         
    Dr. W.B. Barker, President and
    Chief Executive Officer

Date: November 15, 1998
<PAGE>
 
                                DATA RACE, INC.
                                        
                             SUBSCRIPTION AGREEMENT
                             ----------------------
                                        

CONFIDENTIAL
------------

DATA RACE, Inc.
12400 Network Boulevard
San Antonio, Texas 78249
ATTN:  President

1.  SUBSCRIPTION.  The undersigned investor ("Investor") hereby agrees to
    ------------                                                         
    purchase 355,555 shares (the "Shares") of common stock, no par value
    ("Common Stock"), of DATA RACE, Inc., a Texas corporation (the "Company"),
    and 355,555 common stock purchase warrants (the "Warrants") to purchase an
    aggregate of 355,555 shares of Common Stock (the "Warrant Shares"), on the
    terms and conditions described herein. The purchase price for one Share and
    one Warrant is $2.25. Investor shall, upon execution hereof, forward payment
    to the Company for the Shares and Warrants in immediately available funds.

2.  ADDITIONAL TERMS OF PURCHASE.
    ---------------------------- 
    (a) Except as provided herein, each Warrant shall entitle the holder to
    purchase one Warrant Share at an exercise price of $2.25 per share, at any
    time on or before the second anniversary of the closing date.
    Notwithstanding the foregoing, the Warrants may be exercised only if the
    Company obtains shareholder approval to increase its authorized shares of
    Common Stock (in the manner described in the Company's recent proxy
    statement), failing which approval the Warrants shall not be exercisable.
    Subject to the specific terms described herein, the Warrants shall be
    evidenced by a Warrant Agreement in form similar to that delivered to the
    purchasers in the Company's July 24, 1998 private placement, except that the
    Warrant Agreement shall contain customary anti-dilution provisions for stock
    splits, reverse stock splits and stock dividends and shall contain a net
    cashless exercise provision permitting the holder to pay the exercise price
    using shares of Common Stock otherwise issuable upon exercise of the
    Warrants evidenced by the Warrant Agreement.

    (b) The Company agrees to use its best efforts to register the Shares and
    the Warrant Shares for resale under the Securities Act by the holders
    thereof on or before the first anniversary of the closing date. If the
    Company files a Form S-3 registration statement under the Securities Act
    covering the resale of other shares of Common Stock of the Company on or
    after the date of the increase in the Company's authorized shares, then the
    Company shall include in such registration statement the Shares and the
    Warrant Shares for resale by the holders thereof.
<PAGE>
 
     (c) Investor agrees to enter into a "lock-up agreement" pursuant to which
     Investor will be prohibited from selling any Shares or Warrant Shares prior
     to the first anniversary of the closing date.

 3.  CERTAIN INVESTMENT RISKS.  Investor acknowledges that an investment in the
     -------------------------                                                 
     Company involves a high degree of risk which may result in the loss of the
     entire amount of its investment. Investor acknowledges that there are
     numerous risks associated with an investment in the Company, including, but
     not limited to, those set forth in the Company's filings with the
     Securities and Exchange Commission during the last 12 months (the "SEC
     Filings"). Investor acknowledges that it has had full opportunity to review
     the Company's SEC Filings, including, but not limited to, the Company's 10-
     K filed September 28, 1998, the Company's definitive proxy statement filed
     October 14, 1998 and the Company's Form S-3 Registration Statement filed
     November 6, 1998, and Investor has reviewed the Company's quarterly
     earnings release for the quarter ended September 30, 1998. Without limiting
     the foregoing, Investor acknowledges that the Company is not currently in
     compliance with the Nasdaq National Market net tangible assets requirement
     and Investor acknowledges receipt of a copy of Nasdaq's letter to the
     Company, dated November 4, 1998, notifying the Company of such non-
     compliance. Investor further acknowledges that the issuance of the Shares
     hereunder will require substantially all remaining authorized, but unissued
     shares of Common Stock, and there can be no assurance that the Company will
     receive requisite shareholder approval to increase its authorized shares.

 4.  INVESTOR REPRESENTATIONS AND WARRANTIES.  Investor represents and warrants
     ---------------------------------------                                   
     to the Company that:

     (a)  The undersigned is an "accredited investor" within the meaning of
     Regulation D promulgated pursuant to the Securities Act. If Investor is a
     corporation, Investor has not been formed for the specific purpose of
     acquiring the securities offered and Investor has total assets in excess of
     $5,000,000. If Investor is an individual, Investor's net worth (or joint
     net worth with Investor's spouse) exceeds $1,000,000, or Investor had
     income in excess of $200,000 in each of the two most recent years (or joint
     income with Investor's spouse in excess of $300,000 in each of those years)
     and Investor has a reasonable expectation of reaching the same income level
     in the current year. The undersigned has such knowledge and experience in
     financial and business matters that the undersigned is capable of
     evaluating the merits and risks of an investment in the Company. The
     undersigned has made other investments and, by reason of its business and
     financial experience, and skill in investments, the undersigned has the
     capacity to protect its own interest in investments of this nature. The
     undersigned has carefully evaluated its financial resources and investment
     position, and the risks associated with this investment and acknowledges
     that it is able to bear the economic risks of this investment. The
     undersigned represents and warrants that the investment being made does not
     exceed 20% of its net worth.
<PAGE>
 
     (b)  All documents, records and books pertaining to the undersigned's 
proposed investment, which have been requested, have been made available to
undersigned and its advisors. The undersigned has had an opportunity to ask
questions of and receive satisfactory answers from the Company concerning the
Company and its business and the terms and conditions of an investment in the
Company, and all such questions have been answered to the undersigned's full
satisfaction.

