REGISTRATION RIGHTS AGREEMENT


         THIS  REGISTRATION  RIGHTS  AGREEMENT  (the  "Agreement")  is made  and
entered  into as of October  15,  1996  among  INTELECT  COMMUNICATIONS  SYSTEMS
LIMITED, a company organized under the laws of Bermuda (the "Company"), INFINITY
INVESTORS,  LTD., a corporation  organized under the laws of Nevis,  West Indies
and SEACREST CAPITAL LIMITED,  a Corporation  organized under the laws of Nevis,
West Indies (collectively, the "Investor").

                              W I T N E S S E T H:

         WHEREAS,  pursuant to that  Certain  Convertible  Securities  Agreement
dated the date hereof (the  "Subscription  Agreement"),  the  Investor  acquired
Series A Debentures, in an aggregate principal amount of $5,000,000,  and Series
B Debentures,  in an aggregate principal amount of $5,000,000  (collectively the
"Initial Debentures"), which are convertible into common shares, par value $0.01
(the "Common  Shares") of the Company (the shares into which the  Debentures are
convertible are herein collectively referred to as the "Shares"); and

         WHEREAS, the Company has agreed to register the Shares; and

         WHEREAS,  as used  herein,  "Registerable  Securities"  shall  mean the
Common Shares issuable by the Company upon conversion of the Initial  Debentures
pursuant to the terms thereof, which have not been previously sold pursuant to a
registration statement or Rule 144 promulgated under the Securities Act of 1933,
as amended (the "Securities Act").

         NOW  THEREFORE,  in  consideration  of the foregoing and other good and
valuable consideration, the parties agree as follows:

         1. DEMAND REGISTRATION UPON CLOSING.

         (a) Subject to the terms and  conditions  hereof,  within  fifteen (15)
days after the  closing of the  transactions  contemplated  by the  Subscription
Agreement (the "Closing  Date"),  the Company  shall,  at the Company's cost and
expense (other than the fees and  disbursements  of counsel for the Investor and
the underwriting discounts and brokerage commissions, if any, payable in respect
of the Registrable  Securities  sold by the Investor)  prepare and file with the
Securities and Exchange  Commission (the "Commission") a registration  statement
on Form  S-3 (if  the  same is  available),  with  respect  to the  Registerable
Securities  requested  to be  registered  by  the  Investor  and  will  use  all
reasonable  efforts to cause such registration  statement to become effective as
promptly as  practicable.  If Form S-3 is not  available to the Company for such
registration

REGISTRATION RIGHTS AGREEMENT - Page 1




statement,  the Company  shall use all  reasonable  efforts to promptly file the
registration statement on an appropriate alternative form.

         (b) Except as set forth below,  the Company  shall keep  effective  the
registration  statement  contemplated  by this  Section 1 and shall from time to
time amend or supplement such registration  statement,  for a period of not less
than three  hundred  sixty (360) days,  as extended by any period of time during
which the  registration  statement  is not  effective  pursuant to Section  1(c)
below,  unless all of the Registrable  Securities set forth in such registration
statement have thereto been sold.

         (c) The  Company may  terminate  or suspend  the  effectiveness  of any
registration  statement  to be filed  pursuant  to  Section  1(a) one time for a
period of not more than forty five (45) days if the Company shall deliver to the
Investor a  certificate  signed by a Senior Vice  President  or Chief  Executive
Officer of the Company  stating that in the good faith  judgment of the Board of
Directors  of the Company it would (i) be seriously  detrimental  to the Company
for such registration statement to be effected or remain effective at such time,
(ii)  interfere  with any  proposed or pending  material  corporate  transaction
involving the Company or any of its  subsidiaries or (iii) require any premature
disclosure thereof.

         (d) The Company  acknowledges  that the number of Shares  issuable upon
conversion of the  Debentures is subject to variation  depending upon the market
price of the Common Shares of the Company.  The Company shall  register at least
2.3 million Common Shares pursuant to subsection (a) above.

