BOOK ENTRY TRANSFER AGENT AGREEMENT


         This Book Entry  Transfer Agent  Agreement  (this  "Agreement"),  dated
October 15, 1996,  between INTELECT  COMMUNICATIONS  SYSTEMS LIMITED,  a Bermuda
company  (the  "Company"),   INFINITY   INVESTORS  LTD.,  a  Nevis  West  Indies
corporation  ("Infinity"),   SEACREST  CAPITAL  LIMITED,  a  Nevis  West  Indies
corporation ("Seacrest") (Infinity and Fairway collectively being referred to as
the "Holders")  and AMERICAN STOCK TRANSFER & TRUST COMPANY,  a New York banking
corporation (the "Transfer Agent").

                                R E C I T A L S:

         WHEREAS,  pursuant to that certain Convertible  Securities Agreement of
Intelect   Communications   Systems   Limited   dated   October  15,  1996  (the
"Subscription  Agreement") by and among the Company and the Holders, the Company
issued to the Holders an  aggregate of $5 million  principal  amount of Series A
Debentures,  and an  aggregate  of $5  million  principal  amount  of  Series  B
Debentures,  each of which is  convertible  into  common  shares of the  Company
(collectively, the "Debentures"); and

         WHEREAS,  the Company  and the  Holders  have agreed to enter into this
Agreement with the Transfer Agent to provide for (i) the closing of the issuance
of the  Debentures  and  (ii) a  "book  entry"  system  of  accounting  for  the
Debentures; and

         WHEREAS,  the Transfer Agent is willing to (i) serve as an escrow agent
to  facilitate  the  closing  under the  Subscription  Agreement,  (ii) hold the
Debentures on behalf of the Holder,  and (iii)  establish a book entry system of
accounting for the Debentures, on the terms hereafter described.

         NOW, THEREFORE,  in consideration of the foregoing,  the parties hereby
agree as follows:

         1. CLOSINGS. The Transfer Agent hereby agrees to act as an escrow agent
to facilitate the Closings as follows:

                  (a) On the date hereof the Holders  shall wire  transfer to an
account  designated by the Transfer  Agent  $10,000,000  in the  aggregate  (the
"Purchase  Price"),  and the Company  shall  deliver to the  Transfer  Agent the
Debentures  in the  names of the  Holders  and in the  amounts  as set  forth on
Schedule 1 hereto.  The  Transfer  Agent may,  at its  discretion,  confirm  the
authenticity  of the  Debentures by  transmitting a copy of the same in the form
received  from the Company to the  Holders or their  counsel for written or oral
verification as to the form thereof.


BOOK ENTRY TRANSFER AGENT AGREEMENT - Page 1





                  (b)  Immediately  following  the  deliveries  specified in (a)
above,  together  with a delivery  from the Company to the  Transfer  Agent of a
fully executed copy of the Subscription Agreement, the Transfer Agent shall wire
transfer the Purchase Price, less the Consulting Fee (as hereafter defined),  to
the Company  pursuant to wire transfer  instructions as provided by the Company.
The Company hereby  directs the Transfer Agent to wire transfer  $300,000 of the
Purchase  Price (the  "Consulting  Fee") to Alpine Capital  Partners,  Inc. (the
"Consultant") in consideration of certain services provided by the Consultant to
the  Company,  pursuant  to  wire  transfer  instructions  as  provided  by  the
Consultant.

                  (c) The  Transfer  Agent  shall  hold the  Debentures  for the
benefit of the Holders, as hereafter described.

                  (d) All interest (if any) earned on the funds placed in escrow
and prior to their  distribution  to the Company shall be for the account of the
Holders.

         2.  OWNERSHIP OF  DEBENTURES.  Record and  beneficial  ownership of the
Debentures shall remain in the name of the Holders (unless and until transferred
pursuant to the terms of the  Debentures,  with  written  notice  thereof to the
Transfer  Agent).  Any transfer or purported  transfer of the Debentures (1) not
made pursuant to the terms of the Debentures or (2) not properly  noticed to the
Transfer  Agent  shall be null and void ab initio and shall not be given  effect
thereto by the  Transfer  Agent.  The  Transfer  Agent  shall not be required to
acknowledge  any  transfer  of the  Debentures  unless  accompanied  by  written
confirmation thereof from the Company and the Holders.

