CONVERTIBLE SECURITIES AGREEMENT OF
                     INTELECT COMMUNICATIONS SYSTEMS LIMITED


         THIS CONVERTIBLE SECURITIES SUBSCRIPTION AGREEMENT (the "Agreement") is
made and entered into as of this ___day of August,  1996 by and between INTELECT
COMMUNICATIONS  SYSTEMS LIMITED,  a company  organized under the laws of Bermuda
(the   "Seller")    and_________________________________________(the    "Buyer")
providing  for the  purchase  and sale of up to an  aggregate  of $10 million of
certain debentures (the "Debentures"), convertible into common shares, U.S. $.01
par value per share (the "Shares"),  of Seller to the Buyer.  The Seller and the
Buyer  (collectively  the  "Parties")  hereby  represent,  warrant  and agree as
follows:

         1. AGREEMENT TO SUBSCRIBE; PURCHASE PRICE.

                  (i)  Buyer  hereby  subscribes  for the  principal  amount  of
         Dollars  ($________________)  of Debentures.  The  Debentures  shall be
         convertible  into Shares in accordance  with the terms set forth in the
         form of Debenture attached as Exhibit A to this Agreement.

                  (ii) Buyer shall pay  $____________  as the purchase price for
         the  Debentures by delivering  same-day  funds in United States dollars
         against  counter-delivery  of Buyer's  Debentures  by  Seller,  each in
         accordance with the terms of the Escrow Agreement of even date herewith
         substantially in the form attached as Exhibit B to this Agreement.

         2. BUYER'S REPRESENTATIONS AND COVENANTS.

            Buyer represents, warrants and covenants to Seller as follows:

                  (i) This Agreement has been duly authorized,  validly executed
         and  delivered on behalf of Buyer and is a valid and binding  agreement
         of Buyer in accordance with its terms, subject to general principles of
         equity and of bankruptcy or other laws  affecting  the  enforcement  of
         creditors' rights;

                  (ii) Buyer is purchasing  the  Debentures  for its own account
         for investment purposes and not with a view towards distribution. Buyer
         understands  and  agrees  that it must bear the  economic  risks of its
         investment  for an  indefinite  period of time.  Buyer has received and
         carefully  reviewed copies of the Public  Documents (as defined below).
         Buyer  understands  that the offer and sale of the Debentures are being
         made only by means of this Agreement.  No representations or warranties
         have been made to Buyer by the Seller, the officers or directors of the
         Seller, or any agent, employee or affiliate


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         of any of them  except as set  forth  herein.  Buyer is aware  that the
         purchase of the  Debentures  involves a high degree of risk and that it
         may sustain,  and has the financial ability to sustain, the loss of its
         entire  investment.  Buyer has had the opportunity to ask questions of,
         and receive answers  satisfactory  to it from, the Seller's  management
         regarding  the  Seller.  Buyer  understands  that no  federal  or state
         governmental  authority has made any finding or determination  relating
         to the fairness of an investment in the  Debentures and that no federal
         or state  governmental  authority has recommended or endorsed,  or will
         recommend  or endorse,  the  investment  herein.  Buyer,  in making the
         decision to purchase  the  Debentures  subscribed  for, has relied upon
         independent  investigations  made  by it  and  has  not  relied  on any
         information  or  representations  made  by  third  parties.  Buyer  has
         significant  assets,  and  upon  consummation  of the  purchase  of the
         Debentures,  will continue to have significant  assets exclusive of the
         Debentures.  Buyer has not been  organized for the purpose of acquiring
         the Debentures;

                  (iii) Buyer is an "accredited  investor" within the meaning of
         Rule 501 of the  Securities  Act of 1933,  as amended (the  "Securities
         Act");

                  (iv) Buyer  understands  that the Debentures are being offered
         and sold to it in reliance on specific  provisions of federal and state
         securities  laws and that the  Seller  is  relying  upon the  truth and
         accuracy    of    the    representations,    warranties,    agreements,
         acknowledgments  and  understandings of Buyer set forth herein in order
         to determine the applicability of such provisions;

                  (v) Buyer,  in making the decision to purchase the  Debentures
         subscribed for, has relied upon independent  investigations  made by it
         and has not relied on any information or representations  made by third
         parties; and

