Document:

EXHIBIT 4.1

THE SECURITIES REPRESENTED BY THIS WARRANT AND THE COMMON STOCK ISSUABLE THEREBY
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY OTHER APPLICABLE SECURITIES LAW AND, ACCORDINGLY, THE
SECURITIES REPRESENTED BY THIS WARRANT MAY NOT BE RESOLD, PLEDGED, OR OTHERWISE
TRANSFERRED, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER, OR IN
A TRANSACTION EXEMPT FROM REGISTRATION UNDER, THE SECURITIES ACT AND IN
ACCORDANCE WITH ANY OTHER APPLICABLE SECURITIES LAWS.

Warrant No. ________                                       Warrant to Purchase

                                                                 ________
                                                          Shares of Common Stock

                                     WARRANT

                           to Purchase Common Stock of

                          INTELECT COMMUNICATIONS, INC.

Exercisable as of __________________ and Expiring on __________________ 30, 2002

      This Common Stock Purchase Warrant (the "Warrant") certifies that for
value received, (NAME OF ST. JAMES ENTITY), a Delaware limited partnership (the
"Holder") or its assigns, is entitled to subscribe for and purchase from the
Company (as hereinafter defined), in whole or in part, beginning on the Exercise
Date, _________________ shares of duly authorized, validly issued, fully paid
and nonassessable shares of Common Stock (as hereinafter defined) at an initial
Exercise Price (as hereinafter defined) per share of $0.75, SUBJECT, HOWEVER, to
the provisions and upon the terms and conditions hereinafter set forth. The
number of Warrants (as hereinafter defined), the number of shares of Common
Stock purchasable hereunder, and the Exercise Price therefor are subject to
adjustment as hereinafter set forth. This Warrant and all rights hereunder shall
expire at 5:00 p.m., Houston, Texas time, on ___________ 30, 2002 (the
"Termination Date").

      As used herein, the following terms shall have the meanings set forth
below:

      "COMPANY" shall mean Intelect Communications, Inc., a Delaware
corporation, and shall also include any successor thereto with respect to the
obligations hereunder, by merger, consolidation or otherwise.

      "COMMON STOCK" shall mean and include the Company's Common Stock, par
value $0.01 per share, authorized on the date of the original issue of this
Warrant and shall also include (i) in case of any reorganization,
reclassification, consolidation, merger, share exchange or sale, transfer or
other disposition of assets of the character referred to in Section 3.5 hereof,
the stock, securities provided for in such Section 3.5, and (ii) any other
shares of common stock of the Company into which such shares of Common Stock may
be converted.
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      "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

      "EXERCISABLE DATE" shall mean _______________________.

      "EXERCISE PRICE" shall mean the initial purchase price of $0.75 per share
of Common Stock payable upon exercise of the Warrants, as adjusted from time to
time pursuant to the provisions hereof.

      "MARKET PRICE" for any day, when used with reference to Common Stock,
shall mean the price of said Common Stock determined as follows: (x) the last
reported sale price for the Common Stock on such day on the principal securities
exchange on which the Common Stock is listed or admitted to trading or if no
such sale takes place on such date, the average of the closing bid and asked
prices thereof as officially reported, or, if not so listed or admitted to
trading on any securities exchange, the last sale price for the Common Stock on
the National Association of Securities Dealers National Market on such date, or,
if there shall have been no trading on such date or if the Common Stock shall
not be listed on such system, the average of the closing bid and asked prices in
the over-the-counter market as furnished by any NASD member firm selected from
time to time by the Company for such purpose, in each such case, unless
otherwise provided herein, averaged over a period of ten (10) consecutive
Trading Days prior to the date as of which the determination is to be made; or
(y) if the Common Stock shall not be listed or admitted to trading as provided
in clause (x) above, the fair market value of the Common Stock as determined in
good faith by the Board of Directors of the Company.

      "OUTSTANDING," when used with reference to Common Stock, shall mean
(except as otherwise expressly provided herein) at any date as of which the
number of shares thereof is to be determined, all issued shares of Common Stock,
except shares then owned or held by or for the account of the Company.

      "PERSON" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.

      "SECURITIES ACT" means the Securities Act of 1933, as amended from time to
time.

      "TRADING DAYS" shall mean any days during the course of which the
principal securities exchange on which the Common Stock is listed or admitted to
trading is open for the exchange of securities.

      "WARRANT" shall mean the right upon exercise to purchase one Warrant
Share.

      "WARRANT SHARES" shall mean the shares of Common Stock purchased or
purchasable by the holder hereof upon the exercise of the Warrants.

                                    ARTICLE I

                              EXERCISE OF WARRANTS

      1.1 METHOD OF EXERCISE. The Warrants represented hereby may be exercised
by the holder hereof, in whole or in part, at any time and from time to time on
or after the Exercisable Date until 5:00 p.m., Houston, Texas time, on
__________________ 30, 2002. To exercise the Warrants, the holder hereof shall
deliver to the Company, at the Warrant Office designated in Section 2.1 hereof,
(i) a written

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notice in the form of the Subscription Notice attached as an exhibit hereto,
stating therein the election of such holder to exercise the Warrants in the
manner provided in the Subscription Notice; (ii) payment in full of the Exercise
Price (A) in cash or by bank check for all Warrant Shares purchased hereunder,
or (B) if the Company and the holder mutually elect, through a "cashless" or
"net-issue" exercise of each such Warrant ("Cashless Exercise"); the holder
shall exchange each Warrant subject to a Cashless Exercise for that number of
Warrant Shares determined by multiplying the number of Warrant Shares issuable
hereunder by a fraction, the numerator of which shall be the difference between
(x) the Market Price and (y) the Exercise Price for each such Warrant, and the
denominator of which shall be the Market Price; the Subscription Notice shall
set forth the calculation upon which the Cashless Exercise is based, or (C) a
combination of (A) and (B) above; and (iii) this Warrant. Subject to Section 2.5
hereof, the Warrants shall be deemed to be exercised on the date of receipt by
the Company of the Subscription Notice, accompanied by payment for the Warrant
Shares and surrender of this Warrant, as aforesaid, and such date is referred to
herein as the "Exercise Date". Upon such exercise, subject to Section 2.5, the
Company shall, as promptly as practicable and in any event within ten (10)
business days, issue and deliver to such holder a certificate or certificates
for the full number of the Warrant Shares purchased by such holder hereunder,
and shall, unless the Warrants have expired, deliver to the holder hereof a new
Warrant representing the number of Warrants, if any, that shall not have been
exercised, in all other respects identical to this Warrant. As permitted by
applicable law, the Person in whose name the certificates for Common Stock are
to be issued shall be deemed to have become a holder of record of such Common
Stock on the Exercise Date and shall be entitled to all of the benefits of such
holder on the Exercise Date, including without limitation the right to receive
dividends and other distributions for which the record date falls on or after
the Exercise Date and to exercise voting rights.

      1.2 EXPENSES AND TAXES. The Company shall pay all expenses, and taxes
(including, without limitation, all documentary, stamp, transfer or other
transactional taxes) other than income taxes attributable to the preparation,
issuance or delivery of the Warrants and of the shares of Common Stock issuable
upon exercise of the Warrants.

      1.3 RESERVATION OF SHARES. The Company shall reserve at all times so long
as the Warrants remain outstanding, free from preemptive rights, out of its
treasury Common Stock or its authorized but unissued shares of Common Stock, or
both, solely for the purpose of effecting the exercise of the Warrants, a
sufficient number of shares of Common Stock to provide for the exercise of the
Warrants.

      1.4 VALID ISSUANCE. All shares of Common Stock that may be issued upon
exercise of the Warrants will, upon issuance by the Company, be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens and charges
with respect to the issuance thereof and, without limiting the generality of the
foregoing, the Company shall take no action or fail to take any action which
will cause a contrary result (including, without limitation, any action that
would cause the Exercise Price to be less than the par value, if any, of the
Common Stock).

      1.5 SETTLEMENT AGREEMENT. The Warrants represented hereby are issued
pursuant to that certain Settlement Agreement and Mutual Release (the
"Settlement Agreement") dated as of the date hereof between the Company, the
holder hereof and the other persons listed therein. The holder hereof shall be
entitled to registration under the Securities Act and any applicable state
securities or blue sky laws only to the extent set forth in the provisions of
the Settlement Agreement (the "Registration Rights Provisions").

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Notwithstanding the foregoing, in the event of any conflict between the
provisions of the Settlement Agreement and of this Warrant, the provisions of
this Warrant shall control.

      1.6 ACKNOWLEDGMENT OF RIGHTS. At the time of the exercise of the Warrants
in accordance with the terms hereof and upon the written request of the holder
hereof, the Company will acknowledge in writing its continuing obligation to
afford to such holder any rights (including, without limitation, any right to
registration of the Warrant Shares) to which such holder shall continue to be
entitled after such exercise in accordance with the provisions of this Warrant;
PROVIDED, HOWEVER, that if the holder hereof shall fail to make any such
request, such failure shall not affect the continuing obligation of the Company
to afford to such holder any such rights.

      1.7 NO FRACTIONAL SHARES. The Company shall not be required to issue
fractional shares of Common Stock on the exercise of this Warrant. If more than
one Warrant shall be presented for exercise at the same time by the same holder,
the number of full shares of Common Stock which shall be issuable upon such
exercise shall be computed on the basis of the aggregate number of whole shares
of Common Stock purchasable on exercise of the Warrants so presented. If any
fraction of a share of Common Stock would, except for the provisions of this
Section 1.7, be issuable on the exercise of this Warrant, the Company shall pay
an amount in cash calculated by it to be equal to the Market Price of one share
of Common Stock at the time of such exercise multiplied by such fraction
computed to the nearest whole cent.

                                   ARTICLE II

                                    TRANSFER

      2.1 WARRANT OFFICE. The Company shall maintain an office for certain
purposes specified herein (the "Warrant Office"), which office shall initially
be the Company's offices at 1240 East Campbell Road, Richardson, Texas 75081,
and may subsequently be such other office of the Company or of any transfer
agent of the Common Stock in the continental United States as to which written
notice has previously been given to the holder hereof. The Company shall
maintain, at the Warrant Office, a register for the Warrants in which the
Company shall record the name and address of the Person in whose name this
Warrant has been issued, as well as the name and address of each permitted
assignee of the rights of the registered owner hereof.

      2.2 OWNERSHIP OF WARRANTS. The Company may deem and treat the Person in
whose name the Warrants are registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by anyone
other than the Company) for all purposes and shall not be affected by any notice
to the contrary until presentation of this Warrant for registration of transfer
as provided in this Article II. Notwithstanding the foregoing, the Warrants
represented hereby, if properly assigned in compliance with this Article II, may
be exercised by an assignee for the purchase of Warrant Shares without having a
new Warrant issued.

