Document:

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                                                                   Exhibit 10.15

                                                                       EXHIBIT E

NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT")
OR ANY OTHER APPLICABLE STATE SECURITIES LAWS IN RELIANCE UPON AN EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT PURSUANT TO REGULATION D AND
SUCH OTHER SECURITIES LAWS. NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON
EXERCISE HEREOF MAY BE SOLD, PLEDGED, TRANSFERRED, ENCUMBERED OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR IN A TRANSACTION WHICH IS EXEMPT FROM REGISTRATION UNDER THE
PROVISIONS OF THE SECURITIES ACT AND ANY APPLICABLE STATE LAWS. THIS WARRANT MAY
NOT BE EXERCISED BY OR ON BEHALF OF A UNITED STATES PERSON UNLESS REGISTERED
UNDER THE SECURITIES ACT OR AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE, AS
REQUIRED BY REGULATION D.

                            STOCK PURCHASE WARRANT

               To Purchase ___________ Shares of Common Stock of

                                DATA RACE, INC.

          THIS CERTIFIES that, for value received, [PURCHASER] (the "Holder"),
is entitled, upon the terms and subject to the limitations on exercise and the
conditions hereinafter set forth, at any time on or after June __, 2001 (the
"Initial Exercise Date") and on or prior to the close of business on the fourth
anniversary of the Initial Exercise Date (the "Termination Date") but not
thereafter, to subscribe for and purchase from Data Race, Inc., a corporation
incorporated in the State of Texas (the "Company"), up to ___________ shares
(the "Warrant Shares") of Common Stock, $___ par value per share, of the Company
(the "Common Stock"). The purchase price of one share of Common Stock (the
"Exercise Price") under this Warrant shall be $_____. The Exercise Price and the
number of Warrant Shares for which the Warrant is exercisable shall be subject
to adjustment as provided herein. Capitalized terms used and not otherwise
defined herein shall have the meanings set forth in that certain Convertible
Debentures and Warrants Purchase Agreement (the "Purchase Agreement"), dated
June 12, 2001, between the Company and the investors signatory thereto.

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          1.   Title to Warrant. Prior to the Termination Date and subject to
               ----------------
compliance with applicable laws, this Warrant and all rights hereunder are
transferable, in whole or in part, at the office or agency of the Company by the
Holder in person or by duly authorized attorney, upon surrender of this Warrant
together with the Assignment Form annexed hereto properly endorsed.

          2.   Authorization of Shares. The Company covenants that all Warrant
               -----------------------
Shares which may be issued upon the exercise of the purchase rights represented
by this Warrant will, upon exercise of the purchase rights represented by this
Warrant, be duly authorized, validly issued, fully paid and nonassessable and
free from all taxes, liens and charges in respect of the issue thereof (other
than taxes in respect of any transfer occurring contemporaneously with such
issue).

          3.   Exercise of Warrant.
               -------------------

                    (a)  Except as provided in Section 4 herein, exercise of the
     purchase rights represented by this Warrant may be made at any time or
     times on or after the Initial Exercise Date and on or before the
     Termination Date by the surrender of this Warrant and the Notice of
     Exercise Form annexed hereto duly executed, at the office of the Company
     (or such other office or agency of the Company as it may designate by
     notice in writing to the registered Holder at the address of such Holder
     appearing on the books of the Company) and upon payment of the Exercise
     Price of the shares thereby purchased by wire transfer or cashier's check
     drawn on a United States bank, or by means of a cashless exercise, the
     Holder shall be entitled to receive a certificate for the number of Warrant
     Shares so purchased. Certificates for shares purchased hereunder shall be
     delivered to the Holder within three (3) Trading Days after the date on
     which this Warrant shall have been exercised as aforesaid. This Warrant
     shall be deemed to have been exercised and such certificate or certificates
     shall be deemed to have been issued, and Holder or any other person so
     designated to be named therein shall be deemed to have become a holder of
     record of such shares for all purposes, as of the date the Warrant has been
     exercised by payment to the Company of the Exercise Price and all taxes
     required to be paid by the Holder, if any, pursuant to Section 5 prior to
     the issuance of such shares, have been paid.

                    (b)  If this Warrant shall have been exercised in part, the
     Company shall, at the time of delivery of the certificate or certificates
     representing Warrant Shares, deliver to Holder a new Warrant evidencing the
     rights of Holder to purchase the unpurchased Warrant Shares called for by
     this Warrant, which new Warrant shall in all other respects be identical
     with this Warrant.

                    (c)  This Warrant shall also be exercisable by means of a
     "cashless exercise" in which the Holder shall be entitled to receive a
     certificate for the number of Warrant Shares equal to the quotient obtained
     by dividing [(A-B) (X)] by (A), where:

                    (A) = the average of the high and low trading prices per
                    share of Common Stock on the Trading Day preceding the date
                    of such election on the

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                    Nasdaq Stock Market, or if the Common Stock is not traded on
                    the Nasdaq Stock Market, then the Principal Market in terms
                    of volume;

                    (B) = the Exercise Price of this Warrant; and

                    (X) = the number of Warrant Shares issuable upon exercise of
                    this Warrant in accordance with the terms of this Warrant
                    and the Notice of Exercise.

                    (d)  Notwithstanding anything herein to the contrary, in no
     event shall the Holder be permitted to exercise this Warrant for Warrant
     Shares to the extent that (i) the number of shares of Common Stock owned by
     such Holder (other than Warrant Shares issuable upon exercise of this
     Warrant) plus (ii) the number of Warrant Shares issuable upon exercise of
     this Warrant, would be equal to or exceed 9.9% of the number of shares of
     Common Stock then issued and outstanding, including shares issuable upon
     exercise of this Warrant held by such Holder after application of this
     Section 3(d). As used herein, beneficial ownership shall be determined in
     accordance with Section 13(d) of the Exchange Act. To the extent that the
     limitation contained in this Section 3(d) applies, the determination of
     whether this Warrant is exercisable (in relation to other securities owned
     by the Holder) and of which a portion of this Warrant is exercisable shall
     be in the sole discretion of such Holder, and the submission of a Notice of
     Exercise shall be deemed to be such Holder's determination of whether this
     Warrant is exercisable (in relation to other securities owned by such
     Holder) and of which portion of this Warrant is exercisable, in each case
     subject to such aggregate percentage limitation, and the Company shall have
     no obligation to verify or confirm the accuracy of such determination.
     Nothing contained herein shall be deemed to restrict the right of a Holder
     to exercise this Warrant into Warrant Shares at such time as such exercise
     will not violate the provisions of this Section 3(d). The provisions of
     this Section 3(d) may be waived by the Holder upon, at the election of the
     Holder, not less than 61 days' prior notice to the Company, and the
     provisions of this Section 3(d) shall continue to apply until such 61st day
     (or such later date, as determined by the Holder, as may be specified in
     such notice of waiver). No exercise of this Warrant in violation of this
     Section 3(d) but otherwise in accordance with this Warrant shall affect the
     status of the Warrant Shares as validly issued, fully-paid and
     nonassessable.

          4.   No Fractional Shares or Scrip. No fractional shares or scrip
               -----------------------------
representing fractional shares shall be issued upon the exercise of this
Warrant. As to any fraction of a share which Holder would otherwise be entitled
to purchase upon such exercise, the Company shall pay a cash adjustment in
respect of such final fraction in an amount equal to such fraction multiplied by
the Exercise Price.

          5.   Charges, Taxes and Expenses. Issuance of certificates for Warrant
               ---------------------------
Shares shall be made without charge to the Holder for any issue or transfer tax
or other incidental expense in respect of the issuance of such certificate, all
of which taxes and expenses shall be paid by the Company, and such certificates
shall be issued in the name of the Holder or in such name or names as may be
directed by the Holder; provided, however, that in the event certificates for
                        --------  -------
Warrant Shares are to be issued in a name other than the name of the Holder,
this

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Warrant when surrendered for exercise shall be accompanied by the Assignment
Form attached hereto duly executed by the Holder; and the Company may require,
as a condition thereto, the payment of a sum sufficient to reimburse it for any
transfer tax incidental thereto.

          6.   Closing of Books. The Company will not close its stockholder
               ----------------
books or records in any manner which prevents the timely exercise of this
Warrant.

