<PAGE>

                                                                   Exhibit 10.20
                                                                   -------------

                                 Exhibit 10.20
                                 -------------
                      EIGHTH LOAN MODIFICATION AGREEMENT


This EIGHTH LOAN MODIFICATION AGREEMENT is entered into as of July 14, 2000, by
and between SILICON VALLEY BANK, a California-chartered bank with its principal
place of business at 3003 Tasman Drive, Santa Clara, CA 95054 and with a loan
production office located at Wellesley Office Park, 40 William Street, Suite
350, Wellesley, MA 02181, doing business under the name Silicon Valley East
("Bank"), and TRANSWITCH CORPORATION, a Delaware corporation with its principal
place of business at 3 Enterprise Drive, Shelton, Connecticut 06484
("Borrower").

                                   RECITALS

Borrower has borrowed money from Bank pursuant to certain Existing Loan
Documents, as defined below. In consideration of certain financial
accommodations from Bank, and Borrower's continuing obligations under the
Existing Loan Documents, Borrower and Bank agree as follows:

                                   AGREEMENT

1. DESCRIPTION OF EXISTING LOAN DOCUMENTS. Reference is hereby made to that
certain Commitment Letter dated as of July 1, 1993 between Bank and Borrower, as
amended by letter amendments dated as of September 1, 1994 and March 21, 1995,
as further amended by Loan Modification Agreements dated April 8, 1994, April
19, 1995, January 5, 1996, December 31, 1996, July 11, 1997, July 16, 1998 and
July 15, 1999 between Borrower and Bank, and as such Commitment Letter may
be further amended from time to time (the "Commitment Letter"), providing for
certain financing from Bank to Borrower, such financing to be evidenced by
promissory notes as referenced herein. Hereinafter, all indebtedness owing by
Borrower to Bank pursuant to the Commitment Letter and any promissory notes
shall be referred to as the "Indebtedness." Repayment of the Indebtedness is
secured pursuant to a Security Agreement dated as of July 1, 1993 between
Borrower and Bank, as amended (the "Security Agreement"). Hereinafter, the
Commitment Letter, Security Agreement, and any promissory notes, together with
all other documents securing payment of the Indebtedness, shall be referred to
as the "Existing Loan Documents." Unless otherwise defined herein, capitalized
terms used in this Agreement shall have the same respective meanings as set
forth in the Commitment Letter.

2. DESCRIPTION OF CHANGES IN TERMS.

<PAGE>


2.1 Numbered paragraph 2 of the Commitment Letter, as heretofore amended, is
hereby replaced in its entirety as follows:

    The Working Capital Commitment will commence July 14, 2000 and will expire
on July 13, 2001 (the "Working Capital Expiry Date"). The Equipment Commitment
will commence July 14, 2000 and will expire on July 13, 2001 (the "Equipment
Expiry Date").

2.2 The first three sentences of numbered paragraph 3 of the Commitment
Letter, as heretofore amended, are hereby replaced in their entirety as follows:

Advances under the Working Capital Commitment shall bear interest at a
fluctuating per annum rate of interest equal to the Bank's Prime Rate (as
defined below) or the Interest Rate for LIBOR Rate Loans as set forth on the
attached LIBOR Supplement Agreement, as applicable and advances under the
Equipment Line of Credit Commitment shall bear interest at a fluctuating rate of
interest equal to the Bank's Prime Rate per annum. Borrower shall make payments
of interest in respect of advances under the Working Capital Commitment monthly
on the thirteenth (13th) day of each month and on the Working Capital Expiry
Date. Borrower shall make payments of interest in respect of advances under the
Equipment Commitment monthly on the thirteenth (13th) day of each month and on
the Equipment Expiry Date. Nothwithstanding an Event of Default, Advances under
the Commitments shall bear interest at a rate of 5% per annum plus the rate
otherwise in effect.