      2.3 RESTRICTIONS ON TRANSFER OF WARRANTS. The Company agrees to maintain
at the Warrant Office books for the registration and transfer of the Warrants.
Subject to the restrictions on transfer of the Warrants in this Section 2.3, the
Company, from time to time, shall register the transfer of the Warrants in such
books upon surrender of this Warrant at the Warrant Office properly endorsed or
accompanied by appropriate instruments of transfer and written instructions for
transfer satisfactory to the Company.  Upon

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any such transfer and upon payment by the holder or its transferee of any
applicable transfer taxes, new Warrants shall be issued to the transferee and
the transferor (as their respective interests may appear) and the surrendered
Warrants shall be canceled by the Company. The Company shall pay all taxes
(other than securities transfer taxes or income taxes) and all other expenses
and charges payable in connection with the transfer of the Warrants pursuant to
this Section 2.3.

            2.3.1 RESTRICTIONS IN GENERAL. Subject to Section 2.3 hereof, the
holder of the Warrants agrees that it will neither (i) transfer the Warrants
prior to delivery to the Company of written notice of such transfer, nor (ii)
transfer such Warrant Shares prior to delivery to the Company of written notice
of such transfer, or until registration of such Warrant Shares under the
Securities Act and any applicable state securities or blue sky laws has become
effective.

      2.4 COMPLIANCE WITH SECURITIES LAWS. Subject to the terms of the
Registration Rights Provisions and notwithstanding any other provisions
contained in this Warrant, the holder hereof understands and agrees that the
following restrictions and limitations shall be applicable to all Warrant Shares
and to all resales or other transfers thereof pursuant to the Securities Act:

            2.4.1 The holder hereof agrees that the Warrant Shares shall not be
sold or otherwise transferred unless the Warrant Shares are registered under the
Securities Act and applicable state securities or blue sky laws or are exempt
therefrom.

            2.4.2 A legend in substantially the following form will be placed on
the certificate(s) evidencing the Warrant Shares:

                  "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
            REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
            "SECURITIES ACT"), OR ANY OTHER APPLICABLE SECURITIES LAW AND,
            ACCORDINGLY, THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT
            BE RESOLD, PLEDGED, OR OTHERWISE TRANSFERRED, EXCEPT PURSUANT TO AN
            EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, OR IN A
            TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT AND IN
            ACCORDANCE WITH ANY OTHER APPLICABLE SECURITIES LAWS."

            2.4.3 Stop transfer instructions will be imposed with respect to the
Warrant Shares so as to restrict resale or other transfer thereof, subject to
this Section 2.4.

            2.4.4 The holder of this Warrant represents that it is acquiring
this Warrant and the Warrant Shares for its own account for investment only and
not with a view towards distribution, or for re-sale in connection with the
public sale or distribution of the Warrant or the Warrant Shares, except
pursuant to sales registered or exempted under the Securities Act. The holder
represents that it is an "accredited investor" as such term is applied in Rule
501(a)(1) of Regulation D as promulgated under the Securities Act. The holder
understands that it must bear the economic risk of the investment for an
indefinite period of time because the Warrant Shares have not been registered
under the Securities Act and therefore cannot be sold unless they are
subsequently registered under the Securities Act or an exemption

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from such registration is available. The holder acknowledges that the holder or
the holder's representative is familiar with the condition, financial and
otherwise, of the Company. The holder or the holder's representative has such
knowledge and experience in financial and business matters that the holder or
the holder's representative is able to weigh the information so received and to
evaluate the merits and risks of the holder's investment in the Warrant Shares.

      2.5 REDEMPTION. At any time, subject to the terms and conditions of this
Section 2.5, the Company may make a written demand for redemption (a "Redemption
Demand") for all or any portion of this Warrant. The redemption price shall be
equal to $6.75 (the "Redemption Price") per Warrant Share of that portion of the
Warrant that is redeemed. The Company shall provide the Redemption Demand
pursuant to the notice provisions of Section 4.6, notifying the holder of the
redemption of such Warrant, the number of Warrant Shares represented by that
portion of the Warrant to be redeemed, and specifying the date of redemption
(the "Redemption Date"). The Redemption Date may occur on any date beginning 1
day after the Redemption Demand is delivered but in no event shall it be more
than 20 days after the Redemption Demand is delivered. Upon delivery of the
Redemption Demand the rights to exercise the Warrant for the number of Warrant
Shares specified in the Redemption Demand shall immediately be terminated, and
the Company shall have no obligation to honor any exercise of this Warrant
previously submitted for exercise to the extent such Warrant Shares are included
in the Redemption Demand, and the holder shall deliver to the Company, at the
Warrant Office, this Warrant. Upon redemption of any Warrant Shares, the Company
shall deliver to the holder promptly after the Redemption Date (i) payment in
full of the Redemption Price multiplied by the number of Warrant Shares subject
of the Redemption Demand; and (ii) in the event that less than all of the
Warrant is redeemed, a new warrant of like tenor to replace this Warrant
representing the number of Warrant Shares of that portion of the Warrant that
was not redeemed. Notwithstanding anything to the contrary in this Section 2.5,
no such redemption shall be completed if upon the written opinion of counsel,
reasonably acceptable to the Company and provided within ten (10) business days
after the Redemption Demand is received by the holder, that such redemption if
completed would constitute a "sale" under Section 16(b) of the Exchange Act,
such "sale" would be matched with a "purchase" of securities of the Company made
by the holder within the prior six months and such "purchase" is set forth in
the trading records of SJCP and SJMB supplied to the Company as of the date of
the Settlement Agreement, and the matching of such purchase and sale would cause
SJCP or SJMB, as the case may be, to be liable to the Company for short-swing
profits under Section 16(b) of the Exchange Act.

                                   ARTICLE III

                                  ANTI-DILUTION

      3.1 ANTI-DILUTION PROVISIONS. The Exercise Price shall be subject to
adjustment from time to time as hereinafter provided.

      3.2   ADJUSTMENT OF EXERCISE PRICE UPON ISSUANCE OF COMMON STOCK.

            3.2.1 (A) If and whenever after the date hereof the Company shall
issue or sell any Common Stock for no consideration or for a consideration per
share less than the Exercise Price, then, forthwith upon such issue or sale, the
Exercise Price shall be reduced (but not increased, except as otherwise
specifically provided in Section 3.2.2 (C) hereof), to the price (calculated to
the nearest one-ten

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thousandth of a cent) determined by dividing (x) an amount equal to the sum of
(i) the aggregate number of shares of Common Stock outstanding immediately prior
to such issue or sale multiplied by the consideration received by the Company
upon such issuance or sale on a per share basis plus (ii) the consideration
received by the Company upon such issue or sale by (y) the aggregate number of
shares of Common Stock outstanding immediately after such issue or sale.

                  (B) Notwithstanding the provisions of this Section 3.2, no
adjustment shall be made in the Exercise Price in the event that the Company
issues, in one or more transactions, (i) Common Stock or convertible securities
upon exercise of any options issued to officers, directors or employees of the
Company pursuant to a stock option plan or an employment, severance or
consulting agreement as now or hereafter in effect, in each case approved by the
Board of Directors (provided that the aggregate number of shares of Common Stock
which may be issuable, including options issued prior to the date hereof, under
all such employee plans and agreements shall at no time exceed the number of
such shares of Common Stock that are issuable under currently effective employee
plans and agreements); (ii) Common Stock upon exercise of the Warrants or any
other warrant issued pursuant to the terms of the Settlement Agreement or
otherwise issued to the Holder; (iii) Common Stock upon exercise of any stock
purchase warrant or option (other than the options referred to in clause (i)
above) or other convertible security outstanding on the date hereof; (iv)
securities issued as consideration in acquisitions; (v) Common Stock,
convertible securities, warrants, or any other right or interest convertible,
exchangeable, or exercisable into Common Stock issued in one or more
transactions effected in any year ending on the anniversary date hereof where
such securities are issued or are exercisable, convertible, or exchangeable into
not more than an aggregate of one percent (1%) of the total Common Stock issued
and outstanding during such year; or (vi) Common Stock, warrants, or additional
shares of Common Stock issued or issuable by virtue of the operation of the
anti-dilution provisions of this Warrant, or any other warrants issued pursuant
to the Settlement Agreement and Mutual Release among the Company, the Holder,
and the other parties named therein. In addition, for purposes of calculating
any adjustment of the Exercise Price as provided in this Section 3.2, all of the
shares of Common Stock issuable pursuant to any of the foregoing shall be
assumed to be outstanding prior to the event causing such adjustment to be made.

            3.2.2 For purposes of this Section 3.2, the following Sections
3.2.2(A) to 3.2.2(E) inclusive, shall be applicable:

            (A) ISSUANCE OF RIGHTS OR OPTIONS. In case at any time after the
      date hereof the Company shall in any manner grant (whether directly or by
      assumption in a merger or otherwise) any rights to subscribe for or to
      purchase, or any options for the purchase of, Common Stock or any stock or
      securities convertible into or exchangeable for Common Stock (such
      convertible or exchangeable stock or securities being herein called
      "Convertible Securities"), whether or not such rights or options or the
      right to convert or exchange any such Convertible Securities are
      immediately exercisable, and the price per share for which shares of
      Common Stock are issuable upon the exercise of such rights or options or
      upon conversion or exchange of such Convertible Securities (determined by
      dividing (i) the total amount, if any, received or receivable by the
      Company as consideration for the granting of such rights or options, plus
      the minimum aggregate amount of additional consideration, if any, payable
      to the Company upon the exercise of such rights or options, or plus, in
      the case of such rights or options that relate to Convertible Securities,
      the minimum aggregate amount of additional consideration, if any, payable
      upon the issue or sale of such Convertible Securities and upon the
      conversion or exchange thereof, by (ii) the total

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      maximum number of shares of Common Stock issuable upon the exercise of
      such rights or options or upon the conversion or exchange of all such
      Convertible Securities issuable upon the exercise of such rights or
      options) shall be less than the Exercise Price in effect as of the date of
      granting such rights or options, then the total maximum number of shares
      of Common Stock issuable upon the exercise of such rights or options or
      upon conversion or exchange of all such Convertible Securities issuable
      upon the exercise of such rights or options shall be deemed to be
      outstanding as of the date of the granting of such rights or options and
      to have been issued for such price per share, with the effect on the
      Exercise Price specified in Section 3.2.1 hereof. Except as provided in
      Section 3.2.2 hereof, no further adjustment of the Exercise Price shall be
      made upon the actual issuance of such Common Stock or of such Convertible
      Securities upon exercise of such rights or options or upon the actual
      issuance of such Common Stock upon conversion or exchange of such
      Convertible Securities.