          7.   Transfer, Division and Combination.
               ----------------------------------

                    (a)  Subject to compliance with any applicable securities
     laws, transfer of this Warrant and all rights hereunder, in whole or in
     part, shall be registered on the books of the Company to be maintained for
     such purpose, upon surrender of this Warrant at the principal office of the
     Company, together with a written assignment of this Warrant substantially
     in the form attached hereto duly executed by the Holder or its agent or
     attorney and funds sufficient to pay any transfer taxes payable upon the
     making of such transfer. In the event that the Holder wishes to transfer a
     portion of this Warrant, the Holder shall transfer at least 100,000 shares
     underlying this Warrant to any such transferee. Upon such surrender and, if
     required, such payment, the Company shall execute and deliver a new Warrant
     or Warrants in the name of the assignee or assignees and in the
     denomination or denominations specified in such instrument of assignment,
     and shall issue to the assignor a new Warrant evidencing the portion of
     this Warrant not so assigned, and this Warrant shall promptly be cancelled.
     A Warrant, if properly assigned, may be exercised by a new holder for the
     purchase of Warrant Shares without having a new Warrant issued.
     Notwithstanding the above, the Holder shall not transfer this Warrant or
     any rights hereunder to any person or entity which is then engaged in a
     business that is in the reasonable judgement of the Company is in direct
     competition with the Company.

                    (b)  This Warrant may be divided or combined with other
     Warrants upon presentation hereof at the aforesaid office of the Company,
     together with a written notice specifying the names and denominations in
     which new Warrants are to be issued, signed by the Holder or its agent or
     attorney. Subject to compliance with Section 7(a), as to any transfer which
     may be involved in such division or combination, the Company shall execute
     and deliver a new Warrant or Warrants in exchange for the Warrant or
     Warrants to be divided or combined in accordance with such notice.

                    (c)  The Company shall prepare, issue and deliver at its own
     expense (other than transfer taxes) the new Warrant or Warrants under this
     Section 7.

                    (d)  The Company agrees to maintain, at its aforesaid
     office, books for the registration and the registration of transfer of the
     Warrants.

          8.   No Rights as Shareholder until Exercise. This Warrant does not
               ---------------------------------------
entitle the Holder to any voting rights or other rights as a shareholder of the
Company prior to the exercise hereof. Upon the surrender of this Warrant and the
payment of the aggregate Exercise Price or by means of a cashless exercise, the
Warrant Shares so purchased shall be and be deemed to be

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issued to such Holder as the record owner of such shares as of the close of
business on the later of the date of such surrender or payment.

          9.   Loss, Theft, Destruction or Mutilation of Warrant. The Company
               -------------------------------------------------
covenants that upon receipt by the Company of evidence reasonably satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant or any stock
certificate relating to the Warrant Shares, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it (which shall
not include the posting of any bond), and upon surrender and cancellation of
such Warrant or stock certificate, if mutilated, the Company will make and
deliver a new Warrant or stock certificate of like tenor and dated as of such
cancellation, in lieu of such Warrant or stock certificate.

          10.  Saturdays, Sundays, Holidays, etc. If the last or appointed day
               ----------------------------------
for the taking of any action or the expiration of any right required or granted
herein shall be a Saturday, Sunday or a legal holiday, then such action may be
taken or such right may be exercised on the next succeeding day not a Saturday,
Sunday or legal holiday.

          11.  Adjustments of Exercise Price and Number of Warrant Shares.
               ----------------------------------------------------------

                    (a)  Stock Splits, etc. The number and kind of securities
                         ------------------
     purchasable upon the exercise of this Warrant and the Exercise Price shall
     be subject to adjustment from time to time upon the happening of any of the
     following. In case the Company shall (i) pay a dividend in shares of Common
     Stock or make a distribution in shares of Common Stock to holders of its
     outstanding Common Stock, (ii) subdivide its outstanding shares of Common
     Stock into a greater number of shares, (iii) combine its outstanding shares
     of Common Stock into a smaller number of shares of Common Stock, or (iv)
     issue any shares of its capital stock in a reclassification of the Common
     Stock, then the number of Warrant Shares purchasable upon exercise of this
     Warrant immediately prior thereto shall be adjusted so that the Holder
     shall be entitled to receive the kind and number of Warrant Shares or other
     securities of the Company which it would have owned or have been entitled
     to receive had such Warrant been exercised in advance thereof. Upon each
     such adjustment of the kind and number of Warrant Shares or other
     securities of the Company which are purchasable hereunder, the Holder shall
     thereafter be entitled to purchase the number of Warrant Shares or other
     securities resulting from such adjustment at an Exercise Price per Warrant
     Share or other security obtained by multiplying the Exercise Price in
     effect immediately prior to such adjustment by the number of Warrant Shares
     purchasable pursuant hereto immediately prior to such adjustment and
     dividing by the number of Warrant Shares or other securities of the Company
     resulting from such adjustment. An adjustment made pursuant to this
     paragraph shall become effective immediately after the effective date of
     such event retroactive to the record date, if any, for such event.

                    (b)  Anti-Dilution Provisions. During the Exercise Period,
                         ------------------------
     the Exercise Price and the number of Warrant Shares issuable hereunder and
     for which this Warrant is then exercisable pursuant to Section 1 hereof
     shall be subject to adjustment from time to time as provided in this
     Section 11(b). In the event that any adjustment of the Exercise Price as
     required herein results in a fraction of a cent, such Exercise Price shall
     be rounded up or down to the nearest cent.

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                         (i)    Adjustment of Exercise Price. If and whenever
                                ----------------------------
          solely during the first twelve (12) months of the Exercise Period the
          Company issues or sells, or in accordance with Section 8(b) hereof is
          deemed to have issued or sold, any shares of Common Stock for a
          consideration per share of less than the then current market price
          (the "Base Share Price") or for no consideration (collectively, a
          "Dilutive Issuance"), then effective immediately upon the Dilutive
          Issuance, the Exercise Price will be adjusted in accordance with the
          following formula:

               E'   = E x  O + P/BSP
                         ---------
                           CSDO
               where:

               E'   = the adjusted Exercise Price;
               E    = the then current Exercise Price;
               BSP  = the Base Share Price;
               O    = the number of shares of Common Stock outstanding
                         immediately prior to the Dilutive Issuance;
               P    = the aggregate consideration, calculated as set forth in
                         Section 11(b)(ii) hereof, received by the Company upon
                         such Dilutive Issuance; and
               CSDO = the total number of shares of Common Stock Deemed
                         Outstanding immediately after the Dilutive Issuance.

                         (ii)   Effect on Exercise Price of Certain Events. For
                                ------------------------------------------
          purposes of determining the adjusted Exercise Price under Section
          11(b) hereof, the following will be applicable:

                                (A)  Issuance of Rights or Options. If the
                                     -----------------------------
               Company in any manner issues or grants any warrants, rights or
               options, whether or not immediately exercisable, to subscribe for
               or to purchase Common Stock or other securities exercisable,
               convertible into or exchangeable for Common Stock ("Convertible
               Securities") (such warrants, rights and options to purchase
               Common Stock or Convertible Securities are hereinafter referred
               to as "Options") and the price per share for which Common Stock
               is issuable upon the exercise of such Options is less than the
               Base Share Price ("Below Base Price Options"), then the maximum
               total number of shares of Common Stock issuable upon the exercise
               of all such Below Base Price Options (assuming full exercise,
               conversion or exchange of Convertible Securities, if applicable)
               will, as of the date of the issuance or grant of such Below Base
               Price Options, be deemed to be outstanding and to have been
               issued and sold by the Company for such price per share. For
               purposes of the preceding sentence, the "price per share for
               which Common Stock is issuable upon the exercise of such Below
               Base Price Options" is determined by dividing (i) the total
               amount, if any, received or receivable by the Company as
               consideration for the issuance or granting of

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               all such Below Base Price Options, plus the minimum aggregate
               amount of additional consideration, if any, payable to the
               Company upon the exercise of all such Below Base Price Options,
               plus, in the case of Convertible Securities issuable upon the
               exercise of such Below Base Price Options, the minimum aggregate
               amount of additional consideration payable upon the exercise,
               conversion or exchange thereof at the time such Convertible
               Securities first become exercisable, convertible or exchangeable,
               by (ii) the maximum total number of shares of Common Stock
               issuable upon the exercise of all such Below Base Price Options
               (assuming full conversion of Convertible Securities, if
               applicable). No further adjustment to the Exercise Price will be
               made upon the actual issuance of such Common Stock upon the
               exercise of such Below Base Price Options or upon the exercise,
               conversion or exchange of Convertible Securities issuable upon
               exercise of such Below Base Price Options.

