Document:

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                                                                     EXHIBIT 4.3

                         ALACRITY COMMUNICATIONS, INC.

                                1995 STOCK PLAN

                            STOCK OPTION AGREEMENT

     Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Option Agreement.

I.   NOTICE OF STOCK OPTION GRANT
     ----------------------------

     [NAME]
     c/o Alacrity Communications
     1880 Milmont Drive
     Milpitas, CA 95035

     The undersigned Optionee has been granted an Option to purchase Common
Stock of the Company, subject to the terms and conditions of the Plan and this
Option Agreement, as follows:

     Date of Grant                      _______, 2000

     Vesting Commencement Date          ________, 2000

     Exercise Price per Share           $0.__

     Total Number of Shares Granted     ___________

     Total Exercise Price               $___________

     Type of Option:                     X   Incentive Stock Option
                                        ---

                                        ___  Nonstatutory Stock Option

     Term/Expiration Date:              __________, 2010

     Vesting Schedule:
     ----------------

     This Option shall be exercisable, in whole or in part, according to the
following vesting schedule: That one quarter (1/4/th/) of the total number of
Shares subject to the Option shall be exercisable on the first anniversary of
the Vesting Commencement Date, and an additional one forty-eighth (1/48/th/) of
the total number of Shares subject to the Option shall be exercisable each full
month thereafter until all such shares are exercisable, subject to Optionee's
continuing to be a Service Provider on such dates.

                                      -1-
<PAGE>

     Termination Period:
     ------------------

     This Option shall be exercisable for three months after Optionee ceases to
be a Service Provider. Upon Optionee's death or disability, this Option may be
exercised for one year after Optionee ceases to be a Service Provider. In no
event may Optionee exercise this Option after the Term/Expiration Date as
provided above.

II.  AGREEMENT
     ---------

     1.   Grant of Option.  The Plan Administrator of the Company hereby grants
          ---------------
to the Optionee named in the Notice of Grant (the "Optionee"), an option (the
"Option") to purchase the number of Shares set forth in the Notice of Grant, at
the exercise price per Share set forth in the Notice of Grant (the "Exercise
Price"), and subject to the terms and conditions of the Plan, which is
incorporated herein by reference. Subject to Section 14(c) of the Plan, in the
event of a conflict between the terms and conditions of the Plan and this Option
Agreement, the terms and conditions of the Plan shall prevail.

     If designated in the Notice of Grant as an Incentive Stock Option ("ISO"),
this Option is intended to qualify as an Incentive Stock Option as defined in
Section 422 of the Code. Nevertheless, to the extent that it exceeds the
$100,000 rule of Code Section 422(d), this Option shall be treated as a
Nonstatutory Stock Option ("NSO").

     2.   Exercise of Option.
          ------------------

          (a) Right to Exercise.  This Option shall be exercisable during its
              -----------------
term in accordance with the Vesting Schedule set out in the Notice of Grant and
with the applicable provisions of the Plan and this Option Agreement.

          (b) Method of Exercise.  This Option shall be exercisable by delivery
              ------------------
of an exercise notice in the form attached as Exhibit A (the "Exercise Notice")
which shall state the election to exercise the Option, the number of Shares with
respect to which the Option is being exercised, and such other representations
and agreements as may be required by the Company. The Exercise Notice shall be
accompanied by payment of the aggregate Exercise Price as to all Exercised
Shares.  This Option shall be deemed to be exercised upon receipt by the Company
of such fully executed Exercise Notice accompanied by the aggregate Exercise
Price.

          No Shares shall be issued pursuant to the exercise of an Option unless
such issuance and such exercise complies with Applicable laws.  Assuming such
compliance, for income tax purposes the Shares shall be considered transferred
to the Optionee on the date on which the Option is exercised with respect to
such Shares.

     3.   Optionee's Representations.  In the event the Shares have not been
          --------------------------
registered under the Securities Act of 1933, as amended, at the time this Option
is exercised, the Optionee shall, if required by the Company, concurrently with
the exercise of all or any portion of this Option, deliver to the Company his or
her Investment Representation Statement in the form attached hereto as Exhibit
B.

