Document:

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                                                                    Exhibit 10.7

                                                                  EXECUTION COPY

                         REGISTRATION RIGHTS AGREEMENT

     This REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of May 11,
                                               ---------
2001, is entered into by and among Data Race Inc., a Texas corporation doing
business as IP Axess, with headquarters located at 6509 Windcrest Drive, Suite
120, Plano, Texas 75024 (the "Company"), and the undersigned buyers (each, a
                              -------
"Buyer" and collectively, the "Buyers").
------                         ------

     WHEREAS:

     A.  In connection with the Securities Purchase Agreement by and among the
parties dated as of May ___, 2001 (the "Securities Purchase Agreement"), the
                                        -----------------------------
Company has agreed, upon the terms and subject to the conditions of the
Securities Purchase Agreement, (i) to issue and sell to the Buyers $700,000
principal amount of its 10% Secured Convertible Promissory Notes (the "Notes")
                                                                       -----
which will be initially convertible into 2,333,333.3 shares (the "Conversion
                                                                  ----------
Shares") of the Common Stock, no par value (the "Common Stock") of the Company
------                                           ------------
and (ii) to issue and sell Warrants (the "Warrants") which will be exercisable
                                          --------
to purchase 1,666,666.7 shares (the "Warrant Shares") of the Common Stock; and
                                     --------------

     B.  To induce the Buyers to execute and deliver the Securities Purchase
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute (collectively, the "1933 Act"), and
                                                                 --------
applicable state securities laws.

     NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Buyers hereby
agree as follows:

     1.  DEFINITIONS.
         -----------

          As used in this Agreement, the following terms shall have the
following meanings:

          (a) "Investor" means a Buyer, any transferee or assignee thereof to
               --------
whom a Buyer assigns its rights under this Agreement and who agrees to become
bound by the provisions of this Agreement in accordance with Section 9 and any
transferee or assignee thereof to whom a transferee or assignee assigns its
rights under this Agreement and who agrees to become bound by the provisions of
this Agreement in accordance with Section 9.

          (b) "Person" means a corporation, a limited liability company, an
               ------
association, a partnership, an organization, a business, an individual, a
governmental or political subdivision thereof or a governmental agency.

                                      -1-
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          (c) "Register," "registered," and "registration" refer to a
               --------    ----------        ------------
registration effected by preparing and filing one or more Registration
Statements (as defined below) in compliance with the 1933 Act and pursuant to
Rule 415 under the 1933 Act or any successor rule providing for offering
securities on a continuous basis ("Rule 415"), and the declaration or ordering
                                   --------
of effectiveness of such Registration Statement(s) by the United States
Securities and Exchange Commission (the "SEC").
                                         ---

          (d) "Registrable Securities" means the Conversion Shares issued or
               ----------------------
issuable upon conversion of the Notes and the Warrant Shares issued or issuable
upon exercise of the Warrants and any shares of capital stock issued or issuable
with respect to the Conversion Shares, or the Warrant Shares as a result of any
stock split, stock dividend, recapitalization, exchange, anti-dilution rights or
similar event or otherwise, without regard to any limitation on conversion of
the Note or exercise of the Warrants.

          (e) "Registration Statement" means a registration statement of the
               ----------------------
Company filed under the 1933 Act and pursuant to Rule 415.

Capitalized terms used herein and not otherwise defined herein shall have the
respective meanings set forth in the Securities Purchase Agreement.

     2.   REGISTRATION.
          ------------

          (a)  Mandatory Registration. The Company shall prepare, and, within
               ----------------------
thirty (30) calendar days after the date hereof (or, if less, five (5) days
after the effective date of the Registration Statement on Form S-3 which is on
file with the SEC as of the date hereof, Registration No. 333-57166), file with
the SEC a Registration Statement or Registration Statements (as is necessary) on
Form S-3 (or if such form is unavailable, such other form as is available for
registration) covering the resale of all of the Registrable Securities. The
initial Registration Statement prepared pursuant hereto shall register for
resale at least that number of Company common stock shares equal to the number
of Registrable Securities as of the date immediately preceding the date the
Registration Statement is initially filed with the SEC, subject to adjustment as
provided in Section 3(b). The Company shall use its best efforts to have the
Registration Statement declared effective by the SEC as soon as practicable, but
in no event later than sixty (60) calendar days after the date of filing
thereof.

          (b) Piggy-Back Registrations.  If at any time prior to the expiration
              ------------------------
of the Registration Period (as defined in Section 3(a)) the Company proposes to
file with the SEC a Registration Statement relating to an offering for its own
account or the account of others under the 1933 Act of any of its securities
(other than on Form S-4 or Form S-8 (or their equivalents at such time) relating
to securities to be issued solely in connection with any acquisition of any
entity or business or equity securities issuable in connection with stock option
or other employee benefit plans) the Company shall promptly send to each
Investor written notice of the Company's intention to file a Registration
Statement and of such Investor's rights under this Section 2(b) and, if within
twenty (20) days after receipt of such notice, such Investor shall so request in
writing, the Company

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shall include in such Registration Statement all or any part of the Registrable
Securities such Investor requests to be registered, subject to the priorities
set forth in Section 2(b) below. No right to registration of Registrable
Securities under this Section 2(b) shall be construed to limit any registration
required under Section 2(a). The obligations of the Company under this Section
2(b) may be waived by the Buyers. If an offering in connection with which an
Investor is entitled to registration under this Section 2(b) is an underwritten
offering, then each Investor whose Registrable Securities are included in such
Registration Statement shall, unless otherwise agreed by the Company, offer and
sell such Registrable Securities in an underwritten offering using the same
underwriter or underwriters and, subject to the provisions of this Agreement, on
the same terms and conditions as other shares of Company common stock included
in such underwritten offering. If a registration pursuant to this Section 2(b)
is to be an underwritten public offering and the managing underwriter(s) advise
the Company in writing, that in their reasonable good faith opinion, marketing
or other factors dictate that a limitation on the number of shares of Company
common stock which may be included in the Registration Statement is necessary to
facilitate and not adversely affect the proposed offering, then the Company
shall include in such registration: (1) first, all securities the Company
proposes to sell for its own account, (2) second, up to the full number of
securities proposed to be registered for the account of the holders of
securities entitled to inclusion of their securities in the Registration
Statement by reason of demand registration rights, and (3) third, the securities
requested to be registered by the Investors and other holders of securities
entitled to participate in the registration, as of the date hereof, drawn from
them pro rata based on the number each has requested to be included in such
registration.

          (c) Allocation of Registrable Securities.  The initial number of
              ------------------------------------
Registrable Securities included in any Registration Statement filed pursuant to
Section 2(b) above and each increase in the number of Registrable Securities
included therein shall be allocated pro rata among the Investors based on the
number of Registrable Securities held, or which could be held, by each Investor
at the time the Registration Statement covering such initial number of
Registrable Securities or increase thereof is declared effective by the SEC.  In
the event that an Investor sells or otherwise transfers any of such Person's
Registrable Securities, each transferee shall be allocated a pro rata portion of
the then remaining number of Registrable Securities included in such
Registration Statement for such transferor.  Any shares of Common Stock included
in a Registration Statement and which remain allocated to any Person which
ceases to hold any Registrable Securities shall be allocated to the remaining
Investors, pro rata based on the number of Registrable Securities then held by
such Investors.

          (d) Legal Counsel.  Subject to Section 5 hereof, the Buyers  shall
              -------------
have the right to select one legal counsel to review and oversee any offering
pursuant to this Section 2 ("Legal Counsel"), which shall be such counsel
                             -------------
designated by the holders of two-thirds of Registrable Securities.  The Company
shall reasonably cooperate with Legal Counsel in performing the Company's
obligations under this Agreement.

          (e)  [Omitted]

          (f) Rule 416.  The Company and the Investors each acknowledge that
              --------
each Registration Statement prepared in accordance hereunder shall include an
indeterminate number of Registrable Securities pursuant to Rule 416 under the
1933 Act so as to cover any and all Registrable

                                      -3-
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Securities which may become issuable (i) to prevent dilution resulting from
stock splits, stock dividends or similar transactions and (ii) if permitted by
law, by reason of the anti-dilution provisions contained in the Securities
Purchase Agreement, the Notes and the Warrants in accordance with the terms
thereof (collectively, the "Rule 416 Securities"). In this regard, although the
                            -------------------
Company shall not be required to refer to Rule 416 in the Registration
Statement, the Company agrees to use all reasonable efforts to ensure that the
maximum number of Registrable Securities which may be registered pursuant to
Rule 416 under the 1933 Act are covered by each Registration Statement and,
absent guidance from the SEC or other definitive authority to the contrary, the
Company shall use all reasonable efforts to affirmatively support and to not
take any position adverse to the position that each Registration Statement filed
hereunder covers all of the Rule 416 Securities. If the Company determines that
the Registration Statement filed hereunder does not cover all of the Rule 416
Securities, the Company shall immediately (i) provide to each Investor written
evidence setting forth the basis for the Company's position and the authority
therefor and (ii) prepare and file an amendment to such Registration Statement
or a new Registration Statement in accordance with Section 2(g).

          (g) Sufficient Number of Shares Registered.  In the event the number
              --------------------------------------
of shares available under a Registration Statement filed pursuant to Section
2(a) is insufficient to cover all of the Registrable Securities or an Investor's
allocated portion of the Registrable Securities pursuant to Section 2(c) (a
"Deficit Failure"), the Company shall amend the Registration Statement, or file
 ---------------
a new Registration Statement (on the short form available therefor, if
applicable), or both, so as to cover at least one hundred percent (100%) of such
Registrable Securities in each case, as soon as practicable, but in any event
not later than fifteen (15) days after the necessity therefor arises.  The
Company shall use its best efforts to cause such amendment and/or new
Registration Statement to become effective as soon as practicable following the
filing thereof.  For purposes of the foregoing provision, the number of shares
available under a Registration Statement shall be deemed "insufficient to cover
all of the Registrable Securities" if at any time the number of Registrable
Securities is greater than the number of shares of Company Common Stock
available for resale under such Registration Statement.

     3.   RELATED OBLIGATIONS.
          -------------------

     Whenever an Investor has requested that any Registrable Securities be
registered pursuant to Section 2(b) or at such time as the Company is obligated
to file a Registration Statement with the SEC pursuant to Section 2(a) or 2(g),
the Company will use its best efforts to effect the registration of the
Registrable Securities in accordance with the intended method of disposition
thereof and, pursuant thereto, the Company shall have the following obligations:

          (a) As required by Section 2(a), the Company shall prepare and file
with the SEC a Registration Statement with respect to the Registrable Securities
and the Company shall use its best efforts to cause such Registration Statement
relating to the Registrable Securities to become effective pursuant to Section
2(a), and keep such Registration Statement effective pursuant to Rule 415 at all
times until the earlier of (i) the date as of which the Investors may sell all
of the Registrable Securities without restriction pursuant to Rule 144(k)
promulgated under the 1933 Act (or successor thereto) or (ii) the date on which
the Investors shall have sold all the Registrable Securities (the "Registration
                                                                   ------------
Period"), which Registration Statement (including any amendments or supplements
------

                                      -4-
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thereto and prospectuses contained therein) shall not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein, or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading.

          (b) The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to a Registration
Statement and the prospectus used in connection with such Registration
Statement, which prospectus is to be filed pursuant to Rule 424 promulgated
under the 1933 Act, as may be necessary to keep such Registration Statement
effective at all times during the Registration Period, and, during such period,
comply with the provisions of the 1933 Act with respect to the disposition of
all Registrable Securities of the Company covered by such Registration Statement
until such time as all of such Registrable Securities shall have been disposed
of in accordance with the intended methods of disposition by the seller or
sellers thereof as set forth in such Registration Statement.

          (c) The Company shall permit Legal Counsel to review and comment upon
a Registration Statement and all amendments and supplements thereto at least
seven (7) days prior to their filing with the SEC (or such shorter period as
Legal Counsel may agree), and not file any document in a form to which Legal
Counsel reasonably objects.  The Company shall not submit a request for
acceleration of the effectiveness of a Registration Statement or any amendment
or supplement thereto without the prior approval of Legal Counsel, which consent
shall not be unreasonably withheld.  The Company shall furnish to Legal Counsel,
without charge, (i) any correspondence from the SEC or the staff of the SEC to
the Company or its representatives relating to any Registration Statement, (ii)
promptly after the same is prepared and filed with the SEC, one copy of any
Registration Statement and any amendment(s) thereto, including financial
statements and schedules, all documents incorporated therein by reference and
all exhibits and (iii) upon the effectiveness of any Registration Statement, one
copy of the prospectus included in such Registration Statement and all
amendments and supplements thereto.

          (d) The Company shall furnish to each Investor whose Registrable
Securities are included in any Registration Statement, without charge, (i)
promptly after the same is prepared and filed with the SEC, at least one copy of
such Registration Statement and any amendment(s) thereto, including financial
statements and schedules, all documents incorporated therein by reference and
all exhibits, (ii) upon the effectiveness of any Registration Statement, fifteen
(15) copies of the prospectus included in such Registration Statement and all
amendments and supplements thereto (or such other number of copies as such
Investor may reasonably request) and (iii) such other documents, including
copies of any preliminary or final prospectus, as such Investor may reasonably
request from time to time in order to facilitate the disposition of the
Registrable Securities owned by such Investor.

          (e) The Company shall use reasonable efforts to (i) register and
qualify the Registrable Securities covered by a Registration Statement under
such other securities or "blue sky" laws of such jurisdictions in the United
States as Legal Counsel or any Investor reasonably requests, (ii) prepare and
file in those jurisdictions, such amendments (including post-effective
amendments) and supplements to such registrations and qualifications as may be
necessary to maintain the effectiveness thereof during the Registration Period,
(iii) take such other actions as may be necessary to maintain such registrations
and qualifications in effect at all times during the Registration Period,

                                      -5-
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and (iv) take all other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions; provided, however, that
the Company shall not be required in connection therewith or as a condition
thereto to (x) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(e), (y) subject itself
to general taxation in any such jurisdiction, or (z) file a general consent to
service of process in any such jurisdiction. The Company shall promptly notify
Legal Counsel and each Investor who holds Registrable Securities of the receipt
by the Company of any notification with respect to the suspension of the
registration or qualification of any of the Registrable Securities for sale
under the securities or "blue sky" laws of any jurisdiction in the United States
or its receipt of actual notice of the initiation or threatening of any
proceeding for such purpose.

          (f) In the event Investors who hold a majority of the Registrable
Securities being offered in the offering select underwriters for the offering,
the Company shall enter into and perform its obligations under an underwriting
agreement, in usual and customary form, including, without limitation, customary
and reasonable indemnification and contribution obligations, with the
underwriters of such offering.

