LETTER OF TRANSMITTAL

                      TO ACCOMPANY 5 YEAR SIX PERCENT (6%)
                             SUBORDINATED DEBENTURES

                                       OF

                                 INTELECT, INC.

                   TENDERED PURSUANT TO THE OFFER TO PURCHASE
                             DATED SEPTEMBER 6, 1996

         THE OFFER EXPIRES AT 5:00 P.M., CENTRAL DAYLIGHT SAVINGS TIME,
                ON OCTOBER 7, 1996, UNLESS THE OFFER IS EXTENDED

                               TO: INTELECT, INC.
                            C/O RYAN & SUDAN, L.L.P.
                         TWO HOUSTON CENTER, SUITE 3900
                              HOUSTON, TEXAS 77010
                          ATTENTION: ROBERT C. BEASLEY


DELIVERY OF THIS  INSTRUMENT  TO AN ADDRESS OTHER THAN THAT SHOWN ABOVE DOES NOT
CONSTITUTE A VALID DELIVERY.

To Intelect, Inc.:

         The undersigned hereby tenders to Intelect,  Inc., a Nevada corporation
(formerly  Intelect,  Inc., a Hawaii corporation)  ("Intelect"),  the 5 Year Six
Percent (6%) Subordinated Debenture of Intelect,  dated June 29, 1995, issued in
the name of the undersigned  (the  "Debenture") and surrenders all of its rights
under that certain  Option  Agreement (the "Option  Agreement")  dated March 31,
1995,  by and among those  Sellers  whose  names  appear on the  signature  page
thereof,  Intelect,  and  Intelect  Communications  Systems  Limited,  a Bermuda
corporation  (formerly known as Challenger  International,  Ltd.)  ("ICSL"),  in
exchange for that amount of Common  Shares (the  "Shares"),  $.01 par value,  of
Intelect  Communications Systems Limited ("ICSL") registered with the Securities
and Exchange  Commission (the "SEC"),  and the payment of that certain amount of
cash  in  lieu  of  fractional  shares,  as is  set  forth  in  the  Release  in
Consideration  of Exchange of Property  accompanying  this Letter of Transmittal
(the  "Release"),  subject to the terms and conditions set forth in the Release,
in the Offer to Purchase of Intelect and ICSL dated  September 6, 1996,  receipt
of which is  hereby  acknowledged,  and in this  Letter  of  Transmittal  (which
together constitute the "Offer").

         Subject to and  effective on  acceptance  for payment of the  Debenture
tendered






hereby in  accordance  with the terms of the Offer  (including,  if the Offer is
extended  or  amended,  the  terms  or  conditions  of  any  such  extension  or
amendment), the undersigned hereby surrenders, assigns, and transfers to or upon
the order of Intelect  all right,  title and  interest  in and to the  Debenture
tendered hereby, and surrenders all of its rights under the Option Agreement.

         The  undersigned  hereby  represents  and warrants to Intelect and ICSL
that:

                  (a) the undersigned  understands  that tender of the Debenture
         will  constitute  the   undersigned's   acceptance  of  the  terms  and
         conditions of the Offer;

                  (b) when and to the extent  Intelect  accepts  the  Debenture,
         Intelect will acquire good,  marketable and  unencumbered  title to it,
         free and clear of all security interests, liens, charges, encumbrances,
         conditional  sales  agreements or other  obligations  relating to their
         sale or transfer, and not subject to any adverse claim;

                  (c) on request,  the undersigned  will execute and deliver any
         additional  documents  Intelect or ICSL deems necessary or desirable to
         complete  the  surrender,  transfer  and  conveyance  of the  Debenture
         tendered hereby;

                  (d) on request,  the undersigned  will execute and deliver any
         additional   documents   (including  any   information   questionnaire)
         necessary for ICSL to register the Shares with the SEC; and

                  (e) the undersigned has read and agrees to all of the terms of
         the Offer.

         In the event you have lost or misplaced your  Debenture,  you will need
to present to Intelect,  along with the Release and this Letter of  Transmittal,
an affidavit  stating:  the full name and address of the registered  owner; that
the registered  owner is the legal and beneficial  owner of the Debenture;  that
the Debenture has been lost or misplaced;  that a diligent  search has been made
to find such  Debenture but it has not been found;  that neither the  Debenture,
nor any  interest  therein,  has been  sold,  assigned,  endorsed,  transferred,
deposited under any agreement,  hypothecated,  pawned,  pledged for any loan, or
disposed of in any manner;  that no other person other than the registered owner
thereof has any right, title,  claim,  equity or interest in such Debenture;  an
agreement  to  indemnify  Intelect  and ICSL  against any claim that may be made
against Intelect and ICSL with respect to lost or misplaced Debenture;  and that
if said Debenture comes into the hands,  custody,  or control of such registered
owner,  such person will deliver such Debenture to Intelect in order that it may
be  cancelled.  Such  affidavit  must be  signed  by the  registered  owner  and
acknowledged before a notary public.







         The undersigned  recognizes that under certain  circumstances set forth
in the Offer,  Intelect and ICSL may  terminate or amend the Offer or may not be
required to purchase any of the  Debentures  tendered  hereby.  The  undersigned
understands that if the Debenture is not purchased, the Debenture (together with
the Release and this Letter of Transmittal) will be returned to the undersigned.

         The  undersigned  understands  that  acceptance  of  the  Debenture  by
Intelect and ICSL for payment will  constitute a binding  agreement  between the
undersigned  and Intelect and ICSL upon the terms and subject to the  conditions
of the Offer.

         All  authority  conferred  or agreed to be  conferred in this Letter of
Transmittal  shall survive the death or incapacity of the  undersigned,  and any
obligations of the undersigned under this Letter of Transmittal shall be binding
upon  the  heirs,  personal  representatives,  successors  and  assigns  of  the
undersigned. Except as stated in the Offer, this tender is irrevocable.

         THE  UNDERSIGNED  HEREBY  CERTIFIES THAT ALL OF THE  INFORMATION I HAVE
PROVIDED IN THIS LETTER OF TRANSMITTAL  IS TRUE AND CORRECT,  AND I AGREE TO THE
TERMS OF THE OFFER AND THIS LETTER OF TRANSMITTAL.

*        SIGN HERE:________________________________________________

         DATE:_____________________________________________________

         TELEPHONE NUMBER (INCLUDING AREA CODE):___________________

* MUST BE  SIGNED  BY  REGISTERED  OWNER(S)  EXACTLY  AS  NAME(S)  APPEAR(S)  ON
DEBENTURE.  IF  SIGNATURE  IS  BY  ATTORNEY-IN-FACT,   EXECUTOR,  ADMINISTRATOR,
TRUSTEE,  GUARDIAN, OFFICER OF A CORPORATION OR ANOTHER ACTING IN A FIDUCIARY OR
REPRESENTATIVE CAPACITY, PLEASE SET FORTH THE FULL TITLE.