                                      -2-
<PAGE>

     4.   Lock-Up Period.  Optionee hereby agrees that, if so requested by the
          --------------
Company or any representative of the underwriters (the "Managing Underwriter")
in connection with any registration of the offering of any securities of the
Company under the Securities Act, Optionee shall not sell or otherwise transfer
any Shares or other securities of the Company during the 180-day period (or such
other period as may be requested in writing by the Managing Underwriter and
agreed to in writing by the Company) (the "Market Standoff Period") following
the effective date of a registration statement of the Company filed under the
Securities Act. Such restriction shall apply only to the first registration
statement of the Company to become effective under the Securities Act that
includes securities to be sold on behalf of the Company to the public in an
underwritten public offering under the Securities Act. The Company may impose
stop-transfer instructions with respect to securities subject to the foregoing
restrictions until the end of such Market Standoff Period.

     5.   Method of Payment.  Payment of the aggregate Exercise Price shall be
          -----------------
by any of the following, or a combination thereof, at the election of the
Optionee:

          (a)  cash or check;

          (b)  consideration received by the Company under a formal cashless
exercise program adopted by the Company in connection with the Plan; or

          (c)  surrender of other Shares which, (i) in the case of Shares
acquired upon exercise of an option, have been owned by the Optionee for more
than six (6) months on the date of surrender, and (ii) have a Fair Market Value
on the date of surrender equal to the aggregate Exercise Price of the Exercised
Shares.

     6.   Restrictions on Exercise.  This Option may not be exercised until such
          ------------------------
time as the Plan has been approved by the shareholders of the Company, or if the
issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any Applicable
Law.

     7.   Non-Transferability of Option.  This Option may not be transferred in
          -----------------------------
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by Optionee. The terms of
the Plan and this Option Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.

     8.   Term of Option.  This Option may be exercised only within the term set
          --------------
out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option.

     9.   Tax Consequences.  Set forth below is a brief summary as of the date
          ----------------
of this Option of some of the federal tax consequences of exercise of this
Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE,
AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE SHOULD
CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.

                                      -3-
<PAGE>

          (a) Exercise of ISO.  If this Option qualifies as an ISO, there will
              ---------------
be no regular federal income tax liability upon the exercise of the Option,
although the excess, if any, of the Fair Market Value of the Shares on the date
of exercise over the Exercise Price will be treated as an adjustment to the
alternative minimum tax for federal tax purposes and may subject the Optionee to
the alternative minimum tax in the year of exercise.

          (b) Exercise of Nonstatutory Stock Option.  There may be a regular
              -------------------------------------
federal income tax liability upon the exercise of a Nonstatutory Stock Option.
The Optionee will be treated as having received compensation income (taxable at
ordinary income tax rates) equal to the excess, if any, of the Fair Market Value
of the Shares on the date of exercise over the Exercise Price.  If Optionee is
an Employee or a former Employee, the Company will be required to withhold from
Optionee's compensation or collect from Optionee and pay to the applicable
taxing authorities an amount in cash equal to a percentage of this compensation
income at the time of exercise, and may refuse to honor the exercise and refuse
to deliver Shares if such withholding amounts are not delivered at the time of
exercise.

          (c) Disposition of Shares.  In the case of an NSO, if Shares are held
              ---------------------
for at least one year, any gain realized on disposition of the Shares will be
treated as long-term capital gain for federal income tax purposes.  In the case
of an ISO, if Shares transferred pursuant to the Option are held for at least
one year after exercise and of at least two years after the Date of Grant, any
gain realized on disposition of the Shares will also be treated as long-term
capital gain for federal income tax purposes.  If Shares purchased under an ISO
are disposed of within one year after exercise or two years after the Date of
Grant, any gain realized on such disposition will be treated as compensation
income (taxable at ordinary income rates) to the extent of the difference
between the Exercise Price and the lesser of (1) the Fair Market Value of the
Shares on the date of exercise, or (2) the sale price of the Shares.  Any
additional gain will be taxed as capital gain, short-term or long-term depending
on the period that the ISO Shares were held.