                                       2
<PAGE>

2.3 Numbered paragraph 4 of Schedule II to the Commitment Letter, as
heretofore amended, is hereby replaced in its entirety as follows:
4. Financial Statements, Etc. Borrower will furnish to Bank:

(a) prior to any Advances under the Working Capital Commitment, as soon as
available but in any event within forty five (45) days after the end of each
fiscal quarter in which any Advances under the Working Capital Commitment are
outstanding, commencing with the quarter ending June 30, 2000, consolidated
financial statements of Borrower on Form 10-Q;

(b) as soon as available, but in any event within one hundred twenty
(120) days after the end of Borrower's fiscal year, audited consolidated
financial statements of Borrower on Form 10-K;

(c) within five (5) days of filing, copies of all statements, reports and
notices sent or made available generally by Borrower to its security holders or
to any holders of Subordinated Debt and all reports on Form 10-K, 10-Q and 8-K
(to the extent not previously provided to Bank) filed with the Securities and
Exchange Commission;

(d) promptly upon receipt of notice thereof, a report of any legal actions
pending or threatened against Borrower or any Subsidiary that could result in a
Material Adverse Effect;

(e) such budgets, sales projections, operating plans or other financial
information as Bank may reasonably request from time to time.

(f) prior to any Advances under the Working Capital Commitment, and within
thirty (30) days after the last day of each month in which any Advances under
the Working Capital Commitment are outstanding, an aged listing of accounts
receivable.

(g) prior to any Advances under the Working Capital Commitment and as soon as
available but in any event within forty-five (45) days after the end of each
fiscal quarter in which any Advances under the Working Capital Commitment are
outstanding, commencing with the quarter ending June 30, 2000, a Compliance
Certificate signed by the Chief Financial Officer or the President of Borrower
in a form acceptable to Bank and appropriately completed.

                                       3
<PAGE>

2.4 Numbered paragraph 24 of Schedule II to the Commitment Letter, as heretofore
amended, is hereby replaced in its entirety as follows:

24. Tangible Net Worth. The Borrower will not permit Tangible Net Worth at the
end of any calendar quarter, commencing with the quarter ending June 30, 2000,
to be less than $150,000,000.

2.5 The Compliance Certificate referred to in numbered subparagraph 4(c) of
Schedule II to the Commitment Letter, as heretofore amended, is hereby deleted
and replaced with the Compliance Certificate attached hereto as Exhibit A.

2.6 The definition. of "Eligible Equipment' in Schedule III of the Commitment
Letter, as heretofore amended, is hereby amended by deleting the date July 15,
1999 appearing in the last line of subparagraph (b) thereof and substituting the
date July 14, 2000

3. FACILITY FEE. Borrower shall pay to Bank a Working Capital Commitment
facility fee of TWENTY-FOUR THOUSAND AND NO/100THS Dollars ($24,000) and an
Equipment Commitment facility fee of SIX THOUSAND AND NO/100THS Dollars ($6,000)
as well as any out-of-pocket expenses incurred by the Bank through the date
hereof, including reasonable attorneys' fees and expenses, and after the date
hereof, all Bank

                                       4
<PAGE>

Expenses, including reasonable attorneys' fees and expenses, as and when they
become due.

4. CONDITIONS PRECEDENT TO FURTHER ADVANCES. The obligation of Bank to make
further advances to Borrower under this line is subject to the condition
precedent that Bank shall have received, in form and substance satisfactory to
Bank, the following:

(a) this Eighth Loan Modification Agreement (in duplicate), the Working Capital
Note and the Equipment Note, each duly executed by Borrower;

(b) a certificate of the Secretary of Borrower with respect to resolutions
authorizing the execution and delivery of this Sixth Loan Modification Agreement
and the Loan Documents;

(c) payment of the fees and Bank Expenses then due specified in
Section 3 hereof; and

(d) such other documents, and completion of such other matters, as Bank may
reasonably deem necessary or appropriate.

5. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever
necessary to reflect the changes described in this Eighth Loan Modification
Agreement.

6. NO DEFENSES OF BORROWER. Borrower agrees that as of this date, it has no
defenses against any of the obligations to pay any amounts under the
Indebtedness.

7. CONTINUING VALIDITY. Borrower understands and agrees that (i) in modifying
the Existing Loan Documents, Bank is relying upon Borrower's representations,
warranties and agreements, as set forth in the Existing Loan Documents, (ii)
except as expressly modified pursuant to this Eighth Loan Modification Agreement
(including the effects of Section 5 hereof), the Existing Loan Documents remain
unchanged and in full force and effect, (iii) Bank's agreement to modify the
Existing Loan Documents pursuant to this Eighth Loan Modification Agreement
shall in no way obligate Bank to make any future modifications to the Existing
Loan Documents, (iv) it is the intention of Bank and Borrower to retain as
liable parties all makers and endorsers of the Existing Loan Documents, unless a
party is expressly released by Bank in writing, (v) no maker, endorser or
guarantor will be released by virtue of this Eighth Loan Modification Agreement,
and (vi) the terms of this Section 7 apply not only to this Eighth Loan
Modification Agreement but also to all subsequent loan modification agreements,
if any.

8. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER. The laws of the Commonwealth of
Massachusetts shall apply to this Agreement. BORROWER ACCEPTS FOR ITSELF AND IN
CONNECTION WITH ITS PROPERTIES, UNCONDITIONALLY, THE NON- EXCLUSIVE JURISDICTION
OF ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE COMMONWEALTH OF
MASSACHUSETTS IN ANY ACTION, SUIT, OR

                                       5
<PAGE>

PROCEEDING OF ANY KIND AGAINST IT WHICH ARISES OUT OF OR BY REASON OF THIS
AGREEMENT; PROVIDED, HOWEVER, THAT IF FOR ANY REASON BANK CANNOT AVAIL ITSELF OF
THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS, BORROWER ACCEPTS JURISDICTION
OF THE COURTS AND VENUE IN SANTA CLARA COUNTY, CALIFORNIA. BORROWER AND BANK
EACH HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE
TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH PARTY
RECOGNIZES AND AGREES THAT THE FOREGOING WAIVER CONSTITUTES A MATERIAL
INDUCEMENT FOR IT TO ENTER INTO THIS AGREEMENT. EACH PARTY REPRESENTS AND
WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL.

9. EFFECTIVENESS. This Agreement shall become effective only when it shall have
been executed by Borrower and Bank (provided, however, in no event shall this
Agreement become effective until signed by an officer of Bank in California).

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as a sealed instrument as of the date first set forth above.


"Borrower"                      "Bank"

TRANSWITCH CORPORATION          SILICON VALLEY BANK, doing business as
                                SILICON VALLEY EAST


By: /s/ Michael F. Stauff       By: /s/ William R. Howell
-------------------------       -------------------------
Michael F. Stauff, SVP          William R. Howell, AVP
& Treasurer

                                       6
<PAGE>

                                   Exhibit A

                         FORM OF COMPLIANCE CERTIFICATE

Borrower                                           Bank
TranSwitch Corporation                             Silicon Valley Bank
3 Enterprise Drive                                 3003 Tasman Drive
Shelton, CT  06484                                 Santa Clara, CA 95054

     The undersigned authorized officer of TRANSWITCH CORPORATION hereby
certifies that in accordance with the terms and conditions of the Commitment
Letter dated as of July 1, 1993, as amended, between Borrower and Bank (the
"Agreement"), (i) Borrower is in complete compliance for the period ending
____________ of all required conditions and terms except as noted below and (ii)
all representations and warranties of Borrower stated in the Agreement are true,
accurate and complete in all material respects as of the date hereof.  Attached
herewith are the required documents supporting the above certificate.  The
Officer further certifies that there are prepared in accordance with Generally
Accepted Accounting Principals (GAAP) and are consistent from one period to the
next except as explained in an accompanying letter or footnotes.  The Officer
further expressly acknowledges Borrower may not request any borrowings at any
time or date of determination that Borrower is not in compliance with any of the
terms of the Agreement, and that such compliance is determined not just at the
date this certificate if delivered.

     Please indicate compliance by circling Yes/No under "Complies" column

        REPORTING CONVENANT                        REQUIRED          COMPLIES
Quarterly financial statements & CC       Quarterly within 45 days*  Yes   No
Annual (CPA Audited)                      FYE within 120 days        Yes   No
A/R Agings                                Monthly within 30 days*    Yes   No
A/R Audit                                 Initial and Annual         Yes   No

         FINANCIAL COVENANT               REQUIRED        Actual     COMPLIES
Maintain on a quarterly basis:
Minimum Adjusted Quick Ratio              2.00:1.0       ______:1.0  Yes   No
Minimum Tangible Net Worth                $150,000,000  $______      Yes   No
Maximum Leverage                          1.25:1.0       ______:1.0  Yes   No

required only immediately prior to any initial Advances under the Working
Capital Commitment and while Advances under the Working Capital Commitment are
outstanding.