         2. FUTURE DEMAND REGISTRATION.

         (a)  If,  at  any  one  time  following  thirty  (30)  days  after  the
termination of the  effectiveness  of the  registration  statement  prepared and
filed in accordance with Section 1, the Company  receives a written request from
the Investor,  the Company shall,  at the Company's sole cost and expense (other
than the fees and disbursements of counsel for the Investor and the underwriting
discounts  and  commissions,  if any,  payable  in  respect  of the  Registrable
Securities  sold by the  Investor),  prepare  and file  with the  Commission  an
additional  registration  statement sufficient to permit the public offering and
sale of the  number  of  shares  of  Registrable  Securities  set  forth in such
request. The Company shall file such registration  statement on Form S-3 (if the
same is available to the Company for such registration  statement) within thirty
(30) days of the receipt of the  request.  If Form S-3 is not  available  to the
Company for such  registration  statement,  the Company shall use all reasonable
efforts to promptly file the registration  statement on appropriate  alternative
form.  The Company will use all  reasonable  efforts to cause such  registration
statement  to become  effective  as  promptly  as  practicable.  Notwithstanding
anything to the contrary set forth above,  the Company shall not be obligated to
effect any such  registration,  qualification  or  compliance,  pursuant to this
Section 2 (1) if the Investor, together with the holders of any other securities
of the Company entitled to

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inclusion in such registration,  propose to sell Registrable Securities and such
other  securities  (if  any) at an  aggregate  price to the  public  (net of any
underwriters'  discounts  or  commissions)  of  less  than  $500,000,  provided,
however,  that  such  exception  shall  not  apply in the  event  the  number of
Registrable  Securities then held by the Investor  exceeds the maximum number of
shares of Common Stock which the Investor  could sell pursuant to the provisions
of Rule 144(e)(1) promulgated under the Securities Act; (2) if the Company shall
furnish to the Investor a certificate  signed by a Senior Vice  President or the
Chief  Executive  Officer of the Company stating that in the good faith judgment
of the Board of Directors of the Company,  it would be seriously  detrimental to
the Company and its  stockholders  for such  registration to be effected at such
time, in which event the Company shall have the right to defer the filing of the
registration  statement  for a period of not more than 30 days after  receipt of
the request of the Investor; or (3) in any particular  jurisdiction in which the
Company  would be  required  to quality to do  business  or to execute a general
consent to service of process in effecting such  registration,  qualification or
compliance.

         (b)  The  Company  shall  keep  effective  the  registration  statement
contemplated  by this Section 2 and shall from time to time amend or  supplement
such  registration  statement,  for a period  of not  less  than  three  hundred
sixty-five (365) days.

         (c) The  Company  shall not be  obligated  to file more than  three (3)
registration statements under this Agreement.

         3. THE COMPANY COVENANTS.

         (a) The Company's obligations pursuant to Sections 1 and 2 hereof shall
continue  for two  years  after  the  Closing  Date  or  until  all  Registrable
Securities have been sold, whichever event occurs first.

         (b) In the  event  of a  registration  pursuant  to the  provisions  of
Sections  1 and 2, the  Company  shall use all  reasonable  efforts to cause the
Registrable  Securities  so  registered  to be  registered or qualified for sale
under the securities or blue sky laws of such  jurisdictions as the Investor may
reasonably request; provided, however, that the Company shall not be required to
qualify to do business in any state by reason of this  Section  3(b) in which it
is not otherwise required to quality to do business.

         (c)  The  Company   shall  notify  the  Investor   promptly  when  such
registration  statement has become  effective or a supplement to any  prospectus
forming a part of such registration statement has been filed.

         (d) The Company  shall  advise the  Investor,  promptly  after it shall
receive  notice or obtain  knowledge  of the  issuance  of any stop order by the
Commission suspending the effectiveness of such registration  statement,  or the
initiation or threatening  of any proceeding for that purpose,  and promptly use
all reasonable efforts

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to prevent the  issuance of any stop order or to obtain its  withdrawal  if such
stop order should be issued.

