<PAGE>
                                                                     EXHIBIT 4.1

                         REGISTRATION RIGHTS AGREEMENT


   AGREEMENT dated as of January 18, 2001 among TranSwitch Corporation, a
Delaware corporation (the "Company") and the Shareholders of the Company listed
                           -------
on the signature pages hereto (the "Shareholders").

                             W I T N E S S E T H :

   WHEREAS, pursuant to the Share Purchase Agreement dated January 18, 2001 (the
"Share Purchase Agreement"), among the Company; TranSwitch III, Inc. a Delaware
 ------------------------
corporation and a wholly-owned subsidiary of the Company ("Purchaser"); ADV
                                                           ---------
Engineering, a corporation organized under the laws of France ("ADV"), and the
                                                                ---
Shareholders of ADV, ADV will become a wholly-owned subsidiary of Purchaser.

   WHEREAS, in connection therewith, certain Shareholders are acquiring
unregistered shares of Common Stock of the Company (the "Shares");
                                                         ------

   WHEREAS, the Company and the Shareholders wish to set forth certain rights
and obligations with regard to the registration of the Shares;

   NOW, THEREFORE, the parties hereto agree as follows:

    1.  Certain Definitions.  As used in this Agreement, the following terms
        -------------------
shall have the following respective meanings:

    "Commission" shall mean the United States Securities and Exchange
     ----------
   Commission, or any other federal agency at the time administering the
   Securities Act.

    "Effective Time" shall have the same meaning ascribed to it in the Merger
     --------------
   Agreement.

    "Shares" shall mean the shares of Common Stock of the Company issued to the
     ------
   Shareholders on even date herewith pursuant to the Merger Agreement.

    "Common Stock" shall mean the Common Stock, $.001 par value, of the
     ------------
   Company, as constituted as of the date of this Agreement.

    "Exchange Act" shall mean the United States Securities Exchange Act of
     ------------
   1934, as amended, or any similar federal statute, and the rules and
   regulations of the Commission thereunder, all as the same shall be in effect
   at the time.

    "Registration Expenses" shall mean the expenses so described in Section
     ---------------------
   7.

    "Securities Act" shall mean the United States Securities Act of 1933, as
     --------------
   amended, or any similar federal statute, and the rules and regulations of the
   Commission thereunder, all as the same shall be in effect at the time.
<PAGE>

                                      -2-



       "Selling Expenses" shall mean the expenses so described in Section 7.
        ----------------

     2.   Securities Act Matters.  Each Shareholder acknowledges and agrees that
          ----------------------
the Shares have not been registered under the Securities Act or under the
securities laws of any state or foreign jurisdiction, in reliance upon certain
exemptive provisions of such statutes.  Each Shareholder recognizes and
acknowledges that such claims of exemption are based, in part, upon each
Shareholder's representations contained in this Agreement.  Each Shareholder
further recognizes and acknowledges that, because the Shares are unregistered
under federal and state laws, they are not presently eligible for public resale,
and may only be resold in the future pursuant to an effective registration
statement under the Securities Act and any applicable state securities laws, or
pursuant to a valid exemption from such registration requirements.  Each
Shareholder recognizes and acknowledges that Rule 144 (which facilitates routine
sales of securities in accordance with the terms and conditions of that Rule,
including a holding period requirement) or any other exemption promulgated under
the Securities Act is not now available for resale of the Shares, and each
Shareholder recognizes and acknowledges that, in the absence of the availability
of Rule 144, a sale pursuant to a claim of exemption from registration under the
Securities Act would require compliance with some other exemption under the
Securities Act, none of which may be available for resale of the Shares.  Each
Shareholder recognizes and acknowledges that, except as set forth in this
Agreement, the Company is under no obligation to register the Shares, either
pursuant to the Securities Act or the securities laws of any state.

     3.   Restrictive Legend. Each certificate representing Shares shall, except
          ------------------
as otherwise provided in this Section 3, be stamped or otherwise imprinted with
a legend substantially in the following form:

          "The Securities represented hereby have not been registered under the
     Securities Act of 1933, as amended, and may not be sold, transferred or
     otherwise disposed of except in accordance with the terms thereof and
     unless registered with the Securities and Exchange Commission of the United
     States and the securities regulatory authorities of certain states or
     unless an exemption from such registration is available."