                                (B) Issuance of Convertible Securities. If the
                                    ----------------------------------
               Company in any manner issues or sells any Convertible Securities,
               whether or not immediately convertible (other than where the same
               are issuable upon the exercise of Options) and the price per
               share for which Common Stock is issuable upon such exercise,
               conversion or exchange is less than the Base Share Price, then
               the maximum total number of shares of Common Stock issuable upon
               the exercise, conversion or exchange of all such Convertible
               Securities will, as of the date of the issuance of such
               Convertible Securities, be deemed to be outstanding and to have
               been issued and sold by the Company for such price per share. For
               the purposes of the preceding sentence, the "price per share for
               which Common Stock is issuable upon such exercise, conversion or
               exchange" is determined by dividing (i) the total amount, if any,
               received or receivable by the Company as consideration for the
               issuance or sale of all such Convertible Securities, plus the
               minimum aggregate amount of additional consideration, if any,
               payable to the Company upon the exercise, conversion or exchange
               thereof at the time such Convertible Securities first become
               exercisable, convertible or exchangeable, by (ii) the maximum
               total number of shares of Common Stock issuable upon the
               exercise, conversion or exchange of all such Convertible
               Securities. No further adjustment to the Exercise Price will be
               made upon the actual issuance of such Common Stock upon exercise,
               conversion or exchange of such Convertible Securities.

                                (C)  Change in Option Price or Conversion Rate.
                                     -----------------------------------------
               If there is a change at any time in (i) the amount of additional
               consideration payable to the Company upon the exercise of any
               Options; (ii) the amount of additional consideration, if any,
               payable to the Company upon the exercise, conversion or exchange
               of any Convertible Securities; or (iii) the rate at which any
               Convertible Securities are convertible into or exchangeable for
               Common Stock (in each such case, other than under or

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               by reason of provisions designed to protect against dilution),
               the Exercise Price in effect at the time of such change will be
               readjusted to the Exercise Price which would have been in effect
               at such time had such Options or Convertible Securities still
               outstanding provided for such changed additional consideration or
               changed conversion rate, as the case may be, at the time
               initially granted, issued or sold.

                                (D)  Treatment of Expired Options and
                                     --------------------------------
               Unexercised Convertible Securities. If, in any case, the total
               ----------------------------------
               number of shares of Common Stock issuable upon exercise of any
               Option or upon exercise, conversion or exchange of any
               Convertible Securities is not, in fact, issued and the rights to
               exercise such Option or to exercise, convert or exchange such
               Convertible Securities shall have expired or terminated, the
               Exercise Price then in effect will be readjusted to the Exercise
               Price which would have been in effect at the time of such
               expiration or termination had such Option or Convertible
               Securities, to the extent outstanding immediately prior to such
               expiration or termination (other than in respect of the actual
               number of shares of Common Stock issued upon exercise or
               conversion thereof), never been issued.

                                (E)  Calculation of Consideration Received. If
                                     -------------------------------------
               any Common Stock, Options or Convertible Securities are issued,
               granted or sold for cash, the consideration received therefor for
               purposes of this Warrant will be the amount received by the
               Company therefor, before deduction of reasonable commissions,
               underwriting discounts or allowances or other reasonable expenses
               paid or incurred by the Company in connection with such issuance,
               grant or sale. In case any Common Stock, Options or Convertible
               Securities are issued or sold for a consideration part or all of
               which shall be other than cash, the amount of the consideration
               other than cash received by the Company will be the fair market
               value of such consideration, except where such consideration
               consists of securities, in which case the amount of consideration
               received by the Company will be the Market Price thereof as of
               the date of receipt. In case any Common Stock, Options or
               Convertible Securities are issued in connection with any merger
               or consolidation in which the Company is the surviving
               corporation, the amount of consideration therefor will be deemed
               to be the fair market value of such portion of the net assets and
               business of the non-surviving corporation as is attributable to
               such Common Stock, Options or Convertible Securities, as the case
               may be. The fair market value of any consideration other than
               cash or securities will be determined in good faith by an
               investment banker or other appropriate expert of national
               reputation selected by the Company and reasonably acceptable to
               the holder hereof, with the costs of such appraisal to be borne
               by the Company.

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                                (F)  Exceptions to Adjustment of Exercise Price.
                                     ------------------------------------------
               No adjustment to the Exercise Price will be made (i) upon the
               exercise of this Warrant or any other warrant of this series or
               of any other series issued by the Company in connection with the
               offer and sale of this Company's securities pursuant to the
               Purchase Agreement; (ii) upon the exercise of or conversion of
               any Convertible Securities, options or warrants issued and
               outstanding on the initial issuance date of this Warrant; (iii)
               upon the grant or exercise of any Convertible Securities which
               may hereafter be granted or exercised under any employee benefit
               plan of the Company now existing or to be implemented in the
               future, so long as the issuance of such Convertible Securities is
               approved by a majority of the non-employee members of the Board
               of Directors of the Company or a majority of the members of a
               committee of non-employee directors established for such purpose;
               (iv) upon the issuance of Common Stock or Convertible Securities
               in a public offering, whether or not underwritten; (v) upon the
               issuance of Common Stock or Convertible Securities in any
               transaction of the nature contemplated by Rule 145, promulgated
               under the Securities Act; or (vi) in connection with any
               strategic partnership or joint venture or acquisition (the
               primary purpose of which is not to raise equity capital for the
               Company).

                         (iii)  Notice of Adjustment. Upon the occurrence of any
                                --------------------
          event which requires any adjustment of the Exercise Price, then, and
          in each such case, the Company shall give notice thereof to the holder
          of this Warrant, which notice shall state the Exercise Price resulting
          from such adjustment and the increase or decrease in the number of
          Warrant Shares purchasable at such price upon exercise, setting forth
          in reasonable detail the method of calculation and the facts upon
          which such calculation is based, provided that such notice shall not
          contain any material nonpublic information. Such calculation shall be
          certified by the chief financial officer of the Company.

                         (iv)   Minimum Adjustment of Exercise Price. No
                                ------------------------------------
          adjustment of the Exercise Price shall be made in an amount of less
          than 1% of the Exercise Price in effect at the time such adjustment is
          otherwise required to be made, but any such lesser adjustment shall be
          carried forward and shall be made at the time and together with the
          next subsequent adjustment which, together with any adjustments so
          carried forward, shall amount to not less than 1% of such Exercise
          Price.

                         (v)    Certain Events. If, at any time during the
                                --------------
          Exercise Period, any event occurs of the type contemplated by the
          adjustment provisions of this Section 11 but not expressly provided
          for by such provisions, the Company will give notice of such event as
          provided in Section 11 hereof, and the Company's Board of Directors
          will make an appropriate adjustment in the Exercise Price and the
          number of shares of Common Stock acquirable upon exercise of this
          Warrant

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          so that the rights of the holder shall be neither enhanced nor
          diminished by such event.

                         (vi)   Certain Definitions. "Common Stock Deemed
                                -------------------
          Outstanding" shall mean the number of shares of Common Stock actually
          outstanding (not including shares of Common Stock held in the treasury
          of the Company), plus (x) in the case of any adjustment hereunder
          resulting from the issuance of any Options, the maximum total number
          of shares of Common Stock issuable upon the exercise of the Options
          for which the adjustment is required (including any Common Stock
          issuable upon the conversion of Convertible Securities issuable upon
          the exercise of such Options), and (y) in the case of any adjustment
          required hereunder resulting from the issuance of any Convertible
          Securities, the maximum total number of shares of Common Stock
          issuable upon the exercise, conversion or exchange of the Convertible
          Securities for which the adjustment is required, as of the date of
          issuance of such Convertible Securities, if any.