         (e) The Company shall promptly notify the Investor,  at any time when a
prospectus  relating  thereto is required to be delivered  under the  Securities
Act,  of the  happening  of any event of which it has  knowledge  as a result of
which the prospectus included in such registration statement, as then in effect,
would  include  an  untrue  statement  of a  material  fact or omit to state any
material fact required to be stated  therein or necessary to make the statements
therein not misleading in the light of the circumstances  then existing,  and at
the reasonable  request of the Investor  prepare and furnish to them such number
of  copies of a  supplement  to or an  amendment  of such  prospectus  as may be
necessary so that, as thereafter delivered to the purchasers of such Registrable
Securities or securities,  such prospectus shall not include an 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 not misleading in the light
of the circumstances under which they were made.

         (f) If requested by the  underwriter for any  underwritten  offering of
Registrable  Securities  on behalf of the  Investor  pursuant to a  registration
requested  under  Sections 1 and 2, the Company and the Investor will enter into
an underwriting  agreement with such underwriter for such offering,  which shall
be  reasonably  satisfactory  in  substance  and  form  to the  Company  and the
Company's counsel, the Investor,  and the underwriter,  and such agreement shall
contain such  representations and warranties by the Company and the Investor and
such other terms and provisions as are customarily  contained in an underwriting
agreement   with   respect  to   secondary   distributions   solely  by  selling
stockholders,  including,  without limitation,  indemnities substantially to the
effect and to the extent provided in Section 4. 

         4. INDEMNIFICATION.

         (a) Subject to the  conditions  set forth below,  the Company agrees to
indemnify  and hold harmless the Investor,  its officers,  directors,  partners,
employees,  agents, and counsel,  and each person, if any, who controls any such
person within the meaning of Section 15 of the  Securities  Act or Section 20(a)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act") from and
against  any and  all  loss,  liability,  charge,  claim,  damage,  and  expense
whatsoever (which shall include,  for all purposes of this Section 4, but not be
limited  to,  reasonable  attorneys'  fees and any and all  reasonable  expenses
whatsoever  incurred  in  investigating,  preparing,  or  defending  against any
litigation,  commenced or threatened, or any claim whatsoever),  arising out of,
based  upon,  or in  connection  with any untrue  statement  or  alleged  untrue
statement  of a  material  fact  contained  (A) in any  registration  statement,
preliminary  prospectus,  or final  prospectus (as from time to time amended and
supplemented)  or any amendment or supplement  thereto,  relating to the sale of
any of the Registrable Securities or (B) in any application or other document or
communication (in this Section 4 collectively called an

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"application")  executed  by or on behalf of the  Company or based upon  written
information  furnished by or on behalf of the Company filed in any  jurisdiction
in order to  register  or qualify any of the  Registrable  Securities  under the
securities  or blue  sky  laws  thereof  or filed  with  the  Commission  or any
securities  exchange;  or any  omission or alleged  omission to state a material
fact  required to be stated  therein or  necessary to make the  statements  made
therein  not  misleading,  unless (x) such  statement  or  omission  was made in
reliance  upon and in  conformity  with  written  information  furnished  to the
Company  by or on behalf  of the  Investor  for  inclusion  in any  registration
statement,  preliminary  prospectus,  or final  prospectus,  or any amendment or
supplement thereto, or in any application, as the case may be, or (y) such loss,
liability, charge, claim, damage or expense arises out of the Investor's failure
to  comply  with the terms  and  provisions  of this  Agreement.  The  foregoing
agreement to  indemnify  shall be in addition to any  liability  the Company may
otherwise have, including liabilities arising under this Agreement.