     Such certificates shall not bear such legend if in the opinion of counsel
satisfactory to the Company the securities being sold thereby may be publicly
sold without registration under the Securities Act or if such securities have
been sold pursuant to Rule 144, any other exemption under the Securities Act, or
an effective registration statement.

     4.   Required Registration on Form S-3. Subject to the provisions set forth
          ---------------------------------
below, the Company agrees to use commercially reasonable best efforts to (i)
cause a registration statement on Form S-3 under the Securities Act (the "S-3
                                                                          ---
Registration Statement") relating to the resale of the Shares to be filed as
----------------------
soon as practicable and in any event no later than two [2] days after the
Effective Time (as defined in the Merger Agreement) (the "Initial Filing Date");
                                                          -------------------
and (ii) cause the S-3 Registration Statement to become effective no later than
[six weeks] after the Initial Filing Date and thereafter remain effective until
the earlier of (A) the first (1st) anniversary of the Effective Time (the
"Distribution Period") or (B) the sale of all Shares covered thereby. The
 -------------------
Company may suspend sales at any time under the S-3 Registration Statement
immediately upon
<PAGE>

                                      -3-

notice to each of the Shareholders at their last known addresses, for any of the
reasons and for the time periods set forth in Section 6. Any registration
statement filed or required to be filed by the Company pursuant to this Section
4 shall be referred to herein as the "Registration Statement."
                                      ----------------------

     5.   Registration Procedures.  If and whenever the Company is required by
          -----------------------
the provisions of Section 4 to use commercially reasonable best efforts to
effect the registration of any Shares under the Securities Act, the Company
will, as expeditiously as possible:

          (a)  prepare and file with the Commission such amendments and
supplements to the Registration Statement, and the prospectuses used in
connection therewith, as may be necessary to comply with the Securities Act;

          (b)  furnish to each Shareholder such number of copies of the
Registration Statement and each such amendment and supplement thereto (in each
case including exhibits) and the prospectus included therein (including each
preliminary prospectus) as such persons reasonably may request in order to
facilitate the public sale or other disposition of the Shares covered by the
Registration Statement;

          (c)  register or qualify the Shares covered by the Registration
Statement under the securities or "blue sky" laws of the jurisdictions where the
Company is currently registered or qualified, provided, however, that the
Company shall not for any such purpose be required to qualify generally to
transact business as a foreign corporation in any jurisdiction where it is not
so qualified or to consent to general service of process in any such
jurisdiction;

          (d)  have the Shares covered by the Registration Statement subject to
quotation on the Nasdaq National Market or listed on any exchange on which
shares of Common Stock are traded; and

          (e)  promptly notify each Shareholder (at their last known addresses)
(i) of the effective date of the Registration Statement and the date when any
post-effective amendment to the Registration Statement becomes effective, (ii)
of any stop order or notification from the Commission or any other jurisdiction
as to the suspension of the effectiveness of the Registration Statement, or
(iii) of the end of any suspension under Section 6.

          (f)  notify the Shareholder of the happening of any event as a result
of which the prospectus included in such Registration Statement, as then in
effect, includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing, and at
the request of the Shareholder prepare and furnish to the Shareholder a
reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such shares, such prospectus shall not include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in light of
the circumstances then existing.
<PAGE>

                                      -4-

          (g)  Delivery of Prospectus.  For any offer or sale of any of the
               ----------------------
Registrable Shares by a Shareholder in a transaction that is not exempt under
the Securities Act, the Shareholder, in addition to complying with any other
federal securities laws, shall deliver a copy of the final prospectus (or
amendment of or supplement to such prospectus) of Parent covering the
Registrable Shares in the form furnished to the Shareholder by Parent to the
purchaser of any of the Registrable Shares on or before the settlement date for
the purchase of such Registrable Shares.

     6.   Suspension.
          ----------

          (a)  The rights of the Shareholders to distribute the Shares pursuant
to this Agreement and the S-3 Registration Statement may be suspended by the
Company at any time immediately upon notice to the Shareholders at the last
known addresses of the Shareholders, for a period or periods of time not to
exceed 45 days consecutively or 90 days in the aggregate during any 12-month
period, if there then exists material, non-public information relating to the
Company, which, in the reasonable opinion of the Company, would not be
appropriate for disclosure during that time; provided, however, that any such
                                             --------  -------
suspension shall apply only for so long as "affiliates" (as defined in Rule 501
of Regulation D) of the Company are restricted from selling shares of the
Company.