          (g) As promptly as practicable after becoming aware of such event, the
Company shall notify Legal Counsel and each Investor in writing of the happening
of any event as a result of which the prospectus included in a Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omission to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, and promptly prepare a supplement or amendment to such
Registration Statement to correct such untrue statement or omission, and deliver
ten (10) copies of such supplement or amendment to Legal Counsel and each
Investor (or such other number of copies as Legal Counsel or such Investor may
reasonably request).  The Company shall also promptly notify Legal Counsel and
each Investor in writing (i) when a prospectus or any prospectus supplement or
post-effective amendment has been filed, and when a Registration Statement or
any post-effective amendment has become effective (notification of such
effectiveness shall be delivered to Legal Counsel and each Investor by facsimile
on the same day of such effectiveness and by overnight mail), (ii) of any
request by the SEC for amendments or supplements to a Registration Statement or
related prospectus or related information, and (iii) of the Company's reasonable
determination that a post-effective amendment to a Registration Statement would
be appropriate.

          (h) The Company shall use its best efforts to prevent the issuance of
any stop order or other suspension of effectiveness of a Registration Statement,
or the suspension of the qualification of any of the Registrable Securities for
sale in any jurisdiction and, if such an order or suspension is issued, to
obtain the withdrawal of such order or suspension at the earliest possible
moment and to notify Legal Counsel and each Investor who holds Registrable
Securities being sold (and, in the event of an underwritten offering, the
managing underwriters) of the issuance of such order and the resolution thereof
or its receipt of actual notice of the initiation or threat of any proceeding
for such purpose.

          (i) At the request of any Investor, the Company shall furnish to such
Investor, on the date of the effectiveness of the Registration Statement and
thereafter from time to time on such dates as an Investor may reasonably request
if required by an underwriter, (i) a letter, dated such date,

                                      -6-
<PAGE>

from the Company's independent certified public accountants in form and
substance as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the underwriters,
and (ii) an opinion, dated as of such date, of counsel representing the Company
for purposes of such Registration Statement, in form, scope and substance as is
customarily given in an underwritten public offering, addressed to the
underwriters and the Investors.

          (j) The Company shall make available for inspection by (i) any
Investor, (ii) Legal Counsel, (iii) any underwriter participating in any
disposition pursuant to a Registration Statement, (iv) one firm of accountants
or other agents retained by the Investors, and (v) one firm of attorneys
retained by such underwriters (collectively, the "Inspectors") all pertinent
                                                  ----------
financial and other records, and pertinent corporate documents and properties of
the Company (collectively, the "Records"), as shall be reasonably necessary for
                                -------
each Inspector to carry out the purposes of this Agreement, and cause the
Company's officers, directors and employees to supply all information which any
Inspector may reasonably request; provided, however, that each Inspector shall
hold in strict confidence and shall not make any disclosure (except to an
Investor) or use of any Record or other information which the Company determines
in good faith to be confidential, and of which determination the Inspectors are
so notified, unless (a) the disclosure of such Records is necessary to avoid or
correct a misstatement or omission in any Registration Statement or is otherwise
required under the 1933 Act, (b) the release of such Records is ordered pursuant
to a final, non-appealable subpoena or order from a court or government body of
competent jurisdiction, or (c) the information in such Records has been made
generally available to the public other than by disclosure in violation of this
or any other agreement of which the Inspector has knowledge.  Each Investor
agrees that it shall, upon learning that disclosure of such Records is sought in
or by a court or governmental body of competent jurisdiction or through other
means, give prompt notice to the Company and allow the Company, at its expense,
to undertake appropriate action to prevent disclosure of, or to obtain a
protective order for, the Records deemed confidential.

          (k) The Company shall hold in confidence and not make any disclosure
of information concerning an Investor provided to the Company unless (i)
disclosure of such information is necessary to comply with federal or state
securities laws, (ii) the disclosure of such information is necessary to avoid
or correct a misstatement or omission in any Registration Statement, (iii) the
release of such information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available to the
public other than by disclosure in violation of this Agreement or any other
agreement.  The Company agrees that it shall, upon learning that disclosure of
such information concerning an Investor is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
written notice to such Investor and allow such Investor, at the Investor's
expense, to undertake appropriate action to prevent disclosure of, or to obtain
a protective order for, such information.

          (l) The Company shall use its best efforts either to (i) cause all the
Registrable Securities covered by a Registration Statement to be listed on each
securities exchange on which securities of the same class or series issued by
the Company are then listed, if any, if the listing of such Registrable
Securities is then permitted under the rules of such exchange, or (ii) secure
designation and quotation of all the Registrable Securities covered by the
Registration Statement on

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<PAGE>

the Nasdaq National Market. The Company shall pay all fees and expenses in
connection with satisfying its obligation under this Section 3(l).

          (m)  [Omitted]

          (n)  [Omitted]

          (o)  If requested by the managing underwriters or an Investor, the
Company shall (i) immediately incorporate in a prospectus supplement or post-
effective amendment such information as the managing underwriters and the
Investors agree should be included therein relating to the sale and distribution
of Registrable Securities, including, without limitation, information with
respect to the number of Registrable Securities being sold to such underwriters,
the purchase price being paid therefor by such underwriters and any other terms
of the underwritten (or best efforts underwritten) offering of the Registrable
Securities to be sold in such offering; (ii) make all required filings of such
prospectus supplement or post-effective amendment as soon as notified of the
matters to be incorporated in such prospectus supplement or post-effective
amendment; and (iii) supplement or make amendments to any Registration Statement
if requested by a shareholder or any underwriter of such Registrable Securities.

          (p)  The Company shall use its best efforts to cause the Registrable
Securities covered by the applicable Registration Statement to be registered
with or approved by such other governmental agencies or authorities as may be
necessary to consummate the disposition of such Registrable Securities.

          (q)  [Omitted]

          (r)  The Company shall otherwise use its best efforts to comply with
all applicable rules and regulations of the SEC in connection with any
registration hereunder and the Company shall use its best efforts to file with
the SEC in a timely manner all reports and documents required of the Company
under the 1933 Act and the 1934 Act (as defined in Section 6(a)).

          (s)  Within two (2) Business Days after the Registration Statement
which includes the Registrable Securities is ordered effective by the SEC, the
Company shall deliver, and shall cause legal counsel for the Company to deliver,
to the transfer agent for such Registrable Securities (with copies to the
Investors whose Registrable Securities are included in such Registration
Statement) confirmation that the Registration Statement has been declared
effective by the SEC in the form attached hereto as Exhibit A.
                                                    ---------

          (t)  [Omitted]

          (u)  The Company shall take all other reasonable actions necessary to
expedite and facilitate disposition by the Investors of Registrable Securities
pursuant to a Registration Statement.

                                      -8-
<PAGE>

          (v) Notwithstanding anything to the contrary contained in this
Agreement, the Registration Statement (other than a Registration Statement filed
pursuant to Section 2(b) above) shall register only the Registrable Securities.

     4.   OBLIGATIONS OF THE INVESTORS.
          ----------------------------

          (a) At least seven (7) days prior to the first anticipated filing date
of the Registration Statement, the Company shall notify each Investor in writing
of the information the Company requires from each such Investor if such Investor
elects to have any of such Investor's Registrable Securities included in such
Registration Statement.  It shall be a condition precedent to the obligations of
the Company to complete the registration pursuant to this Agreement with respect
to the Registrable Securities of a particular Investor that such Investor shall
furnish to the Company such information regarding itself and the Registrable
Securities held by it as shall be reasonably required to effect the registration
of such Registrable Securities and shall execute such documents in connection
with such registration as the Company may reasonably request.

          (b) Each Investor by such Investor's acceptance of the Registrable
Securities agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of any Registration
Statement hereunder, unless such Investor has notified the Company in writing of
such Investor's election to exclude all of such Investor's Registrable
Securities from such Registration Statement.

          (c) In the event any Investor elects to participate in an underwritten
public offering pursuant to Section 2, each such Investor agrees to enter into
and perform such Investor's obligations under an underwriting agreement, in
usual and customary form, including, without limitation, customary
indemnification and contribution obligations, with the managing underwriter of
such offering and take such other actions as are reasonably required in order to
expedite or facilitate the disposition of the Registrable Securities.

     5.   EXPENSES OF REGISTRATION.
          ------------------------

          All reasonable expenses, other than underwriting discounts and
commissions, incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3, including, without limitation, all
registration, listing and qualifications fees, printers and accounting fees, and
fees and disbursements of counsel for the Company and fees and disbursements of
Legal Counsel, shall be paid by the Company.

     6.   INDEMNIFICATION.
          ---------------

          In the event any Registrable Securities are included in a Registration
Statement under this Agreement:

          (a) To the fullest extent permitted by law, the Company will, and
hereby does, indemnify, hold harmless and defend each Investor who holds such
Registrable Securities, the directors, officers, partners, employees, agents,
representatives of, and each Person, if any, who controls any Investor within
the meaning of the 1933 Act or the Securities Exchange Act of 1934,

                                      -9-
<PAGE>

as amended (the "1934 Act"), and any underwriter (as defined in the 1933 Act)
                 --------
for the Investors, and the directors and officers of, and each Person, if any,
who controls, any such underwriter within the meaning of the 1933 Act or the
1934 Act (each, an "Indemnified Person"), against any losses, claims, damages,
                    ------------------
liabilities, judgments, fines, penalties, charges, costs, reasonable attorneys'
fees, amounts paid in settlement or expenses, joint or several, (collectively,
"Claims") incurred in investigating, preparing or defending any action, claim,
 ------
suit, inquiry, proceeding, investigation or appeal taken from the foregoing by
or before any court or governmental, administrative or other regulatory agency,
body or the SEC, whether pending or threatened, whether or not an indemnified
party is or may be a party thereto ("Indemnified Damages"), to which any of them
                                     -------------------
may become subject insofar as such Claims (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon: (i)
any untrue statement or alleged untrue statement of a material fact in a
Registration Statement or any post-effective amendment thereto or in any filing
made in connection with the qualification of the offering under the securities
or other "blue sky" laws of any jurisdiction in which Registrable Securities are
offered ("Blue Sky Filing"), or the omission or alleged omission to state a
          ---------------
material fact required to be stated therein or necessary to make the statements
therein not misleading, (ii) any untrue statement or alleged untrue statement of
a material fact contained in any preliminary prospectus if used prior to the
effective date of such Registration Statement, or contained in the final
prospectus (as amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged omission
to state therein any material fact necessary to make the statements made
therein, in light of the circumstances under which the statements therein were
made, not misleading, (iii) any violation or alleged violation by the Company of
the 1933 Act, the 1934 Act, any other law, including, without limitation, any
state securities law, or any rule or regulation thereunder relating to the offer
or sale of the Registrable Securities pursuant to a Registration Statement (the
matters in the foregoing clauses (i) through (iii) being, collectively,
"Violations").  The Company shall reimburse the Investors and each such
 ----------
underwriter or controlling person, promptly as such expenses are incurred and
are due and payable, for any reasonable legal fees or other reasonable expenses
incurred by them in connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 6(a): (i) shall not apply to a Claim by an
Indemnified Person arising out of or based upon a Violation which occurs in
reliance upon and in conformity with information furnished in writing to the
Company by such Indemnified Person or underwriter for such Indemnified Person
expressly for use in connection with the preparation of the Registration
Statement or any such amendment thereof or supplement thereto, if such
prospectus was timely made available by the Company pursuant to Section 3(d);
(ii) with respect to any preliminary prospectus, shall not inure to the benefit
of any such person from whom the person asserting any such Claim purchased the
Registrable Securities that are the subject thereof (or to the benefit of any
person controlling such person) if the untrue statement or omission of material
fact contained in the preliminary prospectus was corrected in the prospectus, as
then amended or supplemented, if such prospectus was timely made available by
the Company pursuant to Section 3(d), and the Indemnified Person was promptly
advised in writing not to use the incorrect prospectus prior to the use giving
rise to a violation and such Indemnified Person, notwithstanding such advice,
used it; (iii) shall not be available to the extent such Claim is based on a
failure of the Investor to deliver or to cause to be delivered the prospectus
made available by the Company, if such prospectus was timely made available by
the Company pursuant to Section 3(d); and (iv) shall not apply to amounts paid
in settlement of any Claim if such settlement is effected without the prior
written consent of the Company, which consent shall not be unreasonably withheld
or delayed.  Such

                                      -10-
<PAGE>

indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Indemnified Person and shall survive the transfer of
the Registrable Securities by the Investors pursuant to Section 9.

          (b) In connection with any Registration Statement in which an Investor
is participating, each such Investor agrees to severally and not jointly
indemnify, hold harmless and defend, to the same extent and in the same manner
as is set forth in Section 6(a), the Company, each of its directors, each of its
officers who signs the Registration Statement, each Person, if any, who controls
the Company within the meaning of the 1933 Act or the 1934 Act (collectively and
together with an Indemnified Person, an "Indemnified Party"), against any Claim
                                         -----------------
or Indemnified Damages to which any Indemnified Party may become subject, under
the 1933 Act, the 1934 Act or otherwise, insofar as such Claim or Indemnified
Damages arise out of or are based upon any Violation, in each case to the
extent, and only to the extent, that such Violation occurs in reliance upon and
in conformity with written information furnished to the Company by such Investor
expressly for use in connection with such Registration Statement; and, subject
to Section 6(d), such Investor will reimburse any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such Claim; provided, however, that the indemnity agreement contained in this
Section 6(b) and the agreement with respect to contribution contained in Section
7 shall not apply to amounts paid in settlement of any Claim if such settlement
is effected without the prior written consent of such Investor, which consent
shall not be unreasonably withheld or delayed; provided, further, however, that
the Investor shall be liable under this Section 6(b) for only that amount of a
Claim or Indemnified Damages as does not exceed the net proceeds to such
Investor as a result of the sale of Registrable Securities pursuant to such
Registration Statement.  Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such Indemnified Party
and shall survive the transfer of the Registrable Securities by the Investors
pursuant to Section 9.  Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 6(b) with
respect to any preliminary prospectus shall not inure to the benefit of any
Indemnified Party if the untrue statement or omission of material fact contained
in the preliminary prospectus was corrected on a timely basis in the prospectus,
as then amended or supplemented.

          (c) The Company shall be entitled to receive indemnities from
underwriters, selling brokers, dealer managers and similar securities industry
professionals participating in any distribution, to the same extent as provided
above, with respect to information such persons so furnished in writing
expressly for inclusion in the Registration Statement.