     (c)  The undersigned is not acting on the basis of any promotional sales
materials, or representations and warranties by any person or contained in any
document, except for this document and the SEC Filings and any other documents
or information furnished by the Company upon request by the undersigned. The
undersigned has had full opportunity to be represented by its own legal and tax
counsel.

     (d)  The securities for which the undersigned is subscribing will be 
acquired for its own account for investment purposes only and not with a view
to, or for resale in connection with, any distribution of securities within the
meaning of the Securities Act, and the undersigned does not now have any reason
to anticipate any change in circumstances or other particular occasion or event
which would cause the undersigned to sell or transfer such securities.

     (e)  The address and Social Security number (or, if a Company, partnership
or other form of business, the federal employer identification number) set forth
herein are true and correct. The undersigned is presently a bona fide resident
of the state set forth on the signature page hereof and has no present intention
of becoming a resident of any other state or jurisdiction. If a Company,
partnership, trust or other form of business, the undersigned represents and
warrants that its principal place of business is within such state. The
securities subscribed for have been offered and will be purchased in such state.

     (f)  The undersigned understands that the undersigned must bear the 
economic risk of an investment in the Shares and Warrant Shares for an
indefinite period of time because neither the Shares nor the Warrant Shares have
been registered under any securities laws and therefore cannot be sold without
registration under applicable securities laws or an exemption from such
registration is available.

     (g)  The execution and delivery of this Subscription Agreement and the 
purchase of the securities of the Company hereunder is within the undersigned's
power and authority, and have been duly authorized by all necessary action.
Assuming due execution and delivery by the Company, this Subscription Agreement
constitutes a valid and binding obligation, enforceable against the undersigned.

     (h)  The information provided to the Company herein is true and correct
in all respects as of the date hereof. The undersigned agrees to notify the
Company immediately if any of the statements made herein shall become untrue.
The undersigned understands that the Company is relying upon these
representations and warranties in completing this investment.
<PAGE>
 
      5.  RESTRICTIONS ON TRANSFER.  The undersigned understands that it must
          ------------------------ 
bear the economic risk of the purchase of the Shares and Warrant Shares for an
indefinite period of time, because (a) the securities have not been registered
under the Securities Act or applicable state securities laws; (b) the Shares and
Warrant Shares may therefore not be sold, transferred, pledged or otherwise
disposed of unless the shares are subsequently so registered or, in the opinion
of counsel for or satisfactory to the Company, registration under the Securities
Act or any applicable state securities laws is not required; and (c) the Company
is under no obligation to perfect any exemption for resale of the Common Stock.
The Shares, the Warrants and the Warrant Shares will bear appropriate legends
setting forth such restrictions on transfer.

      6.  GENERAL.  This Agreement sets forth the entire understanding between
          -------                                                             
the parties hereto concerning the subject matter contained herein. Provisions of
this Agreement may be amended or waived only by written instrument executed by
the party against whom enforcement is sought. This Agreement shall be binding
upon the parties and the respective successors and assigns. The parties agree to
execute such additional documents and take such additional actions as may be
reasonably necessary to give effect to the purposes and intent of this
Agreement. This Agreement may be executed in one or more counterparts, any of
which shall be deemed to be an original, all of which taken together shall
constitute one and the same instrument. In the event any provision of this
Agreement is held to be unenforceable or invalid by any court of competent
jurisdiction, the validity and enforceability of the remaining provisions shall
not be affected thereby. This Agreement shall be governed by the laws of the
State of Texas without regard to conflicts of law rules.



                           [signature page follows]
<PAGE>
 
THE SECURITIES SUBSCRIBED FOR HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES ACT AND MAY NOT BE
SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF ABSENT SUCH REGISTRATION OR AN
EXEMPTION THEREFROM.

THIS SIGNATURE PAGE SHOULD BE DULY EXECUTED BY THE PURCHASER AND THE ENTIRE
EXECUTED SUBSCRIPTION AGREEMENT SHOULD BE DELIVERED TO DATA RACE, INC., ATTN:
PRESIDENT, AT 12400 NETWORK BOULEVARD, SAN ANTONIO, TEXAS 78216.

================================================================================

     The undersigned hereby irrevocably subscribes for 355,555 Shares and
355,555 Warrants (as defined in the Subscription Agreement), at an aggregate
price of $800,000.

     The undersigned represents that the undersigned has read the above
Subscription Agreement and the representations therein made by the undersigned
are true and correct.

     IN WITNESS WHEREOF, this Subscription Agreement has been executed by the
undersigned as of November 16, 1998.


 
                                 /s/ Robert S. London
                                 -------------------------------
                                 ROBERT S. LONDON
 
                            Address:
                            c/o Cruttenden Roth
                            809 Presidio Avenue, Suite B
                            Santa Barbara, CA  93101
                            (800) 873-4886 (phone)
                            (805) 966-9302 (fax)


SUBSCRIPTION ACCEPTED:

DATA RACE, INC.