     7.   Expenses. All expenses incurred by the Company in complying with
          --------
Section 5, including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel and independent public
accountants for the Company, fees and expenses incurred in connection with
complying with state securities or "blue sky" laws, fees of the National
Association of Securities Dealers, Inc., transfer taxes, fees of transfer agents
and registrars, and costs of issuance, but excluding any Selling Expenses (as
hereinafter defined), are called "Registration Expenses". All underwriting
                                  ------------ --------
discounts (if any) and selling commissions applicable to the sale of the Shares
covered by the Registration Statement, as well as all professional service fees
incurred by the Shareholders, are called "Selling Expenses".
                                          ----------------

     The Company will pay all Registration Expenses in connection with the
preparation and filing of the Registration Statement.  All Selling Expenses
shall be borne by the Shareholders in proportion to the number of Shares sold by
each.

     8.  Indemnification and Contribution.
         --------------------------------

        (a)    In connection with the registration of the Shares under the
Securities Act pursuant to Section 4, the Company will indemnify and hold
harmless each Shareholder and each other person, if any, who controls such
Shareholder within the meaning of the Securities Act, against any losses,
claims, damages or liabilities, joint or several, to which such Shareholder or
controlling person may become subject under the Securities Act, Exchange Act,
state securities laws or otherwise, insofar as such losses, claims, damages or
liabilities (or actions, proceedings or settlements in respect thereof) arise
out of or are based upon (i) any untrue statement or alleged untrue statement of
material fact contained in the registration statement under which such Shares
were registered under the Securities Act pursuant to Section 4, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereto, (ii) the omission
<PAGE>

                                      -5-

or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading or (iii) any violation
by the Company or its agents of any rule or regulation promulgated under the
Securities Act, Exchange Act or state securities laws applicable to the Company
or its agents and relating to action or inaction required of the Company in
connection with such registration, and the Company will reimburse each such
Shareholder and each such controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action, provided, however, that the
                                               --------  -------
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission so made based upon
information furnished in writing by any such Shareholder or any such controlling
person for use in such Registration Statement.

          (b)  In connection with the registration of the Shares under the
Securities Act pursuant to Section 4, each Shareholder, severally and not
jointly, will indemnify and hold harmless the Company, each person, if any, who
controls the Company within the meaning of the Securities Act, each officer of
the Company who signs such registration statement and each director of the
Company, against all losses, claims, damages or liabilities, joint or several,
to which the Company or such officer or director may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions, proceedings or settlements in respect thereof) arise
out of or are based upon (i) the failure of such Shareholder to comply with the
provisions of Section 11 herein or (ii) any untrue statement or alleged untrue
statement of any material fact contained in the registration statement, any
preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse the
Company and each such officer and director for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action, provided, however, that, such
                                               --------  -------
Shareholder will be liable hereunder in any such case if and only to the extent
that any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in reliance upon and based upon information pertaining to such Shareholder,
furnished in writing by or for such Shareholder for use in such registration
statement, provided, further, however, that the liability of each Shareholder
           --------  -------  -------
hereunder shall be limited to the proceeds received by such Shareholder from the
sale of the Shares covered by such registration statement; and provided,
                                                               --------
further, however, that the obligations of the Shareholder hereunder shall not
-------  -------
apply to amounts paid in settlement of any such loss, claim, damage, liability,
or action if such settlement is effected without the consent of the Shareholder.

          (c)  Promptly after receipt by an indemnified party hereunder of
notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party hereunder,
notify the indemnifying party in writing thereof, but the omission so to notify
the indemnifying party shall not relieve it from any liability which it may have
to such indemnified party other than under this Section 8 and shall only relieve
it from any liability which it may have to such indemnified party under this
Section 8 if and to the extent the indemnifying party is prejudiced by such
omission. In case any such action shall be
<PAGE>

                                      -6-

brought against any indemnified party and it shall notify the indemnifying party
of the commencement thereof, the indemnifying party shall be entitled to
participate in and, to the extent it shall wish, to assume and undertake the
defense thereof with counsel satisfactory to such indemnified party, and, after
notice from the indemnifying party to such indemnified party of its election so
to assume and undertake the defense thereof and the approval by the indemnified
party of the counsel chosen by the indemnifying party, the indemnifying party
shall not be liable to such indemnified party under this Section 8 for any legal
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation and of liaison with
counsel so selected, provided, however, that, if the defendants in any such
                     --------  -------
action include both the indemnified party and the indemnifying party and if the
interests of the indemnified party reasonably may be deemed to conflict with the
interests of the indemnifying party, the indemnified party shall have the right
to select a separate counsel and to assume such legal defenses and otherwise to
participate in the defense of such action, with the expenses and fees of such
separate counsel and other expenses related to such participation to be
reimbursed by the indemnifying party as incurred.