            (B) CHANGE IN OPTION PRICE OR CONVERSION RATE. Upon the happening of
      any of the following events, namely, if the purchase price provided for in
      any right or option referred to in Section 3.2.2, the additional
      consideration, if any, payable upon the conversion or exchange of any
      Convertible Securities referred to in Section 3.2.2, or the rate at which
      any Convertible Securities referred to in Section 3.2.2, are convertible
      into or exchangeable for Common Stock shall change (other than under or by
      reason of provisions designed to protect against dilution), the Exercise
      Price then in effect hereunder shall forthwith be readjusted (increased or
      decreased, as the case may be) to the Exercise Price that would have been
      in effect at such time had such rights, options or Convertible Securities
      still outstanding provided for such changed purchase price, additional
      consideration or conversion rate, as the case may be, at the time
      initially granted, issued or sold. On the expiration of any such option or
      right referred to in Section 3.2.2, or on the termination or upward
      adjustment of the exercise or conversion price of any such right to
      convert or exchange any such Convertible Securities referred to in Section
      3.2.2, the Exercise Price then in effect hereunder shall forthwith be
      readjusted (increased or decreased, as the case may be) to the Exercise
      Price that would have been in effect at the time of such expiration and
      adjustment or termination had such right, option or Convertible
      Securities, to the extent outstanding immediately prior to such expiration
      or termination, never been granted, issued or sold, and the Common Stock
      issuable thereunder shall no longer be deemed to be outstanding. If the
      purchase price provided for in Section 3.2.2 or the rate at which any
      Convertible Securities referred to in Section 3.2.2 reduced at any time
      under or by reason of provisions with respect thereto designed to protect
      against dilution, then in case of the delivery of Common Stock upon the
      exercise of any such right or option or upon conversion or exchange of any
      such Convertible Securities, the Exercise Price then in effect hereunder
      shall, if not already adjusted, forthwith be adjusted to such amount as
      would have obtained had such right, option or Convertible Securities never
      been issued as to such Common Stock and had adjustments been made upon the
      issuance of the Common Stock delivered as aforesaid, but only if as a
      result of such adjustment the Exercise Price then in effect hereunder is
      thereby reduced.

            (C) CONSIDERATION FOR STOCK. In case at any time Common Stock or
      Convertible Securities or any rights or options to purchase any such
      Common Stock or Convertible Securities shall be issued or sold for cash,
      the consideration therefor shall be deemed to be the amount received by
      the Company therefor. In case at any time any Common Stock, Convertible
      Securities or any rights or options to purchase any such Common Stock or
      Convertible Securities shall be

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      issued or sold for consideration other than cash, the amount of the
      consideration other than cash received by the Company shall be deemed to
      be the fair value of such consideration, as determined reasonably and in
      good faith by the Board of Directors of the Company. In case at any time
      any Common Stock, Convertible Securities or any rights or options to
      purchase any Common Stock or Convertible Securities shall be issued in
      connection with any merger or consolidation in which the Company is the
      surviving corporation, the amount of consideration received therefor shall
      be deemed to be the fair value, as determined reasonably and in good faith
      by the Board of Directors of the Company, of such portion of the assets
      and business of the nonsurviving corporation as such Board of Directors
      may determine to be attributable to such Common Stock, Convertible
      Securities, rights or options as the case may be. In case at any time any
      rights or options to purchase any shares of Common Stock or Convertible
      Securities shall be issued in connection with the issuance and sale of
      other securities of the Company, together consisting of one integral
      transaction in which no consideration is allocated to such rights or
      options by the parties, such rights or options shall be deemed to have
      been issued with consideration.

            (D) RECORD DATE. In the case the Company shall take a record of the
      holders of its Common Stock for the purpose of entitling them (i) to
      receive a dividend or other distribution payable in Common Stock or
      Convertible Securities, or (ii) to subscribe for or purchase Common Stock
      or Convertible Securities, then such record date shall be deemed to be the
      date of the issuance or sale of the Common Stock or Convertible Securities
      deemed to have been issued or sold as a result of the declaration of such
      dividend or the making of such other distribution or the date of the
      granting of such right of subscription or purchase, as the case may be.

            (E) TREASURY SHARES. The number of shares of Common Stock
      outstanding at any given time shall not include shares owned directly by
      the Company in treasury, and the disposition of any such shares shall be
      considered an issuance or sale of Common Stock for the purpose of this
      Section 3.2.

            3.2.3 ADJUSTMENT OF WARRANT SHARES UPON ISSUANCE OR SALE OF COMMON
STOCK. In the event that the Exercise Price is adjusted in accordance with
Section 3.2, then upon each adjustment of the Exercise Price, the holder of this
Warrant shall thereafter be entitled to an adjustment of the number of Warrant
Shares that shall be acquired upon the exercise of the Warrant to a number equal
to the product of the number of Warrant Shares purchasable immediately prior to
such adjustment of the Exercise Price multiplied by a fraction, the numerator of
which shall be the sum of (i) the number of shares of Common Stock outstanding
immediately prior to such issuance or sale and (ii) the number of shares issued
or sold by the Company in the transaction that caused the adjustment of the
Exercise Price; and (B) the denominator which shall be the number of shares of
Common Stock outstanding immediately prior to such issuance or sale.

      3.3 STOCK DIVIDENDS. In case the Company shall declare a dividend or make
any other distribution upon any shares of the Company, payable in Common Stock
or Convertible Securities, any Common Stock or Convertible Securities, as the
case may be, issuable in payment of such dividend or distribution shall be
deemed to have been issued or sold without consideration.

      3.4 STOCK SPLITS AND REVERSE SPLITS. In the event that the Company shall
at any time subdivide its outstanding shares of Common Stock into a greater
number of shares, the Exercise Price in effect

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immediately prior to such subdivision shall be proportionately reduced and the
number of Warrant Shares purchasable pursuant to this Warrant immediately prior
to such subdivision shall be proportionately increased, and conversely, in the
event that the outstanding shares of Common stock shall at any time be combined
into a smaller number of shares, the Exercise Price in effect immediately prior
to such combination shall be proportionately increased and the number of Warrant
Shares purchasable upon the exercise of this Warrant immediately prior to such
combination shall be proportionately reduced. Except as provided in this Section
3.4, no adjustment in the Exercise Price and no change in the number of Warrant
Shares purchasable shall be made under this Article III as a result of or by
reason of any such subdivision or combination.

      3.5 REORGANIZATIONS AND ASSET SALES. If any capital reorganization or
reclassification of the capital stock of the Company, or any consolidation,
merger or share exchange of the Company with another Person, or the sale,
transfer or other disposition of all or substantially all of its assets to
another Person shall be effected in such a way that a holder of Common Stock of
the Company shall be entitled to receive capital stock, securities or assets
with respect to or in exchange for their shares, then the following provisions
shall apply:

            3.5.1 As a condition of such reorganization, reclassification,
consolidation, merger, share exchange, sale, transfer or other disposition
(except as otherwise provided below in this Section 3.5), lawful and adequate
provisions shall be made whereby the holder of Warrants shall thereafter have
the right to purchase and receive upon the terms and conditions specified in
this Warrant and in lieu of the Warrant Shares immediately theretofore
receivable upon the exercise of the rights represented hereby, such shares of
capital stock, securities or assets as may be issued or payable with respect to
or in exchange for a number of outstanding shares of such Common Stock equal to
the number of Warrant Shares immediately theretofore so receivable had such
reorganization, reclassification, consolidation, merger, share exchange or sale
not taken place, and in any such case appropriate provision reasonably
satisfactory to such holder shall be made with respect to the rights and
interests of such holder to the end that the provisions hereof (including,
without limitation, provisions for adjustments of the Exercise Price and of the
number of Warrant Shares receivable upon the exercise) shall thereafter be
applicable, as nearly as possible, in relation to any shares of capital stock,
securities or assets thereafter deliverable upon the exercise of Warrants.

            3.5.2 In the event of a merger, share exchange or consolidation of
the Company with or into another Person as a result of which a number of shares
of common stock or its equivalent of the successor Person greater or lesser than
the number of shares of Common Stock outstanding immediately prior to such
merger, share exchange or consolidation are issuable to holders of Common Stock,
then the Exercise Price in effect immediately prior to such merger, share
exchange or consolidation shall be adjusted in the same manner as though there
were a subdivision or combination of the outstanding shares of Common Stock.

            3.5.3 The Company shall not effect any such consolidation, merger,
share exchange, sale, transfer or other disposition unless prior to or
simultaneously with the consummation thereof the successor Person (if other than
the Company) resulting from such consolidation, share exchange or merger or the
Person purchasing or otherwise acquiring such assets shall have assumed by
written instrument executed and mailed or delivered to the holder hereof at the
last address of such holder appearing on the books of the Company the obligation
to deliver to such holder such shares of capital stock, securities or

                                       10
<PAGE>
assets as, in accordance with the foregoing provisions, such holder may be
entitled to receive, and all other liabilities and obligations of the Company
hereunder. Upon written request by the holder hereof, such successor Person will
issue a new Warrant revised to reflect the modifications in this Warrant
effected pursuant to this Section 3.5.

      3.5.4 If a purchase, tender or exchange offer is made to and accepted by
the holders of 50% or more of the outstanding shares of Common Stock, the
Company shall not effect any consolidation, merger, share exchange or sale,
transfer or other disposition of all or substantially all of the Company's
assets with the Person having made such offer or with any affiliate of such
Person, unless prior to the consummation of such consolidation, merger, share
exchange, sale, transfer or other disposition the holder hereof shall have been
given a reasonable opportunity to then elect to receive upon the exercise of the
Warrants either the capital stock, securities or assets then issuable with
respect to the Common Stock or the capital stock, securities or assets, or the
equivalent, issued to previous holders of the Common Stock in accordance with
such offer.

      3.6 ADJUSTMENT FOR ASSET DISTRIBUTION. If the Company declares a dividend
or other distribution payable to all holders of shares of Common Stock in
evidences of indebtedness of the Company or other assets of the Company
(including, cash (other than regular cash dividends declared by the Board of
Directors), capital stock (other than Common Stock, Convertible Securities or
options or rights thereto) or other property), the Exercise Price in effect
immediately prior to such declaration of such dividend or other distribution
shall be reduced by an amount equal to the amount of such dividend or
distribution payable per share of Common Stock, in the case of a cash dividend
or distribution, or by the fair value of such dividend or distribution per share
of Common Stock (as reasonably determined in good faith by the Board of
Directors of the Company), in the case of any other dividend or distribution.
Such reduction shall be made whenever any such dividend or distribution is made
and shall be effective as of the date as of which a record is taken for purpose
of such dividend or distribution or, if a record is not taken, the date as of
which holders of record of Common Stock entitled to such dividend or
distribution are determined.