         3. PAYING AGENT.  The Transfer  Agent shall act as paying agent for the
Debentures.  Accordingly,  all  payments  of  principal  required of the Company
related to the  Debentures  shall be made to the Transfer  Agent for the account
and benefit of the holders of such  Debentures as registered on the books of the
Transfer  Agent  ("Registered  Debentureholder").  Upon the  receipt of any such
payment of principal,  in cash,  the Transfer Agent shall promptly wire transfer
such sum to the account of the Debentureholders as follows:


Infinity                                           Seacrest
--------                                           --------
CitiBank New York                                  CitiBank New York
ABA 021 000 089                                    ABA 021 000 089
Credit:  Bear Stearns                              Credit:  Bear Stearns
Account No. 0925-3186                              Account No. 0925-3186
Credit:  Infinity Investors Ltd.                   Credit: Seacrest Capital Ltd.
Acct. No. 102-05092                                Acct. No. 483-91295


BOOK ENTRY TRANSFER AGENT AGREEMENT - Page 2





         ALL OTHER REGISTERED DEBENTUREHOLDERS
         -------------------------------------

         Such account as is reflected on the books of the Transfer Agent.

All   payments  of   interest   shall  be  made   directly  to  the   Registered
Debentureholders  by the Company,  which shall notify the Transfer Agent of such
payments when made.

         4.  ACCOUNTING  AGENT.  The Transfer  Agent shall act as the accounting
agent of the Company and the Registered Debentureholders and shall establish and
maintain a book entry system of accounting for the Debentures  (the  "Accounting
Ledger") crediting (reducing) the outstanding balance owed thereunder by all (i)
payments of principal  made by the Company to the Transfer Agent as paying agent
as required  pursuant to Section 3 above,  (ii) by the  appropriate  amount upon
delivery  of  Converted  Stock  to the  applicable  Registered  Debentureholders
following  receipt  of a Notice of  Conversion  (as each such term is defined in
Section 5 below),  and (iii) by payments in cash of interest made by the Company
to the  Registered  Debentureholders  of which  notice is given to the  Transfer
Agent  pursuant to Section 3 above.  At such time as the  remaining  sum due and
owing on any Debenture as reflected on the  Accounting  Ledger is zero following
the procedures described in this Agreement, the Transfer Agent shall return such
Debenture to the Company marked "Paid in Full."

         5. ISSUANCE OF CONVERTED SHARES.

                  (a) Consistent with Section 3.2 of each Debenture, in order to
convert all or a portion of a Debenture  into common  shares of the Company (the
"Converted  Stock"),  a Registered  Holder shall deliver written notice (each, a
"Notice of Conversion") to the Transfer Agent of the portion of the Debenture it
elects to so convert  and a  calculation  of the  number of shares of  Converted
Stock to be issued upon such  conversion.  Upon receipt by the Transfer Agent of
any such  Notice  of  Conversion  (including  receipt  via  facsimile)  from any
Registered Holder,  the Transfer Agent shall immediately  deliver a copy thereof
to the Company,  via facsimile,  requesting the Company to confirm the number of
shares of Converted Stock to be issued to such  Registered  Holder in connection
therewith. The Company shall, upon receipt thereof,  promptly confirm or dispute
the number of shares of Converted  Stock to be issued to the Registered  Holder,
providing  written  notice  thereof via facsimile to the Transfer  Agent and the
Registered Holder (the "Company Notice").  In the event the Company confirms the
number of shares of Converted  Stock to be so issued,  it shall,  as part of the
Company  Notice,  direct the  Transfer  Agent to issue such shares of  Converted
Stock to the Registered  Holder. In the event the Company disputes the number of
shares of Converted Stock to be so issued, the Company and the Registered Holder
shall immediately, in good faith, seek to resolve such dispute. In the event the
Company and the  Registered  Holder  cannot  resolve  such  dispute,  each party
reserves all rights and remedies  against the other  associated with such Notice
of Conversion.


BOOK ENTRY TRANSFER AGENT AGREEMENT - Page 3





                  (b) The  Transfer  Agent shall not be required to issue shares
of Converted Stock unless and until receipt (including via facsimile) of written
notice from either (i) the Company, confirming the number of shares of Converted
Stock to be issued or (ii) the Registered Holder and the Company,  setting forth
the number of shares of Converted Stock to be issued.