         If any action is brought  against the Investor or any of its  officers,
directors,  partners,  employees, agents, or counsel, or any controlling persons
of such person (an  "indemnified  party") in respect of which  indemnity  may be
sought against the Company pursuant to the foregoing paragraph, such indemnified
party or parties shall promptly notify the Company in writing of the institution
of such action (but the failure so to notify  shall not relieve the Company from
any liability  other than pursuant to this Section 4 (a) unless,  the failure to
so notify shall prejudice any rights or defenses with respect to such claim) and
the Company  shall  promptly  assume the defense of such action,  including  the
employment of counsel  (reasonably  satisfactory  to such  indemnified  party or
parties)  provided that the indemnified party shall have the right to employ its
or their own counsel in any such case, but the fees and expenses of such counsel
shall be at the expense of such indemnified party or parties unless:

         (i) the  employment  of such  counsel  shall  have been  authorized  in
writing by the Company in connection with the defense of such action; or

         (ii) such indemnified party or parties shall have reasonably concluded,
based on an opinion of counsel  reasonably  satisfactory  to the  Company,  that
there  may be one or more  legal  defenses  available  to it or them or to other
indemnified parties which are different from or additional to those available to
the Company, in any material respect, and that as a result thereof a conflict of
interest would arise absent separate representation of the parties.

In the event of clauses (i) or (ii) above, such fees and expenses shall be borne
by the Company and the Company shall not have the right to direct the defense of
such  action on behalf of the  indemnified  party or  parties.  Anything in this
Section 4 to the contrary  notwithstanding,  the Company shall not be liable for
any settlement of any such claim or action effected without its written consent,
which shall not be unreasonably  withheld,  unless such  settlement  contains an
unconditional release of the Company. The Company

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shall not, without the prior written consent of each  indemnified  party that is
not released as described in this sentence,  settle or compromise any action, or
permit a default or consent to the entry of  judgment  in or  otherwise  seek to
terminate any pending or threatened action, in respect of which indemnity may be
sought  hereunder  (whether  or not any  indemnified  party is a party  thereto)
unless  such  settlement,   compromise,  consent,  or  termination  includes  an
unconditional release of each indemnified party from all liability in respect of
such  action.  The  Company  agrees  to  promptly  notify  the  Investor  of the
commencement of any litigation or proceedings  against the Company or any of its
officers or directors in connection with the sale of any Registrable  Securities
or any preliminary prospectus, prospectus,  registration statement, or amendment
or  supplement  thereto,  or  any  application  relating  to  any  sale  of  any
Registrable Securities.

         (b) Each Investor agrees,  severally, and not jointly, to indemnify and
hold  harmless the Company,  each  director of the Company,  each officer of the
Company who shall have signed any registration  statement  covering  Registrable
Securities  held by the Investor,  each other  person,  if any, who controls the
Company  within the meaning of Section 15 of the Securities Act or Section 20(a)
of the Exchange Act, and its or their respective  counsel, to the same extent as
the  foregoing  indemnity  from the Company to the Investor in Section 4 (a) but
only with respect to statements or omissions,  if any, made in any  registration
statement,  preliminary  prospectus,  or final  prospectus (as from time to time
amended and  supplemented)  or any  amendment or supplement  thereto,  or in any
application,  in  reliance  upon  and in  conformity  with  written  information
furnished  to the Company  with  respect to the  Investor by or on behalf of the
Investor,  for  inclusion  in  any  such  registration  statement,   preliminary
prospectus,  or final prospectus,  or any amendment or supplement thereto, or in
any application,  as the case may be. If any action shall be brought against the
Company  or any  other  person  so  indemnified  based on any such  registration
statement,  preliminary  prospectus,  or final  prospectus,  or any amendment or
supplement thereto, or in any application, and in respect of which indemnity may
be sought against the Investor  pursuant to this Section 4(b) the Investor shall
have the rights and duties given to the Company,  and the Company and each other
person so indemnified  shall have the rights and duties given to the indemnified
parties, by the provisions of Section 4(a).

         (c)  To  provide  for  just  and  equitable  contribution,  if  (i)  an
indemnified party makes a claim for indemnification  pursuant to Section 4(a) or
4(b) (subject to the  limitations  thereof) but it is found in a final  judicial
determination,  not subject to further appeal, that such indemnification may not
be enforced in such case,  even though this  Agreement  expressly  provides  for
indemnification  in such case, or (ii) any  indemnified  or  indemnifying  party
seeks contribution under the Securities Act, the Exchange Act or otherwise, then
the Company (including for this purpose any contribution made by or on behalf of
any  director  of the  Company,  any  officer of the Company who signed any such
registration statement, any controlling person of the Company as one entity, and
the Investor, included in such registration in the aggregate (including for this
purpose any contribution by or on behalf of an indemnified  party),  as a second
entity, shall