      3.7 DE MINIMIS ADJUSTMENTS. No adjustment in the number of shares of
Common Stock purchasable hereunder shall be required unless such adjustment
would require an increase or decrease of at least one share of Common Stock
purchasable upon an exercise of each Warrant and no adjustment in the Exercise
Price shall be required unless such adjustment would require an increase or
decrease of at least $0.01 in the Exercise Price; provided, however, that any
adjustments which by reason of this Section 3.7 are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations shall be made to the nearest full share or nearest one
hundredth of a dollar, as applicable.

      3.8 NOTICE OF ADJUSTMENT. Whenever the Exercise Price or the number of
Warrant Shares issuable upon the exercise of the Warrants shall be adjusted as
herein provided, or the rights of the holder hereof shall change by reason of
other events specified herein, the Company shall compute the adjusted Exercise
Price and the adjusted number of Warrant Shares in accordance with the
provisions hereof and shall prepare an Officer's Certificate setting forth the
adjusted Exercise Price and the adjusted number of Warrant Shares issuable upon
the exercise of the Warrants or specifying the other shares of stock, securities
or assets receivable as a result of such change in rights, and showing in
reasonable detail the facts and calculations upon which such adjustments or
other changes are based. The Company shall cause to be mailed to the holder
hereof copies of such Officer's Certificate together with a notice stating that
the

                                       11
<PAGE>
Exercise Price and the number of Warrant Shares purchasable upon exercise of the
Warrants have been adjusted and setting forth the adjusted Exercise Price and
the adjusted number of Warrant Shares purchasable upon the exercise of the
Warrants.

      3.9   NOTIFICATIONS TO HOLDERS.  In case at any time the Company proposes:

            (i) to declare any dividend upon its Common Stock payable in capital
      stock or make any special dividend or other distribution (other than cash
      dividends) to the holders of its Common Stock;

            (ii) to offer for subscription pro rata to all of the holders of its
      Common Stock any additional shares of capital stock of any class or other
      rights;

            (iii) to effect any capital reorganization, or reclassification of
      the capital stock of the Company, or consolidation, merger or share
      exchange of the Company with another Person, or sale, transfer or other
      disposition of all or substantially all of its assets; or

            (iv) to effect a voluntary or involuntary dissolution, liquidation
      or winding up of the Company,

then, in any one or more of such cases, the Company shall give the holder hereof
(a) at least 10 days' (but not more than 90 days') prior written notice of the
date of which the books of the Company shall close or a record shall be taken
for such dividend, distribution or subscription rights or for determining rights
to vote in respect of such issuance, reorganization, reclassification,
consolidation, merger, share exchange, sale, transfer, disposition, dissolution,
liquidation or winding up, and (b) in the case of any such issuance,
reorganization, reclassification, consolidation, merger, share exchange, sale,
transfer, disposition, dissolution, liquidation or winding up, at least 10 days'
(but not more than 90 days') prior written notice of the date when the same
shall take place. Such notice in accordance with the foregoing clause (a) shall
also specify, in the case of any such dividend, distribution or subscription
rights, the date on which the holders of Common Stock shall be entitled thereto,
and such notice in accordance with the foregoing clause and (b) shall also
specify the date on which the holders of Common Stock shall be entitled to
exchange their Common Stock, as the case may be, for securities or other
property deliverable upon such reorganization, reclassification, consolidation,
merger, share exchange, sale, transfer, disposition, dissolution, liquidation or
winding up, as the case may be.

      3.10 COMPANY TO PREVENT DILUTION. If any event or condition occurs as to
which other provisions of this Article III are not strictly applicable or if
strictly applicable would not fairly protect the exercise or purchase rights of
the Warrants evidenced hereby in accordance with the essential intent and
principles of such provisions, or that might materially and adversely affect the
exercise or purchase rights of the holder hereof under any provisions of this
Warrant, then the Company shall make such adjustments in the application of such
provisions, in accordance with such essential intent and principles, so as to
protect such exercise and purchase rights as aforesaid, and any adjustments
necessary with respect to the Exercise Price and the number of Warrant Shares
purchasable hereunder so as to preserve the rights of the holder hereunder. In
no event shall any such adjustment have the effect of increasing the Exercise
Price as otherwise determined pursuant to this Article III except in the event
of a combination of shares

                                       12
<PAGE>
of the type contemplated in Section 3.4 hereof, and then in no event to an
amount greater than the Exercise Price as adjusted pursuant to Section 3.4
hereof.

                                   ARTICLE IV

                                  MISCELLANEOUS

      4.1 ENTIRE AGREEMENT. This Warrant, together with the Settlement
Agreement, contain the entire agreement between the holder hereof and the
Company with respect to the Warrant Shares purchasable upon exercise hereof and
the related transactions and supersedes all prior arrangements or understandings
with respect thereto.

      4.2 GOVERNING LAW. This warrant shall be governed by and construed in
accordance with the laws of the State of Texas.

      4.3 WAIVER AND AMENDMENT. Any term or provision of this Warrant may be
waived at any time by the party which is entitled to the benefits thereof and
any term or provision of this Warrant may be amended or supplemented at any time
by agreement of the holder hereof and the Company, except that any waiver of any
term or condition, or any amendment or supplementation, of this Warrant shall be
in writing. A waiver of any breach or failure to enforce any of the terms or
conditions of this Warrant shall not in any way effect, limit or waive a party's
rights hereunder at any time to enforce strict compliance thereafter with every
term or condition of this Warrant.

      4.4 ILLEGALITY. In the event that any one or more of the provisions
contained in this Warrant shall be determined to be invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in any other respect and the remaining
provisions of this Warrant shall not, at the election of the party for whom the
benefit of the provision exists, be in any way impaired.

      4.5 COPY OF WARRANT. A copy of this Warrant shall be filed among the
records of the Company.

      4.6 NOTICE. Any notice or other document required or permitted to be given
or delivered to the holder hereof shall be in writing and delivered at, or sent
by certified or registered mail to such holder at, the last address shown on the
books of the Company maintained at the Warrant Office for the registration of
this Warrant or at any more recent address of which the holder hereof shall have
notified the Company in writing. Any notice or other document required or
permitted to be given or delivered to the Company, other than such notice or
documents required to be delivered to the Warrant Office, shall be delivered at,
or sent by certified or registered mail to, the offices of the Company at 1240
East Campbell Road, Richardson, Texas 75081 or such other address within the
continental United States of America as shall have been furnished by the Company
to the holder of this Warrant, with a copy to Michael T. Larkin, Esq.,Bisk &
Fitch, L.L.P., 750 Weslayan Tower, 24 Greenway Plaza, Houston, Texas 77046.

      4.7 LIMITATION OF LIABILITY; NOT STOCKHOLDERS. No provision of this
Warrant shall be construed as conferring upon the holder hereof the right to
vote, consent, receive dividends or receive notices (other

                                       13
<PAGE>
than as herein expressly provided) in respect of meetings of stockholders for
the election of directors of the Company or any other matter whatsoever as a
stockholder of the Company. No provision hereof, in the absence of affirmative
action by the holder hereof to purchase shares of Common Stock, and no mere
enumeration herein of the rights or privileges of the holder hereof, shall give
rise to any liability of such holder for the purchase price of any shares of
Common Stock or as a stockholder of the Company, whether such liability is
asserted by the Company or by creditors of the Company.

      4.8 EXCHANGE, LOSS, DESTRUCTION, ETC. OF WARRANT. Upon receipt of evidence
satisfactory to the Company of the loss, theft, mutilation or destruction of
this Warrant, and in the case of any such loss, theft or destruction upon
delivery of a bond of indemnity or such other security in such form and amount
as shall be reasonably satisfactory to the Company, or in the event of such
mutilation upon surrender and cancellation of this Warrant, the Company will
make and deliver a new Warrant of like tenor, in lieu of such lost, stolen,
destroyed or mutilated Warrant. Any Warrant issued under the provisions of this
Section 4.8 in lieu of any Warrant alleged to be lost, destroyed or stolen, or
in lieu of any mutilated Warrant, shall constitute an original contractual
obligation on the part of the Company. This Warrant shall be promptly canceled
by the Company upon the surrender hereof in connection with any exchange or
replacement. The Company shall pay all taxes (other than securities transfer
taxes or income taxes) and all other expenses and charges payable in connection
with the preparation, execution and delivery of Warrants pursuant to this
Section 4.8.

      4.9 REGISTRATION RIGHTS. The Warrant Shares shall be entitled to such
registration rights under the Securities Act and under applicable state
securities laws as are specified in the Registration Rights Provisions.

      4.10 HEADINGS. The Article and Section and other headings herein are for
convenience only and are not a part of this Warrant and shall not affect the
interpretation thereof.

                                       14
<PAGE>
      IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in
its name and issued effective the date hereof.

Dated: November 30, 2000

                                   INTELECT COMMUNICATIONS, INC.

                                   By: /s/ HERMAN M. FRIETSCH
                                   Name:   Herman M. Frietsch
                                   Title:  Chairman and Chief Executive Officer

                                       15
<PAGE>
                              SUBSCRIPTION NOTICE

      The undersigned, the holder of the foregoing Warrant, hereby elects to
exercise purchase rights represented thereby for and to purchase thereunder,
________ shares of the Common Stock covered by such Warrant, and herewith makes
payment in full for such shares pursuant to Section 1.1 of such Warrant, and
requests (a) that certificates for such shares (and any other securities or
other property issuable upon such exercise) be issued in the name of, and
delivered to _____________________________________ and (b), if such shares shall
not include all of the shares issuable as provided in such Warrant, that a new
Warrant of like tenor and date for the balance of the shares issuable thereunder
be delivered to the undersigned.

                                           _____________________________________

Date:_____________________________________

                                       16
<PAGE>
                                  ASSIGNMENT

      For value received, _______________________, hereby sells, assigns, and
transfers unto _________________________ the within Warrant, together with all
right, title and interest therein, and does hereby irrevocably constitute and
appoint ________________________ attorney, to transfer such Warrant on the books
of the Company, with full power of substitution.