                  (c)  Reference  is hereby  made to that  certain  Registration
Rights  Agreement  appended  to the  Subscription  Agreement.  At such time as a
Registration  Statement as contemplated  therein has been declared  effective by
the  Securities  and Exchange  Commission  covering the resale of the  Converted
Stock,  the  Company  shall cause its legal  counsel to deliver to the  Transfer
Agent  an  opinion  certifying  that  the  Converted  Stock  may be  sold by the
Registered Holder receiving such shares upon conversion of the Debentures,  with
the purchaser thereof receiving  certificates  without restrictive legend, which
opinion shall remain effective so long as such Registration Statement remains in
full  force  and  effect.  In the event  that,  at any  time,  the  Registration
Statement  ceases  to be  effective,  the  Company  or its legal  counsel  shall
immediately  deliver  written  notice  thereof  to the  Transfer  Agent  and the
Registered  Holders  stating that the opinion of the Company's legal counsel may
no  longer  be  relied  upon by the  Transfer  Agent  (unless  and until any new
Registration  Statement is so declared effective with an accompanying opinion to
that effect of the Company's legal  counsel).  Upon the receipt of any Notice of
Conversion  while a  Registration  Statement is effective,  the Converted  Stock
described above may be sold by the Registered  Holder receiving such shares upon
conversion of the Debentures,  with the purchaser thereof receiving certificates
without restrictive legend.

         6.  TERMINATION.  This  Agreement  shall  terminate  promptly  upon the
earlier to occur of (1) written demand by all of the Registered Debentureholders
of their respective  Debentures or (2) no sum remains due and owing under any of
the Debentures.  Notwithstanding the foregoing, the Transfer Agent may terminate
its  obligations  under this  Agreement  at such time as the  Transfer  Agent no
longer serves as the transfer agent for the Company's  common stock, by delivery
of written  notice  thereof to the  Registered  Holders  and the  Company.  Upon
delivery  of  such  notice,  the  Transfer  Agent  shall  deliver  the  original
Debentures to Infinity,  on behalf of all  Registered  Holders,  together with a
copy of the  Accounting  Ledger  (with a  corresponding  copy  delivered  to the
Company).

         7. FEES.  The Company  hereby agrees to pay the Transfer  Agent for all
services rendered hereunder.

         8. NOTICES. Any notice or demand to be given or that may be given under
this  Agreement  shall be in writing and shall be (a)  delivered by hand, or (b)
delivered through or by expedited mail or package service, or (c) transmitted by
telecopy,  in each case with personal  delivery  acknowledged,  addressed to the
parties as follows:


BOOK ENTRY TRANSFER AGENT AGREEMENT - Page 4





           As to the Company:        Intelect Communications Systems Limited
                                              Reid House, Church Street
                                              Hamilton, Bermuda
                                              Telephone: 441/295-8639
                                              Fax: 441-292-5560
                                              Attn: Peter G. Leighton

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

           As to either Holder:      c/o HW Finance
                                              4000 Thanksgiving Tower
                                              1601 Elm Street
                                              Dallas, Texas 75201
                                              Telephone: 214/720-1689
                                              Fax: 214/720-1662
                                              Attn: Barrett Wissman

           With a copy to:           c/o HW Finance
                                              4000 Thanksgiving Tower
                                              1601 Elm Street
                                              Dallas, Texas 75201
                                              Telephone: 214/720-1689
                                              Fax: 214/720-1612
                                              Attn: Barrett Wissman

           As to the Transfer
           Agent:                    American Stock Transfer
                                              & Trust Company
                                              40 Wall Street
                                              New York, New York 10005
                                              Telephone: 718/921-8200
                                              Fax: 718/236-4588

         9.  NONCONTRAVENTION.  The Company  agrees that it will not at any time
take any action or undertake any activity that would in any way impede, restrict
or limit the right and ability of the Registered Debentureholders to convert the
Debentures  into shares of Converted  Stock pursuant to the terms and provisions
of this Agreement, the Subscription Agreement, as amended from time to time, and
the  Debentures.  Accordingly,  the  Company  agrees that the  instructions  and
procedures set forth above

BOOK ENTRY TRANSFER AGENT AGREEMENT - Page 5




in  this  Agreement   constitute   irrevocable   instructions,   directions  and
authorizations  to the Transfer  Agent and that the Transfer Agent is authorized
to disregard any written or oral  communication  received by it from the Company
or otherwise  that could in any way be construed to constitute an  authorization
or  direction  for the Transfer  Agent to act contrary to, or to not  faithfully
comply with, the irrevocable instruction,  direction and authorization set forth
herein.  Each of the  Registered  Debentureholders  is an  intended  third party
beneficiary of these irrevocable instructions.

