REGISTRATION RIGHTS AGREEMENT


         THIS  REGISTRATION  RIGHTS  AGREEMENT  (the  "Agreement")  is made  and
entered into as of August 8, 1996 among INTELECT COMMUNICATIONS SYSTEMS LIMITED,
a company  organized under the laws of Bermuda (the "Company"),  and each of the
investors listed on Exhibit A hereto (collectively, the "Investors").


                              W I T N E S S E T H:

         WHEREAS,  pursuant to that certain Convertible Securities  Subscription
Agreement dated the date hereof (the  "Subscription  Agreement"),  the Investors
acquired  a series of  Debentures,  in an  aggregate  principal  amount of up to
$10,000,000  (collectively the "Debentures"),  which are convertible into common
shares, par value U.S. $.01 per share (the "Common Shares"), of the Company (the
shares into which the Debentures are convertible are collectively referred to as
the "Shares"); and

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

         WHEREAS, as used herein, "Registrable Securities" shall mean the Common
Shares  issuable by the Company upon  conversion of the Debentures or in payment
of interest  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. 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



                                       -1-





available), with respect to an aggregate of 2,582,107 Registrable Securities and
will use all reasonable  efforts to cause such registration  statement to become
effective  promptly.  If Form  S-3 is not  available  to the  Company  for  such
registration statement,  the Company shall use its best 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  two (2)  years,  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
theretofore 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 30 days if the Company  shall  deliver to the Investor a
certificate  signed by the President or Chief  Financial  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) result in any premature disclosure thereof.

         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
an Investor,  the Company  shall,  at the Company's sole cost and expense (other
than  the  fees  and   disbursements  of  counsel  for  such  Investor  and  the
underwriting  discounts  and  commissions,  if any,  payable  in  respect of the
Registrable  Securities  sold by such  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.  Following receipt of any such request, the Company shall provide,
as promptly as is reasonably practicable, written notice of such request to each
other  Investor.  Each other  Investor  shall have the right to have included in
such  registration   statement  such  number  of  such  Investor's   Registrable
Securities  as such  Investor  specifies  in a  written  notice  to the  Company
delivered to the Company within 5 calendar days after receipt of such notice. If
such   registration  is  an  underwritten   public  offering  and  the  managing
underwriters  advise the Company in writing that in their  opinion the inclusion
of the number of  Registrable  Securities and other  securities  requested to be
included in such offering creates a substantial risk that the price per share of
Common Stock will be reduced,  the Company  will  include in such  registration,
prior to the inclusion of any securities  which are not Registrable  Securities,
the number of  Registrable  Securities  requested to be  included,  which in the
opinion of such  underwriters can be sold in such offering without creating such
a

                                       -2-








risk,  pro rata among the respective  holders of  Registrable  Securities on the
basis of the  number  of  Registrable  Securities  owned by such  holders,  with
further  successive  pro rata  allocations  among  the  holders  of  Registrable
Securities  if any such  holder of  Registrable  Securities  has  requested  the
registration  of less than all such  Registrable  Securities  it is  entitled to
register. 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 its best efforts
to promptly file the registration statement on an appropriate  alternative form.
The Company will use all reasonable efforts to cause such registration statement
to become effective promptly. 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(a):(1) if such Investor,
together  with the holders of any other  securities  of the Company  entitled to
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 such 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 the  President  or the Chief
Financial  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 qualify 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 one hundred eighty
(180) days.

         (c) The  Company  shall  not be  obligated  to file  more  than two (2)
registration statements under this Agreement.

         (d) The Company shall  furnish to the Investors  such numbers of copies
of a prospectus in conformity  with the  requirements of the Securities Act, and
such other



                                       -3-





documents as may reasonably be requested in order to facilitate the  disposition
of the Registrable Shares owned by the Investors.

         3. THE COMPANY COVENANTS.

         (a) The Company's obligations pursuant to Sections 1 and 2 hereof shall
continue  for three  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 qualify 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 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 each 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 each 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 each Investor will enter into
an underwriting  agreement with such underwriter for such offering,  which shall
be

                                       -4-








reasonably  satisfactory  in substance and form to the Company and the Company's
counsel,  each Investor,  and the underwriter,  and such agreement shall contain
such  representations  and  warranties by the Company and each 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 Investors, their respective 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 "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 any of the Investors 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 any 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.




                                       -5-





         If any  action  is  brought  against  the  Investors  or  any of  their
respective 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.  The Company 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  promptly to 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 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

                                       -6-




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  Investors 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
Investors  by or  on  behalf  of  the  Investors,  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  Investors  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 Investors,  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 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  Investors  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 Investors, 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 Investors agree
that it would be unjust and  inequitable  if the  respective  obligations of the
Company and the Investors for



                                       -7-





contribution  were  determined  by pro  rata  or per  capita  allocation  of the
aggregate  losses,  liabilities,  claims,  damages,  and  expenses  (even if the
Investors 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
Investors be responsible for a portion of the contribution obligation imposed on
the Investors in excess of each Investor's pro rata share based on the number of
Common  Shares  owned by each  Investor  and  included in such  registration  as
compared  to the total  number  of  Common  Shares  owned by the  Investors  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  any  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 any 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  Investors'  rights to receive  the Damage
Payment as specified in the Subscription Agreement.

         (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  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 5(c).

         (i)  if to the Company:

                                       -8-








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

         (ii)     if to the  Investors,  to each investor and at such address as
                  is listed for such Investor on Exhibit A hereto.

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  Investors  shall
cooperate  in all  reasonable  respects  with  the  filing  of the  registration
statement  contemplated  hereby.  Without limiting the foregoing,  each 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 an
Investor to any purchaser or transferee of the 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 Bermuda  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.



                                       -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  understanding  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.

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


                                            INTELECT COMMUNICATIONS SYSTEMS
                                            LIMITED


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

                                            INVESTORS

                                            By:_________________________________

                                            Name:_______________________________

                                            Title:______________________________


                                            By:_________________________________

                                            Name:_______________________________

                                            Title:______________________________


                                            By:_________________________________

                                            Name:_______________________________

                                            Title:______________________________


                                            By:_________________________________

                                            Name:_______________________________


                                      -10-








                                            Title:______________________________


                                            By:_________________________________

                                            Name:_______________________________

                                            Title:______________________________


                                            By:_________________________________

                                            Name:_______________________________

                                            Title:______________________________


                                            By:_________________________________

                                            Name:_______________________________

                                            Title:______________________________


                                            By:_________________________________

                                            Name:_______________________________

                                            Title:______________________________


                                            By:_________________________________

                                            Name:_______________________________

                                            Title:______________________________


                                            By:_________________________________

                                            Name:_______________________________




                                      -11-





                                            Title:______________________________

                                            By:_________________________________

                                            Name:_______________________________

                                            Title:______________________________


                                            By:_________________________________

                                            Name:_______________________________

                                            Title:______________________________


                                            By:_________________________________

                                            Name:_______________________________

                                            Title:______________________________


                                            By:_________________________________

                                            Name:_______________________________

                                            Title:______________________________


                                            By:_________________________________

                                            Name:_______________________________

                                            Title:______________________________



                                      -12-





                                    Exhibit A

                    List of Names and Addresses of Investors



                                      -13-