Comments Regarding Exceptions:

On behalf of the Borrower, the Officer further acknowledges that at any such
time as Borrower is out of compliance with any of the terms set forth in the
Agreement, including, without limitation, any of the financial covenants,
Borrower cannot receive any advances.

Sincerely,


_______________________________
Signature

TITLE:  _______________________

DATE:    ______________________

                                       7
<PAGE>

                         LIBOR SUPPLEMENT TO AGREEMENT

  This LIBOR Supplement to Agreement (the "Supplement") is a supplement to the
Commitment Letter dated as of July 1, 1993, as amended (the "Loan Agreement")
between Silicon Valley Bank ("Bank") and TRANSWITCH CORPORATION ("Borrower"),
and forms a part of and is incorporated into the Loan Agreement.

1.  DEFINITIONS

     "Business Day" means a day of the year (a) that is not a Sunday or other
day on which banks in the State of California or the City of London are
authorized or required to close and (b) on which dealings are carried on in the
interbank market in which Bank customarily participates.

     "Interest Period" means for each LIBOR Rate Loan, a period of approximately
three months, provided that the last day of an Interest Period for a LIBOR Rate
Loan shall be determined in accordance with the practices of the LIBOR interbank
market as from time to time in effect, provided, further, in all cases such
period shall expire not later than the applicable Maturity Date.

     "Interest Rate" shall mean as to: (a) Prime Rate Loans, an annual rate
equal to the Prime Rate; and (b) LIBOR Rate Loans, an annual rate of 2.5% in
excess of the LIBOR Rate (based on the LIBOR Rate applicable for the Interest
Period).

     "LIBOR Base Rate" means, for any Interest Period for a LIBOR Rate Loan, the
rate of interest per annum determined by Bank to be the per annum rate of
interest at which deposits in United States Dollars are offered to Bank in the
London interbank market in which Bank customarily participates at 11:00 A.M.
(local time in such interbank market) two (2) Business Days before the first day
of such Interest Period for a period approximately equal to such Interest Period
and in an amount approximately equal to the amount of such Loan.

     "LIBOR Rate" shall mean, for any Interest Period for a LIBOR Rate Loan, a
rate per annum (rounded upwards, if necessary, to the nearest 1/16 of 1%) equal
to (i) the LIBOR Base Rate for such Interest Period divided by (ii) 1 minus the
Reserve Requirement for such Interest Period.

     "LIBOR Rate Loans" means any Loans made or a portion thereof on which
interest is payable based on the LIBOR Rate in accordance with the terms hereof.

     "Prime Rate" means the variable rate of interest per annum, most recently
announced by Bank as its "prime rate," whether or not such announced rate is the
lowest rate available from Bank.  The Interest rate applicable to the Prime Rate
Loans shall change on each date there is a change in the Prime Rate.

     "Prime Rate Loans" means any Loans made or a portion thereof on which
interest is payable based on the Prime Rate in accordance with the terms hereof.

     "Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System as the same may be amended or supplemented from time to time.

                                       8
<PAGE>

     "Regulatory Change" means, with respect to Bank, any change on or after the
date of this Loan Agreement in United States federal, state or foreign laws or
regulations, including Regulation D, or the adoption or making on or after such
date of any interpretations, directives or requests applying to a class of
lenders including Bank of or under any United States federal or state, or any
foreign, laws or regulations (whether or not having the force of law) by any
court or governmental or monetary authority charged with the interpretation or
administration thereof.

     "Reserve Requirement" means, for any Interest Period, the average maximum
rate at which reserves (including any marginal, supplemental or emergency
reserves) are required to be maintained during such Interest Period under
Regulation D against "Eurocurrency liabilities" (as such term is used in
Regulation D) by member banks of the Federal Reserve System.  Without limiting
the effect of the foregoing, the Reserve Requirement shall reflect any other
reserves required to be maintained by Bank by reason of any Regulatory Change
against (i) any category of liabilities which includes deposits by reference to
which the LIBOR Rate is to be determined as provided in the definition of "LIBOR
Base Rate" or (ii) any category of extensions of credit or other assets which
include Loans.