          12.  Reorganization, Reclassification, Merger, Consolidation or
               ----------------------------------------------------------
Disposition of Assets. In case the Company shall reorganize its capital,
---------------------
reclassify its capital stock, consolidate or merge with or into another
corporation (where the Company is not the surviving corporation or where there
is a change in or distribution with respect to the Common Stock of the Company),
or sell, transfer or otherwise dispose of all or substantially all its property,
assets or business to another corporation and, pursuant to the terms of such
reorganization, reclassification, merger, consolidation or disposition of
assets, shares of common stock of the successor or acquiring corporation, or any
cash, shares of stock or other securities or property of any nature whatsoever
(including warrants or other subscription or purchase rights) in addition to or
in lieu of common stock of the successor or acquiring corporation ("Other
Property"), are to be received by or distributed to the holders of Common Stock
of the Company, then the Holder shall have the right thereafter to receive, upon
exercise of this Warrant, the number of shares of Common Stock of the successor
or acquiring corporation or of the Company, if it is the surviving corporation,
and Other Property receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by a Holder of
the number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such event. In case of any such reorganization,
reclassification, merger, consolidation or disposition of assets, the successor
or acquiring corporation (if other than the Company) shall expressly assume the
due and punctual observance and performance of each and every covenant and
condition of this Warrant to be performed and observed by the Company and all
the obligations and liabilities hereunder, subject to such modifications as may
be deemed appropriate (as determined in good faith by resolution of the Board of
Directors of the Company) in order to provide for adjustments of Warrant Shares
for which this Warrant is exercisable which shall be as nearly equivalent as
practicable to the adjustments provided for in this Section 12. For purposes of
this Section 12, "common stock of the successor or acquiring corporation" shall
include stock of such corporation of any class which is not preferred as to
dividends or assets over any other class of stock of such corporation and which
is not subject to redemption and shall also include any evidences of
indebtedness, shares of stock or other securities which are convertible into or
exchangeable for any such stock,

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either immediately or upon the arrival of a specified date or the happening of a
specified event and any warrants or other rights to subscribe for or purchase
any such stock. The foregoing provisions of this Section 12 shall similarly
apply to successive reorganizations, reclassifications, mergers, consolidations
or disposition of assets.

          13.  Voluntary Adjustment by the Company. The Company may at any time
               -----------------------------------
during the term of this Warrant reduce the then current Exercise Price to any
amount and for any period of time deemed appropriate by the Board of Directors
of the Company.

          14.  Notice of Adjustment. Whenever the number of Warrant Shares or
               --------------------
number or kind of securities or other property purchasable upon the exercise of
this Warrant or the Exercise Price is adjusted, as herein provided, the Company
shall promptly mail by registered or certified mail, return receipt requested,
to the Holder notice of such adjustment or adjustments setting forth the number
of Warrant Shares (and other securities or property) purchasable upon the
exercise of this Warrant and the Exercise Price of such Warrant Shares (and
other securities or property) after such adjustment, setting forth a brief
statement of the facts requiring such adjustment and setting forth the
computation by which such adjustment was made. Such notice, in the absence of
manifest error, shall be conclusive evidence of the correctness of such
adjustment.

          15.  Notice of Corporate Action. If at any time:
               --------------------------

                    (a)  the Company shall take a record of the holders of its
     Common Stock for the purpose of entitling them to receive a dividend or
     other distribution, or any right to subscribe for or purchase any evidences
     of its indebtedness, any shares of stock of any class or any other
     securities or property, or to receive any other right, or

                    (b)  there shall be any capital reorganization of the
     Company, any reclassification or recapitalization of the capital stock of
     the Company or any consolidation or merger of the Company with, or any
     sale, transfer or other disposition of all or substantially all the
     property, assets or business of the Company to, another corporation or,

                    (c)  there shall be a voluntary or involuntary dissolution,
     liquidation or winding up of the Company;

then, in any one or more of such cases, the Company shall give to Holder (i) at
least 20 days' prior written notice of the date on which a record date shall be
selected for such dividend, distribution or right or for determining rights to
vote in respect of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, liquidation or winding up, and (ii)
in the case of any such reorganization, reclassification, merger, consolidation,
sale, transfer, disposition, dissolution, liquidation or winding up, at least 20
days' prior written notice of the date when the same shall take place. Such
notice in accordance with the foregoing clause also shall specify (i) the date
on which any such record is to be taken for the purpose of such dividend,
distribution or right, the date on which the holders of Common Stock shall be
entitled to any such dividend, distribution or right, and the amount and
character thereof, and (ii) the date

                                       11
<PAGE>

on which any such reorganization, reclassification, merger, consolidation, sale,
transfer, disposition, dissolution, liquidation or winding up is to take place
and the time, if any such time is to be fixed, as of which the holders of Common
Stock shall be entitled to exchange their Warrant Shares for securities or other
property deliverable upon such disposition, dissolution, liquidation or winding
up. Each such written notice shall be sufficiently given if addressed to Holder
at the last address of Holder appearing on the books of the Company and
delivered in accordance with Section 17(d).

          16.  Authorized Shares. The Company covenants that during the period
               -----------------
the Warrant is outstanding, it will reserve from its authorized and unissued
Common Stock a sufficient number of shares to provide for the issuance of the
Warrant Shares upon the exercise of any purchase rights under this Warrant. The
Company further covenants that its issuance of this Warrant shall constitute
full authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for the Warrant
Shares upon the exercise of the purchase rights under this Warrant. The Company
will take all such reasonable action as may be necessary to assure that such
Warrant Shares may be issued as provided herein without violation of any
applicable law or regulation, or of any requirements of the Principal Market
upon which the Common Stock may be listed.

                    The Company shall not by any action, including, without
limitation, amending its certificate of incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such actions as may be necessary or appropriate to protect the
rights of Holder against impairment. Without limiting the generality of the
foregoing, the Company will (a) not increase the par value of any Warrant Shares
above the amount payable therefor upon such exercise immediately prior to such
increase in par value, (b) take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and nonassessable Warrant Shares upon the exercise of this Warrant, and (c) use
commercially reasonable efforts to obtain all such authorizations, exemptions or
consents from any public regulatory body having jurisdiction thereof as may be
necessary to enable the Company to perform its obligations under this Warrant.

                    Before taking any action which would result in an adjustment
in the number of Warrant Shares for which this Warrant is exercisable or in the
Exercise Price, the Company shall obtain all such authorizations or exemptions
thereof, or consents thereto, as may be necessary from any public regulatory
body or bodies having jurisdiction thereof.

          17.  Miscellaneous.
               -------------

                    (a)  Jurisdiction. This Warrant shall constitute a contract
                         ------------
     under the laws of New York, without regard to its conflict of law,
     principles or rules, and be subject to arbitration pursuant to the terms
     set forth in the Purchase Agreement.

                                       12
<PAGE>

                    (b)  Restrictions. The Holder acknowledges that the Warrant
                         ------------
     Shares acquired upon the exercise of this Warrant, if not registered, will
     have restrictions upon resale imposed by state and federal securities laws.

                    (c)  Nonwaiver and Expenses. No course of dealing or any
                         ----------------------
     delay or failure to exercise any right hereunder on the part of Holder
     shall operate as a waiver of such right or otherwise prejudice Holder's
     rights, powers or remedies, notwithstanding all rights hereunder terminate
     on the Termination Date. If the Company willfully and knowingly fails to
     comply with any provision of this Warrant, which results in any material
     damages to the Holder, the Company shall pay to Holder such amounts as
     shall be sufficient to cover any costs and expenses including, but not
     limited to, reasonable attorneys' fees, including those of appellate
     proceedings, incurred by Holder in collecting any amounts due pursuant
     hereto or in otherwise enforcing any of its rights, powers or remedies
     hereunder.

                    (d)  Notices. Any notice, request or other document required
                         -------
     or permitted to be given or delivered to the Holder by the Company shall be
     delivered in accordance with the notice provisions of the Purchase
     Agreement.

                    (e)  Limitation of Liability. No provision hereof, in the
                         -----------------------
     absence of affirmative action by Holder to purchase Warrant Shares, and no
     enumeration herein of the rights or privileges of Holder, shall give rise
     to any liability of Holder for the purchase price of any Common Stock or as
     a stockholder of the Company, whether such liability is asserted by the
     Company or by creditors of the Company.

                    (f)  Remedies. Holder, in addition to being entitled to
                         --------
     exercise all rights granted by law, including recovery of damages, will be
     entitled to specific performance of its rights under this Warrant. The
     Company agrees that monetary damages would not be adequate compensation for
     any loss incurred by reason of a breach by it of the provisions of this
     Warrant and hereby agrees to waive the defense in any action for specific
     performance that a remedy at law would be adequate.

                    (g)  Successors and Assigns. Subject to applicable
                         -----------------------
     securities laws, this Warrant and the rights and obligations evidenced
     hereby shall inure to the benefit of and be binding upon the successors of
     the Company and the successors and permitted assigns of Holder. The
     provisions of this Warrant are intended to be for the benefit of all
     Holders from time to time of this Warrant and shall be enforceable by any
     such Holder or holder of Warrant Shares.

                    (h)  Amendment. This Warrant may be modified or amended or
                         ---------
     the provisions hereof waived with the written consent of the Company and
     the Holder.

                    (i)  Severability. Wherever possible, each provision of this
                         ------------
     Warrant shall be interpreted in such manner as to be effective and valid
     under applicable law, but if any provision of this Warrant shall be
     prohibited by or invalid under applicable law, such provision shall be
     ineffective to the extent of such prohibition or invalidity, without
     invalidating the remainder of such provisions or the remaining provisions
     of this Warrant.