                  (vi) Buyer represents and covenants that all of its trading in
         the securities of the Seller will be in compliance  with all applicable
         requirements of federal and state securities laws;

                  (vii) Buyer  understands  that neither the  Debentures nor the
         Shares have been  registered  under the Securities Act and therefore it
         cannot  dispose of any or all of the  Debentures  or the Shares  unless
         such  Debentures  or  Shares  are  subsequently  registered  under  the
         Securities  Act or exemptions  from such  registration  are  available.
         Buyer  acknowledges  that,  until an effective  registration  statement
         relating to the Shares is in place, a legend  substantially  as follows
         will be placed on the certificates representing the Shares:

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN TAKEN WITHOUT A VIEW TO THE
DISTRIBUTION  THEREOF  WITHIN THE  MEANING  OF THE  SECURITIES  ACT OF 1933,  AS
AMENDED,  AND MAY NOT BE SOLD,  PLEDGED,  TRANSFERRED  OR OTHERWISE  DISPOSED OF
EXCEPT IN ACCORDANCE WITH SUCH ACT AND THE RULES AND REGULATIONS  THEREUNDER AND
IN ACCORDANCE WITH APPLICABLE  STATE SECURITIES LAWS. THE ISSUER OF THESE SHARES
WILL NOT TRANSFER SUCH SHARES EXCEPT UPON RECEIPT OF EVIDENCE SATISFACTORY TO


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THE COMPANY THAT THE REGISTRATION PROVISIONS OF SUCH ACT HAVE BEEN COMPLIED WITH
OR THAT  SUCH  REGISTRATION  IS NOT  REQUIRED  AND THAT SUCH  TRANSFER  WILL NOT
VIOLATE ANY APPLICABLE STATE SECURITIES LAWS.

         (viii)  Neither  Buyer  nor any of its  affiliates  shall  directly  or
indirectly  maintain any short  position in the Shares of the Seller until after
the ninetieth (90th) day following the Closing.

         3. SELLER'S REPRESENTATIONS AND COVENANTS.

         Seller represents, warrants and covenants to the Buyer as follows:

                  (i) Seller has been duly  incorporated and is validly existing
         and in good  standing  under the laws of Bermuda,  with full  corporate
         power and  authority to own,  lease and operate its  properties  and to
         conduct its business as currently conducted, and is duly registered and
         qualified  to conduct  its  business  and is in good  standing  in each
         jurisdiction or place where the nature of its properties or the conduct
         of its business  requires such  registration or  qualification,  except
         where the failure so to  register  or qualify  does not have a material
         adverse  effect  on  the  condition  (financial  or  other),  business,
         properties,  net worth or results of operations  of the Seller.  Seller
         has  registered  its  common  shares  pursuant  to  Section  12 of  the
         Securities Exchange Act of 1934, as amended (the "Exchange Act"), is in
         full  compliance  with all reporting  requirements of the Exchange Act,
         and Seller's  common  shares are quoted on the Nasdaq  National  Market
         (trading symbol ICOMF);

                  (ii) Seller has  furnished  Buyer with copies of Seller's most
         recent  Annual  Report  on Form  10-K  filed  with the  Securities  and
         Exchange  Commission  ("SEC"),  all Forms 10-Q and 8-K filed thereafter
         and the  registration  statement on Form S-3 filed with the SEC on July
         29, 1996 (collectively,  the "Public Documents").  The Public Documents
         at the time of their  filing do not  include an untrue  statement  of a
         material fact or omit to state any material fact  necessary in order to
         make the statements  contained  therein,  in light of the circumstances
         under  which they were  made,  not  misleading.  Seller  currently  has
         12,910,537  common  shares,   and  no  preferred  shares,   issued  and
         outstanding;

                  (iii)  Seller  has filed all  materials  required  to be filed
         pursuant to all applicable  reporting  obligations under either Section
         13(a) or 15(d) of the Exchange  Act for a period  necessary to meet the
         eligibility  requirements  of the  SEC  with  respect  to the  use of a
         Registration  Statement  on  Form  S-3  for  the  filing  of  a  resale
         registration  statement with the SEC, and Seller  currently  meets such
         eligibility requirements;