         10. INDEMNIFICATION.  The Company agrees to indemnify and hold harmless
the Transfer Agent, each officer,  director,  employee and agent of the Transfer
Agent,  and each person,  if any,  who  controls  the Transfer  Agent within the
meaning of the  Securities Act of 1933, as amended (the "Act") or the Securities
Exchange  Act of 1934,  as amended  (the  "Exchange  Act")  against  any losses,
claims,  damages, or liabilities,  joint or several, to which it, they or any of
them,  or  such  controlling  person,  may  become  subject,  under  the  Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect  thereof) arise out of or are based upon the performance by the Transfer
Agent of its duties  pursuant to the Agreement;  and will reimburse the Transfer
Agent, and each officer, director, employee and agent of the Transfer Agent, and
each such controlling person for any legal or other expenses reasonably incurred
by it or any of them in  connection  with  investigating  or defending  any such
loss, claim, damage,  liability or action;  provided,  however, that the Company
will not be liable in any case if such loss,  claim,  damage or liability arises
out of or is based  upon any action  not taken in good  faith,  or any action or
omission that constitutes gross negligence or willful misconduct.

         Promptly  after receipt by an  indemnified  party under this Section of
notice of the  commencement  of any action,  such  indemnified  party will, if a
claim in respect  thereof is to be made against the Company  under this Section,
notify in writing the  Company of the  commencement  thereof,  and failure so to
notify the  Company  will  relieve  the Company  from any  liability  under this
Section as to the particular item for which indemnification is then being sought
but not from any  other  liability  which it may have to any  indemnified  party
(unless such failure to so notify the Company does not prejudice in any material
respect  the rights and  defenses  of the  Company).  In case any such action is
brought  against  any  indemnified  party,  and it  notifies  the Company of the
commencement  thereof,  the  Company  will be  entitled  to assume  the  defense
thereof,  with  counsel  who  shall be to the  reasonable  satisfaction  of such
indemnified party. The Company shall not be liable to any such indemnified party
on account of any settlement of any claim of action effected without the consent
of the Company.

         11. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance  with the laws of the state of New  York,  without  giving  effect to
conflicts of law rules of such jurisdiction.


BOOK ENTRY TRANSFER AGENT AGREEMENT - Page 6





         12. ENTIRE AGREEMENT;  AMENDMENTS.  This Agreement constitutes the full
and entire  understanding  of the parties  with  respect to the  subject  matter
hereof.  Neither  this  Agreement  nor any term hereof may be  amended,  waived,
discharged, or terminated other than by a written instrument signed by the party
against whom enforcement of any such amendment, waiver, discharge or termination
is sought.

         13.  COUNTERPARTS.  This  Agreement  may be  executed  in  one or  more
counterparts and by facsimile signature.




                            [Signature page follows]




BOOK ENTRY TRANSFER AGENT AGREEMENT - Page 7





         IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of
the date first above written.

                                                INTELECT  COMMUNICATIONS SYSTEMS
                                                LIMITED


                                                By:/s/ Peter G. Leighton
                                                  ------------------------------
                                                Title: PRESIDENT
                                                  ------------------------------


                                                INFINITY INVESTORS LTD.


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


                                                SEACREST CAPITAL LIMITED


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


                                                AMERICAN STOCK TRANSFER & TRUST
                                                COMPANY


                                                By: /s/ Herbert J. Lemmar
                                                  ------------------------------
                                                Title: Vice President
                                                  ------------------------------


BOOK ENTRY TRANSFER AGENT AGREEMENT - Page 8





                                   SCHEDULE 1


                                    Principal Amount             Purchase Price
                                     of Debentures               of Debentures
                                     -------------               -------------

Infinity Investors Ltd.     
   Series A Debentures                $ 4,500,000.00             $ 4,500,000.00
   Series B Debentures                $ 4,500,000.00             $ 4,500,000.00
Seacrest Capital Limited
   Series A Debentures                $   500,000.00             $   500,000.00
   Series B Debentures                $   500,000.00             $   500,000.00
Totals                 
                                      $10,000,000.00             $10,000,000.00
                                      ==============             ==============


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