          (d) Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 6 of notice of the commencement of any action or
proceeding (including any governmental action or proceeding) involving a Claim,
such Indemnified Person or Indemnified Party shall, if a Claim in respect
thereof is to be made against any indemnifying party under this Section 6,
deliver to the indemnifying party a written notice of the commencement thereof,
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnified Person or
the Indemnified Party, as the case may be; provided, however, that an
Indemnified Person or Indemnified Party shall have the right to retain its own
counsel with the fees and expenses to be paid

                                      -11-
<PAGE>

by the indemnifying party, if, in the reasonable opinion of counsel retained by
the indemnifying party, the representation by such counsel of the Indemnified
Person or Indemnified Party and the indemnifying party would be inappropriate
due to actual or potential differing interests between such Indemnified Person
or Indemnified Party and any other party represented by such counsel in such
proceeding. The Company shall pay reasonable fees for only one separate legal
counsel for the Investors, and such legal counsel shall be selected by the
Investors holding a majority in interest of the Registrable Securities included
in the Registration Statement to which the Claim relates. The Indemnified Party
or Indemnified Person shall cooperate fully with the indemnifying party in
connection with any negotiation or defense of any such action or claim by the
indemnifying party and shall furnish to the indemnifying party all information
reasonably available to the Indemnified Party or Indemnified Person which
relates to such action or claim. The indemnifying party shall keep the
Indemnified Party or Indemnified Person fully apprised at all times as to the
status of the defense or any settlement negotiations with respect thereto. No
indemnifying party shall be liable for any settlement of any action, claim or
proceeding effected without its written consent, provided, however, that the
indemnifying party shall not unreasonably withhold, delay or condition its
consent. No indemnifying party shall, without the consent of the Indemnified
Party or Indemnified Person, consent to entry of any judgment or enter into any
settlement or other compromise which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such Indemnified Party or
Indemnified Person of a release from all liability in respect to such claim or
litigation. Following indemnification as provided for hereunder, the
indemnifying party shall be subrogated to all rights of the Indemnified Party or
Indemnified Person with respect to all third parties, firms or corporations
relating to the matter for which indemnification has been made. The failure to
deliver written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of any
liability to the Indemnified Person or Indemnified Party under this Section 6,
except to the extent that the indemnifying party is prejudiced in its ability to
defend such action.

          (e) The indemnification required by this Section 6 shall be made by
periodic payments of the amount thereof during the course of the investigation
or defense, as and when bills are received or Indemnified Damages are incurred.

          (f) The indemnity agreements contained herein shall be in addition to
(i) any cause of action or similar right of the Indemnified Party or Indemnified
Person against the indemnifying party or others, and (ii) any liabilities the
indemnifying party may be subject to pursuant to the law.

                                      -12-
<PAGE>

     7.   CONTRIBUTION.
          ------------

          To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Section 6 to the fullest extent permitted by law; provided, however, that:
(i) no seller of Registrable Securities guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1933 Act) shall be entitled to
contribution from any seller of Registrable Securities who was not guilty of
fraudulent misrepresentation; and (ii) contribution by any seller of Registrable
Securities shall be limited in amount to the net amount of proceeds received by
such seller from the sale of such Registrable Securities.

                                      -13-
<PAGE>

     8.   LIQUIDATED DAMAGES.
          ------------------

          The Company agrees that the Buyers will suffer damages if the Company
fails to fulfill its obligations pursuant to Sections 2(a), 2(g), 3(a), 3(b),
3(e), 3(h) or 3(v) of this Agreement or Section 4(f) of the Securities Purchase
Agreement (each such event referred to herein as a "Registration Default") and
                                                    --------------------
that it would not be possible to ascertain the extent of such damages.
Accordingly, in the event of such Registration Default, the Company hereby
agrees to pay liquidated damages ("Liquidated Damages") to each Buyer following
                                   ------------------
the occurrence of such Registration Default in an amount determined by
multiplying (i) two percent (2%) of the aggregate consideration paid by such
Buyer pursuant to the Securities Purchase Agreement after the Registered
Securities then held by such Buyer, by (ii) the percentage derived by dividing
(A) the actual number of days elapsed from the last day of the date of the
Registration Default or the prior 30-day period, as applicable, to the day such
Registration Default has been completely cured by (B) 30, in cash, or at the
Buyer's option, but subject to the Company's reasonable consent, in the number
of shares of Company common stock equal to the quotient of (v) the dollar amount
of the Liquidated Damages on the Payment Date (as defined below) by (w) the
closing bid price of the Company's common stock as of the date of the
Registration Default (as quoted in the Principal Market or the market or
exchange where the Company's common stock is then traded).  The Liquidated
Damages payable pursuant hereto shall be payable within five (5) Business Days
from the end of each calendar month commencing on the first calendar month in
which the Registration Default occurs (each, a "Payment Date").  In the event
                                                ------------
the Buyer elects to receive the Liquidated Damages amount in shares of Company
common stock, such shares shall also be considered Registrable Securities and
shall have the registration rights set forth in this Agreement (subject to any
limitations with respect to the registration of such shares under the 1933 Act).
The Company shall not be obligated to pay any Liquidated Damages under this
Section with respect to Registration Defaults which may be continuing after the
second anniversary of the date of issuance of the relevant shares of Common
Stock.  Further, the Company shall not be obligated to pay to any Buyer any
Liquidated Damages to the extent that any Registration Default is attributable
to any material breach by Buyer of this Agreement or the Securities Purchase
Agreement.

     9.   ASSIGNMENT OF REGISTRATION RIGHTS.
          ---------------------------------

          The rights under this Agreement shall be automatically assignable by
the Investors to any transferee of all or any portion of Registrable Securities
if: (i) the Investor agrees in writing with the transferee or assignee to assign
such rights, and a copy of such agreement is furnished to the Company within a
reasonable time after such assignment; (ii) the Company is, within a reasonable
time after such transfer or assignment, furnished with written notice of (a) the
name and address of such transferee or assignee, and (b) the securities with
respect to which such registration rights are being transferred or assigned;
(iii) immediately following such transfer or assignment the further disposition
of such securities by the transferee or assignee is restricted under the 1933
Act and applicable state securities laws; provided, however, that the transferee
or assignee may subsequently transfer or assign all or any portion of the
Registrable Securities if an exemption from registration under the 1933 Act is
applicable to such transfer or assignment; (iv) at or before the time the
Company receives the written notice contemplated by clause (ii) of this sentence
the transferee or assignee agrees in writing with the Company to be bound by all
of the provisions contained

                                      -14-
<PAGE>

herein; and (v) such transfer shall have been made in accordance with the
applicable requirements of the Securities Purchase Agreement.

     10.  AMENDMENT OF REGISTRATION RIGHTS.
          --------------------------------

          Provisions of this Agreement may be amended and the observance thereof
may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and Investors who then hold two-thirds (2/3) of the Registrable Securities.  Any
amendment or waiver effected in accordance with this Section 10 shall be binding
upon each Investor and the Company.  No such amendment shall be effective to the
extent that it applies to less than all of the holders of the Registrable
Securities.  No consideration shall be offered or paid to any Person to amend or
consent to a waiver or modification of any provision of any of this Agreement
unless the same consideration also is offered to all of the parties to this
Agreement.

     11.  MISCELLANEOUS.
          -------------

          (a) A Person is deemed to be a holder of Registrable Securities
whenever such Person owns or is deemed to own of record such Registrable
Securities.  If the Company receives conflicting instructions, notices or
elections from two or more Persons with respect to the same Registrable
Securities, the Company shall act upon the basis of instructions, notice or
election received from the registered owner of such Registrable Securities.

          (b) Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Agreement must be in writing and
will be deemed to have been delivered:  (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (provided confirmation of
transmission is mechanically or electronically generated and kept on file by the
sending party); or (iii) one Business Day after deposit with a nationally
recognized overnight delivery service, in each case properly addressed to the
party to receive the same.  The addresses and facsimile numbers for such
communications shall be:

          If to the Company:

               Data Race, Inc.
               6509 Windcrest Drive, Suite 120
               Plano, Texas 75024
               Telephone:  (972) 205-4005
               Facsimile:  (210) 558-0356
               Attention:  James G. Scogin

                                      -15-
<PAGE>

          With a copy to:

               Jackson Walker L.L.P.
               901 Main Street, Suite 6000
               Dallas, Texas 75202
               Telephone:  (214) 953 - 5801
               Facsimile:  (214) 953 - 5736
               Attention:  James S. Ryan, III, Esq.

If to a Buyer, to it at the address and facsimile number set forth on the
Schedule of Buyers attached hereto, with copies to such Buyer's representatives
as set forth on the Schedule of Buyers, or at such other address and/or
facsimile number and/or to the attention of such other person as the recipient
party has specified by written notice given to each other party five days prior
to the effectiveness of such change.

          (c) Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.

          (d) This Agreement shall be governed by and construed in all respects
by the internal laws of the State of Texas (except for the proper application of
the United States federal securities laws), without giving effect to any choice
of law or conflict of law provision or rule (whether of the State of Texas or
any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of Texas.   Each party hereby irrevocably
submits to the non-exclusive jurisdiction of the state and federal courts
sitting the City of Dallas, for the adjudication of any dispute hereunder.  If
any provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or the
validity or enforceability of any provision of this Agreement in any other
jurisdiction.

          (e) This Agreement, the Securities Purchase Agreement, the Notes and
the Warrants (together with all other documents provided for herein or therein)
constitute the entire agreement among the parties hereto with respect to the
subject matter hereof and thereof.  There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein and
therein.  This Agreement, the Securities Purchase Agreement, the Notes and the
Warrants (together with all other documents provided for herein or therein)
supersede all prior agreements and understandings among the parties hereto with
respect to the subject matter hereof and thereof.

          (f) Subject to the requirements of Section 9, this Agreement shall
inure to the benefit of and be binding upon the permitted successors and assigns
of each of the parties hereto.

          (g) The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.

          (h) This Agreement may be executed in identical counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same agreement.  This Agreement, once executed by a party, may be delivered to
the other party hereto by facsimile

                                      -16-
<PAGE>

transmission of a copy of this Agreement bearing the signature of the party so
delivering this Agreement.

          (i) Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.

          (j) All consents and other determinations to be made by the Investors
pursuant to this Agreement shall be made, unless otherwise specified in this
Agreement, by Investors holding at least two-thirds of the Registrable
Securities.

          (k) The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent and no rules of
strict construction will be applied against any party.

          (l) This Agreement is intended for the benefit of the parties hereto
and their respective permitted successors and assigns, and is not for the
benefit of, nor may any provision hereof be enforced by, any other Person.

                                 [Signature Page Follows]

                                      -17-
<PAGE>

                                   EXHIBIT D

     IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of day and year first above written.

COMPANY:                            BUYERS:

DATA RACE, INC.                     FIRST CAPITAL GROUP OF TEXAS II, L.P.
                                    By:  First Capital Group Investment,
                                       Partners LP, its General Partner
                                      By:  First Capital Group Management
                                           Company, LP, its General Partner

By:                                       By:
   -----------------------------------        ----------------------------------
  James G. Scogin, Vice President and             Jeffrey P. Blanchard, Managing
Partner
  Chief Financial Officer

                                    ICN Capital Ltd.

                                    By:                   , its
                                       ------------------       -------------

                                    By:
                                       ------------------------
                                    Name:
                                         ----------------------
                                    Title:
                                          ---------------------
<PAGE>

                                   EXHIBIT D

SCHEDULE OF BUYERS
------------------

          Investor Name                                Contact Information
------------------------------------------------------------------------------
First Capital Group of Texas II, L.P.        750 E. Mulberry, Suite 305
                                             San Antonio, TX 78212
                                             Attention:  Jeffrey P. Blanchard
                                             (p) 210-736-4233
                                             (f) 210-736-5449
------------------------------------------------------------------------------
ICN Capital Ltd.                             19 Mount Havelock
                                             Douglas, Isle of Man
                                             United Kingdom
                                             1M1 2QG
                                             Attn: Ann Nicholson
                                             (p)011-44-1624-623911
                                             (f)011-44-1624-677313
------------------------------------------------------------------------------
<PAGE>

                                   EXHIBIT D

                                                                       EXHIBIT A

                        FORM OF NOTICE OF EFFECTIVENESS
                           OF REGISTRATION STATEMENT

[TRANSFER AGENT]
Attn:
     ----------------------

      Re:  DATA RACE INC.
         ------------------

Ladies and Gentlemen:

      We are counsel to Data Race Inc., a Texas corporation (the "Company"), and
have represented the Company in connection with that certain Securities Purchase
Agreement dated as of May ___, 2001 (the "Purchase Agreement") entered into by
and among the Company and the buyers named therein (collectively, the "Holders")
pursuant to which the Company issued to the Holders $700,000 principal amount of
its 10% Secured Convertible Promissory Notes (the "Notes") which are convertible
into shares (the "Conversion Shares") of the Common Stock, no par value (the
"Common Stock"), of the Company and Warrants exercisable into shares (the
"Warrant Shares") of the Common Stock.  Pursuant to the Purchase Agreement, the
Company also has entered into a Registration Rights Agreement with the Holders
(the "Registration Rights Agreement") pursuant to which the Company agreed,
among other things, to register the Registrable Securities (as defined in the
Registration Rights Agreement), including the Conversion Shares and the Warrant
Shares, under the Securities Act of 1933, as amended (the "1933 Act").  In
connection with the Company's obligations under the Registration Rights
Agreement, on _________, 2001, the Company filed a Registration Statement on
Form S-3 (File No. _____________) (the "Registration Statement") with the
Securities and Exchange Commission (the "SEC") relating to the Registrable
Securities which names each of the Holders as a selling stockholder thereunder.

      In connection with the foregoing, we advise you that a member of the SEC's
staff has advised us by telephone that the SEC has entered an order declaring
the Registration Statement effective under the 1933 Act at [ENTER TIME OF
EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge, that
any stop order suspending its effectiveness has been issued or that any
proceedings for that purpose are pending before, or threatened by, the SEC and
the Registrable Securities are available for resale under the 1933 Act pursuant
to the Registration Statement.

                              Very truly yours,

                              [ISSUER'S COUNSEL]

                              By:
                                 -------------------------------------

cc:   [LIST NAMES OF HOLDERS]<PAGE>

                                                                    Exhibit 10.8

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.
THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR
SALE, SOLD, TRANSFERRED OR ASSIGNED (1) IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "1933 ACT"), OR APPLICABLE STATE SECURITIES LAWS, OR (2) IN THE
ABSENCE OF AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT
REGISTRATION IS NOT REQUIRED UNDER THE 1933 ACT OR (3) UNLESS SOLD, TRANSFERRED
OR ASSIGNED PURSUANT TO RULE 144 UNDER SAID ACT.

                                DATA RACE, INC.