          (d)  In order to provide for just and equitable contribution to joint
liability in any case in which either (i) any Shareholder exercising rights
under this Agreement makes a claim for indemnification pursuant to this Section
8 but it is judicially determined (by the entry of a final judgment or decree by
a court of competent jurisdiction and the expiration of time to appeal or the
denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 8 provides for
indemnification in such case, or (ii) contribution under the Securities Act may
be required on the part of any such Shareholder in circumstances for which
indemnification is provided under this Section 8; then, and in each such case,
the Company and such Shareholder will contribute to the aggregate losses,
claims, damages or liabilities to which they may be subject (after contribution
from others) in proportion to the relative fault of the Company, on the one
hand, and each Shareholder, severally, on the other hand; provided, however,
                                                          --------  -------
that, in any such case, no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any person or entity who was not guilty of
such fraudulent misrepresentation and no such indemnifying party will be
required to contribute any amount in excess of the public offering price of all
shares offered by it pursuant to such registration statement.  The relative
fault of the indemnifying party and of the indemnified party shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact relates to
information supplied by the indemnifying party or by the indemnified party and
the parties' relative intent, knowledge, access to information, and opportunity
to correct or prevent such statement or omission.

          (e)  The indemnities provided in this Section 8 shall survive the
transfer of any Shares by such Shareholder.

     9.   Reports Under Securities Exchange Act of 1934.  With a view to making
          ---------------------------------------------
available to the Shareholders the benefits of Rule 144 promulgated under the
Securities Act and any other rule or regulation thereunder that may at any time
permit a Shareholder to sell securities of the Company to the public without
registration, the Company agrees to:
<PAGE>

                                      -7-

          (a)  make and keep public information available, as those terms are
understood and defined in Rule 144;

          (b)  maintain registration of its Common Stock under Section 12 of the
Exchange Act;

          (c)  file in a timely manner all reports and other documents required
of the Company under the Securities Act and the Exchange Act; and

          (d)  furnish to any Shareholder, so long as the Shareholder owns any
Shares, forthwith upon request:  (i) a written statement by the Company that it
has complied with the reporting requirements of Rule 144; (ii) a copy of the
most recent annual or quarterly report of the Company and such other reports and
documents so filed by the Company; and (iii) such other information as may be
reasonably requested in availing any Shareholder of any rule or regulation under
the Securities Act which permits the selling of any such securities without
registration or pursuant to such form.

     10.  Changes in Common Stock. If, and as often as, there is any change in
          -----------------------
the Common Stock by way of a stock split, stock dividend, combination or
reclassification, or through a merger, consolidation, reorganization or
recapitalization, or by any other means, appropriate adjustment shall be made in
the provisions hereof so that the rights and privileges granted hereby shall
continue with respect to the Shares as so changed.

     11.  Shareholders' Conduct. With respect to any sale of Shares covered by
          ---------------------
the Registration Statement, each Shareholder understands and agrees as follows:

          (a)  Each Shareholder will carefully review the information concerning
him or her contained in the Registration Statement and will promptly notify the
Company if such information is not complete and accurate in all respects,
including having properly disclosed any position, office or other material
relationship within the past three years with the Company or its affiliates;

          (b)  Each Shareholder agrees to sell Shares only in the manner set
forth in the Registration Statement;

          (c)  Each Shareholder agrees to comply with the anti-manipulation
rules under the Exchange Act in connection with purchases and sales of
securities of the Company during the time the Registration Statement remains
effective;

          (d)  Each Shareholder agrees to only sell Shares in a jurisdiction
after counsel for the Company has advised that such sale is permissible under
the applicable state securities or "Blue Sky" laws;

          (e)  Each Shareholder agrees to comply with the prospectus delivery
requirements of the Exchange Act;
<PAGE>

                                      -8-

          (f)  Each Shareholder agrees to suspend sales during the periods when
sales are to be suspended pursuant to Section 6;

          (g)  In connection with the registration of the Shares, each
Shareholder will furnish to the Company in writing such information requested by
the Company with respect to themselves and the proposed distribution by them as
shall be necessary in order to assure compliance with federal and applicable
state securities laws; and

          (h)  The Company, at its discretion, may cause stop transfer orders to
be placed with its transfer agent with respect to the certificates representing
the Shares, provided that such stop transfer orders are consistent with the
other provisions of the Agreement.