                                       13
<PAGE>

                    (j)  Headings. The headings used in this Warrant are for the
                         --------
     convenience of reference only and shall not, for any purpose, be deemed a
     part of this Warrant.

                                       14
<PAGE>

          IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its officer thereunto duly authorized.

Dated: June __, 2001
                                   DATA RACE, INC.

                                   By:
                                      ----------------------------------------
                                       Michael McDonnell, President & CEO

                                       15
<PAGE>

                              NOTICE OF EXERCISE

To:  Data Race, Inc.

          (1)  The undersigned hereby elects to purchase ________ Warrant Shares
(the "Common Stock"), of Data Race, Inc. pursuant to the terms of the attached
Warrant, and tenders herewith payment of the exercise price in full, together
with all applicable transfer taxes, if any.

          (2)  Please issue a certificate or certificates representing said
Warrant Shares in the name of the undersigned or in such other name as is
specified below:

               ------------------------------

The Warrant Shares shall be delivered to the following:

               ------------------------------

               ------------------------------

               ------------------------------

                                   [PURCHASER]

                                   By:
                                       ------------------------------
                                        Name:
                                        Title:

                                   Dated:
                                         ----------------------------
<PAGE>

                  NOTICE OF EXERCISE OF COMMON STOCK WARRANT
                   PURSUANT TO CASHLESS EXERCISE PROVISIONS

To: Data Race, Inc.

Aggregate Price of Warrant Before Exercise:  $__________
Aggregate Price Being Exercised:  $__________
Exercise Price:  $__________ per share
Number of Shares of Common Stock to be Issued Under this Notice: __________
Remaining Aggregate Price (if any) After Issuance:  $__________

Gentlemen:

          The undersigned, registered Holder of the Warrant delivered herewith,
hereby irrevocably exercises such Warrant for, and purchases thereunder, shares
of the Common Stock of Data Race, Inc., a Texas corporation, as provided below.
Capitalized terms used herein, unless otherwise defined herein, shall have the
meanings given in the Warrant. The portion of the Exercise Price (as defined in
the Warrant) to be applied toward the purchase of Common Stock pursuant to this
Notice of Exercise is $_______, thereby leaving a remaining Exercise Price (if
any) equal to $________. Such exercise shall be pursuant to the cashless
exercise provisions of Section 3 of the Warrant; therefore, Holder makes no
payment with this Notice of Exercise. The number of shares to be issued pursuant
to this exercise shall be determined by reference to the formula in Section 3 of
the Warrant which, by reference to Section 3, requires the use of the high and
low trading price of the Company's Common Stock on the Trading Day preceding the
date of such election. The high and low trading price of the Company's Common
Stock has been determined by Holder to be $______ and $_________, respectively,
which figure is acceptable to Holder for calculations of the number of shares of
Common Stock issuable pursuant to this Notice of Exercise. Holder requests that
the certificates for the purchased shares of Common Stock be issued in the name
of _________________________ and delivered to _________________________________.
To the extent the foregoing exercise is for less than the full Aggregate Price
of the Warrant, a replacement Warrant representing the remainder of the
Aggregate Price (and otherwise of like form, tenor and effect) shall be
delivered to Holder along with the share certificate evidencing the Common Stock
issued in response to this Notice of Exercise.

                                    [Purchaser]

                                    By:
                                       ------------------------------
                                        Name:
                                        Title:

                                    Date:

                                     NOTE
          The execution to the foregoing Notice of Exercise must exactly
correspond to the name of the Holder on the Warrant

                                       2
<PAGE>

                                ASSIGNMENT FORM

                   (To assign the foregoing warrant, execute
                  this form and supply required information.
                Do not use this form to exercise the warrant.)

          FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to

                                                whose address is
-----------------------------------------------

-----------------------------------------------------------------.

-----------------------------------------------------------------

                                   Dated:
                                         ---------------, ------

               Holder's Signature:
                                  ------------------------------

               Holder's Address:
                                  ------------------------------

                                  ------------------------------

Signature Guaranteed:
                     ----------------------------------------

NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in an fiduciary or other representative
capacity should file proper evidence of authority to assign the foregoing
Warrant.<PAGE>

                                                                   Exhibit 10.16

                                                                       EXHIBIT A

                            6% CONVERTIBLE DEBENTURE

     NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON CONVERSION HEREOF
     HAVE BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE
     COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE OR UNDER THE
     SECURITIES ACT OF 1933, AS AMENDED (THE "ACT").  THE SECURITIES ARE
     RESTRICTED AND MAY NOT BE OFFERED, RESOLD, PLEDGED OR TRANSFERRED EXCEPT AS
     PERMITTED UNDER THE ACT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR
     AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS.

No. __                                                               US $250,000

                                Data Race, Inc.

                  6% CONVERTIBLE DEBENTURE DUE JUNE __, 2004

          THIS DEBENTURE is issued by Data Race, Inc., a corporation organized
and existing under the laws of the State of Texas (the "Company") and is
designated as its 6% Convertible Debenture due June __, 2004.

          FOR VALUE RECEIVED, the Company promises to pay to ______________ or
permitted assigns (the "Holder"), the principal sum of Two Hundred Fifty
Thousand and 00/100 (US $250,000) Dollars on June __, 2004 (the "Maturity Date")
and to pay interest on the principal sum outstanding from time to time quarterly
in arrears at the rate of 6% per annum (based upon a 360 calendar day year)
accruing from the date of initial issuance. Accrual of interest shall commence
on the first business day to occur after the date of initial issuance and
continue until payment in full of the principal sum has been made or duly
provided for.  Quarterly interest payments shall be due and payable on December
1, April 1, June 1 and October 1 of each year, commencing with October 1, 2001.
If any interest payment date or the Maturity Date is not a business day in the
State of New York, then such payment shall be made on the next succeeding
business day. The Company will pay the principal of, and any accrued but unpaid
interest due upon this Debenture on the Maturity Date, by check or wire transfer
to the person who is the registered Holder of this Debenture as of the tenth day
prior to the Maturity Date and addressed to such Holder at the last address
appearing on the Debenture Register. The Company shall not pay the principal due
upon this Debenture prior to the Maturity Date without the express written
consent of the Holder or as set forth in Section 3 herein. The forwarding of
such check or money order on the Maturity Date shall constitute a payment of
principal and interest hereunder and shall satisfy and discharge the liability
for principal and interest on this Debenture to the extent of the sum
represented by such check or wire transfer plus any amounts so deducted.

          This Debenture is subject to the following additional provisions:

          1.  Withholdings.  The Company shall be entitled to withhold from all
              ------------
     payments of interest on this Debenture any amounts required to be withheld
     under the applicable provisions of the United States income tax laws or
     other applicable laws at the time of such payments, and Holder shall
     execute and deliver all required documentation in connection therewith.

          2.  Transfers.  This Debenture has been issued subject to investment
              ---------
     representations of the original purchaser hereof and may be transferred or
     exchanged only in compliance with the Securities Act of 1933, as amended
     (the "Act"), and other applicable state and foreign securities laws.  The
     Holder shall

                                       1
<PAGE>

     deliver written notice to the Company of any proposed transfer of this
     Debenture. In the event of any proposed transfer of this Debenture, the
     Company may require, prior to issuance of a new Debenture in the name of
     such other person, that it receive reasonable transfer documentation
     including legal opinions that the issuance of the Debenture in such other
     name does not and will not cause a violation of the Act or any applicable
     state or foreign securities laws. Prior to due presentment for transfer of
     this Debenture, the Company and any agent of the Company may treat the
     person in whose name this Debenture is duly registered on the Company's
     Debenture Register as the owner hereof for the purpose of receiving payment
     as herein provided and for all other purposes, whether or not this
     Debenture be overdue, and neither the Company nor any such agent shall be
     affected by notice to the contrary. This Debenture has been executed and
     delivered pursuant to the Convertible Debentures and Warrants Purchase
     Agreement dated as of June 12, 2001 between the Company and the original
     Holder (the "Purchase Agreement"), and is subject to the terms and
     conditions of the Purchase Agreement, which are, by this reference,
     incorporated herein and made a part hereof. Capitalized terms used and not
     otherwise defined herein shall have the meanings set forth for such terms
     in the Purchase Agreement.