By:   /s/ Dr. W. B. Barker
      ----------------------------------
      Dr. W.B. Barker, President and
      Chief Executive Officer

Date:  November 16, 1998
<PAGE>
 
                                DATA RACE, INC.
                                        
                            SUBSCRIPTION AGREEMENT
                            ----------------------


CONFIDENTIAL
------------

DATA RACE, Inc.
12400 Network Boulevard
San Antonio, Texas 78249
ATTN:  President

 1.  SUBSCRIPTION.  The undersigned investor ("Investor") hereby agrees to
     ------------                                                         
     purchase 44,444 shares (the "Shares") of common stock, no par value
     ("Common Stock"), of DATA RACE, Inc., a Texas corporation (the "Company"),
     and 44,444 common stock purchase warrants (the "Warrants") to purchase an
     aggregate of 44,444 shares of Common Stock (the "Warrant Shares"), on the
     terms and conditions described herein. The purchase price for one Share and
     one Warrant is $2.25. Investor shall, upon execution hereof, forward
     payment to the Company for the Shares and Warrants in immediately available
     funds.

 2.  ADDITIONAL TERMS OF PURCHASE.
     ---------------------------- 
     (a) Except as provided herein, each Warrant shall entitle the holder to
     purchase one Warrant Share at an exercise price of $2.25 per share, at any
     time on or before the second anniversary of the closing date.
     Notwithstanding the foregoing, the Warrants may be exercised only if the
     Company obtains shareholder approval to increase its authorized shares of
     Common Stock (in the manner described in the Company's recent proxy
     statement), failing which approval the Warrants shall not be exercisable.
     Subject to the specific terms described herein, the Warrants shall be
     evidenced by a Warrant Agreement in form similar to that delivered to the
     purchasers in the Company's July 24, 1998 private placement, except that
     the Warrant Agreement shall contain customary anti-dilution provisions for
     stock splits, reverse stock splits and stock dividends and shall contain a
     net cashless exercise provision permitting the holder to pay the exercise
     price using shares of Common Stock otherwise issuable upon exercise of the
     Warrants evidenced by the Warrant Agreement.

     (b) The Company agrees to use its best efforts to register the Shares and
     the Warrant Shares for resale under the Securities Act by the holders
     thereof on or before the first anniversary of the closing date. If the
     Company files a Form S-3 registration statement under the Securities Act
     covering the resale of other shares of Common Stock of the Company on or
     after the date of the increase in the Company's authorized shares, then the
     Company shall include in such registration statement the Shares and the
     Warrant Shares for resale by the holders thereof.
<PAGE>
 
     (c) Investor agrees to enter into a "lock-up agreement" pursuant to which
     Investor will be prohibited from selling any Shares or Warrant Shares prior
     to the first anniversary of the closing date.

 3.  CERTAIN INVESTMENT RISKS.  Investor acknowledges that an investment in the
     -------------------------                                                 
     Company involves a high degree of risk which may result in the loss of the
     entire amount of its investment. Investor acknowledges that there are
     numerous risks associated with an investment in the Company, including, but
     not limited to, those set forth in the Company's filings with the
     Securities and Exchange Commission during the last 12 months (the "SEC
     Filings"). Investor acknowledges that it has had full opportunity to review
     the Company's SEC Filings, including, but not limited to, the Company's 10-
     K filed September 28, 1998, the Company's definitive proxy statement filed
     October 14, 1998 and the Company's Form S-3 Registration Statement filed
     November 6, 1998, and Investor has reviewed the Company's quarterly
     earnings release for the quarter ended September 30, 1998. Without limiting
     the foregoing, Investor acknowledges that the Company is not currently in
     compliance with the Nasdaq National Market net tangible assets requirement
     and Investor acknowledges receipt of a copy of Nasdaq's letter to the
     Company, dated November 4, 1998, notifying the Company of such non-
     compliance. Investor further acknowledges that the issuance of the Shares
     hereunder will require substantially all remaining authorized, but unissued
     shares of Common Stock, and there can be no assurance that the Company will
     receive requisite shareholder approval to increase its authorized shares.

 4.  INVESTOR REPRESENTATIONS AND WARRANTIES.  Investor represents and warrants
     ---------------------------------------                                   
     to the Company that:

     (a)  The undersigned is an "accredited investor" within the meaning of
     Regulation D promulgated pursuant to the Securities Act. If Investor is a
     corporation, Investor has not been formed for the specific purpose of
     acquiring the securities offered and Investor has total assets in excess of
     $5,000,000. If Investor is an individual, Investor's net worth (or joint
     net worth with Investor's spouse) exceeds $1,000,000, or Investor had
     income in excess of $200,000 in each of the two most recent years (or joint
     income with Investor's spouse in excess of $300,000 in each of those years)
     and Investor has a reasonable expectation of reaching the same income level
     in the current year. The undersigned has such knowledge and experience in
     financial and business matters that the undersigned is capable of
     evaluating the merits and risks of an investment in the Company. The
     undersigned has made other investments and, by reason of its business and
     financial experience, and skill in investments, the undersigned has the
     capacity to protect its own interest in investments of this nature. The
     undersigned has carefully evaluated its financial resources and investment
     position, and the risks associated with this investment and acknowledges
     that it is able to bear the economic risks of this investment. The
     undersigned represents and warrants that the investment being made does not
     exceed 20% of its net worth.
<PAGE>
 
     (b)  All documents, records and books pertaining to the undersigned's
proposed investment, which have been requested, have been made available to
undersigned and its advisors. The undersigned has had an opportunity to ask
questions of and receive satisfactory answers from the Company concerning the
Company and its business and the terms and conditions of an investment in the
Company, and all such questions have been answered to the undersigned's full
satisfaction.