2.  REQUESTS FOR LOANS: CONFIRMATION OF INITIAL LOANS.

          (a) Each LIBOR Rate Loan shall be made upon the irrevocable written
request of Borrower received by Bank not later than 11:00 a.m. (Santa Clara,
California time) on the Business Day three (3) Business Days prior to the such
date Loan is to be made.  Each such notice shall specify the date such Loan is
to made, which day shall be a Business Day, the amount of such Loan, and comply
with such other requirements as Bank determines are reasonable or desirable in
connection therewith.

          (b) Each written request for a LIBOR Rate Loan shall be in the form of
a LIBOR Rate Loan Borrowing Certificate as set forth on Schedule A, which shall
be duly executed by the Borrower.

          (c) Each Prime Rate Loan shall be made upon the irrevocable written
request of Borrower received by Bank not later than 11:00 a.m. (Santa Clara,
California time) on the Business Day one (1) Business days prior to the date
such Loan is to be made.  Each such notice shall specify the date such Loan is
to be made, which day shall be a Business Day and the amount of such Loan, and
comply with such other requirements as Bank determines are reasonable or
desirable in connection therewith.

3.  CONVERSION/CONTINUATION OF LOANS.

          (a) Borrower may from time to time submit in writing a request that
Prime Rate Loans be converted to LIBOR Rate Loans or that any existing LIBOR
Rate Loans continue for an additional Interest Period.  Such request shall
specify the amount of the Prime Rate Loans which will constitute LIBOR Rate
Loans (subject to the limits set forth below) and the Interest Period to be
applicable to such LIBOR Rate Loans.  Each written request for a conversion to
LIBOR Rate Conversion/Continuation Certificate as set forth on Schedule B, which
shall be duly executed by the Borrower.  Subject to the terms and conditions
contained herein, three (3) Business Days after Bank's receipt of such a request
from Borrower, such Prime Rate Loans shall be converted to LIBOR Rate Loans or
such LIBOR Rate Loans shall continue, as the case may be, provided that:

                                       9
<PAGE>

              (i) no Event of Default, or event which with notice or passage of
          time or both would constitute an Event of Default, exists;

              (ii) no party hereto shall have sent any notice of termination of
          this Supplement or of the Loan Agreement;

              (ii) Borrower shall have complied with such customary procedures
          as Bank has established from time to time for Borrower's requests for
          LIBOR Rate Loans;

              (iv) the amount of a LIBOR Rate Loan shall be $500,000 or such
          greater amount which is an integral multiple of $50,000; and

              (v) Bank shall have determined that the Interest Period or LIBOR
          Rate is available to Bank which can be readily determined as of the
          date of the request for such LIBOR Rate Loan.

     Any request by Borrower to convert Prime Rate Loans to LIBOR Rate Loans or
continue any existing LIBOR Rate Loans shall be irrevocable.  Notwithstanding
anything to the contrary contained herein, Bank shall not be required to
purchase United States Dollar deposits in the London interbank market or other
applicable LIBOR Rate market to fund any LIBOR Rate Loans, but the provisions
hereof shall be deemed to apply as if Bank had purchased such deposits to fund
the LIBOR Rate Loans.

          (b) Any LIBOR Rate Loans shall automatically convert to Prime Rate
Loans upon the last day of the applicable Interest Period, unless Bank has
received and approved a complete and proper request to continue such LIBOR Rate
Loan at least three (3) Business Days prior to such last day in accordance with
the terms hereof.  Any LIBOR Rate Loans shall, at Bank's option, convert to
Prime Rate Loans in the event that (i) an Event of Default, or event which with
the notice or passage of time or both would constitute an Event of Default,
shall exist, (ii) this Supplement or the Loan Agreement shall terminate, or
(iii) the aggregate principal amount of the Prime Rate Loans which have
previously been converted to LIBOR Rate Loans, or the aggregate principal amount
of existing LIBOR Rate Loans continued, as the case may be, at the beginning of
an interest Period shall at any time during such Interest Period exceeds the
Working Capital Commitment.  Borrower agrees to pay to Bank, upon demand by Bank
(or Bank may, at its option, charge Borrower's loan account) any amounts
required to compensate Bank for any loss (including loss of anticipated
profits), cost or expense Incurred by such person, as a result of the conversion
of LIBOR Rate Loans to Prime Rate Loans pursuant to any of the foregoing.

          (c) On all Loans, Interest shall be payable by Borrower to Bank, at
the applicable Interest Rate, monthly in arrears not later than the thirteenth
(13th) day of each calendar month.