                         Common Stock Purchase Warrant

Warrant No.:   2001A-1                             Number of Shares: 583,333
Date of Issuance:  May 11, 2001

Data Race Inc., a Texas corporation doing business as IP Axess (the "Company"),
                                                                     -------
hereby certifies that, for Ten United States Dollars ($10.00) and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, First Capital Group of Texas II, L.P., the registered holder
hereof or its permitted assigns, is entitled, subject to the terms set forth
below, to purchase from the Company upon surrender of this Warrant, at any time
or times on or after the date hereof, but not after 11:59 P.M. Central Time on
the Expiration Date (as defined herein) Five Hundred Eighty-Three Thousand Three
Hundred Thirty-Three (583,333) fully paid nonassessable shares of Common Stock
(as defined herein) (the "Warrant Shares") at the purchase price per share
                          --------------
provided in Section 1(b) below.

     Section 1.

          (a) Securities Purchase Agreement.  This Warrant certificate
              -----------------------------
represents one of the Common Stock Purchase Warrants issued pursuant to the
terms of that certain Securities Purchase Agreement dated as of May 11, 2001,
among the Company and the Buyers referred to therein (the "Securities Purchase
                                                           -------------------
Agreement").
---------

          (b) Definitions.  The following words and terms as used in this
              -----------
Warrant shall have the following meanings:

              (i) "Common Stock" means (i) the Company's common stock, no par
                   ------------
value per share, and (ii) any capital stock into which such Common Stock shall
have been changed or any capital stock resulting from a reclassification of such
Common Stock.

                                       1
<PAGE>

          (ii)   "Common Stock Deemed Outstanding" means, at any given time, the
                  -------------------------------
number of shares of Common Stock actually outstanding at such time, plus the
number of shares of Common Stock deemed to be outstanding pursuant to Sections
8(b)(i) and 8(b)(ii) hereof regardless of whether the Options (as defined below)
or Convertible Securities (as defined below) are actually exercisable or
convertible at such time, but excluding any shares of Common Stock owned or held
by or for the account of the Company or issuable upon exercise of the Common
Stock Purchase Warrants issued pursuant to the Securities Purchase Agreement.

          (iii)  "Convertible Securities" means any stock or securities (other
                  ----------------------
than Options) directly or indirectly convertible into or exchangeable for Common
Stock.

          (iv)   "Exempt Issuance" means (A) a loan from a commercial bank which
                  ---------------
has only an incidental equity feature or any equity line or similar transaction
from any financial institution, (B) any transaction involving the Company's
issuances of securities (1) as consideration in a merger or consolidation, (2)
in connection with a strategic partnership or joint venture (the primary purpose
of which is not to raise equity capital), or (3) as consideration for the
acquisition of a business, product, license or other assets by the Company, (C)
the issuance of common stock in a firm commitment, underwritten public offering,
(D) the issuance of securities upon exercise or conversion of the Company's
options, warrants or other convertible securities outstanding as of the date
hereof, (E) the grant of additional options or warrants, or the issuance of
additional securities, under any Company stock option plan, restricted stock
plan,  stock purchase plan or other plan or written compensation agreement for
the benefit of the Company's employees, directors, consultants or advisors, or
(F) the issuance of securities pursuant to any shareholder rights plan adopted
by the Company prior to the Closing (as defined in the Securities Purchase
Agreement).

          (v)    "Expiration Date" means the date five (5) years from the date
                  ---------------
of this Warrant or, if such date falls on a Saturday, Sunday or other day on
which banks are required or authorized to be closed in the City of Dallas or the
State of Texas or on which trading does not take place on the principal exchange
or automated quotation system on which the Common Stock is traded (a "Holiday"),
the next date that is not a Holiday.

          (vi)   "Fair Market Value" means as of any specified date, the closing
                  -----------------
price of the Common Stock on the NASDAQ National Market (or, if the Common Stock
is not listed thereon, such other national securities exchange on which the
Common Stock is then listed) on that date, or if no prices are reported on that
date, on the last preceding date on which such prices of the Common Stock are so
reported.  If the Common Stock is not then listed on any national securities
exchange but is traded over the counter at the time the determination of the
Fair Market Value of the Common Stock is required to be made hereunder, such
Fair Market Value shall be deemed to be equal to the average between the
reported high and low sales prices of the Common Stock on the most recent date
on which the Common Stock was publicly traded. If the Common Stock is not
publicly traded at the time the determination of the Fair Market Value thereof
is required to be made hereunder, the determination of such Fair Market Value
shall be made by the Board of Directors of the Company in good faith.

                                       2
<PAGE>

              (vii)   "Options" means any rights, warrants or options to
                       -------
subscribe for or purchase Common Stock or Convertible Securities.

              (viii)  "Other Securities" means (i) the Common Stock Purchase
                       ----------------
Warrants issued pursuant to the Securities Purchase Agreement, not including
this Warrant and (ii) the Company's 10% Secured Convertible Promissory Notes
issued pursuant to the Securities Purchase Agreement.

              (ix)    "Person" means an individual, a limited liability company,
                       ------
a partnership, a joint venture, a corporation, a trust, an unincorporated
organization and a government or any department or agency thereof.

              (x)     "Securities Act" means the Securities Act of 1933, as
                       --------------
amended.

              (xi)    "Warrant" means this Warrant and all Warrants issued in
                       -------
exchange, transfer or replacement of any thereof.

              (xii)   "Warrant Exercise Price" shall be $0.30 per common share,
                       ----------------------
subject to adjustment as hereinafter provided.

  Section 2.  Exercise of Warrant.
              -------------------

          (a) Subject to the terms and conditions hereof, this Warrant may be
exercised by the holder hereof then registered on the books of the Company, in
whole or in part, at any time on any Business Day (as defined in the Securities
Purchase Agreement) on or after the opening of business on the date hereof and
prior to 11:59 P.M. Central Time on the Expiration Date by (i) delivery of a
written notice, in the form of the subscription notice attached as Exhibit A
                                                                   ---------
hereto (the "Exercise Notice"), of such holder's election to exercise this
             ---------------
Warrant, which notice shall specify the number of Warrant Shares to be
purchased, (ii) payment to the Company of an amount equal to the Warrant
Exercise Price multiplied by the number of Warrant Shares as to which this
Warrant is being exercised (plus any applicable issue or transfer taxes) (the

"Aggregate Exercise Price") (x) in cash or by check or wire transfer, (y) in
 ------------------------
unissued Warrant Shares then issuable upon exercise of this Warrant and
surrendered to the Company for cancellation, or (z) in a combination thereof,
and (iii) the surrender to a common carrier for delivery to the Company as soon
as practicable following such date, this Warrant (or an indemnification
undertaking with respect to this Warrant in the case of its loss, theft or
destruction); provided, that if such Warrant Shares are to be issued in any name
other than that of the registered holder of this Warrant, such issuance shall be
deemed a transfer and the provisions of Section 7 shall be applicable.  For
purposes of determining the amount, if any, of the Aggregate Exercise Price
satisfied by the payment in unissued Warrant Shares surrendered to the Company
for cancellation, each such surrendered Warrant Share shall be valued at an
amount equal to the Fair Market Value of a share of the Common Stock of the
Company less the Warrant Exercise Price of such surrendered Warrant Share.  In
the event of any exercise of the rights represented by this Warrant in
compliance with this Section 2(a), a certificate or certificates for the Warrant
Shares so purchased, in such denominations as may be requested by the holder
hereof and registered in the name of, or as directed by, the holder, shall be
delivered at the

                                       3
<PAGE>

Company's expense to, or as directed by, such holder as soon as practicable, and
in no event later than two Business Days, after the Company's receipt of the
Exercise Notice, the Aggregate Exercise Price and this Warrant (or an
indemnification undertaking with respect to this Warrant in the case of its
loss, theft or destruction). Upon delivery of the Exercise Notice and Aggregate
Exercise Price referred to in clause (ii) above, the holder of this Warrant
shall be deemed for all corporate purposes to have become the holder of record
of the Warrant Shares with respect to which this Warrant has been exercised,
irrespective of the date of delivery of this Warrant as required by clause (iii)
above or the certificates evidencing such Warrant Shares.

          (b) Unless the rights represented by this Warrant shall have expired
or shall have been fully exercised, the Company shall, as soon as practicable
and in no event later than five (5) Business Days after any exercise and at its
own expense, issue a new Warrant identical in all respects to this Warrant
exercised except it shall represent rights to purchase the number of Warrant
Shares purchasable immediately prior to such exercise under this Warrant
exercised, less the number of Warrant Shares with respect to which such Warrant
is exercised.

          (c) No fractional shares of Common Stock are to be issued upon the
exercise of this Warrant, but rather the number of shares of Common Stock issued
upon exercise of this Warrant shall be rounded up or down to the nearest whole
number.

          (d) If the Company shall fail for any reason or for no reason to issue
to the holder on a timely basis as described in this Section 2, a certificate
for the number of shares of Common Stock to which the holder is entitled upon
the holder's exercise of this Warrant or a new Warrant for the number of shares
of Common Stock to which such holder is entitled pursuant to Section 2(b)
hereof, the Company shall, in addition to any other remedies under this Warrant
or the Securities Purchase Agreement or otherwise available to such holder,
including any indemnification under the Securities Purchase Agreement, pay as
additional damages in cash to such holder on each day the issuance of such
Common Stock certificate or new Warrant, as the case may be, is not timely
effected an amount equal to 0.25% of the product of (A) the sum of the number of
shares of Common Stock not issued to the holder on a timely basis and to which
the holder is entitled and/or, the number of shares represented by the portion
of this Warrant which is not being converted, as the case may be, and (B) the
average of the closing bid price of the Common Stock for the three consecutive
trading days immediately preceding the last possible date which the Company
could have issued such Common Stock or Warrant, as the case may be, to the
holder without violating this Section 2.

  Section 3.  Covenants as to Common Stock.  The Company hereby covenants and
              ----------------------------
agrees as follows:

          (a) This Warrant is, and any Warrant issued in substitution for or
replacement of this Warrant will upon issuance be, duly authorized and validly
issued.

          (b) All Warrant Shares which may be issued upon the exercise of the
rights represented by this Warrant will, upon issuance, be validly issued, fully
paid and nonassessable and free from all taxes, liens and charges with respect
to the issue thereof.

                                       4
<PAGE>

          (c) During the period within which the rights represented by this
Warrant may be exercised, the Company will at all times have authorized and
reserved at least 100% of the number of shares of Common Stock needed to provide
for the exercise of the rights then represented by this Warrant and the par
value, if any, of said shares will at all times be less than or equal to the
applicable Warrant Exercise Price.

          (d) The Company shall promptly secure the listing of the shares of
Common Stock issuable upon exercise of this Warrant upon each national
securities exchange or automated quotation system, if any, upon which shares of
Common Stock are then listed (subject to official notice of issuance upon
exercise of this Warrant) and shall maintain, so long as any other shares of
Common Stock shall be so listed, such listing of all Warrant Shares from time to
time issuable upon the exercise of this Warrant; and the Company shall so list
on each national securities exchange or automated quotation system, as the case
may be, and shall maintain such listing of any other shares of capital stock of
the Company issuable upon the exercise of this Warrant if and so long as any
shares of the same class shall be listed on such national securities exchange or
automated quotation system.

          (e) The Company will not, by amendment of its Articles 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 to be
observed or performed by it hereunder, but will at all times in good faith
assist in the carrying out of all the provisions of this Warrant and in the
taking of all such action as may reasonably be requested by the holder of this
Warrant in order to protect the exercise privilege of the holder of this Warrant
against dilution or other impairment, consistent with the tenor and purpose of
this Warrant will take all such actions as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock upon the exercise of this Warrant.

  Section 4.  Taxes.  The Company shall pay any and all taxes which may be
              -----
payable with respect to the issuance and delivery of Warrant Shares upon
exercise of this Warrant.

  Section 5.  Warrant Holder Not Deemed a Stockholder.  Except as otherwise
              ---------------------------------------
specifically provided herein, no holder, as such, of this Warrant shall be
entitled to vote or receive dividends or be deemed the holder of shares of the
Company for any purpose, nor shall anything contained in this Warrant be
construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote, give or withhold consent to any
corporate action (whether any reorganization, issue of stock, reclassification
of stock, consolidation, merger, conveyance or otherwise), receive notice of
meetings, receive dividends or subscription rights, or otherwise, prior to the
issuance to the holder of this Warrant of the Warrant Shares which he or she is
then entitled to receive upon the due exercise of this Warrant.  In addition,
nothing contained in this Warrant shall be construed as imposing any liabilities
on such holder to purchase any securities (upon exercise of this Warrant or
otherwise) or as a stockholder of the Company, whether such liabilities are
asserted by the Company or by creditors of the Company.  Notwithstanding this
Section 5, the Company will provide the holder

                                       5
<PAGE>

of this Warrant with copies of the same notices and other information given to
the shareholders of the Company generally, contemporaneously with the giving
thereof to the shareholders.

     Section 6.  [Omitted]

     Section 7.  Ownership and Transfer.
                 ----------------------

             (a) The Company shall maintain at its principal executive offices
(or such other office or agency of the Company as it may designate by notice to
the holder hereof), a register for this Warrant, in which the Company shall
record the name and address of the person in whose name this Warrant has been
issued, as well as the name and address of each transferee. The Company may
treat the person in whose name any Warrant is registered on the register as the
owner and holder thereof for all purposes, notwithstanding any notice to the
contrary, but in all events recognizing any transfers made in accordance with
the terms of this Warrant.

             (b) This Warrant and the rights granted to the holder hereof are
transferable, in whole or in part, upon surrender of this Warrant, together with
a properly executed warrant power in the form of Exhibit B attached hereto;
provided, however, that any transfer or assignment shall be subject to the
conditions set forth in Section 7(c) below.

             (c) The holder of this Warrant understands that this Warrant has
not been and is not expected to be, registered under the Securities Act or any
state securities laws, and may not be offered for sale, sold, assigned or
transferred unless (a) subsequently registered thereunder, or (b) such holder
shall have delivered to the Company an opinion of counsel, in generally
acceptable form, to the effect that the securities to be sold, assigned or
transferred may be sold, assigned or transferred pursuant to an exemption from
such registration; provided that (i) any sale of such securities made in
reliance on Rule 144 promulgated under the Securities Act may be made only in
accordance with the terms of said Rule and further, if said Rule is not
applicable, any resale of such securities under circumstances in which the
seller (or the person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the Securities Act) may require
compliance with some other exemption under the Securities Act or the rules and
regulations of the Securities and Exchange Commission thereunder; and (ii)
neither the Company nor any other person is under any obligation to register the
Warrants under the Securities Act or any state securities laws or to comply with
the terms and conditions of any exemption thereunder.

             (d) The Company is obligated to register the Warrant Shares for
resale under the Securities Act pursuant to the Registration Rights Agreement
dated May 11, 2001 by and between the Company and the Buyers listed on the
signature page thereto (the "Registration Rights Agreement") and the initial
                             -----------------------------
holder of this Warrant (and certain assignees thereof) is entitled to the
registration rights in respect of the Warrant Shares as set forth in the
Registration Rights Agreement.