     (c)  The undersigned is not acting on the basis of any promotional sales
materials, or representations and warranties by any person or contained in any
document, except for this document and the SEC Filings and any other documents
or information furnished by the Company upon request by the undersigned. The
undersigned has had full opportunity to be represented by its own legal and tax
counsel.

     (d)  The securities for which the undersigned is subscribing will be
acquired for its own account for investment purposes only and not with a view
to, or for resale in connection with, any distribution of securities within the
meaning of the Securities Act, and the undersigned does not now have any reason
to anticipate any change in circumstances or other particular occasion or event
which would cause the undersigned to sell or transfer such securities.

     (e)  The address and Social Security number (or, if a Company, partnership
or other form of business, the federal employer identification number) set forth
herein are true and correct. The undersigned is presently a bona fide resident
of the state set forth on the signature page hereof and has no present intention
of becoming a resident of any other state or jurisdiction. If a Company,
partnership, trust or other form of business, the undersigned represents and
warrants that its principal place of business is within such state. The
securities subscribed for have been offered and will be purchased in such state.

     (f)  The undersigned understands that the undersigned must bear the 
economic risk of an investment in the Shares and Warrant Shares for an
indefinite period of time because neither the Shares nor the Warrant Shares have
been registered under any securities laws and therefore cannot be sold without
registration under applicable securities laws or an exemption from such
registration is available.

     (g)  The execution and delivery of this Subscription Agreement and the 
purchase of the securities of the Company hereunder is within the undersigned's
power and authority, and have been duly authorized by all necessary action.
Assuming due execution and delivery by the Company, this Subscription Agreement
constitutes a valid and binding obligation, enforceable against the undersigned.

     (h)  The information provided to the Company herein is true and correct 
in all respects as of the date hereof. The undersigned agrees to notify the
Company immediately if any of the statements made herein shall become untrue.
The undersigned understands that the Company is relying upon these
representations and warranties in completing this investment.
<PAGE>
 
      5.  RESTRICTIONS ON TRANSFER.  The undersigned understands that it must
          ------------------------ 
bear the economic risk of the purchase of the Shares and Warrant Shares for an
indefinite period of time, because (a) the securities have not been registered
under the Securities Act or applicable state securities laws; (b) the Shares and
Warrant Shares may therefore not be sold, transferred, pledged or otherwise
disposed of unless the shares are subsequently so registered or, in the opinion
of counsel for or satisfactory to the Company, registration under the Securities
Act or any applicable state securities laws is not required; and (c) the Company
is under no obligation to perfect any exemption for resale of the Common Stock.
The Shares, the Warrants and the Warrant Shares will bear appropriate legends
setting forth such restrictions on transfer.

      6.  GENERAL.  This Agreement sets forth the entire understanding between
          -------   
the parties hereto concerning the subject matter contained herein. Provisions of
this Agreement may be amended or waived only by written instrument executed by
the party against whom enforcement is sought. This Agreement shall be binding
upon the parties and the respective successors and assigns. The parties agree to
execute such additional documents and take such additional actions as may be
reasonably necessary to give effect to the purposes and intent of this
Agreement. This Agreement may be executed in one or more counterparts, any of
which shall be deemed to be an original, all of which taken together shall
constitute one and the same instrument. In the event any provision of this
Agreement is held to be unenforceable or invalid by any court of competent
jurisdiction, the validity and enforceability of the remaining provisions shall
not be affected thereby. This Agreement shall be governed by the laws of the
State of Texas without regard to conflicts of law rules.



                            [signature page follows]
<PAGE>
 
THE SECURITIES SUBSCRIBED FOR HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES ACT AND MAY NOT BE
SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF ABSENT SUCH REGISTRATION OR AN
EXEMPTION THEREFROM.

THIS SIGNATURE PAGE SHOULD BE DULY EXECUTED BY THE PURCHASER AND THE ENTIRE
EXECUTED SUBSCRIPTION AGREEMENT SHOULD BE DELIVERED TO DATA RACE, INC., ATTN:
PRESIDENT, AT 12400 NETWORK BOULEVARD, SAN ANTONIO, TEXAS 78216.

================================================================================

     The undersigned hereby irrevocably subscribes for 44,444 Shares and 44,444
Warrants (as defined in the Subscription Agreement), at an aggregate price of
$100,000.

     The undersigned represents that the undersigned has read the above
Subscription Agreement and the representations therein made by the undersigned
are true and correct.

     IN WITNESS WHEREOF, this Subscription Agreement has been executed by the
undersigned as of November 17, 1998.


 
                                  /s/ Anthony Altavilla
                                  ----------------------------------
                                  ANTHONY ALTAVILLA
 
                            Address:
                            c/o Liviakis Financial Communications, Inc.
                            2420 "K" Street, Suite 220
                            Sacramento, CA 95816
                            Tel: (916) 448-6084
                            Fax: (916) 448-6089


SUBSCRIPTION ACCEPTED:

DATA RACE, INC.