          3.  Optional Conversion.  The Holder of this Debenture is entitled, at
              -------------------
     its option, to convert at any time commencing on the date hereof until this
     Debenture is paid in full, the principal amount of this Debenture or any
     portion thereof, plus any accrued and unpaid interest, into shares of
     Common Stock of the Company ("Conversion Shares") at a conversion price for
     each share of Common Stock ("Conversion Price") equal to the lesser of (i)
     $_____ (110% of the Bid Price on the Trading Day immediately prior to the
     applicable Closing Date (and, at the Holder's option, if not listed on the
     Principal Market, the closing bid price of the Common Stock on the pink
     sheets or any other trading market) (the "Set Price")(subject to adjustment
     for stock splits and the like)), and (ii) 50% of the average of the five
     (5) lowest Bid Prices during the 25 Trading Days immediately preceding the
     applicable Conversion Date (and, at the Holder's option, if not listed on
     the Principal Market, the closing bid price of the Common Stock on the pink
     sheets or any other trading market).  If, upon any conversion of this
     Debenture, the Company's issuance of Conversion Shares would cause it to
     violate any listing requirement of the Principal Market, then, at the
     election of the Holder, (i) the Holder may convert this Debenture at a
     Conversion Price equal to 100% of the Bid Price on the first Closing Date,
     or (ii) in lieu of such stock issuance, the Company shall pay the Holder
     cash in an amount equal to the highest Bid Price during the period
     commencing on the Conversion Date and ending on the Trading Day payment is
     actually delivered to the Holder multiplied by the number of Conversion
     Shares which would otherwise have been issuable upon such conversion, but
     which were not delivered because of said listing requirement.  The Company
     shall be liable to the Holder for liquidated damages as set forth in
     Section 7(b) herein for failure to make such payments to Holder within
     three (3) Trading Days after the Conversion Date.  Additionally, except for
     sales of its securities (i) pursuant to the exercise of options granted or
     to be granted under an employee benefit plan which plan has been approved
     by the Company's stockholders, (ii) pursuant to any compensatory plan for a
     full-time employee or key consultant, or (iii) in connection with a
     strategic partnership or other business transaction, the principal purpose
     of which is not simply to raise money, or (iv) pursuant to the Equity Line,
     if during the period beginning on the date hereof and ending when the
     Holder no longer holds any of the principal amount of this Debenture or any
     accrued but unpaid interest of this Debenture (the "MFN Period"), the
     Company sells any shares of its Common Stock at a per share selling price
     ("Per Share Selling Price") lower than the Set Price per share, then the
     Set Price shall be adjusted downward to equal such lower Per Share Selling
     Price.  The Company shall give to each Holder written notice of any such
     sale within 24 hours of the closing of any such sale.

                    (a) For the purpose of this Section 3, the term "Per Share
          Selling Price" shall mean the amount actually paid by third parties
          for a share of Common Stock.  A sale of shares of Common Stock shall
          include the sale or issuance of rights, options, warrants or
          convertible securities ("derivative securities") under which the
          Company is or may become obligated to issue shares of Common Stock,
          and in such circumstances the sale of Common Stock shall be deemed to
          have occurred at the time of the issuance of the derivative securities
          and the Per Share Selling Price of the Common Stock covered thereby
          shall also include the exercise or conversion price thereof (in
          addition to the consideration per underlying Conversion Share received
          by the Company upon such sale or issuance of the derivative security).
          In case of any such security

                                       2
<PAGE>

          issued within the MFN Period in a "Variable Rate Transaction" or an
          "MFN Transaction" (each as defined below), the Per Share Selling Price
          shall be deemed to be the lowest conversion or exercise price at which
          such securities are converted or exercised in the case of a Variable
          Rate Transaction, or the lowest adjustment price in the case of an MFN
          Transaction. If shares are issued for a consideration other than cash,
          the per share selling price shall be the fair value of such
          consideration as determined in good faith by the Board of Directors of
          the Company.

               (b)  For the purpose of Section 3(a), the term "Variable Rate
          Transaction" shall mean a transaction in which the Company issues or
          sells (i) any debt or equity securities that are convertible into,
          exchangeable or exercisable for, or include the right to receive
          additional shares of Common Stock either (A) at a conversion, exercise
          or exchange rate or other price that is based upon and/or varies with
          the trading prices of or quotations for the Common Stock at any time
          after the initial issuance of such debt or equity securities, or (B)
          with a conversion, exercise or exchange price that is subject to being
          reset at some future date after the initial issuance of such debt or
          equity security or upon the occurrence of specified or contingent
          events directly or indirectly related to the business of the Company
          or the market for the Common Stock (but excluding standard stock split
          anti-dilution provisions), or (ii) any securities of the Company
          pursuant to an "equity line" structure which provides for the sale,
          from time to time, of securities of the Company which are registered
          for resale pursuant to the Securities  Act.

               (c) For the purposes of Section 3(a), the term "MFN Transaction"
          shall mean a transaction in which the Company issues or sells any
          securities in a capital raising transaction or series of related
          transactions (the "New Offering") which grants to an investor (the
          "New Investor") the right to receive additional shares based upon
          future transactions of the Company on terms more favorable than those
          granted to the New Investor in the New Offering.

               (d) In case of any stock split or reverse stock split, stock
          dividend, reclassification of the common stock, recapitalization,
          merger or consolidation, or like capital adjustment affecting the
          Common Stock of the Company, the provisions of this Section 3 shall be
          applied in a fair, equitable and reasonable manner so as to give
          effect, as nearly as may be, to the purposes hereof.

          4.  Interest.  The rate of interest on this Debenture shall be six
              --------
percent (6%), per annum (based upon a 360 calendar day year), on the outstanding
principal until paid, redeemed or converted. The Company shall have the right to
issue registered Common Stock in exchange for interest otherwise payable in cash
pursuant to this Debenture. The exact number of shares of Common Stock into
which such interest payment is convertible shall be determined as set forth in
Section 3.

          5.  Redemption.  The Company shall have the right to deliver to the
              ----------
Holder a written notice ("Redemption Notice") of the Company's intent to redeem
all or any part of the outstanding principal amount of this Debenture provided
that it also pays at such time all accrued but unpaid interest on the entire
outstanding principal amount plus the applicable Payment Premium. The Payment
Premium shall be (i) if the redemption payment is made prior to the 75th Trading
Day after the first Closing Date, 20% of the outstanding principal amount being
redeemed, and (ii) if the redemption payment is made on or after the 75th
Trading Day after the first Closing Date, 30% of the outstanding principal
amount being redeemed. The Company shall give the Holder at least five (5)
Trading Days' notice prior to the date a redemption payment is made ("Redemption
Date"). The Redemption Date and the outstanding principal amount being redeemed
shall be set forth in the Redemption Notice. The Holder shall have the right to
convert this Debenture as set forth in Section 3 until the Trading Day
immediately prior to the Trading Day set for payment of the redemption price. If
the Company fails to make the redemption payment to the Holder on the Redemption
Date, the Company shall thereafter not have any further right to redeem this
Debenture. Additionally, at the election of each Investor, the Company shall use
at least 50% of the net proceeds from any other sale for cash of its securities
(including the Equity Line) (each a "Subsequent Sale"), to redeem this
Debenture, plus all accrued but unpaid interest and the applicable Payment
Premium (as set forth above). The Company shall give the Holder at least five
(5) Trading Days' notice prior to the closing date

                                       3
<PAGE>

of a Subsequent Sale (each a "Subsequent Sale Closing Date"). The Company shall
make redemption payments to the Holder on such Subsequent Sale Closing Date
directly out of the proceeds of any such Subsequent Sale. The Holder shall have
the right to convert this Debenture as set forth in Section 3 until the Trading
Day i mmediately prior to the Trading Day set for payment of the redemption
price.

          6.  Maturity.  On the Maturity Date, the Company shall pay the
              --------
principal of and any accrued but unpaid interest due upon this Debenture, less
any amounts required by law to be deducted, to the registered Holder of this
Debenture and addressed to such Holder at the last address appearing on the
Debenture Register. The Company shall not have the right to pre-pay this
Debenture, except pursuant to Section 5 herein, without the prior written
consent of the Holder.