REGISTRATION RIGHTS AGREEMENT - Page 6





contribute to the losses, liabilities,  claims, damages, and expenses whatsoever
to  which  any of them  may be  subject,  on the  basis  of  relevant  equitable
considerations  such as the  relative  fault of the Company and the  Investor in
connection  with the facts which resulted in such losses,  liabilities,  claims,
damages,  and expenses.  The relative fault, in the case of an untrue statement,
alleged untrue statement,  omission, or alleged omission shall be determined by,
among other  things,  whether such  statement,  alleged  statement,  omission or
alleged  omission  relates  to  information  supplied  by the  Company or by the
Investor,  and the parties' relative intent,  knowledge,  access to information,
and  opportunity  to correct  or  prevent  such  statement,  alleged  statement,
omission, or alleged omission,  the Company and the Investor agree that it would
be unjust and  inequitable if the respective  obligations of the Company and the
Investor for contribution  were determined by pro rata or per capita  allocation
of the aggregate losses, liabilities, claims, damages, and expenses (even if the
Investor and the other  indemnified  parties were treated as one entity for such
purpose)  or by any  other  method  of  allocation  that  does not  reflect  the
equitable  considerations referred to in this Section 4(c). In no case shall the
Investor be responsible for a portion of the contribution  obligation imposed on
the  --Investor in excess of its pro rata share based on the number of shares of
Common  Stock owned by it and included in such  registration  as compared to the
total  number  of Common  Shares  owned by the  Investor  and  included  in such
registration.  No person  guilty of a fraudulent  misrepresentation  (within the
meaning  of  Section  11(f)  of  the  Securities   Act)  shall  be  entitled  to
contribution   from  any   person   who  is  not   guilty  of  such   fraudulent
misrepresentation.  For purposes of this  Section 4(c) each person,  if any, who
controls the Investor  within the meaning of Section 15 of the Securities Act or
Section 20(a) of the Exchange Act and each officer, director, partner, employee,
agent,  and counsel of the Investor or control person shall have the same rights
to contribution  as the Investor or control person and each person,  if any, who
controls the Company  within the meaning of Section 15 of the  Securities Act or
Section  20(a) of the Exchange  Act,  each officer of the Company who shall have
signed any such registration statement, each director of the Company, and its or
their  respective  counsel  shall have the same  rights to  contribution  as the
Company,  subject to each case to the provisions of this Section 4(c).  Anything
in this Section 4(c) to the contrary  notwithstanding,  no party shall be liable
for contribution  with respect to the settlement of any claim or action effected
without its written  consent.  This Section  4(c) is intended to  supersede  any
right to contribution under the Securities Act, the Exchange Act or otherwise.

         5. MISCELLANEOUS.

         (a) REMEDIES.  In the event of a breach by any party of its obligations
under this Agreement, the other party, in addition to being entitled to exercise
all rights granted by law,  including  recovery of damages,  will be entitled to
specific performance of its rights under this Agreement. Such rights shall be in
addition  to, and not in lieu of, the  Investor's  rights to receive  the Damage
Payment as specified in the Subscription Agreement.


REGISTRATION RIGHTS AGREEMENT - Page 7





         (b) AGREEMENTS AND WAIVERS. The provisions of this Agreement, including
the provisions of this sentence,  may not be amended,  modified or supplemented,
unless such  amendment,  modification  or supplement is in writing and signed by
the parties hereto.

         (c)  NOTICES.  All notices  and other  communications  provided  for or
permitted  hereunder  shall  be made in  writing  by  hand-delivery,  registered
first-class  mail,  telex,  or  telecopies,  initially  to the address set forth
below,  and  thereafter  at such  other  address,  notice  of  which is given in
accordance with the provisions of this Section 5(c).