                                       6
<PAGE>

  Section 8.  Adjustment of Warrant Exercise Price and Number of Shares.  The
              ---------------------------------------------------------
Warrant Exercise Price and the number of shares of Common Stock issuable upon
exercise of this Warrant shall be adjusted from time to time as follows:

          (a) Adjustment of Warrant Exercise Price and Number of Shares upon
              --------------------------------------------------------------
Issuance of Common Stock.  If and whenever on or after the date of issuance of
------------------------
this Warrant, the Company issues or sells, or in accordance with Section 8(b) is
deemed to have issued or sold, any shares of Common Stock (including the
issuance or sale of shares of Common Stock owned or held by or for the account
of the Company, but excluding shares of Common Stock deemed to have been issued
by the Company in connection with an Exempt Issuance or upon exercise or
conversion of the Other Securities) for consideration per share (the "Applicable
                                                                      ----------
Price") which is less than the Warrant Exercise Price in effect immediately
-----
prior to such time, then immediately after such issue or sale the Warrant
Exercise Price then in effect shall be reduced to an amount equal to the
Applicable Price.  Upon each such adjustment of the Warrant Exercise Price
hereunder, the number of Warrant Shares acquirable upon exercise of this Warrant
shall be adjusted to the number of shares determined by dividing (i) the product
of (x) the Warrant Exercise Price in effect immediately prior to such adjustment
and (y) the number of shares of Warrant Shares acquirable upon exercise of this
Warrant immediately prior to such adjustment by (ii) the Warrant Exercise Price
resulting from such adjustment.

          (b) Effect on Warrant Exercise Price of Certain Events.  For purposes
              --------------------------------------------------
of determining the adjusted Warrant Exercise Price under Section 8(a) above, the
following shall be applicable:

              (i)  Issuance of Options.  If the Company in any manner grants any
                   -------------------
Options and the lowest price per share for which one share of Common Stock is
issuable upon the exercise of any such Option or upon conversion or exchange of
any Convertible Securities issuable upon exercise of any such Option is less
than the Warrant Exercise Price then in effect, then such share of Common Stock
shall be deemed to be outstanding and to have been issued and sold by the
Company at the time of the granting or sale of such Option for such price per
share.  For purposes of this Section 8(b)(i), the "lowest price per share for
which one share of Common Stock is issuable upon exercise of such Options or
upon conversion or exchange of such Convertible Securities" shall be equal to
the sum of the lowest amounts of consideration (if any) received or receivable
by the Company with respect to any one share of Common Stock upon the granting
or sale of the Option, upon exercise of the Option and upon conversion or
exchange of any Convertible Security issuable upon exercise of such Option. No
further adjustment of the Warrant Exercise Price shall be made upon the actual
issuance of such Common Stock or of such Convertible Securities upon the
exercise of such Options or upon the actual issuance of such Common Stock upon
conversion or exchange of such Convertible Securities.  Notwithstanding the
foregoing, no adjustment shall be made pursuant to this Section 8(b)(i) to the
extent that such adjustment is based solely on the fact that the Convertible
Securities issuable upon exercise of such Option are convertible into or
exchangeable for Common Stock at a price which varies with the market price of
the Common Stock.

              (ii) Issuance of Convertible Securities.  If the Company in any
                   ----------------------------------
manner issues or sells any Convertible Securities and the lowest price per share
for which one share of

                                       7
<PAGE>

Common Stock is issuable upon such conversion or exchange thereof is less than
the Warrant Exercise Price then in effect, then such share of Common Stock shall
be deemed to be outstanding and to have been issued and sold by the Company at
the time of the issuance or sale of such Convertible Securities for such price
per share. For the purposes of this Section 8(b)(ii), the "lowest price per
share for which one share of Common Stock is issuable upon such conversion or
exchange" shall be equal to the sum of the lowest amounts of consideration (if
any) received or receivable by the Company with respect to one share of Common
Stock upon the issuance or sale of the Convertible Security and upon conversion
or exchange of such Convertible Security. No further adjustment of the Warrant
Exercise Price shall be made upon the actual issuance of such Common Stock upon
conversion or exchange of such Convertible Securities, and if any such issue or
sale of such Convertible Securities is made upon exercise of any Options for
which adjustment of the Warrant Exercise Price had been or are to be made
pursuant to other provisions of this Section 8(b), no further adjustment of the
Warrant Exercise Price shall be made by reason of such issue or sale.
Notwithstanding the foregoing, no adjustment shall be made pursuant to this
Section 8(b)(ii) to the extent that such adjustment is based solely on the fact
that such Convertible Securities are convertible into or exchangeable for Common
Stock at a price which varies with the market price of the Common Stock.

          (iii)  Change in Option Price or Rate of Conversion.  If the purchase
                 --------------------------------------------
price provided for in any Options, the additional consideration, if any, payable
upon the issue, conversion or exchange of any Convertible Securities, or the
rate at which any Convertible Securities are convertible into or exchangeable
for Common Stock changes at any time, the Warrant Exercise Price in effect at
the time of such change shall be adjusted to the Warrant Exercise Price which
would have been in effect at such time had such Options or Convertible
Securities provided for such changed purchase price, additional consideration or
changed conversion rate, as the case may be, at the time initially granted,
issued or sold and the number of shares of Common Stock acquirable hereunder
shall be correspondingly readjusted.  For purposes of this Section 8(b)(iii), if
the terms of any Option or Convertible Security that was outstanding as of the
date of issuance of this Warrant are changed in the manner described in the
immediately preceding sentence, then such Option or Convertible Security and the
Common Stock deemed issuable upon exercise, conversion or exchange thereof shall
be deemed to have been issued as of the date of such change.  No adjustment
shall be made if such adjustment would result in an increase of the Warrant
Exercise Price then in effect.

          (iv)   Treatment of Expired Options and Unexercised Convertible
                 --------------------------------------------------------
Securities.  If, in any case, the total number of shares of Common Stock
----------
issuable upon the exercise of any Option or upon exercise, conversion or
exchange of any Convertible Security 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 Warrant Exercise Price then in
effect will be readjusted to the Warrant 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.

                                       8
<PAGE>

          (c) Effect on Warrant Exercise Price of Certain Events.  For purposes
              --------------------------------------------------
of determining the adjusted Warrant Exercise Price under Sections 8(a) and 8(b),
the following shall be applicable:

              (i)  Calculation of Consideration Received.  In case any Option is
                   -------------------------------------
issued in connection with the issue or sale of other securities of the Company,
together comprising one integrated transaction in which no specific
consideration is allocated to such Options by the parties thereto, the Options
will be deemed to have been issued for a consideration of $.01.  If any Common
Stock, Options or Convertible Securities are issued or sold or deemed to have
been issued or sold for cash, the consideration received therefor will be deemed
to be the amount received by the Company therefor before deduction of reasonable
commissions, underwriting discounts or allowances or other similar reasonable
expenses incurred by the Company.  If any Common Stock, Options or Convertible
Securities are issued or sold for a consideration other than cash, the amount of
such consideration received by the Company will be the fair value of such
consideration, except where such consideration consists of securities that are
listed for trading on a national securities exchange or automated quotation
system, in which case the amount of consideration received by the Company will
be the average market price of such securities for the twenty (20) consecutive
trading days immediately preceding the date of receipt.  If any Common Stock,
Options or Convertible Securities are issued to the owners of the non-surviving
entity in connection with any merger in which the Company is the surviving
entity, the amount of consideration therefor will be deemed to be the fair value
of such portion of the net assets and business of the non-surviving entity as is
attributable to such Common Stock, Options or Convertible Securities, as the
case may be.  The fair value of any consideration other than cash or securities
that are listed for trading on a national securities exchange or automated
quotation system will be determined jointly by the Company and the holders of
Warrants representing a majority of the shares of Common Stock obtainable upon
exercise of the Warrants then outstanding.  If such parties are unable to reach
agreement within ten (10) days after the occurrence of an event requiring
valuation (the "Valuation Event"), the fair value of such consideration will be
                ---------------
determined within five Business Days after the tenth (10th) day following the
Valuation Event by an independent, reputable appraiser jointly selected by the
Company and the holders of Warrants representing two-thirds majority of the
shares of Common Stock obtainable upon exercise of the Warrants then
outstanding.  The determination of such appraiser shall be final and binding
upon all parties and the fees and expenses of such appraiser shall be borne by
the Company.

              (ii) Record Date.  If the Company takes a record of the holders of
                   -----------
Common Stock for the purpose of entitling them (1) to receive a dividend or
other distribution payable in Common Stock, Options or in Convertible Securities
or (2) to subscribe for or purchase Common Stock, Options or Convertible
Securities, then such record date will be deemed to be the date of the issue or
sale of the shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other distribution or the
date of the granting of such right of subscription or purchase, as the case may
be.

          (d) Adjustment of Warrant Exercise Price upon Subdivision or
              --------------------------------------------------------
Combination of Common Stock.  If the Company at any time after the date of
---------------------------
issuance of this Warrant subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes

                                       9
<PAGE>

of its outstanding shares of Common Stock into a greater number of shares, the
Warrant Exercise Price in effect immediately prior to such subdivision will be
proportionately reduced and the number of shares of Common Stock obtainable upon
exercise of this Warrant will be proportionately increased. If the Company at
any time after the date of issuance of this Warrant combines (by combination,
reverse stock split or otherwise) one or more classes of its outstanding shares
of Common Stock into a smaller number of shares, the Warrant Exercise Price in
effect immediately prior to such combination will be proportionately increased
and the number of shares of Common Stock obtainable upon exercise of this
Warrant will be proportionately decreased.

          (e) Distribution of Assets.  If the Company shall declare or make any
              ----------------------
distribution of its assets (or rights to acquire its assets) to holders of
Common Stock as a partial liquidating dividend, by way of return of capital or
otherwise (including, without limitation, any distribution of cash, property or
securities of a subsidiary) (a "Distribution"), at any time after the issuance
                                ------------
of this Warrant, then, in each such case:

              (i)  the Warrant Exercise Price in effect immediately prior to the
close of business on the record date fixed for the determination of holders of
Common Stock entitled to receive the Distribution shall be reduced, effective as
of the close of business on such record date, to a price determined by
multiplying such Warrant Exercise Price by a fraction of which (A) the numerator
shall be the closing bid price on the trading day immediately preceding such
record date minus the value of the Distribution (as determined in good faith by
the Company's Board of Directors) applicable to one share of Common Stock, and
(B) the denominator shall be the closing bid price on the trading day
immediately preceding such record date; and

              (ii) either (A) the number of Warrant Shares obtainable upon
exercise of this Warrant shall be increased to a number of shares equal to the
number of shares of Common Stock obtainable immediately prior to the close of
business on the record date fixed for the determination of holders of Common
Stock entitled to receive the Distribution multiplied by the reciprocal of the
fraction set forth in the immediately preceding clause (i), or (B) in the event
that the Distribution is of common stock of a company whose common stock is
traded on a national securities exchange or a national automated quotation
system, then the holder of this Warrant shall receive an additional warrant to
purchase Common Stock, the terms of which shall be identical to those of this
Warrant, except that such warrant shall be exercisable into the amount of the
assets that would have been payable to the holder of this Warrant pursuant to
the Distribution had the holder exercised this Warrant immediately prior to such
record date and with an exercise price equal to the amount by which the exercise
price of this Warrant was decreased with respect to the Distribution pursuant to
the terms of the immediately preceding clause (i).

          (f) Certain Events.  If any event occurs of the type contemplated by
              --------------
the provisions of this Section 8 but not expressly provided for by such
provisions (including, without limitation, the granting of stock appreciation
rights, phantom stock rights or other rights with equity features), then the
Company's Board of Directors will make an appropriate adjustment in the Warrant
Exercise Price and the number of Warrant Shares obtainable upon exercise of this
Warrant so as to protect the rights of the holders of the Warrants; provided
that no such

                                       10
<PAGE>

adjustment will increase the Warrant Exercise Price or decrease the number of
shares of Common Stock obtainable as otherwise determined pursuant to this
Section 8.

          (g)  Notices.
               -------

              (i)   Immediately upon any adjustment of the Warrant Exercise
Price, the Company will give written notice thereof to the holder of this
Warrant, setting forth in reasonable detail, and certifying, the calculation of
such adjustment.

              (ii)  The Company will give written notice to the holder of this
Warrant at least twenty (20) days prior to the date on which the Company closes
its books or takes a record (A) with respect to any dividend or distribution
upon the Common Stock, (B) with respect to any pro rata subscription offer to
holders of Common Stock or (C) for determining rights to vote with respect to
any Organic Change (as defined below), dissolution or liquidation, provided that
such information shall be made known to the public prior to or in conjunction
with such notice being provided to such holder.

              (iii) The Company will also give written notice to the holder of
this Warrant at least twenty (20) days prior to the date on which any Organic
Change (as defined below), dissolution or liquidation will take place, provided
that such information shall be made known to the public prior to or in
conjunction with such notice being provided to such holder.

  Section 9.  Purchase Rights; Reorganization, Reclassification,
                 --------------------------------------------------
Consolidation, Merger or Sale.
-----------------------------
          (a) If at any time after the date hereof, the Company grants, issues
or sells any Options, Convertible Securities or rights to purchase stock,
warrants, securities or other property pro rata to the record holders of any
class of Common Stock (the "Purchase Rights"), then the holder of this Warrant
                            ---------------
will be entitled to acquire, upon the terms applicable to such Purchase Rights,
the aggregate Purchase Rights which such holder could have acquired if such
holder had held the number of shares of Common Stock acquirable upon complete
exercise of this Warrant immediately before the date on which a record is taken
for the grant, issuance or sale of such Purchase Rights, or, if no such record
is taken, the date as of which the record holders of Common Stock are to be
determined for the grant, issue or sale of such Purchase Rights.