                                           _____________________________________

Date:_____________________________________

                                       17EXHIBIT 10.1

                     SETTLEMENT AGREEMENT AND MUTUAL RELEASE

      This Settlement Agreement and Mutual Release (hereinafter "Agreement") is
made and entered into effective as of this 30th day of November, 2000 by and
among Intelect Communications, Inc., a Delaware corporation ("Intelect"), and
St. James Capital Corp., a Delaware corporation ("SJCC"), St. James Capital
Partners, L.P., a limited partnership organized under the laws of the State of
Delaware ("SJCP"), SJMB, L.P., a limited partnership organized under the laws of
the State of Delaware ("SJMB"), SJMB, L.L.C., a Delaware limited liability
company ("SJMB LLC"), Charles E. Underbrink ("Underbrink"), and John L. Thompson
("Thompson") (SJCC, SJCP, SJMB, SJMB LLC, Underbrink and Thompson collectively
the "St. James Parties") and Falcon Seaboard Investment Co., L.P., a limited
partnership organized under the laws of the State of Delaware ("Falcon");

      WHEREAS, pursuant to an Agreement for Purchase and Sale dated February 12,
1998 between Intelect and SJCP, as partially assigned to SJMB as of April 2,
1998 (the "Credit Agreement"), each of SJCP and SJMB loaned money to Intelect
(the "Loan") and in connection with such Loan Intelect issued a warrant to SJCP
to purchase 300,000 shares of common stock, par value $0.01 per share of
Intelect (the "Common Stock"), at an exercise price of $7.50 per share, subject
to adjustment (the "SJCP Warrant"), and issued a warrant to SJMB to purchase
1,200,000 shares of Common Stock at an exercise price of $7.50 per share,
subject to adjustment (the "SJMB Warrant");

      WHEREAS, pursuant to the Credit Agreement, in connection with an extension
of the maturity date of the Loan, in January 1999 Intelect issued a warrant to
SJCP to purchase 110,000 shares of Common Stock at an exercise price of $3.20
per share, subject to adjustment (the "SJCP Extension Warrant"), and issued a
warrant to SJMB to purchase 425,000 shares of Common Stock at an exercise price
of $3.20 per share, subject to adjustment (the "SJMB Extension Warrant")(the

<PAGE>
SJCP Warrant, the SJMB Warrant, the SJCP Extension Warrant and the SJMB
Extension Warrant collectively the "Existing Warrants");

      WHEREAS, SJCP and SJMB have previously sold a participation interest in
the Credit Agreement to Falcon and Falcon has certain third party beneficiary
rights under the Credit Agreement and certain of the Existing Warrants;

      WHEREAS, SJMB and SJCP have filed suit against Intelect in ST. JAMES
CAPITAL PARTNERS, L.P. AND SJMB, L.P. V. INTELECT COMMUNICATIONS, INC., Cause
No. 2000-2666, in the 113th District Court, Harris County, Texas (the "Harris
County Suit") alleging, among other things, that Intelect was in violation of
the terms of the Existing Warrants relating to the anti-dilution provisions of
such warrants;

      WHEREAS, Intelect has filed suit against SJCP and SJMB in INTELECT
COMMUNICATIONS, INC. V. ST. JAMES CAPITAL PARTNERS, L.P. AND SJMB, L.P., in the
192nd District Court, Dallas County, Texas (the "Dallas County Suit") alleging,
among other things, that SJCP and SJMB improperly failed to return certain
collateral pledged by Intelect in the connection with the Credit Agreement and
violated the terms of that certain Pledge Agreement dated February 12, 1998
between Intelect and SJCP (the "Pledge Agreement");

      WHEREAS, Intelect has filed suit against the St. James Parties in INTELECT
COMMUNICATIONS, INC. V. ST. JAMES CAPITAL CORP, ET. AL, Civil Action No.
3-00CV-1957X, in the United States District Court for the Northern District of
Texas, Dallas Division (the "Federal Court Suit") (the Harris County Suit, the
Dallas County Suit, and the Federal Court Suit collectively the "Disputes")
alleging that the St. James Parties are liable for the disgorgement of
short-swing profits under Section 16(b) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act");

                                        2
<PAGE>
            WHEREAS, each party has consulted with counsel of its choice,
engaged in arm's length negotiations, engaged the services of a mediator,
mediated the Disputes on October 11, 2000, and agreed at mediation to
compromise, settle, and resolve the Disputes, such that it is knowingly and
voluntarily entering into the settlement and compromise of such claims evidenced
by this Agreement;

            WHEREAS, the parties have concluded that it would be in the best
interests of each party to enter into this Agreement in order to avoid the
uncertainties, expense, inconvenience and burdens of litigation, and to put to
rest this controversy;

      NOW, THEREFORE, in consideration of the foregoing and the mutual and
respective releases, covenants and undertakings and in full, complete and final
settlement of such claims and controversies, the parties agree as follows:

1.    THIS AGREEMENT IS NOT AN ADMISSION.

            The parties hereto agree that this Agreement, and any and all
negotiations, documents and discussions associated with it, shall not be deemed
or construed to be an admission or evidence of any violation of any contractual
provision, statute, law, rule or regulation or of any liability or wrongdoing by
any of the parties hereto, or of any absence of wrongdoing or of limitation of
damage or injury, and shall not be used, directly or indirectly, as evidence
thereof, in any way in any action or proceeding.

2.    BINDING EFFECT.

            Each party is entering into this Agreement on behalf of itself, and,
to the extent not prohibited by applicable law, its agents, affiliates,
stockholders, partners, employees, directors, representatives, successors and
assigns. This Agreement shall be binding upon, and inure to the

                                        3
<PAGE>
benefit of, each party and, to the extent not prohibited by applicable law, its
agents, affiliates, stockholders, members, partners, employees, directors,
managers, representatives, successors and assigns.

3.    ISSUANCE OF REPLACEMENT WARRANTS.

            Upon the execution and delivery of this Agreement (the "Closing"),
Intelect shall execute and deliver (a) to SJCP warrants to purchase (i) 860,500
shares of Common Stock at an exercise price of $0.75 expiring on June 30, 2002
(the " First Initial SJCP Warrant") and (ii) 2,119 shares of Common Stock at an
exercise price of $0.75 expiring on June 30, 2002 (the "Second Initial SJCP
Warrant"), (b) to SJMB warrants to purchase (i) 3,427,001 shares of Common Stock
at an exercise price of $0.75 expiring on June 30, 2002 (the "First Initial SJMB
Warrant") and (ii) 10,380 shares of Common Stock at an exercise price of $0.75
expiring on June 30, 2002 (the "Second Initial SJMB Warrant") (the First Initial
SJCP Warrant, the Second Initial SJCP Warrant, the First Initial SJMB Warrant,
and the Second Initial SJMB Warrant are hereinafter collectively the "Initial
Warrants"), (c) to SJCP a warrant to purchase 1,280,000 shares of Common Stock
at an exercise price of $0.75 expiring on September 30, 2002, exercisable no
earlier than April 15, 2001 (the "First Additional SJCP Warrant"), (d) to SJMB a
warrant to purchase 6,320,000 shares of Common Stock at an exercise price of
$0.75 expiring on September 30, 2002, exercisable no earlier than April 15,
2001, (the "First Additional SJMB Warrant"), (e) to SJCP a warrant to purchase
1,335,991 shares of Common Stock at an exercise price of $0.75 expiring on
September 30, 2002, exercisable no earlier than October 15, 2001 (the "Second
Additional SJCP Warrant"), and (f) to SJMB a warrant to purchase 6,264,009
shares of Common Stock at an exercise price of $0.75 and expiring on September
30, 2002, exercisable no earlier than October 15, 2001 (the "Second Additional
SJMB

                                        4
<PAGE>
Warrant")(the First Additional SJCP Warrant, the First Additional SJMB Warrant,
the Second Additional SJCP Warrant and the Second Additional SJMB Warrant are
hereinafter collectively the "Additional Warrants")(the Initial Warrants and the
Additional Warrants are hereinafter collectively the "Warrants"). As set forth
in the Warrants, Intelect has the right to redeem the Warrants at $6.75 per
share; PROVIDED, HOWEVER, that no such redemption shall be completed if upon the
written opinion of counsel, reasonably acceptable to Intelect and provided to
Intelect within ten (10) business days after the Redemption Demand (as defined
in the Warrant) is received by the holder of the Warrants, that such redemption
if completed would constitute a "sale" under Section 16(b) of the Exchange Act,
such "sale" would be matched with a "purchase" of securities of Intelect made by
the holder within the prior six months and such "purchase" is set forth in the
trading records of SJCP and SJMB supplied to Intelect as of the date of this
Agreement, and the matching of such purchase and sale would cause SJCP or SJMB,
as the case may be, to be liable to Intelect for short-swing profits under
Section 16(b) of the Exchange Act. Each of the referenced Warrants are attached
hereto as EXHIBIT A. Each of the Warrants are issued in connection with
anti-dilution provisions in the Existing Warrants (as defined in the recital),
the number and value of which have been agreed upon to resolve any and all
claims that have or could have been asserted in the Disputes, including any and
all liability of the St. James Parties to Intelect under Section 16 of the
Exchange Act for any and all sales and/or purchases made by SJCP and SJMB up
through and including the date of this Agreement. Intelect represents and
warrants that the resale of the 860,500 shares of Common Stock issuable upon
exercise of the First Initial SJCP Warrant and the 3,427,001 shares of Common
Stock issuable upon exercise of the First Initial SJMB Warrant (collectively the
"Registered Shares") are covered by currently effective registration statements
(collectively the "Effective Registration

                                        5
<PAGE>
Statements") previously filed by Intelect with the Securities and Exchange
Commission (the "SEC"). The date of the prospectuses included within such
Effective Registration Statements, copies of which have previously been
delivered or made available to SJCP or SJMB, as the case may be, are June 8,
1998, April 15, 1999, and February 28, 2000 (the "Effective Prospectuses").
Intelect agrees to file with the SEC, and make available to SJCP and SJMB,
copies of any supplements or amendments as may be required by the SEC to be made
to such Effective Registration Statements as a result of the transactions
pursuant to this Agreement. As a result of the transactions under this
Agreement, in the event that the SEC notifies Intelect in writing that the SEC
requires a new registration statement to be filed by Intelect covering the
Registered Shares or a court of competent jurisdiction shall render a judgment
that the Registered Shares cannot be sold or distributed under the Effective
Registration Statements, Intelect agrees to use its commercially reasonable best
efforts to file a new registration statement with the SEC on the appropriate
form covering the re-sale of the Registered Shares within ten (10) days after
receiving such notice from the SEC or such judgment is rendered and obtain the
effectiveness of such registration statement within forty five (45) days after
such notice is received or judgment is rendered, as the case may be (the
"Replacement Registration Statement"). For purposes of the remainder of this
Agreement, the Effective Registration Statements shall also be deemed to include
the Replacement Registration Statement, whichever shall apply.

4. DELIVERY OF COLLATERAL.

            At the Closing, the St. James Parties shall deliver to Intelect the
Collateral (as such term is defined in the Pledge Agreement) free and clear of
all liens, security interests, claims, encumbrances, hypothecations, or adverse
claims.

                                        6
<PAGE>
5. REGISTRATION RIGHTS AND RELATED PROVISIONS.