(i)      if to the Company:

                  Intelect Communications Systems Limited
                  Reid House, 31 Church Street
                  Hamilton, Bermuda
                  Attn:  Peter G. Leighton
                  Fax:  441/292-5560

(ii)     with a copy to:

                  Hale and Dorr
                  60 State Street
                  Boston, Massachusetts 02109
                  Telephone:  617/526-6000
                  Fax:  617/526-5000
                  Attn:  Philip P. Rossetti

(iii)    if to the Investor

                  Infinity Investors, Ltd.
                  27 Wellington Road
                  Cork, Ireland
                  Attn:  James G. O'Brien
                  Fax:  353 21 501 255

                  Seacrest Capital Limited
                  27 Wellington Road
                  Cork, Ireland
                  Attn:  James G. O'Brien
                  Fax:  353 21 501 255


REGISTRATION RIGHTS AGREEMENT - Page 8





(iv)     with a copy to:

                  c/o HW Finance
                  4000 Thanksgiving Tower
                  1601 Elm Street
                  Dallas, Texas 75201
                  (Telephone) 214/720-1689
                  (Fax) 214/721-1662
                  Attn:  Stuart J. Chasanoff, Esq.

All such  notices  and  communications  shall be deemed to have been duly given:
when delivered by hand, if personally  delivered;  two business days after being
deposited in the mail,  postage  prepaid,  if mailed;  when  answered  back,  if
telexed; and when receipt is acknowledged, if telecopied.

         (d)  REASONABLE   COOPERATION  OF  THE  INVESTOR.  The  Investor  shall
cooperate  in all  reasonable  respects  with  the  filing  of the  registration
statement  contemplated  hereby.  Without  limiting the foregoing,  the Investor
shall  furnish  to the  Company  (or  any  regulatory  authority)  such  written
information and representations that the Company may reasonably request in order
to facilitate any registration of the Registrable Securities hereunder.

         (e)  SUCCESSORS  AND  ASSIGNS.  This  Agreement  may be assigned by the
Investor to any purchaser or transferee of the Initial Debentures.

         (f) COUNTERPARTS. This Agreement may be executed by facsimile signature
and  in any  number  of  counterparts  and by the  parties  hereto  in  separate
counterparts,  each of which when so executed  shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.

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

         (h) GOVERNING LAW. This Agreement shall be governed by and construed in
accordance  with the laws of the State of New  York,  without  reference  to its
conflict of laws provisions.

         (i)  SEVERABILITY.  In the event that any one or more of the provisions
contained herein, or the application hereof in any circumstance is held invalid,
illegal or unenforceable,  the validity, legality and enforceability of any such
provisions  in every other  respect and of the  remaining  provisions  contained
herein shall not be affected or impaired thereby.


REGISTRATION RIGHTS AGREEMENT - Page 9




         (j) ENTIRE  AGREEMENT.  This  Agreement is intended by the parties as a
final  expression of their agreement and intended to be a complete and exclusive
statement of this  agreement and under standing of the parties hereto in respect
of the subject matter contained  herein.  There are no  restrictions,  promises,
warranties  or  undertakings,  other than those set forth or referred to herein,
concerning  the  registration  rights  granted by the  Company  pursuant to this
Agreement.

                            [Signature page follows]


REGISTRATION RIGHTS AGREEMENT - Page 10





         IN WITNESS  WHEREOF,  the  parties  have caused  this  Agreement  to be
executed as of the date first written above.


                                             INTELECT COMMUNICATIONS SYSTEMS
                                             LIMITED



                                             By:/s/ Peter G. Leighton
                                             ---------------------------
                                             Peter G. Leighton, President


                                             INFINITY INVESTORS, LTD.



                                             By: /s/ J. A. Loughran   
                                             ---------------------------
                                             Name: J. A. Loughran 
                                             ---------------------------
                                             Title: Director              
                                             ---------------------------

                                             SEACREST CAPITAL LIMITED


                                             By: /s/ James E. Martin 
                                             ---------------------------
                                             Name: James E. Martin  
                                             ---------------------------
                                             Title: President and Treasurer  
                                             ---------------------------



REGISTRATION RIGHTS AGREEMENT - Page 11