                                       10
<PAGE>

4.   ADDITIONAL REQUIREMENTS/PROVISIONS REGARDING LIBOR RATE LOANS: ETC.

          (a) If for any reason (including voluntary or mandatory prepayment of
acceleration), Bank receives all or part of the principal amount of a LIBOR Rate
Loan prior to the last day of the Interest Period for such Loan, Borrower shall
immediately notify Borrower's account officer at Bank and, on demand by Bank,
pay Bank the amount (if any) by which (i) the additional interest which would
have been payable on the amount so received had it not been received until the
last day of such Interest Period exceeds (ii) the interest which would have been
recoverable by Bank by placing the amount so received on deposit in the
certificate of deposit markets or the offshore currency interbank markets or
United States Treasury investment products, as the case may be, for a period
starting on the date on which it was so received and ending on the last day of
such Interest Period at the Interest rate determined by Ban in its reasonable
discretion.  Bank's determination as to such amount shall be conclusive absent
manifest effort.

          (b) Borrower shall pay to Bank, upon demand by Bank, from time to time
such amounts as Bank may determine to be necessary to compensate it for any
costs incurred by Bank that Bank determines are attributable to its making or
maintaining of any amount receivable by Bank hereunder in respect of any Loans
relating thereto (such increases in costs and reductions in amounts receivable
being herein called "Additional Costs"), in each case resulting from any
Regulatory Change which:

              (i) changes the basis of taxation of any amounts payable to Bank
          under this Supplement in respect of any Loans (other than changes
          which affect taxes measured by or imposed on the overall net income of
          Bank by the jurisdiction in which such Bank has its principal office);
          or

              (ii) imposes or modifies any reserve, special deposit or similar
         requirements relating to any extensions of credit or other assets of,
         or any deposits with or other liabilities of Bank (including any Loans
         or any deposits referred to in the definition of "LIBOR Base Rate"); or

              (iii)  imposes any other condition affecting this Supplement (or
          any of such extensions of credit or liabilities).

     Bank will notify Borrower of any event which will entitle Bank to
compensation pursuant to this section as promptly as practicable after it
obtains knowledge thereof and determines to request such compensation.  Bank
will furnish Borrower with a statement setting forth the basis and amount of
each request by Bank for compensation under this Section 4.  Determinations and
allocations by Bank for purposes of this Section 4 of the effect of any
Regulatory Change on its costs of maintaining its obligations to make Loans or
of making or maintaining Loans or on amounts receivable by it in respect of
Loans, and of the additional amounts required to compensate Bank in respect of
any Additional Costs, shall be conclusive absent manifest error.

          (c) Borrower shall pay to Bank, upon the request of Bank, such amount
or amounts as shall be sufficient (in the sole good faith opinion of such Bank)
to compensate it for any loss, costs or expense incurred by it as a result of
any failure by Borrower to borrow a Loan on the date for such borrowing
specified in the relevant notice of borrowing hereunder.

                                       11
<PAGE>

          (d) If Bank shall determine that the adoption or implementation of any
applicable law, rule, regulation or treaty regarding capital adequacy, or any
change therein, or any change in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by Bank (or its
applicable lending office) with respect to any directive regarding capital
adequacy (whether or not having the force of law) of any such authority, central
bank or comparable agency, has or would have the effect of reducing the rate of
return on capital of Bank or any person or entity controlling Bank (a "Parent")
as a consequence of its obligations hereunder to a level below that which Bank
(or its Parent) could have achieved but for such adoption, change or compliance
(taking into consideration its policies with respect to capital adequacy) by an
amount deemed by Bank to be material, then from time to time, within 15 days
after demand by Bank, Borrower shall pay to Bank such additional amount or
amounts as will compensate Bank for such reduction.  A statement of Bank
claiming compensation under this Section and setting forth the additional amount
or amounts to be paid to it hereunder shall be conclusive absent manifest error.