By: Dr. W. B. Barker
    ------------------------------
    Dr. W.B. Barker, President and
    Chief Executive Officer

Date:  November 17, 1998
<PAGE>
 
                                DATA RACE, INC.
                                        
                            SUBSCRIPTION AGREEMENT
                            ----------------------


CONFIDENTIAL
------------

DATA RACE, Inc.
12400 Network Boulevard
San Antonio, Texas 78249
ATTN:  President

 1.  SUBSCRIPTION.  The undersigned investor ("Investor") hereby agrees to
     ------------                                                         
     purchase 44,444 shares (the "Shares") of common stock, no par value
     ("Common Stock"), of DATA RACE, Inc., a Texas corporation (the "Company"),
     and 44,444 common stock purchase warrants (the "Warrants") to purchase an
     aggregate of 44,444 shares of Common Stock (the "Warrant Shares"), on the
     terms and conditions described herein. The purchase price for one Share and
     one Warrant is $2.25. Investor shall, upon execution hereof, forward
     payment to the Company for the Shares and Warrants in immediately available
     funds.

 2.  ADDITIONAL TERMS OF PURCHASE.
     ---------------------------- 
     (a)  Except as provided herein, each Warrant shall entitle the holder to
     purchase one Warrant Share at an exercise price of $2.25 per share, at any
     time on or before the second anniversary of the closing date.
     Notwithstanding the foregoing, the Warrants may be exercised only if the
     Company obtains shareholder approval to increase its authorized shares of
     Common Stock (in the manner described in the Company's recent proxy
     statement), failing which approval the Warrants shall not be exercisable.
     Subject to the specific terms described herein, the Warrants shall be
     evidenced by a Warrant Agreement in form similar to that delivered to the
     purchasers in the Company's July 24, 1998 private placement, except that
     the Warrant Agreement shall contain customary anti-dilution provisions for
     stock splits, reverse stock splits and stock dividends and shall contain a
     net cashless exercise provision permitting the holder to pay the exercise
     price using shares of Common Stock otherwise issuable upon exercise of the
     Warrants evidenced by the Warrant Agreement.

     (b) The Company agrees to use its best efforts to register the Shares and
     the Warrant Shares for resale under the Securities Act by the holders
     thereof on or before the first anniversary of the closing date. If the
     Company files a Form S-3 registration statement under the Securities Act
     covering the resale of other shares of Common Stock of the Company on or
     after the date of the increase in the Company's authorized shares, then the
     Company shall include in such registration statement the Shares and the
     Warrant Shares for resale by the holders thereof.
<PAGE>
 
     (c)  Investor agrees to enter into a "lock-up agreement" pursuant to which
     Investor will be prohibited from selling any Shares or Warrant Shares prior
     to the first anniversary of the closing date.

 3.  CERTAIN INVESTMENT RISKS.  Investor acknowledges that an investment in the
     -------------------------                                                 
     Company involves a high degree of risk which may result in the loss of the
     entire amount of its investment. Investor acknowledges that there are
     numerous risks associated with an investment in the Company, including, but
     not limited to, those set forth in the Company's filings with the
     Securities and Exchange Commission during the last 12 months (the "SEC
     Filings"). Investor acknowledges that it has had full opportunity to review
     the Company's SEC Filings, including, but not limited to, the Company's 10-
     K filed September 28, 1998, the Company's definitive proxy statement filed
     October 14, 1998 and the Company's Form S-3 Registration Statement filed
     November 6, 1998, and Investor has reviewed the Company's quarterly
     earnings release for the quarter ended September 30, 1998. Without limiting
     the foregoing, Investor acknowledges that the Company is not currently in
     compliance with the Nasdaq National Market net tangible assets requirement
     and Investor acknowledges receipt of a copy of Nasdaq's letter to the
     Company, dated November 4, 1998, notifying the Company of such non-
     compliance. Investor further acknowledges that the issuance of the Shares
     hereunder will require substantially all remaining authorized, but unissued
     shares of Common Stock, and there can be no assurance that the Company will
     receive requisite shareholder approval to increase its authorized shares.

 4.  INVESTOR REPRESENTATIONS AND WARRANTIES.  Investor represents and warrants
     ---------------------------------------                                   
     to the Company that:
     (a)  The undersigned is an "accredited investor" within the meaning of
Regulation D promulgated pursuant to the Securities Act. If Investor is a
corporation, Investor has not been formed for the specific purpose of acquiring
the securities offered and Investor has total assets in excess of $5,000,000. If
Investor is an individual, Investor's net worth (or joint net worth with
Investor's spouse) exceeds $1,000,000, or Investor had income in excess of
$200,000 in each of the two most recent years (or joint income with Investor's
spouse in excess of $300,000 in each of those years) and Investor has a
reasonable expectation of reaching the same income level in the current year.
The undersigned has such knowledge and experience in financial and business
matters that the undersigned is capable of evaluating the merits and risks of an
investment in the Company. The undersigned has made other investments and, by
reason of its business and financial experience, and skill in investments, the
undersigned has the capacity to protect its own interest in investments of this
nature. The undersigned has carefully evaluated its financial resources and
investment position, and the risks associated with this investment and
acknowledges that it is able to bear the economic risks of this investment. The
undersigned represents and warrants that the investment being made does not
exceed 20% of its net worth.
<PAGE>
 
     (b)  All documents, records and books pertaining to the undersigned's 
proposed investment, which have been requested, have been made available to
undersigned and its advisors. The undersigned has had an opportunity to ask
questions of and receive satisfactory answers from the Company concerning the
Company and its business and the terms and conditions of an investment in the
Company, and all such questions have been answered to the undersigned's full
satisfaction.