          (b) Any recapitalization, reorganization, reclassification,
consolidation, merger, sale of all or substantially all of the Company's assets
to another Person or other transaction which is effected in such a way that
holders of Common Stock are entitled to receive (either directly or upon
subsequent liquidation) stock, securities or assets with respect to or in
exchange for Common Stock is referred to herein as "Organic Change."  Prior to
                                                    --------------
the consummation of any (i) sale of all or substantially all of the Company's
assets to an acquiring Person or (ii) other Organic Change following which the
Company is not a surviving entity, the Company will use its best efforts to
secure from the Person purchasing such assets or the successor resulting from
such Organic Change (in each case, the "Acquiring Entity") written agreement (in
                                        ----------------
form and substance satisfactory to the holders of Warrants representing a
majority of the shares of Common Stock obtainable upon exercise of the Warrants
then outstanding) to

                                       11
<PAGE>

deliver to each holder of Warrants in exchange for such Warrants, a security of
the Acquiring Entity evidenced by a written instrument substantially similar in
form and substance to this Warrant and satisfactory to the holders of the
Warrants (including, an adjusted warrant exercise price equal to the value for
the Common Stock reflected by the terms of such consolidation, merger or sale,
and exercisable for a corresponding number of shares of Common Stock acquirable
and receivable upon exercise of the Warrants, if the value so reflected is less
than the Warrant Exercise Price in effect immediately prior to such
consolidation, merger or sale). Prior to the consummation of any other Organic
Change, the Company shall use its best efforts to make appropriate provision (in
form and substance satisfactory to the holders of Warrants representing a
majority of the shares of Common Stock obtainable upon exercise of the Warrants
then outstanding) to ensure that each of the holders of the Warrants will
thereafter have the right to acquire and receive in lieu of or in addition to
(as the case may be) the Warrant Shares immediately theretofore acquirable and
receivable upon the exercise of such holder's Warrants, such shares of stock,
securities or assets that would have been issued or payable in such Organic
Change with respect to or in exchange for the number of Warrant Shares which
would have been acquirable and receivable upon the exercise of such holder's
Warrant as of the date of such Organic Change (without taking into account any
limitations or restrictions on the exercisability of this Warrant).

          (c) In the event the Company proposes to effect an Organic Change,
then in addition to any other rights the holder may have, the holder shall have
the right to effect a Cashless Exercise (as defined below), by presentation and
surrender of this Warrant to the Company at its principal executive offices with
a written notice of the holder's intention to effect a Cashless Exercise,
including a calculation of the number of shares of Common Stock to be issued
upon such exercise in accordance with the terms hereof.  A "Cashless Exercise"
                                                            -----------------
shall mean that, in lieu of paying the Warrant Exercise Price in cash, the
holder shall surrender this Warrant for that number of Warrant Shares determined
by subtracting from the number of Warrant Shares otherwise issuable to the
holder upon such exercise, an amount of Warrant Shares (the "Surrendered
                                                             -----------
Shares") having a closing bid price (as reported by Bloomberg) on the date
------
immediately preceding the date of the exercise notice equal to the Aggregate
Exercise Price (as defined in Section 2) of the Warrant Shares for which this
Warrant is being exercised; and thereafter the Surrendered Shares shall no
longer be available for issuance hereunder.

  Section 10. Lost, Stolen, Mutilated or Destroyed Warrant.  If this Warrant
              --------------------------------------------
is lost, stolen, mutilated or destroyed, the Company shall, on receipt of an
indemnification undertaking, issue a new Warrant of like denomination and tenor
as this Warrant so lost, stolen, mutilated or destroyed.

  Section 11. Notice.  Any notices, consents, waivers or other communications
              ------
required or permitted to be given under the terms of this Warrant must be in
writing and will be deemed to have been delivered: (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one Business Day after deposit with
a nationally recognized overnight delivery service, in each case properly
addressed to the party to receive the same. The addresses and facsimile numbers
for such communications shall be:

                                       12
<PAGE>

          If to the Company:

               Data Race Inc.
               6509 Windcrest Drive, Suite 120
               Plano, Texas 75024
               Telephone:    (972) 205-4005
               Facsimile:    (210) 558-0356
               Attention:    James G. Scogin

          With copy to:

               Jackson Walker LLP
               901 Main Street, Suite 6000
               Dallas, Texas 75202
               Telephone:    (214) 953 - 5801
               Facsimile:    (214) 953 - 5736
               Attention:    James S. Ryan, III, Esq.

If to a holder of this Warrant, to it at the address and facsimile number set
forth on the Schedule of Buyers to the Securities Purchase Agreement, with
copies to such holder's representatives as set forth on such Schedule of Buyers,
or at such other address and facsimile as shall be delivered to the Company upon
the issuance or transfer of this Warrant.  Each party shall provide five days'
prior written notice to the other party of any change in address or facsimile
number.  Written confirmation of receipt (A) given by the recipient of such
notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender's facsimile machine containing the time,
date, recipient facsimile number and an image of the first page of such
transmission or (C) provided by a nationally recognized overnight delivery
service shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.

     Section 12.  [Omitted]

     Section 13.  Date.  The date of this Warrant is May 11, 2001.  This
                  ----
Warrant, in all events, shall be wholly void and of no effect after the close of
business on the Expiration Date, except that notwithstanding any other
provisions hereof, the provisions of Section 7 shall continue in full force and
effect after such date as to any Warrant Shares or other securities issued upon
the exercise of this Warrant.

     Section 14.  Amendment and Waiver.  Except as otherwise provided herein,
                  --------------------
the provisions of the Warrants may be amended and the Company may take any
action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the written consent of the
holders of Warrants representing two-thirds of the shares of Common Stock
obtainable upon exercise of the Warrants then outstanding; provided that no such
action may increase the Warrant Exercise Price of the Warrants or decrease the
number of

                                       13
<PAGE>

shares or class of stock obtainable upon exercise of any Warrants without the
written consent of the holder of such Warrant.

     Section 15.  Descriptive Headings; Governing Law.  The descriptive headings
                  -----------------------------------
of the several Sections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant.  This Warrant
shall be governed by the internal laws of the State of Texas, without giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of Texas or any other jurisdictions) that would cause the application of
the laws of any jurisdictions other than the State of Texas.

                           [Signature Page Follows]

                                       14
<PAGE>

     This Warrant has been duly executed by the Company as of the date first set
forth above.

                                    DATA RACE INC.

                                    By:
                                         ------------------------------------
                                    Name:  James G. Scogin
                                         ------------------------------------
                                    Title:  Senior Vice President, Chief
                                            Financial Officer

                                       15
<PAGE>

                             EXHIBIT A TO WARRANT
                             --------------------

                               SUBSCRIPTION FORM

       TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS WARRANT

                                DATA RACE INC.

     The undersigned holder hereby exercises the right to purchase ___________
of the shares of Common Stock ("Warrant Shares") of Data Race Inc., a Texas
corporation (the "Company"), evidenced by the attached Warrant (the "Warrant").
Capitalized terms used herein and not otherwise defined shall have the
respective meanings set forth in the Warrant.

     1.  Payment of Warrant Exercise Price.  The holder shall pay the sum of
$___________________ to the Company in accordance with the terms of the Warrant.

     2.  Delivery of Warrant Shares.  The Company shall deliver to the holder
__________ Warrant Shares in accordance with the terms of the Warrant.

Date:                        ,
      ----------------- ----   -------

Name of Registered Holder

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

                                       16
<PAGE>

                              EXHIBIT B TO WARRANT
                              --------------------

                             FORM OF WARRANT POWER

FOR VALUE RECEIVED, the undersigned does hereby assign and transfer to
________________, Federal Identification No. __________, a warrant to purchase
____________ shares of the capital stock of Data Race Inc., a Texas corporation,
represented by warrant certificate no. _____, standing in the name of the
undersigned on the books of said corporation.  The undersigned does hereby
irrevocably constitute and appoint ______________, attorney to transfer the
warrants of said corporation, with full power of substitution in the premises.

Dated:  _________, 200__

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

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

                                       17
<PAGE>

                                                                    Exhibit 10.8

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.
THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR
SALE, SOLD, TRANSFERRED OR ASSIGNED (1) IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "1933 ACT"), OR APPLICABLE STATE SECURITIES LAWS, OR (2) IN THE
ABSENCE OF AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT
REGISTRATION IS NOT REQUIRED UNDER THE 1933 ACT OR (3) UNLESS SOLD, TRANSFERRED
OR ASSIGNED PURSUANT TO RULE 144 UNDER SAID ACT.

                                DATA RACE, INC.

                         Common Stock Purchase Warrant

Warrant No.:   2001A-2                        Number of Shares:  833,333
Date of Issuance:  May 11, 2001

Data Race Inc., a Texas corporation doing business as IP Axess (the "Company"),
                                                                     -------
hereby certifies that, for Ten United States Dollars ($10.00) and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, ICN Capital Ltd., the registered holder hereof or its permitted
assigns, is entitled, subject to the terms set forth below, to purchase from the
Company upon surrender of this Warrant, at any time or times on or after the
date hereof, but not after 11:59 P.M. Central Time on the Expiration Date (as
defined herein) Eight Hundred Thirty-Three Thousand Three Hundred Thirty-Three
(833,333) fully paid nonassessable shares of Common Stock (as defined herein)
(the "Warrant Shares") at the purchase price per share provided in Section 1(b)
      --------------
below.

     Section 1.

          (a) Securities Purchase Agreement.  This Warrant certificate
              -----------------------------
represents one of the Common Stock Purchase Warrants issued pursuant to the
terms of that certain Securities Purchase Agreement dated as of May 11, 2001,
among the Company and the Buyers referred to therein (the "Securities Purchase
                                                           -------------------
Agreement").
---------

          (b) Definitions.  The following words and terms as used in this
              -----------
Warrant shall have the following meanings:

              (i) "Common Stock" means (i) the Company's common stock, no par
                   ------------
value per share, and (ii) any capital stock into which such Common Stock shall
have been changed or any capital stock resulting from a reclassification of such
Common Stock.

                                       1
<PAGE>

          (ii) "Common Stock Deemed Outstanding" means, at any given time, the
                -------------------------------
number of shares of Common Stock actually outstanding at such time, plus the
number of shares of Common Stock deemed to be outstanding pursuant to Sections
8(b)(i) and 8(b)(ii) hereof regardless of whether the Options (as defined below)
or Convertible Securities (as defined below) are actually exercisable or
convertible at such time, but excluding any shares of Common Stock owned or held
by or for the account of the Company or issuable upon exercise of the Common
Stock Purchase Warrants issued pursuant to the Securities Purchase Agreement.

          (iii)  "Convertible Securities" means any stock or securities (other
                  ----------------------
than Options) directly or indirectly convertible into or exchangeable for Common
Stock.

          (iv) "Exempt Issuance" means (A) a loan from a commercial bank which
                ---------------
has only an incidental equity feature or any equity line or similar transaction
from any financial institution, (B) any transaction involving the Company's
issuances of securities (1) as consideration in a merger or consolidation, (2)
in connection with a strategic partnership or joint venture (the primary purpose
of which is not to raise equity capital), or (3) as consideration for the
acquisition of a business, product, license or other assets by the Company, (C)
the issuance of common stock in a firm commitment, underwritten public offering,
(D) the issuance of securities upon exercise or conversion of the Company's
options, warrants or other convertible securities outstanding as of the date
hereof, (E) the grant of additional options or warrants, or the issuance of
additional securities, under any Company stock option plan, restricted stock
plan,  stock purchase plan or other plan or written compensation agreement for
the benefit of the Company's employees, directors, consultants or advisors, or
(F) the issuance of securities pursuant to any shareholder rights plan adopted
by the Company prior to the Closing (as defined in the Securities Purchase
Agreement).

          (v) "Expiration Date" means the date five (5) years from the date of
               ---------------
this Warrant or, if such date falls on a Saturday, Sunday or other day on which
banks are required or authorized to be closed in the City of Dallas or the State
of Texas or on which trading does not take place on the principal exchange or
automated quotation system on which the Common Stock is traded (a "Holiday"),
the next date that is not a Holiday.

          (vi) "Fair Market Value" means as of any specified date, the closing
                -----------------
price of the Common Stock on the NASDAQ National Market (or, if the Common Stock
is not listed thereon, such other national securities exchange on which the
Common Stock is then listed) on that date, or if no prices are reported on that
date, on the last preceding date on which such prices of the Common Stock are so
reported.  If the Common Stock is not then listed on any national securities
exchange but is traded over the counter at the time the determination of the
Fair Market Value of the Common Stock is required to be made hereunder, such
Fair Market Value shall be deemed to be equal to the average between the
reported high and low sales prices of the Common Stock on the most recent date
on which the Common Stock was publicly traded. If the Common Stock is not
publicly traded at the time the determination of the Fair Market Value thereof
is required to be made hereunder, the determination of such Fair Market Value
shall be made by the Board of Directors of the Company in good faith.

                                       2
<PAGE>

                 (vii)  "Options" means any rights, warrants or options to
                         -------
subscribe for or purchase Common Stock or Convertible Securities.

                 (viii)  "Other Securities" means (i) the Common Stock Purchase
                          ----------------
Warrants issued pursuant to the Securities Purchase Agreement, not including
this Warrant and (ii) the Company's 10% Secured Convertible Promissory Notes
issued pursuant to the Securities Purchase Agreement.

                 (ix) "Person" means an individual, a limited liability
                       ------
company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or any department or agency
thereof.

                 (x) "Securities Act" means the Securities Act of 1933, as
                      --------------
amended.

                 (xi) "Warrant" means this Warrant and all Warrants issued in
                       -------
exchange, transfer or replacement of any thereof.

                 (xii)  "Warrant Exercise Price" shall be $0.30 per common
                         ----------------------
share, subject to adjustment as hereinafter provided.

     Section 2.  Exercise of Warrant.
                 -------------------

          (a) Subject to the terms and conditions hereof, this Warrant may be
exercised by the holder hereof then registered on the books of the Company, in
whole or in part, at any time on any Business Day (as defined in the Securities
Purchase Agreement) on or after the opening of business on the date hereof and
prior to 11:59 P.M. Central Time on the Expiration Date by (i) delivery of a
written notice, in the form of the subscription notice attached as Exhibit A
                                                                   ---------
hereto (the "Exercise Notice"), of such holder's election to exercise this
             ---------------
Warrant, which notice shall specify the number of Warrant Shares to be
purchased, (ii) payment to the Company of an amount equal to the Warrant
Exercise Price multiplied by the number of Warrant Shares as to which this
Warrant is being exercised (plus any applicable issue or transfer taxes) (the
"Aggregate Exercise Price") (x) in cash or by check or wire transfer, (y) in
-------------------------
unissued Warrant Shares then issuable upon exercise of this Warrant and
surrendered to the Company for cancellation, or (z) in a combination thereof,
and (iii) the surrender to a common carrier for delivery to the Company as soon
as practicable following such date, this Warrant (or an indemnification
undertaking with respect to this Warrant in the case of its loss, theft or
destruction); provided, that if such Warrant Shares are to be issued in any name
other than that of the registered holder of this Warrant, such issuance shall be
deemed a transfer and the provisions of Section 7 shall be applicable.  For
purposes of determining the amount, if any, of the Aggregate Exercise Price
satisfied by the payment in unissued Warrant Shares surrendered to the Company
for cancellation, each such surrendered Warrant Share shall be valued at an
amount equal to the Fair Market Value of a share of the Common Stock of the
Company less the Warrant Exercise Price of such surrendered Warrant Share.  In
the event of any exercise of the rights represented by this Warrant in
compliance with this Section 2(a), a certificate or certificates for the Warrant
Shares so purchased, in such denominations as may be requested by the holder
hereof and registered in the name of, or as directed by, the holder, shall be
delivered at the

                                       3
<PAGE>

Company's expense to, or as directed by, such holder as soon as practicable, and
in no event later than two Business Days, after the Company's receipt of the
Exercise Notice, the Aggregate Exercise Price and this Warrant (or an
indemnification undertaking with respect to this Warrant in the case of its
loss, theft or destruction). Upon delivery of the Exercise Notice and Aggregate
Exercise Price referred to in clause (ii) above, the holder of this Warrant
shall be deemed for all corporate purposes to have become the holder of record
of the Warrant Shares with respect to which this Warrant has been exercised,
irrespective of the date of delivery of this Warrant as required by clause (iii)
above or the certificates evidencing such Warrant Shares.