     12.  Representations and Covenants. Each Shareholder hereby represents and
          -----------------------------
warrants to the Company as follows:

          (a)  EACH SHAREHOLDER UNDERSTANDS THAT HIS OR HER INVESTMENT IN THE
SHARES INVOLVES RISK.

          (b)  EACH SHAREHOLDER HAS CONSULTED HIS OR HER OWN ATTORNEY,
ACCOUNTANT OR INVESTMENT ADVISOR WITH RESPECT TO THE INVESTMENT CONTEMPLATED
HEREBY AND ITS SUITABILITY FOR SUCH SHAREHOLDER. ANY SPECIFIC ACKNOWLEDGMENT SET
FORTH BELOW WITH RESPECT TO ANY STATEMENT OR INFORMATION FURNISHED TO THE
SHAREHOLDERS SHALL NOT BE DEEMED TO LIMIT THE GENERALITY OF THIS REPRESENTATION
AND WARRANTY.

          (c)  The Company has made available to each Shareholder, during the
course of this transaction and prior to the acquisition of the Shares, the
opportunity to ask questions of and receive complete and correct answers from
representatives of the Company concerning the terms and conditions of the Shares
and to obtain any additional information relating to the financial condition and
business of the Company.

          (d)  Each Shareholder understands that he or she must bear the
economic risk of this investment until such time as the Shares are registered;
that the Shares are not currently registered under the Securities Act, and,
therefore, cannot be resold unless they are subsequently registered under the
Securities Act or unless an exemption from such registration is available; that
such Shareholder is purchasing the Shares with no present view toward resale or
other distribution thereof; and that each Shareholder agrees not to resell or
otherwise dispose of all or any part of the Shares, except as permitted by law,
including, without limitation, any and all applicable provisions of the Merger
Agreement, and this Agreement and any regulations under the Securities Act and
applicable state securities laws.

          (e)  Each Shareholder has adequate means of providing for his or her
current needs and personal contingencies and has no need for liquidity in
connection with this investment in the Shares.
<PAGE>

                                      -9-

          (f)  Each Shareholder has reviewed the representations and warranties
of the Company set forth in the Merger Agreement and has consulted with his or
her personal legal and financial advisors in evaluating the merits and risks of
the investment in the Shares.

          (g)  Each Shareholder received an offer concerning the Shares and
first learned of this investment in the state or other jurisdiction listed in
such Shareholder's residence address on the signature page hereto, and intends
that the state securities laws of that state or other jurisdiction alone govern
this transaction.

          (h)  Each Shareholder acknowledges and warrants that, prior to the
execution of this Agreement, he or she has had the opportunity to ask questions
and receive answers from the Company and ADV concerning the terms and conditions
of the transactions contemplated by the Merger Agreement and the issuance of the
Shares, and concerning any of the documents identified above and to obtain such
additional further information from the Company and ADV as he or she has deemed
necessary to verify the accuracy of the information contained in the documents
identified above or any other information furnished to the Shareholders.

          (i)  Each Shareholder understands that the representations, warranties
and covenants set forth herein will be relied upon by ADV, other Shareholders of
ADV, the Company, the Shareholders of the Company and their respective counsel
and accounting firms.

          (j)  Each Shareholder hereby represents and warrants that he or she
has not sold, exchanged, transferred, pledged, disposed or otherwise reduced his
or her risk relative to any shares of ADV capital stock owned by him or her
during the 30 day period preceding the date hereof.

     13.  Miscellaneous.
          -------------

          (a)  All covenants and agreements contained in this Agreement by or on
behalf of any of the parties hereto shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto (including without
limitation transferees of any Shares, provided, that such transferee executes a
                                      --------
counterpart signature page to this Agreement), whether so expressed or not.