            (a) Intelect agrees that a registration statement on Form S-3 (the
"Registration Statement") covering the resale of the shares of Common Stock
issuable upon exercise of the Second Initial SJCP Warrant, the Second Initial
SJMB Warrant, the First Additional SJCP Warrant, the First Additional SJMB
Warrant, the Second Additional SJCP Warrant, and the Second Additional SJMB
Warrant (collectively the "Registrable Securities") will be filed by Intelect
with the SEC on or before March 30, 2001, and Intelect will use its commercially
reasonable best efforts to have the Registration Statement declared effective on
or before April 13, 2001 (the "Required Effective Date"), and subject to the
provisions of this Agreement, will use its commercially reasonable best efforts
to keep the Registration Statement and the Effective Registration Statements
continuously effective until all of such shares have been sold or may be resold
pursuant to Rule 144 (k) as promulgated under the Securities Act of 1933, as
amended (the "Securities Act") or all of the remaining Warrants have been
redeemed or expired by their terms. In the event that Form S-3 is unavailable
for such a registration, Intelect shall use such other form as is available for
such registration. Intelect agrees to supplement or amend the Registration
Statement and the Effective Registration Statements, as required by the form
utilized by Intelect and by the Securities Act and the rules and regulations
promulgated thereunder, and to furnish the St. James Parties copies of any such
supplement or amendment prior to its use.

            (b)    Intelect shall:

            (i)   After the Registration Statement has been declared effective
                  by the SEC, use its commercially reasonable best efforts to
                  furnish to SJCP and SJMB such numbers of copies of a
                  prospectus included in the Registration Statement in

                                       7
<PAGE>
                  conformity with the requirements of the Securities Act, and
                  such other documents as may be reasonably requested in order
                  to facilitate the disposition of the Registrable Securities;

            (ii)  Use its commercially reasonable best efforts to register and
                  qualify the securities covered by such Registration Statement
                  under other securities or Blue Sky laws of such jurisdictions
                  as shall be reasonably requested by SJCP and SJMB, provided
                  that Intelect shall not be required in connection therewith or
                  as a condition thereto to qualify as a broker-dealer in any
                  states or jurisdictions or to do business or to file a general
                  consent to service of process in any such states or
                  jurisdictions;

            (iii) Use its commercially reasonable best efforts to notify SJCP
                  and SJMB at any time when a prospectus relating thereto and
                  covered by the Registration Statement and the Effective
                  Registration Statements is required to be delivered under the
                  Securities Act, of the happening of any event as a result of
                  which the prospectus included in such registration statements,
                  as then in effect, includes an untrue statement of a material
                  fact or omits to state a material fact required to be stated
                  therein or necessary to make the statements therein not
                  misleading in light of the circumstances then existing.

            (iv)  Use its commercially reasonable best efforts to notify SJCP
                  and SJMB after it shall receive notice or obtain knowledge
                  thereof, of the issuance of any stop order by the SEC
                  suspending the effectiveness of the Registration Statement or
                  the Effective Registration Statements or the initiation or
                  threatening of any

                                        8
<PAGE>
                  proceeding for such purpose and promptly use all reasonable
                  efforts to prevent the issuance of any stop order or to obtain
                  its withdrawal if such stop order shall be issued.

            (c) Except for Selling Expenses, all expenses incurred in connection
with the registration of the Registrable Securities, including without
limitation all registration, filing, and qualification fees, printer's expenses,
and accounting and legal fees and expenses of Intelect shall be borne by
Intelect. All Selling Expenses (as hereafter defined) shall be borne by SJCP and
SJMB.

      "Selling Expenses" shall mean all underwriting discounts, selling
commissions and taxes applicable to the shares sold or transferred by the St.
James Parties and all fees and disbursements of counsel for the St. James
Parties.

            (d) To the fullest extent permitted by law, Intelect will, and
hereby does, indemnify, hold harmless and defend each of the St. James Parties
who holds such Registrable Securities and the Registered Shares, the directors,
officers, partners, employees, agents of, and each person, if any, who controls
any St. James Party within the meaning of the Securities Act or the Exchange Act
(each, an "Indemnified Person"), against any losses, claims, damages,
liabilities, judgments, fines, penalties, charges, costs, attorneys' fees,
amounts paid in settlement or expenses, joint or several, (collectively,
"Claims") incurred in investigating, preparing or defending any action, claim,
suit, inquiry, proceeding, investigation or appeal taken from the foregoing by
or before any court or governmental, administrative or other regulatory agency,
body or the SEC, whether pending or threatened, whether or not an indemnified
party is or may be a party thereto ("Indemnified Damages"), to which any of them
may become subject to the extent such Claims (or actions or proceedings, whether
commenced or threatened, in respect thereof) are attributable to: (i) any untrue

                                        9
<PAGE>
statement or alleged untrue statement of a material fact in a Registration
Statement or the Effective Registration Statements or any post-effective
amendment thereto or in any filing made in connection with the qualification of
the offering under the securities or other "blue sky" laws of any jurisdiction
in which Registrable Securities or Registered Shares are offered ("Blue Sky
Filing"), or the omission or alleged omission to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which the statements therein were made, not misleading,
(ii) any untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus (but only to the extent that Intelect
specifically authorizes in writing the use of such preliminary prospectus by the
St. James Parties) or the final prospectus (as amended or supplemented, if
Intelect files any amendment thereof or supplement thereto with the SEC) or the
omission or alleged omission to state therein any material fact necessary to
make the statements made therein, in light of the circumstances under which the
statements therein were made, not misleading, or (iii) any violation or alleged
violation by Intelect of the Securities Act, the Exchange Act, any state
securities law, or any rule or regulation thereunder relating to the offer or
sale of the Registrable Securities or the Registered Shares pursuant to a
registration statement (the matters in the foregoing clauses (i) through (iii)
being, collectively, "Violations"). Notwithstanding anything to the contrary
contained herein, the indemnification provisions contained in this Section 5(d):
(i) shall not apply to a Claim by an Indemnified Person arising out of or based
upon a Violation which occurs in reliance upon and in conformity with written
information furnished to Intelect by such Indemnified Person or underwriter for
such Indemnified Person for use in connection with the preparation of the
Registration Statement or the Effective Registration Statements or any such
amendment thereof or supplement thereto; (ii) with respect to any prospectus,
shall not inure to the

                                       10
<PAGE>
benefit of any such person from whom the person asserting any such Claim
purchased the Registrable Securities or the Registered Shares that are the
subject thereof (or to the benefit of any person controlling such person) if the
Indemnified Person was promptly advised in writing not to use the incorrect
prospectus prior to the use giving rise to a violation and such Indemnified
Person, notwithstanding such advice, used it; (iii) shall not be available to
the extent such Claim is based on a failure of the St. James Parties to deliver
or to cause to be delivered the prospectus made available by Intelect or any
violation by the St. James Parties of the Plan of Distribution set forth in the
prospectus; (iv) shall not apply to amounts paid in settlement of any Claim if
such settlement is effected without the prior written consent of Intelect, which
consent shall not be unreasonably withheld; and (v) with respect to any
preliminary prospectus shall not inure to the benefit of any Indemnified Person
if the untrue statement or omission of material fact contained in the
preliminary prospectus was corrected on a timely basis in the prospectus, as
then amended or supplemented. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Indemnified
Person.

            (e) To the fullest extent permitted by law, in connection with the
Registration Statement or the Effective Registration Statements in which a St.
James Party is participating, each such St. James Party agrees to indemnify,
hold harmless and defend, to the same extent and in the same manner as is set
forth in Section 5(d), Intelect, each of its directors, each of its officers who
signs the Registration Statement or the Effective Registration Statements, each
person, if any, who controls Intelect within the meaning of the Securities Act
or the Exchange Act (collectively an "Indemnified Party"), against any Claim or
Indemnified Damages to which any of them may become subject, under the
Securities Act, the Exchange Act or otherwise, insofar as such Claim or

                                       11
<PAGE>
Indemnified Damages arise out of or are based upon any Violation, to the extent,
(i) that such Violation occurs in reliance upon and in conformity with written
information furnished to Intelect by such St. James Party for use in connection
with such Registration Statement or the Effective Registration Statements, (ii)
that such Violation arises out of a misstatement or omission in a preliminary
prospectus or a prospectus which Intelect advised the St. James Party in writing
to not use, and the St. James Party subsequently used it, (iii) the St. James
Party failed to deliver or cause to be delivered the prospectus made available
by Intelect, or (iv) for any violation by the St. James Parties of the
provisions in the Plan of Distribution set forth in the prospectus. In such
event the St. James Party will reimburse any legal or other expenses reasonably
incurred by the Indemnified Party in connection with investigating or defending
any such Claim; provided, however, that the indemnity provisions contained in
this Section 5(e) and the provisions with respect to contribution contained in
Section 5(g) shall not apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of such St. James
Party, which consent shall not be unreasonably withheld. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of such Indemnified Party.

            (f) Promptly after receipt by an Indemnified Person or Indemnified
Party, as the case may be, under this Section 5 of notice of the commencement of
any action or proceeding (including any governmental action or proceeding)
involving a Claim, such Indemnified Person or Indemnified Party, as the case may
be, shall, if a Claim in respect thereof is to be made against any indemnifying
party under this Section 5, deliver to the indemnifying party a written notice
of the commencement thereof, and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed,

                                       12
<PAGE>
to assume control of the defense thereof and to select counsel therefore. If the
indemnifying party selects counsel pursuant to the preceding sentence, the
Indemnified Person or the Indemnified Party, as the case may be, shall have the
right to approve such counsel which approval shall not be unreasonably withheld.
In the event that the Indemnified Person or the Indemnified Party, as the case
may be, does not approve of the selection of counsel by the indemnifying party
and the withholding of such approval is reasonable, then the indemnifying party
shall be responsible for the reasonable costs and expenses of one counsel
selected by the Indemnified Person and the Indemnified Party, as the case may
be, to represent their interests, PROVIDED that the indemnifying party shall not
be responsible for the costs and expenses of more than one counsel total
selected by the Indemnified Party or Indemnified Person. The Indemnified Party
or Indemnified Person, as the case may be, shall cooperate fully with the
indemnifying party in connection with any negotiation or defense of any such
action or claim by the indemnifying party and shall furnish to the indemnifying
party all information reasonably available to the Indemnified Party or
Indemnified Person, as the case may be, which relates to such action or claim.
The indemnifying party shall keep the Indemnified Party or Indemnified Person,
as the case may be, fully notified at all times as to the status of the defense
or any settlement negotiations with respect thereto. No indemnifying party shall
be liable for any settlement of any action, claim or proceeding effected without
its written consent, provided, however, that the indemnifying party shall not
unreasonably withhold, delay or condition its consent. No indemnifying party
shall, without the consent of the Indemnified Party or Indemnified Person, as
the case may be, consent to entry of any judgment or enter into any settlement
or other compromise which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party or Indemnified
Person, as the case may be, of

                                       13
<PAGE>
a release from all liability in respect to such claim or litigation. Following
indemnification as provided for hereunder, the indemnifying party shall be
subrogated to all rights of the Indemnified Party or Indemnified Person, as the
case may be, with respect to all third parties, firms or corporations relating
to the matter for which indemnification has been made. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of any
liability to the Indemnified Person or Indemnified Party, as the case may be,
under this Section 5, except to the extent that the indemnifying party is
prejudiced in its ability to defend such action.