          7.  Conversion Procedure.

              (a) Conversion shall be effectuated by surrendering this
Debenture to the Company (if such Conversion will convert all outstanding
principal) together with the form of conversion notice attached hereto as
Exhibit A (the "Notice of Conversion"), executed by the Holder of this Debenture
---------
evidencing such Holder's intention to convert this Debenture or a specified
portion of this Debenture and if, and only if, the Holder intends to convert the
entire outstanding principal amount of this Debenture, the surrender of this
Debenture. Interest accrued or accruing from the Conversion Date shall be paid
as set forth above. No fraction of a share or scrip representing a fraction of a
share will be issued on conversion, but the number of shares issuable shall be
rounded to the nearest whole share. The Conversion Date shall be deemed to be
the date on which the Holder faxes the Notice of Conversion duly executed to the
Company. Facsimile delivery of the Notice of Conversion shall be accepted by the
Company at facsimile number (210) 558-0356 Attn: James G. Scogin. Certificates
representing Common Stock upon conversion will be delivered to the Holder within
three (3) Trading Days from the Conversion Date. Delivery of shares upon
conversion shall be made to the address specified by the Holder in the Notice of
Conversion.

              (b) The Company understands that a delay in the issuance of the
Conversion Shares (without legends, if issued during any periods that the
Registration Statement is effective or sales may be made pursuant to Rule 144
under the Securities Act and hereinafter referred to as "Rule 144") beyond the
three (3) Trading Day period described in Section 7(a) could result in economic
loss to the Holder. As compensation to the Holder for such loss, the Company
agrees to pay late payments to the Holder for late issuance of Conversion Shares
(without legends, if issued during any periods that the Registration Statement
is effective or sales may be made pursuant to Rule 144 under the Securities Act
and hereinafter referred to as "Rule 144") in accordance with the following
schedule (where "No. Trading Days Late" is defined as the number of Trading Days
beyond three (3) Trading Days from the Conversion Date).

-----------------------------------------------------------------------
No. Trading Days Late                Late Payment for Each

                                     $5,000 of Principal Amount

                                     Being Converted
-----------------------------------------------------------------------
          1                           $100
-----------------------------------------------------------------------
          2                           $200
-----------------------------------------------------------------------

                                       4
<PAGE>

-----------------------------------------------------------------------
No. Trading Days Late                Late Payment for Each

                                     $5,000 of Principal Amount

                                     Being Converted
-----------------------------------------------------------------------

          3                           $300
-----------------------------------------------------------------------
          4                           $400
-----------------------------------------------------------------------
          5                           $500
-----------------------------------------------------------------------
          6                           $600
-----------------------------------------------------------------------
          7                           $700
-----------------------------------------------------------------------
          8                           $800
-----------------------------------------------------------------------
          9                           $900
-----------------------------------------------------------------------
          10                        $1,000
-----------------------------------------------------------------------
          More than 10              $1,000 +$200 for each Trading Day
                                    Late beyond 10 Trading Days
-----------------------------------------------------------------------

          The Company shall pay any payments incurred under this Section 7(b) in
     immediately available funds upon demand.  Nothing herein shall limit
     Holder's right to pursue injunctive relief and/or actual damages for the
     Company's failure to issue and deliver Conversion Shares (without legends,
     if issued during any periods that the Registration Statement is effective
     or sales may be made pursuant to Rule 144 under the Securities Act and
     hereinafter referred to as "Rule 144") or a new Debenture to the Holder,
     including, without limitation, the Holder's actual losses occasioned by any
     "buy-in" of Common Stock necessitated by such late delivery.  Furthermore,
     in addition to any other remedies which may be available to the Holder, in
     the event that the Company fails for any reason to effect delivery of such
     Conversion Shares (without legends, if issued during any periods that the
     Registration Statement is effective or sales may be made pursuant to Rule
     144 under the Securities Act and hereinafter referred to as "Rule 144")
     within three (3) Trading Days from the Conversion Date, the Holder will be
     entitled to revoke the relevant Notice of Conversion by delivering a notice
     to such effect to the Company, whereupon the Company and the Holder shall
     each be restored to their respective positions immediately prior to
     delivery of such Notice of Conversion except that the Holder shall retain
     the right to receive both any late payment liquidated damages as set forth
     above, accrued as of the revocation date, plus the actual net costs of any
     "buy-in".

          (c) If at any time (i) the Company challenges, disputes or denies the
     right of the Holder to effect the conversion of this Debenture into
     Conversion Shares or, if applicable, cash, or otherwise dishonors or
     rejects any Notice of Conversion properly delivered in accordance with this
     Section 7, or (ii) any Company stockholder who is not and has never been an
     Affiliate (as defined in Rule 405 under the

                                       5
<PAGE>

     Securities Act of 1933, as amended) of the Holder obtains a judgment or any
     injunctive relief from any court or public or governmental authority which
     denies, enjoins, limits, modifies, delays or disputes the right of the
     Holder hereof to effect the conversion of this Debenture into Conversion
     Shares, then the Holder shall have the right, by written notice, to require
     the Company to promptly redeem this Debenture for cash at a redemption
     price equal to one hundred fifty percent (150%) of the outstanding
     principal amount hereof and all accrued and unpaid interest hereon. Under
     any of the circumstances set forth above, the Company shall indemnify and
     hold harmless the Holder and be responsible for the payment of all costs
     and expenses of the Holder, including its reasonable legal fees and
     expenses, as and when incurred in disputing any such action or pursuing its
     rights hereunder (in addition to any other rights of the Holder). In the
     event a Holder of this Debenture shall elect to convert any or all of the
     outstanding principal amount hereof, the Company may not refuse conversion
     based on any claim that the Holder or any one associated or affiliated with
     the Holder of has been engaged in any violation of law, agreement or for
     any other reason, unless, an injunction from a court, on notice,
     restraining and or enjoining conversion of all or part of this Debenture
     shall have been sought and obtained and the Company posts a surety bond for
     the benefit of the Holder in the amount of 150% of the principal amount of
     this Debenture outstanding, which is subject to the injunction, which bond
     shall remain in effect until the completion of arbitration/litigation of
     the dispute and the proceeds of which shall be payable to such Holder to
     the extent it obtains judgment. In the absence of an injunction precluding
     the same, the Company shall issue Conversion Shares or, if applicable,
     cash, upon a properly noticed conversion.

          8.  Company's Obligation.  No provision of this Debenture shall alter
              --------------------
or impair the obligation of the Company, which is absolute and unconditional, to
pay the principal of, and interest on, this Debenture at the time, place, and
rate, and in the coin or currency or Conversion Shares herein prescribed. This
Debenture is a direct obligation of the Company.

          9.  Recourse.  No recourse shall be had for the payment of the
              --------
principal of, or the interest on, this Debenture, or for any claim based hereon,
or otherwise in respect hereof, against any incorporator, shareholder, employee,
officer or director, as such, past, present or future, of the Company or any
successor corporation, whether by virtue of any constitution, statute or rule of
law, or by the enforcement of any assessment or penalty or otherwise, all such
liability being, by the acceptance hereof and as part of the consideration for
the issue hereof, expressly waived and released.

          10.  Merger, Consolidation or Sale of Assets.  In case of any (a)
               ---------------------------------------
merger or consolidation of the Company with or into another Person, or (b) sale
by the Company of more than one-half of the assets of the Company (on an as
valued basis) in one or a series of related transactions, the Holder shall have
the right to (i) deem such an occurrence an Event of Default and exercise its
rights of prepayment pursuant to Section 14 herein, (ii) convert its aggregate
principal amount of this Debenture then outstanding into the shares of stock and
other securities, cash and property receivable upon or deemed to be held by
holders of Common Stock following such merger, consolidation or sale, and the
Holder shall be entitled upon such event or series of related events to receive
such amount of securities, cash and property as the Conversion Shares into which
such aggregate principal amount of this Debenture could have been converted
immediately prior to such merger, consolidation or sales would have been
entitled, or (iii) in the case of a merger or consolidation, (A) require the
surviving entity to issue securities with such aggregate stated value or in such
face amount, as the case may be, equal to the aggregate principal amount of this
Debenture then held by the Holder, plus all accrued and unpaid interest and
other amounts owing thereon, which newly issued securities shall have terms
identical (including with respect to conversion) to the terms of this Debenture
and shall be entitled to all of the rights and privileges of the Holder of this
Debenture set forth herein and the agreements pursuant to which this Debenture
was issued (including, without limitation, as such rights relate to the
acquisition, transferability, registration and listing of such shares of stock
other securities issuable upon conversion thereof), and (B) simultaneously with
the issuance of such securities, shall have the right to convert such instrument
only into shares of stock and other securities, cash and property receivable
upon or deemed to be held by holders of Common Stock following such merger or
consolidation. The terms of any such merger, sale or consolidation shall include
such terms so as to continue to give the Holder the right to receive the
securities, cash and property set forth in this Section

                                       6
<PAGE>

upon any conversion or redemption following such event. This Section shall
similarly apply to successive such events.