          (b)  All notices and other communications which by any provision of
this Agreement are required or permitted to be given shall be given in writing
and shall be (a) mailed by an internationally recognized express courier
service, (b) sent by telex, telegram, telecopy or other form of rapid
transmission, confirmed by mailing written confirmation (by an internationally
recognized express courier service) at substantially the same time as such rapid
transmission, or (c) personally delivered to the receiving party (which if other
than an individual shall be an officer or other responsible party of the
receiving party). All such notices and communications shall be mailed, sent or
delivered as follows:

     If to Company:               TranSwitch Corporation
     -------------
                                  3 Enterprise Drive

<PAGE>

                                      -10-

                                  Shelton, CT  06484
                                  Attention: Michael F. Stauff, Chief Financial
                                  Officer
                                  Telephone No.:(203) 929-8810
                                  Fax No.:  (203) 925-4979



                                  With copies to:
                                  ---------------

                                  Testa, Hurwitz & Thibeault, LLP
                                  125 High Street
                                  Boston, MA 02110
                                  Attention: Timothy C. Maguire, Esq.
                                  Telephone No.:  (617) 248-7000
                                  Fax No.:  (617) 248-7100

If to any other party hereto:     at the address of such party set forth on the
----------------------------
                                  signature page hereto,

If to any subsequent Shareholder  To it any such address as may have been
--------------------------------
of Shares:                        furnished to the Company in writing by such
---------
                                  Shareholder;

or, in any case, at such other address or addresses as shall have been furnished
in writing to the Company (in the case of a Shareholder) or to the Shareholders
(in the case of the Company) in accordance with the provisions of this
paragraph. Notices shall be deemed duly delivered three business days after
being sent via a reputable international express courier service. Notices
delivered via any other means shall be deemed duly delivered upon actual receipt
by the individual for whom such notice is intended. Any notice delivered to a
party hereunder shall be sent simultaneously, by the same means, to such party's
counsel as set forth above.

          (c)  This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware.

          (d)  This Agreement may be amended or modified, and provisions hereof
may be waived, with the written consent of the Company and the holders of at
least a majority of the outstanding Shares.

          (e)  This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

          (f)  If any provision of this Agreement shall be held to be illegal,
invalid or unenforceable, such illegality, invalidity or unenforceability shall
attach only to such provision and shall not in any manner affect or render
illegal, invalid or unenforceable any other provision
<PAGE>

                                      -11-

of this Agreement, and this Agreement shall be carried out as if any such
illegal, invalid or unenforceable provision were not contained herein.

     (g)  Transferability of Registration Rights.  The rights under this
          --------------------------------------
Agreement are not transferable by holders of Registrable Securities except (a) a
transfer by will or intestacy, (b) estate planning transfers consisting of gifts
to the spouse or issue of the transferee and transfers to trusts for the benefit
of the spouse or issue of the transferee, (c) a transfer to the constituent
partners of a Shareholder that is a partnership as part of a pro rata
distribution of the shares of the Company Common Stock held by such partnership
so long as all such transferees appoint a single representative as their
attorney-in-fact for the purpose of receiving any notices and exercising their
rights under this Agreement, or (d) with the written consent of the Company.


                 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>

                                      -12-

     IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.

                              TRANSWITCH CORPORATION.

                              By:  /s/ Robert Pico
                                   ----------------------------

                              Name: Robert Pico
                                   ----------------------------

                              Title:  Attorney-in-fact
                                     --------------------------


                              SHAREHOLDERS:

                              /s/ Robert Bousquet
                              ---------------------------------
                              Name: Robert Bousquet
                              Represented by: Robert Bousquet,
                              as Attorney-in-fact


                              /s/ Robert Bousquet
                              ---------------------------------
                              Name: Rene Pellat
                              Represented by: Robert Bousquet,
                              as Attorney-in-fact


                              /s/ Robert Bousquet
                              ---------------------------------
                              Name: Baudouin Brunner
                              Represented by: Robert Bousquet,
                              as Attorney-in-fact


                              /s/ Robert Bousquet
                              ---------------------------------
                              Name: Sylvie Bousquet
                              Represented by: Robert Bousquet,
                              as Attorney-in-fact

                              /s/ Robert Bousquet
                              ---------------------------------
                              Name: Robert Lacassagne
                              Represented by: Robert Bousquet,
                              as Attorney-in-fact

                              /s/ Robert Bousquet
                              ---------------------------------
                              Name: Madeleine Lacassagne
                              Represented by: Robert Bousquet,
                              as Attorney-in-fact
<PAGE>

                                      -13-

                             /s/ Robert Bousquet
                             ---------------------------------
                             Name: Patricia Baert
                             Represented by: Robert Bousquet,
                             as Attorney-in-fact