     (c)  The undersigned is not acting on the basis of any promotional sales
materials, or representations and warranties by any person or contained in any
document, except for this document and the SEC Filings and any other documents
or information furnished by the Company upon request by the undersigned. The
undersigned has had full opportunity to be represented by its own legal and tax
counsel.

     (d)  The securities for which the undersigned is subscribing will be 
acquired for its own account for investment purposes only and not with a view
to, or for resale in connection with, any distribution of securities within the
meaning of the Securities Act, and the undersigned does not now have any reason
to anticipate any change in circumstances or other particular occasion or event
which would cause the undersigned to sell or transfer such securities.

     (e)  The address and Social Security number (or, if a Company, partnership
or other form of business, the federal employer identification number) set forth
herein are true and correct. The undersigned is presently a bona fide resident
of the state set forth on the signature page hereof and has no present intention
of becoming a resident of any other state or jurisdiction. If a Company,
partnership, trust or other form of business, the undersigned represents and
warrants that its principal place of business is within such state. The
securities subscribed for have been offered and will be purchased in such state.

     (f)  The undersigned understands that the undersigned must bear the 
economic risk of an investment in the Shares and Warrant Shares for an
indefinite period of time because neither the Shares nor the Warrant Shares have
been registered under any securities laws and therefore cannot be sold without
registration under applicable securities laws or an exemption from such
registration is available.

     (g)  The execution and delivery of this Subscription Agreement and the 
purchase of the securities of the Company hereunder is within the undersigned's
power and authority, and have been duly authorized by all necessary action.
Assuming due execution and delivery by the Company, this Subscription Agreement
constitutes a valid and binding obligation, enforceable against the undersigned.

     (h)  The information provided to the Company herein is true and correct in 
all respects as of the date hereof. The undersigned agrees to notify the Company
immediately if any of the statements made herein shall become untrue. The
undersigned understands that the Company is relying upon these representations
and warranties in completing this investment.
<PAGE>
 
      5.  RESTRICTIONS ON TRANSFER.  The undersigned understands that it must
          ------------------------     
bear the economic risk of the purchase of the Shares and Warrant Shares for an
indefinite period of time, because (a) the securities have not been registered
under the Securities Act or applicable state securities laws; (b) the Shares and
Warrant Shares may therefore not be sold, transferred, pledged or otherwise
disposed of unless the shares are subsequently so registered or, in the opinion
of counsel for or satisfactory to the Company, registration under the Securities
Act or any applicable state securities laws is not required; and (c) the Company
is under no obligation to perfect any exemption for resale of the Common Stock.
The Shares, the Warrants and the Warrant Shares will bear appropriate legends
setting forth such restrictions on transfer.

      6.  GENERAL.  This Agreement sets forth the entire understanding between
          -------
the parties hereto concerning the subject matter contained herein. Provisions of
this Agreement may be amended or waived only by written instrument executed by
the party against whom enforcement is sought. This Agreement shall be binding
upon the parties and the respective successors and assigns. The parties agree to
execute such additional documents and take such additional actions as may be
reasonably necessary to give effect to the purposes and intent of this
Agreement. This Agreement may be executed in one or more counterparts, any of
which shall be deemed to be an original, all of which taken together shall
constitute one and the same instrument. In the event any provision of this
Agreement is held to be unenforceable or invalid by any court of competent
jurisdiction, the validity and enforceability of the remaining provisions shall
not be affected thereby. This Agreement shall be governed by the laws of the
State of Texas without regard to conflicts of law rules.



                            [signature page follows]
<PAGE>
 
THE SECURITIES SUBSCRIBED FOR HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES ACT AND MAY NOT BE
SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF ABSENT SUCH REGISTRATION OR AN
EXEMPTION THEREFROM.

THIS SIGNATURE PAGE SHOULD BE DULY EXECUTED BY THE PURCHASER AND THE ENTIRE
EXECUTED SUBSCRIPTION AGREEMENT SHOULD BE DELIVERED TO DATA RACE, INC., ATTN:
PRESIDENT, AT 12400 NETWORK BOULEVARD, SAN ANTONIO, TEXAS 78216.

================================================================================

     The undersigned hereby irrevocably subscribes for 44,444 Shares and 44,444
Warrants (as defined in the Subscription Agreement), at an aggregate price of
$100,000.

     The undersigned represents that the undersigned has read the above
Subscription Agreement and the representations therein made by the undersigned
are true and correct.

     IN WITNESS WHEREOF, this Subscription Agreement has been executed by the
undersigned as of November 17, 1998.


 
                            /s/ Timothy D. Wilson, Sr.
                            -------------------------------------
                            TIMOTHY D. WILSON, SR.

                            Address:
                            6633 East 1600th Road
                            Martinsville, IL 62442
                            Tel: (217) 382-4229
                            Fax: (217) 382-4630
 


SUBSCRIPTION ACCEPTED:

DATA RACE, INC.