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                  (iv) The Debentures  shall be  enforceable in accordance  with
         their  respective  terms, and the Shares when issued and delivered upon
         conversion  thereof,  have been and will be duly and validly authorized
         and issued,  fully paid and  nonassessable,  free from all encumbrances
         and  restrictions  other  than  restrictions  on  transfer  imposed  by
         applicable securities laws and/or this Agreement,  and will not subject
         the  holders  thereof  to  personal  liability  by reason of being such
         holders.  Except for preemptive  rights as to which Seller has received
         effective waivers, there are no preemptive rights of any shareholder of
         Seller with respect to the Debentures or the Shares;

                  (v) This Agreement has been duly authorized,  validly executed
         and delivered on behalf of Seller and is a valid and binding  agreement
         of Seller in accordance with its terms,  subject to general  principles
         of equity and to bankruptcy or other laws affecting the  enforcement of
         creditors' rights generally, and Seller has full power and authority to
         execute  and  deliver  this  Agreement  and the  other  agreements  and
         documents  contemplated hereby and to perform its obligations hereunder
         and thereunder;

                  (vi) The Company is not, and upon the  execution  and delivery
         of this  Agreement,  the  issuance of the  Debentures,  the issuance of
         Shares upon conversion  thereof,  and the transactions  contemplated by
         this  Agreement will not be in conflict with or in breach of any of the
         terms or provisions of, or in default under, the Seller's Memorandum of
         Association or Byelaws,  or any indenture,  mortgage,  deed of trust or
         other material agreement or instrument to which Seller is a party or by
         which  it or any of its  properties  or  assets  are  bound,  any  law,
         statute, rule, regulation,  or any existing applicable decree, judgment
         or order of any court, federal or state regulatory body, administrative
         agency or other  governmental  body having  jurisdiction over Seller or
         any of its  properties  or assets or will  result  in the  creation  or
         imposition  of any lien,  charge or  encumbrance  upon any  property or
         assets of the Seller or any of its  subsidiaries  pursuant to the terms
         of any  agreement or  instrument  to which any of them is a party or by
         which  any of them  may be bound or to  which  any of the  property  or
         assets of any of them is subject;

                  (vii) No  authorization,  approval,  filing with or consent of
         any  governmental  body is required  for the  issuance  and sale of the
         Debentures,  or the Shares upon conversion  thereof, as contemplated by
         this Agreement;

                  (viii) Seller will issue one or more Debentures in the name of
         Buyer in the ratios  specified in Section 1 above in  denominations  of
         $100,000.  Upon conversion of the Debentures,  Seller will issue one or
         more certificates  representing the Shares in the name of Buyer, with a
         legend (if applicable)  substantially  in the form specified by Section
         2(vii) above, and in such  denominations to be specified by Buyer prior
         to conversion;

                  (ix) Seller will comply with all  applicable  securities  laws
         and regulations with respect to the sale and issuance of the Debentures
         (and the  Shares  into  which  they  are  convertible)  to each  Buyer,
         including  but not limited to the filing of all reports  required to be
         filed in connection therewith

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         with the SEC or any stock  exchange  or Nasdaq or any other  regulatory
         authority,  and shall maintain its  eligibility to use Form S-3 for the
         filing of a resale  registration  statement  with respect to the Shares
         with the SEC;

                  (x) Seller  shall:  (i)  maintain the listing of its Shares on
         the Nasdaq Stock Market;  (ii) reserve immediately prior to the Closing
         and shall  continue  to reserve  from its  authorized  Common  Shares a
         sufficient  number of Common Shares to permit conversion in full of all
         outstanding  Debentures in accordance with their respective  terms; and
         (iii)  file  an  Additional  Shares  Listing  Application  with  Nasdaq
         promptly following the Closing;

                  (xi)  Until  such  time as Buyer  has  converted  one  hundred
         percent  (100%)  of  this  Debenture  into  Shares,  Seller  shall  not
         repurchase  its common shares or otherwise  enter into any  transaction
         which would cause a decrease in the number of its common  shares issued
         and outstanding  (other than transactions  that similarly  decrease the
         number of common shares into which the Debentures are convertible);

                  (xii) Seller  agrees that it will not issue a press release to
         the public  containing  Buyer's name or other  identifying  information
         without such Buyer's  written consent and in fulfilling its obligations
         under the Registration  Rights Agreement.  Buyer acknowledges that this
         Agreement and the related documents may be filed with the SEC; and

                  (xiii)  Subject  in  part to the  truth  and  accuracy  of the
         Buyer's  representations  and warranties in Section 2, the offer,  sale
         and  issuance  of the  Debentures  are  exempt  from  the  registration
         requirements  of the  Securities Act and  applicable  state  securities
         laws.