          (d) Notice of Disqualifying Disposition of ISO Shares.  If the Option
              -------------------------------------------------
granted to Optionee herein is an ISO, and if Optionee sells or otherwise
disposes of any of the Shares acquired pursuant to the ISO on or before the
later of (1) the date two years after the Date of Grant, or (2) the date one
year after the date of exercise, the Optionee shall immediately notify the
Company in writing of such disposition.  Optionee agrees that Optionee may be
subject to income tax withholding by the Company on the compensation income
recognized by the Optionee.

     10.  Entire Agreement; Governing Law.  The Plan is incorporated herein by
          -------------------------------
reference. The Plan and this Option Agreement constitute the entire agreement of
the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely to the
Optionee's interest except by means of a writing signed by the Company and
Optionee. This agreement is governed by the internal substantive laws but not
the choice of law rules of California.

     11.  No Guarantee of Continued Service.  OPTIONEE ACKNOWLEDGES AND AGREES
          ---------------------------------
THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED
ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (NOT THROUGH
THE ACT OF BEING HIRED, BEING GRANTED THIS

                                      -4-
<PAGE>

OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES
THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING
SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF
CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY
PERIOD, OR AT ALL, AND SHALL NOT INTERFERE IN ANY WAY WITH OPTIONEE'S RIGHT OR
THE COMPANY'S RIGHT TO TERMINATE OPTIONEE'S RELATIONSHIP AS A SERVICE PROVIDER
AT ANY TIME, WITH OR WITHOUT CAUSE.

     Optionee acknowledges receipt of a copy of the Plan and represents that he
or she is familiar with the terms and provisions thereof, and hereby accepts
this Option subject to all of the terms and provisions thereof. Optionee has
reviewed the Plan and this Option in their entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Option and fully
understands all provisions of the Option. Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions arising under the Plan or this Option. Optionee
further agrees to notify the Company upon any change in the residence address
indicated below.

[Name]                              ALACRITY COMMUNICATIONS, INC.

_______________________________     _________________________________
Signature                           By

_______________________________     _________________________________
Print Name                          Title

_______________________________

_______________________________
Residence Address

                                      -5-
<PAGE>

                                   EXHIBIT A
                                   ---------

                                1995 STOCK PLAN

                                EXERCISE NOTICE

Alacrity Communications, Inc.
1880 Milmont Drive
Milpitas, CA 95035

Attention:  Secretary

     1.   Exercise of Option.  Effective as of today, ___________, 20__, the
          ------------------
undersigned ("Optionee") hereby elects to exercise Optionee's option to purchase
_________ shares of the Common Stock (the "Shares") of Alacrity Communications,
Inc. (the "Company") under and pursuant to the 1995 Stock Plan (the "Plan") and
the Stock Option Agreement dated ________, 20________ (the "Option Agreement").

     2.   Delivery of Payment.  Purchaser herewith delivers to the Company the
          -------------------
full purchase price of the Shares, as set forth in the Option Agreement.

     3.   Representations of Optionee.  Optionee acknowledges that Optionee has
          ---------------------------
received, read and understood the Plan and the Option Agreement and agrees to
abide by and be bound by their terms and conditions.

     4.   Rights as Shareholder.  Until the issuance of the Shares (as evidenced
          ---------------------
by the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company), no right to vote or receive dividends or any
other rights as a shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option.  The Shares shall be issued to the
Optionee as soon as practicable after the Option is exercised.  No adjustment
shall be made for a dividend or other right for which the record date is prior
to the date of issuance except as provided in Section 12 of the Plan.

     5.   Company's Right of First Refusal.  Before any Shares held by Optionee
          --------------------------------
or any transferee (either being sometimes referred to herein as the "Holder")
may be sold or otherwise transferred (including transfer by gift or operation of
law), the Company or its assignee(s) shall have a right of first refusal to
purchase the Shares on the terms and conditions set forth in this Section (the
"Right of First Refusal").