          (b) Unless the rights represented by this Warrant shall have expired
or shall have been fully exercised, the Company shall, as soon as practicable
and in no event later than five (5) Business Days after any exercise and at its
own expense, issue a new Warrant identical in all respects to this Warrant
exercised except it shall represent rights to purchase the number of Warrant
Shares purchasable immediately prior to such exercise under this Warrant
exercised, less the number of Warrant Shares with respect to which such Warrant
is exercised.

          (c) No fractional shares of Common Stock are to be issued upon the
exercise of this Warrant, but rather the number of shares of Common Stock issued
upon exercise of this Warrant shall be rounded up or down to the nearest whole
number.

          (d) If the Company shall fail for any reason or for no reason to issue
to the holder on a timely basis as described in this Section 2, a certificate
for the number of shares of Common Stock to which the holder is entitled upon
the holder's exercise of this Warrant or a new Warrant for the number of shares
of Common Stock to which such holder is entitled pursuant to Section 2(b)
hereof, the Company shall, in addition to any other remedies under this Warrant
or the Securities Purchase Agreement or otherwise available to such holder,
including any indemnification under the Securities Purchase Agreement, pay as
additional damages in cash to such holder on each day the issuance of such
Common Stock certificate or new Warrant, as the case may be, is not timely
effected an amount equal to 0.25% of the product of (A) the sum of the number of
shares of Common Stock not issued to the holder on a timely basis and to which
the holder is entitled and/or, the number of shares represented by the portion
of this Warrant which is not being converted, as the case may be, and (B) the
average of the closing bid price of the Common Stock for the three consecutive
trading days immediately preceding the last possible date which the Company
could have issued such Common Stock or Warrant, as the case may be, to the
holder without violating this Section 2.

     Section 3.  Covenants as to Common Stock.  The Company hereby covenants and
                 ----------------------------
agrees as follows:

          (a) This Warrant is, and any Warrant issued in substitution for or
replacement of this Warrant will upon issuance be, duly authorized and validly
issued.

          (b) All Warrant Shares which may be issued upon the exercise of the
rights represented by this Warrant will, upon issuance, be validly issued, fully
paid and nonassessable and free from all taxes, liens and charges with respect
to the issue thereof.

                                      4
<PAGE>

          (c) During the period within which the rights represented by this
Warrant may be exercised, the Company will at all times have authorized and
reserved at least 100% of the number of shares of Common Stock needed to provide
for the exercise of the rights then represented by this Warrant and the par
value, if any, of said shares will at all times be less than or equal to the
applicable Warrant Exercise Price.

          (d) The Company shall promptly secure the listing of the shares of
Common Stock issuable upon exercise of this Warrant upon each national
securities exchange or automated quotation system, if any, upon which shares of
Common Stock are then listed (subject to official notice of issuance upon
exercise of this Warrant) and shall maintain, so long as any other shares of
Common Stock shall be so listed, such listing of all Warrant Shares from time to
time issuable upon the exercise of this Warrant; and the Company shall so list
on each national securities exchange or automated quotation system, as the case
may be, and shall maintain such listing of any other shares of capital stock of
the Company issuable upon the exercise of this Warrant if and so long as any
shares of the same class shall be listed on such national securities exchange or
automated quotation system.

          (e) The Company will not, by amendment of its Articles 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 to be
observed or performed by it hereunder, but will at all times in good faith
assist in the carrying out of all the provisions of this Warrant and in the
taking of all such action as may reasonably be requested by the holder of this
Warrant in order to protect the exercise privilege of the holder of this Warrant
against dilution or other impairment, consistent with the tenor and purpose of
this Warrant will take all such actions as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock upon the exercise of this Warrant.

     Section 4.  Taxes.  The Company shall pay any and all taxes which may be
                 -----
payable with respect to the issuance and delivery of Warrant Shares upon
exercise of this Warrant.

     Section 5.  Warrant Holder Not Deemed a Stockholder.  Except as otherwise
                 ---------------------------------------
specifically provided herein, no holder, as such, of this Warrant shall be
entitled to vote or receive dividends or be deemed the holder of shares of the
Company for any purpose, nor shall anything contained in this Warrant be
construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote, give or withhold consent to any
corporate action (whether any reorganization, issue of stock, reclassification
of stock, consolidation, merger, conveyance or otherwise), receive notice of
meetings, receive dividends or subscription rights, or otherwise, prior to the
issuance to the holder of this Warrant of the Warrant Shares which he or she is
then entitled to receive upon the due exercise of this Warrant.  In addition,
nothing contained in this Warrant shall be construed as imposing any liabilities
on such holder to purchase any securities (upon exercise of this Warrant or
otherwise) or as a stockholder of the Company, whether such liabilities are
asserted by the Company or by creditors of the Company.  Notwithstanding this
Section 5, the Company will provide the holder

                                      5
<PAGE>

of this Warrant with copies of the same notices and other information given to
the shareholders of the Company generally, contemporaneously with the giving
thereof to the shareholders.

     Section 6.  [Omitted]

     Section 7.  Ownership and Transfer.
                 ----------------------

          (a) The Company shall maintain at its principal executive offices (or
such other office or agency of the Company as it may designate by notice to the
holder hereof), a register for this Warrant, in which the Company shall record
the name and address of the person in whose name this Warrant has been issued,
as well as the name and address of each transferee.  The Company may treat the
person in whose name any Warrant is registered on the register as the owner and
holder thereof for all purposes, notwithstanding any notice to the contrary, but
in all events recognizing any transfers made in accordance with the terms of
this Warrant.

          (b) This Warrant and the rights granted to the holder hereof are
transferable, in whole or in part, upon surrender of this Warrant, together with
a properly executed warrant power in the form of Exhibit B attached hereto;
provided, however, that any transfer or assignment shall be subject to the
conditions set forth in Section 7(c) below.

          (c) The holder of this Warrant understands that this Warrant has not
been and is not expected to be, registered under the Securities Act or any state
securities laws, and may not be offered for sale, sold, assigned or transferred
unless (a) subsequently registered thereunder, or (b) such holder shall have
delivered to the Company an opinion of counsel, in generally acceptable form, to
the effect that the securities to be sold, assigned or transferred may be sold,
assigned or transferred pursuant to an exemption from such registration;
provided that (i) any sale of such securities made in reliance on Rule 144
promulgated under the Securities Act may be made only in accordance with the
terms of said Rule and further, if said Rule is not applicable, any resale of
such securities under circumstances in which the seller (or the person through
whom the sale is made) may be deemed to be an underwriter (as that term is
defined in the Securities Act) may require compliance with some other exemption
under the Securities Act or the rules and regulations of the Securities and
Exchange Commission thereunder; and (ii) neither the Company nor any other
person is under any obligation to register the Warrants under the Securities Act
or any state securities laws or to comply with the terms and conditions of any
exemption thereunder.

          (d) The Company is obligated to register the Warrant Shares for resale
under the Securities Act pursuant to the Registration Rights Agreement dated May
11, 2001 by and between the Company and the Buyers listed on the signature page
thereto (the "Registration Rights Agreement") and the initial holder of this
              -----------------------------
Warrant (and certain assignees thereof) is entitled to the registration rights
in respect of the Warrant Shares as set forth in the Registration Rights
Agreement.

                                       6
<PAGE>

     Section 8.  Adjustment of Warrant Exercise Price and Number of Shares.  The
                 ---------------------------------------------------------
Warrant Exercise Price and the number of shares of Common Stock issuable upon
exercise of this Warrant shall be adjusted from time to time as follows:

          (a) Adjustment of Warrant Exercise Price and Number of Shares upon
              --------------------------------------------------------------
Issuance of Common Stock.  If and whenever on or after the date of issuance of
------------------------
this Warrant, the Company issues or sells, or in accordance with Section 8(b) is
deemed to have issued or sold, any shares of Common Stock (including the
issuance or sale of shares of Common Stock owned or held by or for the account
of the Company, but excluding shares of Common Stock deemed to have been issued
by the Company in connection with an Exempt Issuance or upon exercise or
conversion of the Other Securities) for consideration per share (the "Applicable
                                                                      ----------
Price") which is less than the Warrant Exercise Price in effect immediately
-----
prior to such time, then immediately after such issue or sale the Warrant
Exercise Price then in effect shall be reduced to an amount equal to the
Applicable Price.  Upon each such adjustment of the Warrant Exercise Price
hereunder, the number of Warrant Shares acquirable upon exercise of this Warrant
shall be adjusted to the number of shares determined by dividing (i) the product
of (x) the Warrant Exercise Price in effect immediately prior to such adjustment
and (y) the number of shares of Warrant Shares acquirable upon exercise of this
Warrant immediately prior to such adjustment by (ii) the Warrant Exercise Price
resulting from such adjustment.

          (b) Effect on Warrant Exercise Price of Certain Events.  For purposes
              --------------------------------------------------
of determining the adjusted Warrant Exercise Price under Section 8(a) above, the
following shall be applicable:

              (i) Issuance of Options.  If the Company in any manner grants any
                  -------------------
Options and the lowest price per share for which one share of Common Stock is
issuable upon the exercise of any such Option or upon conversion or exchange of
any Convertible Securities issuable upon exercise of any such Option is less
than the Warrant Exercise Price then in effect, then such share of Common Stock
shall be deemed to be outstanding and to have been issued and sold by the
Company at the time of the granting or sale of such Option for such price per
share.  For purposes of this Section 8(b)(i), the "lowest price per share for
which one share of Common Stock is issuable upon exercise of such Options or
upon conversion or exchange of such Convertible Securities" shall be equal to
the sum of the lowest amounts of consideration (if any) received or receivable
by the Company with respect to any one share of Common Stock upon the granting
or sale of the Option, upon exercise of the Option and upon conversion or
exchange of any Convertible Security issuable upon exercise of such Option. No
further adjustment of the Warrant Exercise Price shall be made upon the actual
issuance of such Common Stock or of such Convertible Securities upon the
exercise of such Options or upon the actual issuance of such Common Stock upon
conversion or exchange of such Convertible Securities.  Notwithstanding the
foregoing, no adjustment shall be made pursuant to this Section 8(b)(i) to the
extent that such adjustment is based solely on the fact that the Convertible
Securities issuable upon exercise of such Option are convertible into or
exchangeable for Common Stock at a price which varies with the market price of
the Common Stock.

              (ii) Issuance of Convertible Securities.  If the Company in any
                   ----------------------------------
manner issues or sells any Convertible Securities and the lowest price per share
for which one share of

                                       7
<PAGE>

Common Stock is issuable upon such conversion or exchange thereof is less than
the Warrant Exercise Price then in effect, then such share of Common Stock shall
be deemed to be outstanding and to have been issued and sold by the Company at
the time of the issuance or sale of such Convertible Securities for such price
per share. For the purposes of this Section 8(b)(ii), the "lowest price per
share for which one share of Common Stock is issuable upon such conversion or
exchange" shall be equal to the sum of the lowest amounts of consideration (if
any) received or receivable by the Company with respect to one share of Common
Stock upon the issuance or sale of the Convertible Security and upon conversion
or exchange of such Convertible Security. No further adjustment of the Warrant
Exercise Price shall be made upon the actual issuance of such Common Stock upon
conversion or exchange of such Convertible Securities, and if any such issue or
sale of such Convertible Securities is made upon exercise of any Options for
which adjustment of the Warrant Exercise Price had been or are to be made
pursuant to other provisions of this Section 8(b), no further adjustment of the
Warrant Exercise Price shall be made by reason of such issue or sale.
Notwithstanding the foregoing, no adjustment shall be made pursuant to this
Section 8(b)(ii) to the extent that such adjustment is based solely on the fact
that such Convertible Securities are convertible into or exchangeable for Common
Stock at a price which varies with the market price of the Common Stock.

              (iii)  Change in Option Price or Rate of Conversion.  If the
                     --------------------------------------------
purchase price provided for in any Options, the additional consideration, if
any, payable upon the issue, conversion or exchange of any Convertible
Securities, or the rate at which any Convertible Securities are convertible into
or exchangeable for Common Stock changes at any time, the Warrant Exercise Price
in effect at the time of such change shall be adjusted to the Warrant Exercise
Price which would have been in effect at such time had such Options or
Convertible Securities provided for such changed purchase price, additional
consideration or changed conversion rate, as the case may be, at the time
initially granted, issued or sold and the number of shares of Common Stock
acquirable hereunder shall be correspondingly readjusted. For purposes of this
Section 8(b)(iii), if the terms of any Option or Convertible Security that was
outstanding as of the date of issuance of this Warrant are changed in the manner
described in the immediately preceding sentence, then such Option or Convertible
Security and the Common Stock deemed issuable upon exercise, conversion or
exchange thereof shall be deemed to have been issued as of the date of such
change. No adjustment shall be made if such adjustment would result in an
increase of the Warrant Exercise Price then in effect.

              (iv) Treatment of Expired Options and Unexercised Convertible
                   --------------------------------------------------------
Securities.  If, in any case, the total number of shares of Common Stock
----------
issuable upon the exercise of any Option or upon exercise, conversion or
exchange of any Convertible Security 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 Warrant Exercise Price then in
effect will be readjusted to the Warrant 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.