By: /s/ Dr. W. B. Barker
    ------------------------------
    Dr. W.B. Barker, President and
    Chief Executive Officer

Date:  November 17, 1998
<PAGE>
 
                                DATA RACE, INC.
                                        
                            SUBSCRIPTION AGREEMENT
                            ----------------------


CONFIDENTIAL
------------

DATA RACE, Inc.
12400 Network Boulevard
San Antonio, Texas 78249
ATTN:  President

 1.  SUBSCRIPTION.  The undersigned investor ("Investor") hereby agrees to
     ------------                                                         
     purchase 44,444 shares (the "Shares") of common stock, no par value
     ("Common Stock"), of DATA RACE, Inc., a Texas corporation (the "Company"),
     and 44,444 common stock purchase warrants (the "Warrants") to purchase an
     aggregate of 44,444 shares of Common Stock (the "Warrant Shares"), on the
     terms and conditions described herein. The purchase price for one Share and
     one Warrant is $2.25. Investor shall, upon execution hereof, forward
     payment to the Company for the Shares and Warrants in immediately available
     funds.

 2.  ADDITIONAL TERMS OF PURCHASE.
     ---------------------------- 
     (a)  Except as provided herein, each Warrant shall entitle the holder to
     purchase one Warrant Share at an exercise price of $2.25 per share, at any
     time on or before the second anniversary of the closing date.
     Notwithstanding the foregoing, the Warrants may be exercised only if the
     Company obtains shareholder approval to increase its authorized shares of
     Common Stock (in the manner described in the Company's recent proxy
     statement), failing which approval the Warrants shall not be exercisable.
     Subject to the specific terms described herein, the Warrants shall be
     evidenced by a Warrant Agreement in form similar to that delivered to the
     purchasers in the Company's July 24, 1998 private placement, except that
     the Warrant Agreement shall contain customary anti-dilution provisions for
     stock splits, reverse stock splits and stock dividends and shall contain a
     net cashless exercise provision permitting the holder to pay the exercise
     price using shares of Common Stock otherwise issuable upon exercise of the
     Warrants evidenced by the Warrant Agreement.

     (b)  The Company agrees to use its best efforts to register the Shares and
     the Warrant Shares for resale under the Securities Act by the holders
     thereof on or before the first anniversary of the closing date. If the
     Company files a Form S-3 registration statement under the Securities Act
     covering the resale of other shares of Common Stock of the Company on or
     after the date of the increase in the Company's authorized shares, then the
     Company shall include in such registration statement the Shares and the
     Warrant Shares for resale by the holders thereof.
<PAGE>
 
     (c)  Investor hereby agrees that Investor shall be prohibited from selling
     any Shares or Warrant Shares prior to the first anniversary of the closing
     date.

 3.  CERTAIN INVESTMENT RISKS.  Investor acknowledges that an investment in the
     -------------------------                                                 
     Company involves a high degree of risk which may result in the loss of the
     entire amount of its investment. Investor acknowledges that there are
     numerous risks associated with an investment in the Company, including, but
     not limited to, those set forth in the Company's filings with the
     Securities and Exchange Commission during the last 12 months (the "SEC
     Filings"). Investor acknowledges that it has had full opportunity to review
     the Company's SEC Filings, including, but not limited to, the Company's 10-
     K filed September 28, 1998, the Company's definitive proxy statement filed
     October 14, 1998 and the Company's Form S-3 Registration Statement filed
     November 6, 1998, and Investor has reviewed the Company's quarterly
     earnings release for the quarter ended September 30, 1998. Without limiting
     the foregoing, Investor acknowledges that the Company is not currently in
     compliance with the Nasdaq National Market net tangible assets requirement
     and Investor acknowledges receipt of a copy of Nasdaq's letter to the
     Company, dated November 4, 1998, notifying the Company of such non-
     compliance. Investor further acknowledges that the issuance of the Shares
     hereunder will require substantially all remaining authorized, but unissued
     shares of Common Stock, and there can be no assurance that the Company will
     receive requisite shareholder approval to increase its authorized shares.

 4.  INVESTOR REPRESENTATIONS AND WARRANTIES.  Investor represents and warrants
     ---------------------------------------                                   
     to the Company that:

(a)  The undersigned is an "accredited investor" within the meaning of
     Regulation D promulgated pursuant to the Securities Act.  If Investor is a
     corporation, Investor has not been formed for the specific purpose of
     acquiring the securities offered and Investor has total assets in excess of
     $5,000,000.  If Investor is an individual, Investor's net worth (or joint
     net worth with Investor's spouse) exceeds $1,000,000, or Investor had
     income in excess of $200,000 in each of the two most recent years (or joint
     income with Investor's spouse in excess of $300,000 in each of those years)
     and Investor has a reasonable expectation of reaching the same income level
     in the current year.  The undersigned has such knowledge and experience in
     financial and business matters that the undersigned is capable of
     evaluating the merits and risks of an investment in the Company.  The
     undersigned has made other investments and, by reason of its business and
     financial experience, and skill in investments, the undersigned has the
     capacity to protect its own interest in investments of this nature.  The
     undersigned has carefully evaluated its financial resources and investment
     position, and the risks associated with this investment and acknowledges
     that it is able to bear the economic risks of this investment.  The
     undersigned represents and warrants that the investment being made does not
     exceed 20% of its net worth.

(b)  All documents, records and books pertaining to the undersigned's proposed
     investment, which have been requested, have been made available to
     undersigned and its advisors.  The undersigned has had an opportunity to
     ask questions of and receive
<PAGE>
 
     satisfactory answers from the Company concerning the Company and its
     business and the terms and conditions of an investment in the Company, and
     all such questions have been answered to the undersigned's full
     satisfaction.