          (a) Notice of Proposed Transfer.  The Holder of the Shares shall
              ---------------------------
deliver to the Company a written notice (the "Notice") stating:  (i) the
Holder's bona fide intention to sell or otherwise transfer such Shares; (ii) the
name of each proposed purchaser or other transferee ("Proposed Transferee");
(iii) the number of Shares to be transferred to each Proposed Transferee; and
(iv) the bona fide cash price or other consideration for which the Holder
proposes to transfer the Shares (the "Offered Price"), and the Holder shall
offer the Shares at the Offered Price to the Company or its assignee(s).
<PAGE>

          (b) Exercise of Right of First Refusal.  At any time within thirty
              ----------------------------------
(30) days after receipt of the Notice, the Company and/or its assignee(s) may,
by giving written notice to the Holder, elect to purchase all, but not less than
all, of the Shares proposed to be transferred to any one or more of the Proposed
Transferees, at the purchase price determined in accordance with subsection (c)
below.

          (c) Purchase Price.  The purchase price ("Purchase Price") for the
              --------------
Shares purchased by the Company or its assignee(s) under this Section shall be
the Offered Price.  If the Offered Price includes consideration other than cash,
the cash equivalent value of the non-cash consideration shall be determined by
the Board of Directors of the Company in good faith.

          (d) Payment.  Payment of the Purchase Price shall be made, at the
              -------
option of the Company or its assignee(s), in cash (by check), by cancellation of
all or a portion of any outstanding indebtedness of the Holder to the Company
(or, in the case of repurchase by an assignee, to the assignee), or by any
combination thereof within 30 days after receipt of the Notice or in the manner
and at the times set forth in the Notice.

          (e) Holder's Right to Transfer.  If all of the Shares proposed in the
              --------------------------
Notice to be transferred to a given Proposed Transferee are not purchased by the
Company and/or its assignee(s) as provided in this Section, then the Holder may
sell or otherwise transfer such Shares to that Proposed Transferee at the
Offered Price or at a higher price, provided that such sale or other transfer is
consummated within 120 days after the date of the Notice, that any such sale or
other transfer is effected in accordance with any applicable securities laws and
that the Proposed Transferee agrees in writing that the provisions of this
Section shall continue to apply to the Shares in the hands of such Proposed
Transferee.  If the Shares described in the Notice are not transferred to the
Proposed Transferee within such period, a new Notice shall be given to the
Company, and the Company and/or its assignees shall again be offered the Right
of First Refusal before any Shares held by the Holder may be sold or otherwise
transferred.

          (f) Exception for Certain Family Transfers.  Anything to the contrary
              --------------------------------------
contained in this Section notwithstanding, the transfer of any or all of the
Shares during the Optionee's lifetime or on the Optionee's death by will or
intestacy to the Optionee's immediate family or a trust for the benefit of the
Optionee's immediate family shall be exempt from the provisions of this Section.
"Immediate Family" as used herein shall mean spouse, lineal descendant or
antecedent, father, mother, brother or sister.  In such case, the transferee or
other recipient shall receive and hold the Shares so transferred subject to the
provisions of this Section, and there shall be no further transfer of such
Shares except in accordance with the terms of this Section.

          (g) Termination of Right of First Refusal.  The Right of First Refusal
              -------------------------------------
shall terminate as to any Shares upon the first sale of Common Stock of the
Company to the general public pursuant to a registration statement filed with
and declared effective by the Securities and Exchange Commission under the
Securities Act of 1933, as amended.

     6.   Tax Consultation.  Optionee understands that Optionee may suffer
          ----------------
adverse tax consequences as a result of Optionee's purchase or disposition of
the Shares.  Optionee represents that Optionee has consulted with any tax
consultants Optionee deems advisable in connection with

                                      -2-
<PAGE>

the purchase or disposition of the Shares and that Optionee is not relying on
the Company for any tax advice.

     7.   Restrictive Legends and Stop-Transfer Orders.
          --------------------------------------------

          (a) Legends.  Optionee understands and agrees that the Company shall
              -------
cause the legends set forth below or legends substantially equivalent thereto,
to be placed upon any certificate(s) evidencing ownership of the Shares together
with any other legends that may be required by the Company or by state or
federal securities laws:

          THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
          SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED, SOLD OR
          OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
          REGISTERED UNDER THE ACT OR, IN THE OPINION OF COMPANY COUNSEL
          SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR
          TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.

          THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
          RESTRICTIONS ON TRANSFER AND A RIGHT OF FIRST REFUSAL HELD BY THE
          ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN THE EXERCISE NOTICE BETWEEN
          THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH
          MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER
          RESTRICTIONS AND RIGHT OF FIRST REFUSAL ARE BINDING ON TRANSFEREES OF
          THESE SHARES.

          (b) Stop-Transfer Notices.  Optionee agrees that, in order to ensure
              ---------------------
compliance with the restrictions referred to herein, the Company may issue
appropriate "stop transfer" instructions to its transfer agent, if any, and
that, if the Company  transfers its own securities, it may make appropriate
notations to the same effect in its own records.

          (c) Refusal to Transfer.  The Company shall not be required (i) to
              -------------------
transfer on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Agreement or (ii) to treat as owner
of such Shares or to accord the right to vote or pay dividends to any purchaser
or other transferee to whom such Shares shall have been so transferred.

     8.   Successors and Assigns.  The Company may assign any of its rights
          ----------------------
under this Agreement to single or multiple assignees, and this Agreement shall
inure to the benefit of the successors and assigns of the Company.  Subject to
the restrictions on transfer herein set forth, this Agreement shall be binding
upon Optionee and his or her heirs, executors, administrators, successors and
assigns.

                                      -3-
<PAGE>

     9.   Interpretation.  Any dispute regarding the interpretation of this
          --------------
Agreement shall be submitted by Optionee or by the Company forthwith to the
Administrator which shall review such dispute at its next regular meeting.  The
resolution of such a dispute by the Administrator shall be final and binding on
all parties.

     10.  Governing Law; Severability.  This Agreement is governed by the
          ---------------------------
internal substantive laws but not the choice of law rules, of California.

     11.  Entire Agreement.  The Plan and Option Agreement are incorporated
          ----------------
herein by reference.  This Agreement, the Plan, the Option Agreement and the
Investment Representation Statement constitute the entire agreement of the
parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely to the
Optionee's interest except by means of a writing signed by the Company and
Optionee.

Submitted by:                          Accepted by:

[Name]                                 ALACRITY COMMUNICATIONS, INC.

__________________________________     ________________________________
Signature                              By

__________________________________     ________________________________
Print Name                             Its

Address:                               Address:
-------                                -------

__________________________________     ________________________________
__________________________________     ________________________________

                                       ________________________________
                                       Date Received

                                      -4-
<PAGE>

                                   EXHIBIT B
                                   ---------

                      INVESTMENT REPRESENTATION STATEMENT

OPTIONEE:

COMPANY:       ALACRITY COMMUNICATIONS, INC.

SECURITY:      COMMON STOCK

AMOUNT:

DATE:

In connection with the purchase of the above-listed Securities, the undersigned
Optionee represents to the Company the following:

          (a) Optionee is aware of the Company's business affairs and financial
condition and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Securities.  Optionee is
acquiring these Securities for investment for Optionee's own account only and
not with a view to, or for resale in connection with, any "distribution" thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act").

          (b) Optionee acknowledges and understands that the Securities
constitute "restricted securities" under the Securities Act and have not been
registered under the Securities Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of Optionee's investment intent as expressed herein.  In this connection,
Optionee understands that, in the view of the Securities and Exchange
Commission, the statutory basis for such exemption may be unavailable if
Optionee's representation was predicated solely upon a present intention to hold
these Securities for the minimum capital gains period specified under tax
statutes, for a deferred sale, for or until an increase or decrease in the
market price of the Securities, or for a period of one year or any other fixed
period in the future.  Optionee further understands that the Securities must be
held indefinitely unless they are subsequently registered under the Securities
Act or an exemption from such registration is available.  Optionee further
acknowledges and understands that the Company is under no obligation to register
the Securities.  Optionee understands that the certificate evidencing the
Securities will be imprinted with a legend which prohibits the transfer of the
Securities unless they are registered or such registration is not required in
the opinion of counsel satisfactory to the Company, a legend prohibiting their
transfer without the consent of the Commissioner of Corporations of the State of
California and any other legend required under applicable state securities laws.