         4. REGISTRATION.

         Immediately  following the Closing,  Seller shall, at Seller's expense,
effect the registration of the Shares issuable upon conversion of the Debentures
held by  Buyer  under  the  Securities  Act and  relevant  Blue Sky  laws.  Such
registration  shall be effected in accordance with the terms of the Registration
Rights  Agreement  attached  hereto  as  Exhibit  C  (the  "Registration  Rights
Agreement").  In  the  event  the  registration  of  the  Shares  issuable  upon
conversion of the Debentures is not declared  effective by the SEC within ninety
(90) days of the Closing Date (the "Registration Date"), then such failure shall
be a breach of the Debentures  entitling Buyer to be paid by Seller such Buyer's
pro rata  portion of the "Damage  Amount",  as  liquidated  damages and not as a
penalty. The Damage Amount shall mean $500 for each $1 million of Debentures for
each calendar day following the  Registration  Date in which the registration of
the Shares is not effective  with the SEC. The Damage Amount shall be payable in
cash as of the end of each calendar week following the Delivery


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Date, and shall be payable whether or not an Event of Default (as defined in the
Debenture) has occurred.

         5. CLOSING.

                  (i) Closing Date. The Debentures shall be dated and delivered,
         and the Purchase Price shall be paid, on the date that Seller  notifies
         Buyer in its  written  acknowledgment  of  Seller's  receipt of Buyer's
         executed  counterpart  of this  Agreement  (the  "Closing  Date").  The
         Parties anticipate that the Closing Date shall be August 8, 1996.

                  (ii)  Conditions to Closing.

                       (a) The Seller shall furnish to the Buyers legal opinions
         each  addressed to the Buyers and dated as of the Closing Date from (i)
         Appleby,  Spurling  & Kempe  substantially  in the  form of  Exhibit  D
         attached hereto,  and (ii) Hale and Dorr,  substantially in the form of
         Exhibit E attached hereto.

                       (b) Seller shall have delivered a certificate executed by
         its  President,  dated the Closing  Date,  and  certifying  that all of
         Seller's representations and warranties made in this Agreement are true
         and correct as of the Closing Date.

         6. MISCELLANEOUS.

                  (i) This  Agreement  shall be governed by and  interpreted  in
         accordance  with  the laws of  Bermuda.  Facsimile  signatures  of this
         Agreement shall be binding on all parties hereto.

                  (ii) This Agreement may be executed by facsimile signature and
         in counterparts,  each of which shall be deemed an original, but all of
         which together shall constitute one and the same instrument.

                  (iii)  Seller  shall pay to  Freeborn  & Peters  $5,000 at the
         Closing,   in  payment  of   attorneys'   fees  and  related  costs  of
         consummating the transactions contemplated herein.

                  (iv) 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 telecopied,  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 6.

                           if to the Company:

                           Intelect Communications Systems Limited
                           Reid House, 31 Church Street
                           Hamilton, Bermuda
                           Attn:  Peter G. Leighton

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                           Fax:  441/292-5560

                           if to the  Buyer,  at such  address  as is listed for
                           such Buyer on the signature page hereto.

All such  notices  and  communications  shall be deemed to have been duly given:
when delivered by hand, if personally  delivered;  three (3) business days after
being deposited in the mail, postage prepaid,  if mailed; when answered back, if
telexed; and when receipt is acknowledged, if telecopied.

         IN WITNESS WHEREOF,  this Agreement was duly executed on the date first
written above.

                                            Official Signatory of Seller:

                                            INTELECT COMMUNICATIONS SYSTEMS
                                            LIMITED


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

                                            Address:
                                            Reid House, 31 Church Street
                                            Hamilton, Bermuda
                                            (Telephone) 441/295-8639
                                            (Fax) 441/292-5560
                                            Attn: Peter G.  Leighton


                          Official Signatory of Buyer:

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

                                                --------------------------------
                                            Telephone:
                                                --------------------------------
                                            Fax:
                                                --------------------------------




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