            (g) To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Section 5 to the fullest extent permitted by law; provided, however, that
no seller of Registrable Securities or Registered Shares guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any seller of Registrable Securities or
Registered Shares who was not guilty of fraudulent misrepresentation.

            (h) So long as Intelect has a class of securities registered
pursuant to Section 12 of the Exchange Act and so long as the St. James Parties
own any of the shares issuable upon exercise of the Warrants and such shares are
"restricted securities" (as defined in Rule 144), with a view of making
available to the St. James Parties the benefits of Rule 144 under the Securities
Act and any other rule or regulation of the SEC that may at any time permit the
St. James Parties to sell the shares to the public without registration,
Intelect agrees to use its commercially reasonable best efforts to:

                                       14
<PAGE>
            (i)   make and keep public information available, as those terms are
                  understood and defined in Rule 144, at all times;

            (ii)  file with the SEC in a timely manner all reports and other
                  documents required of Intelect under the Securities Act and
                  the Exchange Act; and

            (iii) make available to the St. James Parties, so long as the St.
                  James Parties own any Registrable Securities or Registered
                  Shares a copy of the most recent annual or quarterly report of
                  Intelect and such other SEC reports and documents filed by
                  Intelect and such other information (but not opinion of
                  counsel) as may be reasonably requested by the St. James
                  Parties seeking to avail itself of any rule or regulation of
                  the SEC with permits the selling of any such securities
                  without registration.

            (i) If required under the rules of the Nasdaq Stock Market, Inc.,
Intelect shall file before the Closing any required applications and
notifications in connection with the issuance of the Warrants. Intelect shall
use its commercially reasonable best efforts either to secure and maintain
designation and quotation of all the Registrable Securities covered by the
Registration Statement and all Registered Securities covered by the Effective
Registration Statements on the Nasdaq Small Cap Market or, if, despite
Intelect's commercially reasonable best efforts to satisfy the preceding clause,
Intelect is unsuccessful in satisfying the preceding clause, then Intelect shall
use its commercially reasonable best efforts to secure the inclusion for
quotation on the OTC Bulletin Board for such Registrable Securities and, without
limiting the generality of the foregoing, to arrange for at least two market
makers to register with the National Association of Securities Dealers, Inc.
("NASD") as such with respect to such shares.

                                       15
<PAGE>
6. TERMINATION OF CERTAIN RIGHTS.

      The parties acknowledge that all rights they may have under the Credit
Agreement (including pursuant to any documents, opinions, or certificates
delivered pursuant to the Credit Agreement), the Existing Warrants, the Pledge
Agreement, the Registration Rights Agreement dated February 12, 1998 between
Intelect and SJCP, as amended, the Registration Rights Agreement dated August
13, 1999 among Intelect, SJMB and SJCP, those certain convertible promissory
notes, as amended, issued by Intelect to each of SJMB and SJCP in connection
with the Loan, the Security Agreement, as amended between Intelect, SJCP and
SJMB, the letter agreement dated September 14, 1998 among Intelect, SJMB, SJCP,
and Falcon, and the Repayment and Exchange Agreement dated August 13, 1999 among
Intelect, SJCP and SJMB, or any amendments, supplements or modifications to the
foregoing documents (each of the above documents and any amendments, supplements
or modifications collectively the "Terminated Documents"), are each hereby
terminated.

7. REPRESENTATIONS AND WARRANTIES.

            (a) As of the date hereof and as of the date any shares are issued
upon exercise of the Warrants each St. James Party that is receiving Securities
(as hereinafter defined) hereunder (the "St. James Shareholder"), severally, but
not jointly represents and warrants to Intelect as follows:

            (i)   INVESTMENT INTENT. Such St. James Shareholder is acquiring all
                  of the Warrants and will acquire the shares then issuable upon
                  exercise of the Warrants (the "Warrant Shares")(the Warrants
                  and the Warrant Shares collectively the "Securities") for its
                  own account for investment only and not

                                       16
<PAGE>
                  with a view towards, or for resale in connection with, the
                  public sale or distribution thereof; provided that nothing in
                  this representation shall preclude the transfer of such
                  Securities pursuant to an effective registration statement
                  under the Securities Act or pursuant to an exemption from
                  registration under the Securities Act.

            (ii)  ACCREDITED INVESTOR STATUS. Such St. James Shareholder is an
                  "accredited investor" as that term is defined in Rule 501(a)
                  of Regulation D promulgated under the Securities Act.

            (iii) RELIANCE ON EXEMPTIONS. Such St. James Shareholder understands
                  that the Securities are being issued in reliance on specific
                  exemptions from the registration requirements of United States
                  federal and state securities laws and that Intelect is relying
                  upon the truth and accuracy of, and the St. James
                  Shareholder's compliance with, the representations,
                  warranties, agreements, acknowledgments and understandings of
                  the St. James Shareholder set forth herein in order to
                  determine the availability of such exemptions and their
                  eligibility to acquire the Securities.

            (iv)  INFORMATION. Such St. James Shareholder and its advisors, if
                  any, were at the time the Existing Warrants were first issued
                  furnished with all materials relating to the business,
                  finances and operations of Intelect and materials relating to
                  the offer and issuance of the Securities, which have been
                  requested by them. Such St. James Shareholder understands that
                  the Securities involve a high degree of risk, including
                  without limitation those risks set forth in the

                                       17
<PAGE>
                  Public Documents (as hereafter defined) and that such St.
                  James Shareholder has determined that the Securities are a
                  suitable investment and understands it could bear a complete
                  loss of such investment. Such St. James Shareholder has sought
                  such advice as it has considered necessary to make an informed
                  investment decision with respect to the Securities. Each St.
                  James Shareholder acknowledges that it had access to copies of
                  (and acknowledges that Intelect has offered to provide, upon
                  its request, copies of) Intelect=s filings with the SEC
                  (collectively, the APublic Documents@) and it has not been
                  furnished with any oral representation or warranty in
                  connection with the issuance of the Securities by Intelect or
                  any director, officer, employee, agent, affiliate or
                  subsidiary, which is not contained in or contemplated herein.
                  Any information which any St. James Shareholder has heretofore
                  represented or furnished to Intelect with respect to its
                  experience, or trading practices or records of any of the St.
                  James Shareholder, is correct and complete.

            (v)   NO GOVERNMENTAL REVIEW. Each St. James Shareholder understands
                  that no United States federal or state agency or any other
                  government or governmental agency has passed on or made any
                  recommendation or endorsement of the Securities or the
                  fairness or suitability of the investment in the Securities
                  nor have such authorities passed upon or endorsed the merits
                  of the offering of the Securities.

                                       18
<PAGE>
            (vi)  TRANSFER OR RESALE. Each St. James Shareholder understands
                  that except as provided herein: (i) the Securities have not
                  been and are not being registered under the Securities Act or
                  any state securities laws, and may not be offered for sale,
                  sold, assigned or transferred unless (a) subsequently
                  registered thereunder, (b) the St. James Shareholder, as
                  applicable, shall have delivered to Intelect an opinion of
                  counsel reasonably acceptable to Intelect to the effect that
                  the Securities to be sold, assigned or transferred may be
                  sold, assigned or transferred pursuant to an exemption from
                  such registration, or (c) the St. James Shareholder, as
                  applicable, provides Intelect with an opinion of counsel
                  reasonably acceptable to Intelect that such Securities can be
                  sold, assigned or transferred pursuant to Rule 144; (ii) the
                  Securities shall be issued with the legends as set forth in
                  the Warrants attached hereto as Exhibit A; and (iii) except as
                  expressly provided herein, neither Intelect nor any other
                  person is under any obligation to register such Securities
                  under the Securities Act or any state securities laws or to
                  comply with the terms and conditions of any exemption
                  thereunder.

            (b) As of the date hereof and the date any Securities are issued,
Intelect represents and warrants to each St. James Shareholder that:

            (i)   VALID ISSUANCE OF WARRANTS AND COMMON STOCK. The Warrants,
                  when issued and delivered in accordance with the terms of this
                  Agreement, will be duly and validly issued, fully paid, and
                  non-assessable, and will be free of restrictions on transfer
                  other than restrictions on transfer as set forth in the

                                       19
<PAGE>
                  Agreement or under applicable state and federal securities
                  laws. The Common Stock issuable upon exercise of the Warrants
                  has been duly and validly reserved for issuance and, upon
                  issuance in accordance with the terms of the Warrants, will be
                  duly and validly issued, fully paid, and non-assessable and
                  will be free of restrictions on transfer other than
                  restrictions on transfer as set forth in the Agreement or
                  under applicable state and federal securities laws.

            (ii)  ORGANIZATION, ETC. Intelect is a corporation, duly organized,
                  validly existing and in good standing in the State of
                  Delaware.

            (iii) CAPITALIZATION. As of November 22, 2000, Intelect had
                  200,000,000 shares of Common Stock authorized for issuance, of
                  which 86,089,050 shares of Common Stock were outstanding (as
                  set forth in the Form 10-Q of Intelect for the Quarter ended
                  September 30, 2000) of which 191,435 shares of Common Stock
                  were held in treasury.

8. DISCLOSURE.

      Except as may be required by applicable law or by the rules of any
national securities exchange or registered securities association or deemed
advisable by counsel, neither Intelect nor SJMB or SJCP shall issue any press
release with respect to this Settlement Agreement or the transactions
contemplated hereby without the prior consent of the other party (which consent
shall not be unreasonably withheld under the circumstances).