          11.  Obligations of Holder.  The Holder, by acceptance hereof, agrees
               ---------------------
that this Debenture is being acquired for investment and that such Holder will
not offer, sell or otherwise dispose of this Debenture or the Conversion Shares
thereof except under circumstances which will not result in a violation of the
Act or any applicable state Blue Sky or foreign laws or similar laws relating to
the sale of securities.

          12.  Governing Law.  This Debenture shall be governed by and construed
               -------------
in accordance with the laws of the State of New York. Each of the parties
consents to the jurisdiction of the federal courts whose districts encompass any
part of the City of New York or the state courts of the State of New York
sitting in the City of New York in connection with any dispute arising under
this Agreement and hereby waives, to the maximum extent permitted by law, any
objection, including any objection based on forum non conveniens, to the
bringing of any such proceeding in such jurisdictions.

          13.  Event of Default.  The following shall constitute an "Event of
               ----------------
Default":

          The Company shall default in the payment of principal or interest on
this Debenture and same shall continue for a period of three (3) Trading
Days; or

               a.  Any of the material representations or warranties made by the
          Company herein, in the Purchase Agreement, the Registration Rights
          Agreement, or in any agreement, certificate or financial statements
          heretofore or hereafter furnished by the Company in connection with
          the execution and delivery of this Debenture or the Purchase Agreement
          shall be false or misleading in any material respect at the time made;
          or

               b.  The Company fails to issue Conversion Shares to the Holder or
          to cause its Transfer Agent to issue Conversion Shares, or, if
          applicable, cash, upon proper exercise by the Holder of the conversion
          rights of the Holder in accordance with the terms of this Debenture,
          fails to transfer or to cause its Transfer Agent to transfer any
          certificate for Conversion Shares issued to the as and when required
          by this Debenture or the Registration Rights Agreement, and such
          transfer is otherwise lawful, or fails to remove any restrictive
          legend or to cause its Transfer Agent to transfer any certificate or
          any Conversion Shares issued to the Holder as and when required by
          this Debenture, the Purchase Agreement or the Registration Rights
          Agreement and such legend removal is otherwise lawful, and any such
          failure shall continue uncured for five (5) business days; or

               c.  The Company shall fail to perform or observe, in any material
          respect, any other covenant, term, provision, condition, agreement or
          obligation of the Company under the Purchase Agreement, the
          Registration Rights Agreement or this Debenture; or

               d.  The Company shall (i) admit in writing its inability to pay
          its debts generally as they mature; (ii) make an assignment for the
          benefit of creditors or commence proceedings for its dissolution; or
          (iii) apply for or consent to the appointment of a trustee, liquidator
          or receiver for its or for a substantial part of its property or
          business; or

               e.  A trustee, liquidator or receiver shall be appointed for the
          Company or for a substantial part of its property or business without
          its consent and shall not be discharged within sixty (60) days after
          such appointment; or

               f.  Any governmental agency or any court of competent
          jurisdiction at the instance of any governmental agency shall assume
          custody or control of the whole or any substantial

                                       7
<PAGE>

          portion of the properties or assets of the Company and shall not be
          dismissed wi thin sixty (60) days thereafter; or

               g.  Any money judgment, writ or warrant of attachment, or similar
          process in excess of One Hundred Thousand ($100,000) Dollars in the
          aggregate shall be entered or filed against the Company or any of its
          properties or other assets and shall remain unpaid, unvacated,
          unbonded or unstayed for a period of sixty (60) days or in any event
          later than five (5) days prior to the date of any proposed sale
          thereunder; or

               h.  Bankruptcy, reorganization, insolvency 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
          the Company and, if instituted against the Company, shall not be
          dismissed within sixty (60) days after such institution or the Company
          shall by any action or answer approve of, consent to, or acquiesce in
          any such proceedings or admit the material allegations of, or default
          in answering a petition filed in any such proceeding;

               i.  The Registration Statement is not declared effective by the
          Commission within one hundred twenty (120) days from the first
          Closing; and

               j.  The Company shall have its Common Stock suspended or delisted
          from trading on a Principal Market for in excess of five (5) Trading
          Days.

          Then, or at any time thereafter, and in each and every such case,
unless such Event of Default shall have been waived in writing by the Holder
(which waiver shall not be deemed to be a waiver of any subsequent default) at
the option of the Holder and in the Holder's sole discretion, the Holder may
consider this Debenture immediately due and payable, without presentment,
demand, protest or notice of any kind, all of which are hereby expressly waived,
anything herein or in any note or other instruments contained to the contrary
notwithstanding, and the Holder may immediately enforce any and all of the
Holder's rights and remedies provided herein or any other rights or remedies
afforded by law.

          14.  Rights as Shareholder.  Nothing contained in this Debenture shall
               ---------------------
be construed as conferring upon the Holder the right to vote or to receive
dividends or to consent or receive notice as a shareholder in respect of any
meeting of shareholders or any rights whatsoever as a shareholder of the
Company, unless and to the extent converted in accordance with the terms hereof.
Upon delivery to the Company of a Notice of Conversion by a Holder, such Holder
shall immediately be deemed a shareholder of the Company with respect to the
Conversion Shares to be issued pursuant to such Notice of Conversion.

          15.  Limitation on Conversion.  In no event shall the Holder be
               ------------------------
permitted to convert this Debenture for Conversion Shares to the extent that (a)
the number of shares of Common Stock beneficially owned by such Holder (other
than Conversion Shares) plus (b) the number of Conversion Shares, would be equal
to or exceed 9.9% of the number of shares of Common Stock then issued and
outstanding, including shares issuable upon conversion of this Debenture held by
such Holder after application of this Section 16. As used herein, beneficial
ownership shall be determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder. To
the extent that the limitation contained in this Section 15 applies, the
determination of whether this Debenture is convertible (in relation to other
securities owned by the Holder) and of which a portion of this Debenture is
convertible shall be in the sole discretion of such Holder, and the submission
of a Notice of Conversion shall be deemed to be such Holder's determination of
whether this Debenture is convertible (in relation to other securities owned by
such Holder) and of which portion of this Debenture is convertible, in each case
subject to such aggregate percentage limitation, and the Company shall have no
obligation to verify or confirm the accuracy of such determination. Nothing
contained herein shall be deemed to restrict the right of a Holder to convert
this Debenture at such time as such conversion will not violate the provisions
of this Section 15. The provisions of this Section 15 may be waived by the
Holder of this Debenture upon, at the election of the Holder, not less than 61
calendar days' prior notice to the Company, and the provisions of this Section
15 shall continue to apply until such 61st day (or, at the election of the
Holder, such later date as may be specified in such notice of waiver). No
conversion of this Debenture in violation of this Section

                                       8
<PAGE>

15 but otherwise in accordance with this Debenture shall affect the status of
the Common Stock issued upon such conversion as validly issued, fully-paid and
nonassessable. If instead of receiving cash on the Maturity Date the Holder
instead exercises its right to convert this Debenture into Common Stock pursuant
to Section 3 by delivery of a Notice of Conversion prior to receipt of payment,
and such conversion would cause the limit contained in the first sentence of
this Section 15 to be exceeded, such conversion of this Debenture shall occur up
to such limit and the remaining unconverted portion of this Debenture shall be
converted into Common Stock in accordance with one or more Notices of Conversion
delivered by the Holder 61 days after the Maturity Date.

          16.  Section Headings.  The headings used in this Debenture are used
               ----------------
for convenience only and are not to be considered in construing or
interpreting this Debenture.

                                       9
<PAGE>

          IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by an officer thereunto duly authorized.

Dated: June __, 2001

                              DATA RACE, INC.

                              By:
                                  ---------------------------------------
                                  Michael McDonnell, President & CEO

Attest:

----------------------

                                       10
<PAGE>

                                   EXHIBIT A

                             NOTICE OF CONVERSION

  (To be Executed by the Registered Holder in order to Convert the Debenture)

          The undersigned hereby irrevocably elects to convert $ ___________
of the principal amount of the above Debenture No. ___ into Shares of Common
Stock of Data Race, Inc. (the "Company") according to the conditions hereof, as
of the date written below.

Date of Conversion*
                   -----------------------------------------------------------

Conversion Price *
                   -----------------------------------------------------------

Accrued Interest
                 -------------------------------------------------------------

Signature
          --------------------------------------------------------------------
                           [Name]

Address:
         ---------------------------------------------------------------------

         ---------------------------------------------------------------------

*If such conversion represents the remaining principal balance of the Debenture,
the original Debenture must accompany this notice within three Trading Days.

                                       11

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