                                       8
<PAGE>

          (c) Effect on Warrant Exercise Price of Certain Events.  For purposes
              --------------------------------------------------
of determining the adjusted Warrant Exercise Price under Sections 8(a) and 8(b),
the following shall be applicable:

              (i) Calculation of Consideration Received.  In case any Option is
                  -------------------------------------
issued in connection with the issue or sale of other securities of the Company,
together comprising one integrated transaction in which no specific
consideration is allocated to such Options by the parties thereto, the Options
will be deemed to have been issued for a consideration of $.01.  If any Common
Stock, Options or Convertible Securities are issued or sold or deemed to have
been issued or sold for cash, the consideration received therefor will be deemed
to be the amount received by the Company therefor before deduction of reasonable
commissions, underwriting discounts or allowances or other similar reasonable
expenses incurred by the Company.  If any Common Stock, Options or Convertible
Securities are issued or sold for a consideration other than cash, the amount of
such consideration received by the Company will be the fair value of such
consideration, except where such consideration consists of securities that are
listed for trading on a national securities exchange or automated quotation
system, in which case the amount of consideration received by the Company will
be the average market price of such securities for the twenty (20) consecutive
trading days immediately preceding the date of receipt.  If any Common Stock,
Options or Convertible Securities are issued to the owners of the non-surviving
entity in connection with any merger in which the Company is the surviving
entity, the amount of consideration therefor will be deemed to be the fair value
of such portion of the net assets and business of the non-surviving entity as is
attributable to such Common Stock, Options or Convertible Securities, as the
case may be.  The fair value of any consideration other than cash or securities
that are listed for trading on a national securities exchange or automated
quotation system will be determined jointly by the Company and the holders of
Warrants representing a majority of the shares of Common Stock obtainable upon
exercise of the Warrants then outstanding.  If such parties are unable to reach
agreement within ten (10) days after the occurrence of an event requiring
valuation (the "Valuation Event"), the fair value of such consideration will be
                ---------------
determined within five Business Days after the tenth (10th) day following the
Valuation Event by an independent, reputable appraiser jointly selected by the
Company and the holders of Warrants representing two-thirds majority of the
shares of Common Stock obtainable upon exercise of the Warrants then
outstanding.  The determination of such appraiser shall be final and binding
upon all parties and the fees and expenses of such appraiser shall be borne by
the Company.

              (ii) Record Date.  If the Company takes a record of the holders of
                   -----------
Common Stock for the purpose of entitling them (1) to receive a dividend or
other distribution payable in Common Stock, Options or in Convertible Securities
or (2) to subscribe for or purchase Common Stock, Options or Convertible
Securities, then such record date will be deemed to be the date of the issue or
sale of the shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other distribution or the
date of the granting of such right of subscription or purchase, as the case may
be.

          (d) Adjustment of Warrant Exercise Price upon Subdivision or
              --------------------------------------------------------
Combination of Common Stock.  If the Company at any time after the date of
---------------------------
issuance of this Warrant subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes

                                       9
<PAGE>

of its outstanding shares of Common Stock into a greater number of shares, the
Warrant Exercise Price in effect immediately prior to such subdivision will be
proportionately reduced and the number of shares of Common Stock obtainable upon
exercise of this Warrant will be proportionately increased. If the Company at
any time after the date of issuance of this Warrant combines (by combination,
reverse stock split or otherwise) one or more classes of its outstanding shares
of Common Stock into a smaller number of shares, the Warrant Exercise Price in
effect immediately prior to such combination will be proportionately increased
and the number of shares of Common Stock obtainable upon exercise of this
Warrant will be proportionately decreased.

          (e) Distribution of Assets.  If the Company shall declare or make any
              ----------------------
distribution of its assets (or rights to acquire its assets) to holders of
Common Stock as a partial liquidating dividend, by way of return of capital or
otherwise (including, without limitation, any distribution of cash, property or
securities of a subsidiary) (a "Distribution"), at any time after the issuance
                                ------------
of this Warrant, then, in each such case:

              (i) the Warrant Exercise Price in effect immediately prior to the
close of business on the record date fixed for the determination of holders of
Common Stock entitled to receive the Distribution shall be reduced, effective as
of the close of business on such record date, to a price determined by
multiplying such Warrant Exercise Price by a fraction of which (A) the numerator
shall be the closing bid price on the trading day immediately preceding such
record date minus the value of the Distribution (as determined in good faith by
the Company's Board of Directors) applicable to one share of Common Stock, and
(B) the denominator shall be the closing bid price on the trading day
immediately preceding such record date; and

              (ii) either (A) the number of Warrant Shares obtainable upon
exercise of this Warrant shall be increased to a number of shares equal to the
number of shares of Common Stock obtainable immediately prior to the close of
business on the record date fixed for the determination of holders of Common
Stock entitled to receive the Distribution multiplied by the reciprocal of the
fraction set forth in the immediately preceding clause (i), or (B) in the event
that the Distribution is of common stock of a company whose common stock is
traded on a national securities exchange or a national automated quotation
system, then the holder of this Warrant shall receive an additional warrant to
purchase Common Stock, the terms of which shall be identical to those of this
Warrant, except that such warrant shall be exercisable into the amount of the
assets that would have been payable to the holder of this Warrant pursuant to
the Distribution had the holder exercised this Warrant immediately prior to such
record date and with an exercise price equal to the amount by which the exercise
price of this Warrant was decreased with respect to the Distribution pursuant to
the terms of the immediately preceding clause (i).

          (f) Certain Events.  If any event occurs of the type contemplated by
              --------------
the provisions of this Section 8 but not expressly provided for by such
provisions (including, without limitation, the granting of stock appreciation
rights, phantom stock rights or other rights with equity features), then the
Company's Board of Directors will make an appropriate adjustment in the Warrant
Exercise Price and the number of Warrant Shares obtainable upon exercise of this
Warrant so as to protect the rights of the holders of the Warrants; provided
that no such

                                      10
<PAGE>

adjustment will increase the Warrant Exercise Price or decrease the number of
shares of Common Stock obtainable as otherwise determined pursuant to this
Section 8.

          (g)  Notices.
               -------

               (i) Immediately upon any adjustment of the Warrant Exercise
Price, the Company will give written notice thereof to the holder of this
Warrant, setting forth in reasonable detail, and certifying, the calculation of
such adjustment.

               (ii) The Company will give written notice to the holder of this
Warrant at least twenty (20) days prior to the date on which the Company closes
its books or takes a record (A) with respect to any dividend or distribution
upon the Common Stock, (B) with respect to any pro rata subscription offer to
holders of Common Stock or (C) for determining rights to vote with respect to
any Organic Change (as defined below), dissolution or liquidation, provided that
such information shall be made known to the public prior to or in conjunction
with such notice being provided to such holder.

               (iii)  The Company will also give written notice to the holder
of this Warrant at least twenty (20) days prior to the date on which any Organic
Change (as defined below), dissolution or liquidation will take place, provided
that such information shall be made known to the public prior to or in
conjunction with such notice being provided to such holder.

     Section 9.  Purchase Rights; Reorganization, Reclassification,
                 --------------------------------------------------
Consolidation, Merger or Sale.
-----------------------------

          (a) If at any time after the date hereof, the Company grants, issues
or sells any Options, Convertible Securities or rights to purchase stock,
warrants, securities or other property pro rata to the record holders of any
class of Common Stock (the "Purchase Rights"), then the holder of this Warrant
                            ---------------
will be entitled to acquire, upon the terms applicable to such Purchase Rights,
the aggregate Purchase Rights which such holder could have acquired if such
holder had held the number of shares of Common Stock acquirable upon complete
exercise of this Warrant immediately before the date on which a record is taken
for the grant, issuance or sale of such Purchase Rights, or, if no such record
is taken, the date as of which the record holders of Common Stock are to be
determined for the grant, issue or sale of such Purchase Rights.

          (b) Any recapitalization, reorganization, reclassification,
consolidation, merger, sale of all or substantially all of the Company's assets
to another Person or other transaction which is effected in such a way that
holders of Common Stock are entitled to receive (either directly or upon
subsequent liquidation) stock, securities or assets with respect to or in
exchange for Common Stock is referred to herein as "Organic Change."  Prior to
                                                    --------------
the consummation of any (i) sale of all or substantially all of the Company's
assets to an acquiring Person or (ii) other Organic Change following which the
Company is not a surviving entity, the Company will use its best efforts to
secure from the Person purchasing such assets or the successor resulting from
such Organic Change (in each case, the "Acquiring Entity") written agreement (in
                                        ----------------
form and substance satisfactory to the holders of Warrants representing a
majority of the shares of Common Stock obtainable upon exercise of the Warrants
then outstanding) to

                                      11
<PAGE>

deliver to each holder of Warrants in exchange for such Warrants, a security of
the Acquiring Entity evidenced by a written instrument substantially similar in
form and substance to this Warrant and satisfactory to the holders of the
Warrants (including, an adjusted warrant exercise price equal to the value for
the Common Stock reflected by the terms of such consolidation, merger or sale,
and exercisable for a corresponding number of shares of Common Stock acquirable
and receivable upon exercise of the Warrants, if the value so reflected is less
than the Warrant Exercise Price in effect immediately prior to such
consolidation, merger or sale). Prior to the consummation of any other Organic
Change, the Company shall use its best efforts to make appropriate provision (in
form and substance satisfactory to the holders of Warrants representing a
majority of the shares of Common Stock obtainable upon exercise of the Warrants
then outstanding) to ensure that each of the holders of the Warrants will
thereafter have the right to acquire and receive in lieu of or in addition to
(as the case may be) the Warrant Shares immediately theretofore acquirable and
receivable upon the exercise of such holder's Warrants, such shares of stock,
securities or assets that would have been issued or payable in such Organic
Change with respect to or in exchange for the number of Warrant Shares which
would have been acquirable and receivable upon the exercise of such holder's
Warrant as of the date of such Organic Change (without taking into account any
limitations or restrictions on the exercisability of this Warrant).

          (c) In the event the Company proposes to effect an Organic Change,
then in addition to any other rights the holder may have, the holder shall have
the right to effect a Cashless Exercise (as defined below), by presentation and
surrender of this Warrant to the Company at its principal executive offices with
a written notice of the holder's intention to effect a Cashless Exercise,
including a calculation of the number of shares of Common Stock to be issued
upon such exercise in accordance with the terms hereof.  A "Cashless Exercise"
                                                            -----------------
shall mean that, in lieu of paying the Warrant Exercise Price in cash, the
holder shall surrender this Warrant for that number of Warrant Shares determined
by subtracting from the number of Warrant Shares otherwise issuable to the
holder upon such exercise, an amount of Warrant Shares (the "Surrendered
                                                             -----------
Shares") having a closing bid price (as reported by Bloomberg) on the date
------
immediately preceding the date of the exercise notice equal to the Aggregate
Exercise Price (as defined in Section 2) of the Warrant Shares for which this
Warrant is being exercised; and thereafter the Surrendered Shares shall no
longer be available for issuance hereunder.

     Section 10.  Lost, Stolen, Mutilated or Destroyed Warrant.  If this Warrant
                  --------------------------------------------
is lost, stolen, mutilated or destroyed, the Company shall, on receipt of an
indemnification undertaking, issue a new Warrant of like denomination and tenor
as this Warrant so lost, stolen, mutilated or destroyed.

     Section 11.  Notice.  Any notices, consents, waivers or other
                  ------
communications required or permitted to be given under the terms of this Warrant
must be in writing and will be deemed to have been delivered:  (i) upon receipt,
when delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically  or electronically generated and
kept on file by the sending party); or (iii) one Business Day after deposit with
a nationally recognized overnight delivery service, in each case properly
addressed to the party to receive the same.  The addresses and facsimile numbers
for such communications shall be:
<PAGE>

          If to the Company:

                Data Race Inc.
                6509 Windcrest Drive, Suite 120
                Plano, Texas 75024
                Telephone:    (972) 205-4005
                Facsimile:    (210) 558-0356
                Attention:    James G. Scogin

          With copy to:

                Jackson Walker LLP
                901 Main Street, Suite 6000
                Dallas, Texas 75202
                Telephone:     (214) 953 - 5801
                Facsimile:     (214) 953 - 5736
                Attention:     James S. Ryan, III, Esq.

If to a holder of this Warrant, to it at the address and facsimile number set
forth on the Schedule of Buyers to the Securities Purchase Agreement, with
copies to such holder's representatives as set forth on such Schedule of Buyers,
or at such other address and facsimile as shall be delivered to the Company upon
the issuance or transfer of this Warrant.  Each party shall provide five days'
prior written notice to the other party of any change in address or facsimile
number.  Written confirmation of receipt (A) given by the recipient of such
notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender's facsimile machine containing the time,
date, recipient facsimile number and an image of the first page of such
transmission or (C) provided by a nationally recognized overnight delivery
service shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.

     Section 12.  [Omitted]

     Section 13.  Date.  The date of this Warrant is May 11, 2001.  This
                  ----
Warrant, in all events, shall be wholly void and of no effect after the close of
business on the Expiration Date, except that notwithstanding any other
provisions hereof, the provisions of Section 7 shall continue in full force and
effect after such date as to any Warrant Shares or other securities issued upon
the exercise of this Warrant.

     Section 14.  Amendment and Waiver.  Except as otherwise provided herein,
                  --------------------
the provisions of the Warrants may be amended and the Company may take any
action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the written consent of the
holders of Warrants representing two-thirds of the shares of Common Stock
obtainable upon exercise of the Warrants then outstanding; provided that no such
action may increase the Warrant Exercise Price of the Warrants or decrease the
number of

                                      13
<PAGE>

shares or class of stock obtainable upon exercise of any Warrants without the
written consent of the holder of such Warrant.

     Section 15.  Descriptive Headings; Governing Law.  The descriptive headings
                  -----------------------------------
of the several Sections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant.  This Warrant
shall be governed by the internal laws of the State of Texas, without giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of Texas or any other jurisdictions) that would cause the application of
the laws of any jurisdictions other than the State of Texas.

                                 [Signature Page Follows]

                                      14

<PAGE>

This Warrant has been duly executed by the Company as of the date first set
forth above.

                                    DATA RACE INC.

                                    By:
                                       -------------------------------
                                    Name:  James G. Scogin
                                         ------------------------------
                                    Title: Senior Vice President, Chief
                                           Financial Officer

                                      15

<PAGE>

                             EXHIBIT A TO WARRANT
                             --------------------

                               SUBSCRIPTION FORM
        TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS WARRANT
                                 DATA RACE INC.

     The undersigned holder hereby exercises the right to purchase
_________________ of the shares of Common Stock ("Warrant Shares") of Data Race
Inc., a Texas corporation (the "Company"), evidenced by the attached Warrant
(the "Warrant").  Capitalized terms used herein and not otherwise defined shall
have the respective meanings set forth in the Warrant.

     1.  Payment of Warrant Exercise Price.  The holder shall pay the sum of
$___________________ to the Company in accordance with the terms of the Warrant.

     2.  Delivery of Warrant Shares.  The Company shall deliver to the holder
__________ Warrant Shares in accordance with the terms of the Warrant.

Date:___________ ______, _______

Name of Registered Holder

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

                                      16

<PAGE>

                              EXHIBIT B TO WARRANT
                              --------------------

                             FORM OF WARRANT POWER

FOR VALUE RECEIVED, the undersigned does hereby assign and transfer to
________________, Federal Identification No. __________, a warrant to purchase
____________ shares of the capital stock of Data Race Inc., a Texas corporation,
represented by warrant certificate no. _____, standing in the name of the
undersigned on the books of said corporation.  The undersigned does hereby
irrevocably constitute and appoint ______________, attorney to transfer the
warrants of said corporation, with full power of substitution in the premises.

Dated:  _________, 200_

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

                                      17

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