9. ALLOCATION FOR SATISFACTION OF SECTION 16 PROFITS.

                                       20
<PAGE>
      The parties acknowledge and agree that: (i) the number of Warrants issued
pursuant to this Agreement is less than the number of warrants to which SJCP and
SJMB contend they were entitled under the anti-dilution provisions of the
Existing Warrants as alleged in the Disputes; (ii) the exercise price for the
Warrants issued pursuant to this Agreement is greater than the exercise price to
which SJCP and SJMB contend they were entitled under the anti-dilution
provisions of the Existing Warrants as alleged in the Disputes; (iii) that SJCP
and SJMB contend that they have suffered damages in addition thereto as a result
of Intelect's alleged breach of its obligations related to the anti-dilution
provisions of the Existing Warrants; (iv) that SJCP and SJMB accepted a number
of Warrants pursuant to this Agreement less than the number of warrants to which
SJCP and SJMB contend they were entitled and accepted an exercise price for the
Warrants issued pursuant to this Agreement greater than the exercise price to
which SJCP and SJMB contend they were entitled and that SJCP and SJMB have
released their claims for damages with the intent of and for the purposes fully
satisfying and returning to Intelect the value of any short-swing profits on any
and all sales and/or purchases up through the date of this Agreement as set
forth in the trading records of SJCP and SJMB supplied to Intelect on such date
for which the St. James parties may have been liable to Intelect under Section
16 of the Exchange Act ("Section 16 Profits"); (v) that Intelect has pursuant to
this Agreement received full value for its Section 16 Profits; and (vi) that the
parties intend to and agree to allocate (x) the difference in value between the
number of warrants to which SJCP and SJMB contend they were entitled at the
exercise price to which they contend they were entitled and the number of
Warrants and exercise price actually received pursuant to this Agreement, and
(y) the value of the damages that SJCP and SJMB contend they suffered first to
the full satisfaction of such Section 16 Profits.

10. MUTUAL RELEASES.

                                       21
<PAGE>
            (a) In consideration for this settlement and the additional
consideration reflected in this Agreement, the receipt and sufficiency of which
are hereby acknowledged and confessed, the St. James Parties and Falcon, on
behalf of themselves and, to the extent not prohibited by applicable law, their
respective agents, affiliates, stockholders, partners, members, employees,
directors, managers, representatives, successors and assigns do hereby RELEASE,
ACQUIT AND FOREVER DISCHARGE Intelect, its agents, affiliates, stockholders,
partners, members, employees, directors, managers, representatives, successors
and assigns from and agree not to encourage, cooperate with or assist any third
party to assert any and all manner of claims, demands and causes of action of
whatsoever nature whether known or unknown, direct or indirect, personal or
received by assignment, suspected or unsuspected, asserted or which could have
been asserted, under common law and/or statute, including, but not limited to,
any federal statutes or regulations, state statutes or regulations, any claim
for breach of contract or detrimental reliance, fraud, breach of fiduciary duty,
conversion, negligence, conspiracy, misrepresentation and including actual
damages, punitive or exemplary damages, treble damages, damages for any
violation of statute, regulation or law, or any other kind of expense, loss or
damage of any kind or character, of whatever description, or any other cause of
action under any other legal theory, related to any event, conduct or activity
which occurred prior to the execution of this Agreement or relating to any other
acts, omissions, events, occurrences, happenings or circumstances occurring or
existing prior to the date of this Agreement, in each case arising out of or
relating to the Terminated Documents or the Disputes.

            (b) In consideration of the foregoing consideration, Intelect, on
behalf of itself and, to the extent not prohibited by applicable law, its
agents, affiliates, stockholders, partners, members, employees, directors,
managers, representatives, successors and assigns, do hereby

                                       22
<PAGE>
RELEASE, ACQUIT AND FOREVER DISCHARGE the St. James Parties and Falcon, and
their respective agents, affiliates, stockholders, partners, members, employees,
directors, managers, representatives, successors and assigns, from and agree not
to encourage, cooperate with or assist any third party to assert any and all
manner of claims, demands and causes of action of whatsoever nature whether
known or unknown, direct or indirect, personal or received by assignment,
suspected or unsuspected, asserted or which could have been asserted, under
common law and/or statute including, but not limited to, any federal statute or
regulation, whether arising under Section 16(b) of the Exchange Act or
otherwise, state statute or regulation, any claim for breach of contract or
detrimental reliance, fraud, breach of fiduciary duty, conversion, negligence,
conspiracy, misrepresentation, and including actual damages, punitive or
exemplary damages, treble damages, damages for any violation of statute,
regulation or law, or any other kind of expense, loss or damage of any kind or
character, of whatever description, or any other cause of action under any other
legal theory, related to any event, conduct or activity which occurred prior to
the execution of this Agreement, or relating to any other acts, omissions,
events, occurrences, happenings or circumstances occurring or existing prior to
the date of this Agreement, in each case arising out of or relating to the
Terminated Documents, the Section 16 Profits, or the Disputes.

11. AGREED MOTIONS TO DISMISS.

            The parties agree to promptly file Motion to Dismiss with prejudice
for each of the Dallas County Suit, the Harris County Suit, and the Federal
Court Suit. Each party further agrees to have orders signed effecting dismissal
of each of the Disputes with prejudice. The form of such motions and orders are
attached hereto as Exhibit B.

12. NO UNDUE INFLUENCE.

                                       23
<PAGE>
            As further consideration, the St. James Parties and Intelect each
represent that they have not relied on or otherwise been influenced in the
making of this Agreement by any representations, promises or statements made by
any other party to this Agreement or any agent, attorney, or other
representative of a party to this Agreement, that are not included among the
express terms set forth in this written Agreement, that they have read and fully
understand this Agreement, they understand that the terms of the settlement are
contained only in this written Agreement, and that there are no representations
or agreements of any kind not expressly set forth herein, including, but not
limited to, the Disputes or any defenses Intelect may or may not have had to the
Disputes, and that they realize this settlement is final and conclusive and it
is their desire that it be final and conclusive as provided herein.

13. NO TRANSFER OF RIGHTS.

      As further consideration, the St. James Parties and Intelect do hereby
expressly warrant and represent to the other parties of this Agreement that each
has not assigned, pledged or otherwise in any manner whatsoever sold or
transferred either by instrument in writing, or otherwise, any right, title,
interest or claim which each has or may have by reasons of the Disputes. The St.
James Parties shall not assign or transfer, assign or pledge their rights under
this Agreement or the Warrants without the prior written consent of Intelect,
which consent shall not be unreasonably withheld. Any such assignment, transfer
or pledge without such consent shall be void and of no effect.

14. AUTHORIZATION TO ENTER INTO AGREEMENT.

      Each party represents that (i) it has received all required approvals for,
and is authorized to engage in, the execution, delivery and performance of this
Agreement, and (ii) this Agreement has been duly executed and delivered by such
party and constitutes the valid and binding obligation of

                                       24
<PAGE>
such party enforceable against such party in accordance with its terms, except
as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally, the enforcement of creditors=
rights and remedies. Each party represents and warrants to the other that they
have all requisite power and authority to conduct their business as presently
conducted.

15. INTEGRATED AGREEMENT, NO WAIVER.

      This Agreement constitutes the entire, complete, and integrated statement
of each and every term and provision agreed to by and among the parties relating
to its subject matter and is not subject to any condition not provided for
herein. This Agreement shall not be changed, modified, or supplemented except by
a writing executed by the parties. No failure or delay by any party exercising
any right, power or privilege hereunder shall operate as a waiver thereof, not
shall any single or partial exercise thereof preclude any further exercise
thereof or the exercise of any right, power or privilege thereunder.

16. NO PARTY IS DRAFTER.

      None of the parties hereto shall be considered a drafter of the Agreement
or any provision hereof for the purpose of any statute, case law or rule of
interpretation or construction that might cause any provision to be construed
against the drafter hereof.

17. LEGAL ADVICE.

      Each party has received independent legal advice from attorneys of its
choice with respect to the advisability of making this Agreement and entering
into the releases, covenants and undertakings provided herein.

18. CHOICE OF LAW.

                                       25
<PAGE>
      This Agreement shall be governed and construed under Texas law without
regard to choice of law principles.

19. COUNTERPARTS.

      This Agreement may be signed in multiple counterparts, each of which shall
constitute an original. Facsimile signatures of this Agreement may be exchanged
which shall have the same legal effect as executed originals, provided that the
parties shall exchange originally executed signatures of this Agreement as soon
thereafter as practicable.

20. NOTICES.

      All notices or other communications which are required or may be given
under this Agreement shall be in writing and shall be deemed to have been duly
given when delivered in person, transmitted by telecopier (with receipt
confirmed) or mailed by registered or certified first class mail, postage
prepaid, return receipt requested to the parties hereto at the address set forth
below (as the same may be changed from time to time by notice similarly given)
or at the last known business or residence address of such other person as may
be designated by either party hereto in writing.

If to Intelect:                            With a copy to:

      Intelect Communications, Inc.              Bisk & Fitch, L.L.P.
      1240 East Campbell Road                    24 Greenway Plaza, Suite 750
      Richardson, Texas 75081                    Houston, Texas 77046
      Facsimile: (469) 330-4972                  Facsimile: (713) 871-0721
      Attn.: Herman M. Frietsch,                 Attn.: Michael T. Larkin, Esq.
             Chairman and CEO

If to any of the St. James Parties:        With a copy to:
      c/o St. James Capital Corp.                Gardere, Wynne & Sewell, L.L.P.
      777 Post Oak Boulevard, Suite 950          1000 Louisiana, Suite 3400
      Houston, Texas 77056                       Houston, Texas 77002-5007

                                       26
<PAGE>
      Facsimile: (713) 871-1028                  Facsimile: (713) 276-5555
      Attn.: John L. Thompson, President         Attn.: Eric Blumrosen, Esq.

If to Falcon:

      c/o FSI Management, LLC
      5 Post Oak Park, Suite 1400
      Houston, Texas 77027
      Facsimile: (713) 621-4638
      Attn.: Martin H. Young, Jr.

                                       27
<PAGE>
      EXECUTED in multiple originals this 30th day of November, 2000.

                                INTELECT COMMUNICATIONS, INC.

                                By: /s/ HERMAN M. FRIETSCH
                                        Herman M. Frietsch
                                        Chairman and Chief Executive Officer

                                ST. JAMES CAPITAL PARTNERS, L.P.
                                By: St. James Capital Corp., its General Partner

                                By: /s/ JOHN L. THOMPSON
                                        John L. Thompson
                                        President

                                SJMB, L.P.
                                By: SJMB, L.L.C., its General Partner

                                By: /s/ JOHN L. THOMPSON
                                        John L. Thompson
                                        President

                                SJMB, L.L.C.

                                By: /s/ JOHN L. THOMPSON
                                        John L. Thompson
                                        President

                                ST. JAMES CAPITAL CORP.

                                By: /s/ JOHN L. THOMPSON
                                        John L. Thompson
                                        President

                                /s/ CHARLES E. UNDERBRINK
                                    Charles E. Underbrink

                                /s/ JOHN L. THOMPSON
                                    John L. Thompson

                                       28
<PAGE>
                                FALCON SEABOARD INVESTMENT CO., L.P.
                                By: FSI Management Company, L.L.C.,  its General
                                Partner

                                By: /s/ MARTIN H. YOUNG, JR.
                                        Martin H. Young, Jr.
                                        Senior Vice President and Chief
                                        Financial Officer

                                       29

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