(c)  The undersigned is not acting on the basis of any promotional sales
     materials, or representations and warranties by any person or contained in
     any document, except for this document and the SEC Filings and any other
     documents or information furnished by the Company upon request by the
     undersigned.  The undersigned has had full opportunity to be represented by
     its own legal and tax counsel.

(d)  The securities for which the undersigned is subscribing will be acquired
     for its own account for investment purposes only and not with a view to, or
     for resale in connection with, any distribution of securities within the
     meaning of the Securities Act, and the undersigned does not now have any
     reason to anticipate any change in circumstances or other particular
     occasion or event which would cause the undersigned to sell or transfer
     such securities.

(e)  The address and Social Security number (or, if a Company, partnership or
     other form of business, the federal employer identification number) set
     forth herein are true and correct.  The undersigned is presently a bona
     fide resident of the state set forth on the signature page hereof and has
     no present intention of becoming a resident of any other state or
     jurisdiction.  If a Company, partnership, trust or other form of business,
     the undersigned represents and warrants that its principal place of
     business is within such state.  The securities subscribed for have been
     offered and will be purchased in such state.

(f)  The undersigned understands that the undersigned must bear the economic
     risk of an investment in the Shares and Warrant Shares for an indefinite
     period of time because neither the Shares nor the Warrant Shares have been
     registered under any securities laws and therefore cannot be sold without
     registration under applicable securities laws or an exemption from such
     registration is available.

(g)  The execution and delivery of this Subscription Agreement and the purchase
     of the securities of the Company hereunder is within the undersigned's
     power and authority, and have been duly authorized by all necessary action.
     Assuming due execution and delivery by the Company, this Subscription
     Agreement constitutes a valid and binding obligation, enforceable against
     the undersigned.

(h)  The information provided to the Company herein is true and correct in all
     respects as of the date hereof.  The undersigned agrees to notify the
     Company immediately if any of the statements made herein shall become
     untrue.  The undersigned understands that the Company is relying upon these
     representations and warranties in completing this investment.

 5.  RESTRICTIONS ON TRANSFER.  The undersigned understands that it must bear
     ------------------------                                                
     the economic risk of the purchase of the Shares and Warrant Shares for an
     indefinite period of time, because (a) the securities have not been
     registered under the Securities
<PAGE>
 
     Act or applicable state securities laws; (b) the Shares and Warrant Shares
     may therefore not be sold, transferred, pledged or otherwise disposed of
     unless the shares are subsequently so registered or, in the opinion of
     counsel for or satisfactory to the Company, registration under the
     Securities Act or any applicable state securities laws is not required; and
     (c) the Company is under no obligation to perfect any exemption for resale
     of the Common Stock. The Shares, the Warrants and the Warrant Shares will
     bear appropriate legends setting forth such restrictions on transfer.

 6.  GENERAL.  This Agreement sets forth the entire understanding between the
     -------                                                                 
     parties hereto concerning the subject matter contained herein. Provisions
     of this Agreement may be amended or waived only by written instrument
     executed by the party against whom enforcement is sought. This Agreement
     shall be binding upon the parties and the respective successors and
     assigns. The parties agree to execute such additional documents and take
     such additional actions as may be reasonably necessary to give effect to
     the purposes and intent of this Agreement. This Agreement may be executed
     in one or more counterparts, any of which shall be deemed to be an
     original, all of which taken together shall constitute one and the same
     instrument. In the event any provision of this Agreement is held to be
     unenforceable or invalid by any court of competent jurisdiction, the
     validity and enforceability of the remaining provisions shall not be
     affected thereby. This Agreement shall be governed by the laws of the State
     of Texas without regard to conflicts of law rules.


                            [signature page follows]
<PAGE>
 
THE SECURITIES SUBSCRIBED FOR HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES ACT AND MAY NOT BE
SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF ABSENT SUCH REGISTRATION OR AN
EXEMPTION THEREFROM.

THIS SIGNATURE PAGE SHOULD BE DULY EXECUTED BY THE PURCHASER AND THE ENTIRE
EXECUTED SUBSCRIPTION AGREEMENT SHOULD BE DELIVERED TO DATA RACE, INC., ATTN:
SENIOR VICE PRESIDENT, AT 12400 NETWORK BOULEVARD, SAN ANTONIO, TEXAS 78216.

================================================================================

     The undersigned hereby irrevocably subscribes for 44,444 Shares and 44,444
Warrants (as defined in the Subscription Agreement), at an aggregate price of
$100,000.

     The undersigned represents that the undersigned has read the above
Subscription Agreement and the representations therein made by the undersigned
are true and correct.

     IN WITNESS WHEREOF, this Subscription Agreement has been executed by the
undersigned as of January 4, 1999.


 
                                 /s/ Dr. W. B. Barker
                                 ------------------------------
                                 Dr. W. B. Barker
 
                            Address:
                            c/o DATA RACE, Inc.
                            12400 Network Boulevard
                            San Antonio, Texas 78249
                            Tel: (210) 263-2200
                            Fax: (210) 558-0363


SUBSCRIPTION ACCEPTED:

DATA RACE, INC.

By: /s/ Gregory T. Skalla
    --------------------------------------------
    Gregory T. Skalla, Senior Vice President and
    Chief Financial Officer

Date:  January 4, 1999.