          (e) If at any time Bank, in its sole and absolute discretion,
determines that (i) the amount of the LIBOR Rate Loans for periods equal to the
corresponding interest Periods are not available to Bank in the offshore
currency interbank markets, or (ii) the LIBOR Rate does not accurately reflect
the cost to Bank of lending the LIBOR Rate Loan, then Bank shall promptly give
notice thereof to Borrower, and upon the giving of such notice Bank's obligation
to make the LIBOR Rate Loans shall terminate, unless Bank and Borrower agree in
writing to a different interest rate applicable to LIBOR Rate Loans.  If it
shall become unlawful for Bank to continue to fund or maintain any Loans, or to
perform its obligations hereunder, upon demand by Bank, Borrower shall prepay
the Loans in full with accrued interest thereon and all other amounts payable by
Borrower hereunder (including, without limitation, any amount payable in
connection with such prepayment pursuant to Section 4(a)).

5.  CONFLICTS.

          If there is any conflict between the terms and conditions of this
LIBOR Supplement to Loan Agreement and the terms and conditions of the Loan
Agreement, the terms and conditions of this LIBOR Supplement to Loan Agreement
shall control.

                                       12
<PAGE>

                         SCHEDULE A TO LIBOR SUPPLEMENT
                     LIBOR RATE LOAN BORROWING CERTIFICATE

              The undersigned hereby certifies as follows:

              I, __________________, am the duly elected and acting
________________ of TRANSWITCH CORPORATION ("Borrower").

          This certificate is delivered pursuant to Section 2 of that certain
LIBOR Supplement to Agreement together with the Commitment Letter dates as of
JULY 1, 1993, as amended, by and between Borrower and Silicon Valley Bank
("Bank") (the "Loan Agreement").  The terms used in this Borrowing Certificate
which are defined in the Loan Agreement have the same meaning herein as ascribed
to them therein.

              Borrower hereby requests on __________, 20__ a LIBOR Rate Loan
(the "Loan") as follows:

(a)  The date on which the Loan is to be made is ___________, 20__.

(b)  The amount of the Loan is to be _____________ ($_________), for an Interest
     Period of three (3) months.

     All representations and warranties of Borrower stated in the Loan Agreement
are true, correct and complete in all material respects as of the date of this
request for a loan; provided, however, that those representations and warranties
expressly referring to another date shall be true, correct and complete in all
material respects as of such date.

     IN WITNESS WHEREOF, this Borrowing Certificate is executed by the
undersigned as of this _________ day of _________, 20__.

                                    TRANSWITCH CORPORATION

                                    By:
                                    Title:

     Internal Bank Use Only

LIBOR Pricing Date      LIBOR Rate      LIBOR Rate Variance    Maturity Date
-------------------------------------------------------------------------------

-------------------------------------------------------------------------------

-------------------------------------------------------------------------------

                                       13
<PAGE>

                         SCHEDULE B TO LIBOR SUPPLEMENT
                 LIBOR RATE CONVERSION/CONTINUATION CERTIFICATE

         The undersigned hereby certifies as follows:

                                                            I,
__________________, am the duly elected and acting _____________ of TRANSWITCH
CORPORATION ("Borrower").

          This certificate is delivered pursuant to Section 2 of that certain
LIBOR Supplement to Agreement together with the Commitment Letter dates as of
July 1, 1993, as amended, by and between Borrower and Silicon Valley Bank
("Bank") (the "Loan Agreement").  The terms used in this LIBOR Rate
Conversion/Continuation Certificate which are defined in the Loan Agreement have
the same meaning herein as ascribed to them therein,

                                                            Borrower hereby
requests on ___________, 20__ a LIBOR Rate Loan (the "Loan") as follows:

     (a) _______ (i) A rate conversion of an existing Prime Rate Loan from a
Prime Rate Loan to a LIBOR Rate Loan; or

         _______ (ii) A continuation of an existing LIBOR Rate Loan as a LIBOR
Rate Loan;

         [Check (i) or (ii) above]

     (b) The date on which the Loan is to be made is ___________, 20__.

     (c) The amount of the Loan is to be ___________ ($________), for an
Interest Period of three (3) months.

     All representations and warranties of Borrower stated in the Loan Agreement
are true, correct and complete in all material respects as of the date of this
request for a loan; provided, however, that those representations and warranties
expressly referring to another date shall be true, correct and complete in all
material respects as of such date.

     IN WITNESS WHEREOF, this LIBOR Rate Conversion/Continuation Certificate is
executed by the undersigned as of this _________ day of _________, 20__.

                                    TRANSWITCH CORPORATION

                                    By:
                                    Title:

     Internal Bank Use Only

LIBOR Pricing Date      LIBOR Rate      LIBOR Rate Variance    Maturity Date
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