          (c) Optionee is familiar with the provisions of Rule 701 and Rule 144,
each promulgated under the Securities Act, which, in substance, permit limited
public resale of "restricted securities" acquired, directly or indirectly from
the issuer thereof, in a non-public offering subject to the satisfaction of
certain conditions.  Rule 701 provides that if the issuer qualifies under Rule
701 at
<PAGE>

the time of the grant of the Option to the Optionee, the exercise will be exempt
from registration under the Securities Act. In the event the Company becomes
subject to the reporting requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, ninety (90) days thereafter (or such longer period as any
market stand-off agreement may require) the Securities exempt under Rule 701 may
be resold, subject to the satisfaction of certain of the conditions specified by
Rule 144, including: (1) the resale being made through a broker in an
unsolicited "broker's transaction" or in transactions directly with a market
maker (as said term is defined under the Securities Exchange Act of 1934); and,
in the case of an affiliate, (2) the availability of certain public information
about the Company, (3) the amount of Securities being sold during any three
month period not exceeding the limitations specified in Rule 144(e), and (4) the
timely filing of a Form 144, if applicable.

     In the event that the Company does not qualify under Rule 701 at the time
of grant of the Option, then the Securities may be resold in certain limited
circumstances subject to the provisions of Rule 144, which requires the resale
to occur not less than one year after the later of the date the Securities were
sold by the Company or the date the Securities were sold by an affiliate of the
Company, within the meaning of Rule 144; and, in the case of acquisition of the
Securities by an affiliate, or by a non-affiliate who subsequently holds the
Securities less than two years, the satisfaction of the conditions set forth in
sections (1), (2), (3) and (4) of the paragraph immediately above.

          (d) Optionee further understands that in the event all of the
applicable requirements of Rule 701 or 144 are not satisfied, registration under
the Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rules 144
and 701 are not exclusive, the Staff of the Securities and Exchange Commission
has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rules 144 or 701 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do so
at their own risk.  Optionee understands that no assurances can be given that
any such other registration exemption will be available in such event.

                                   Signature of Optionee:

                                   ________________________________

                                   Date:_____________________, 20__

                                      -2-<PAGE>

                                                                     Exhibit 4.1

                         REGISTRATION RIGHTS AGREEMENT

     AGREEMENT dated as of August 1, 2000 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 Agreement and Plan of Reorganization dated July
25, 2000 (the "Merger Agreement"), among the Company; TXC Acquisition
               ----------------
Corporation, a Delaware corporation and a wholly-owned subsidiary of the Company
("Merger Sub"); Alacrity Communications, Inc., a California corporation
  ----------
("Alacrity"), and the Shareholders, Merger Sub will be merged with and into
  --------
Alacrity with the effect being that Alacrity will continue as the surviving
corporation.

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

     WHEREAS, in connection with the Merger, certain Shareholders are acquiring
Shares pursuant to a Purchase Agreement among the Company, Merger Sub, Alacrity
and certain Shareholders, and

     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
   and the Purchase Agreement and the shares of Common Stock to be transferred
   to KLM Capital Management, Inc. and Dain Raischer Wessels by certain of the
   Shareholders after the date hereof.
<PAGE>

                                      -2-

          "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.

          "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
<PAGE>

                                      -3-

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 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 fifteen (15) 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 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 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.
<PAGE>

                                      -4-

          (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.

          (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.
<PAGE>

                                      -5-

     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 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,
                                                               --------
<PAGE>

                                      -6-

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 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
<PAGE>

                                      -7-

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:

          (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;
<PAGE>

                                      -8-

          (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;

          (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
<PAGE>

                                      -9-

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.

          (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 Alacrity 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 Alacrity 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 Alacrity, other
Shareholders of Alacrity, 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 Alacrity 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
<PAGE>

                                     -10-

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 the Company, at 3 Enterprise Drive, Shelton,
       Connecticut 06484, Attention: Michael F. Stauff, Chief
       Financial Officer, with a copy to Testa, Hurwitz & Thibeault,
       LLP, 125 High Street, Boston, Massachusetts 02110, Attn:
       Timothy C. Maguire, Esq.;

          if to any other party hereto, at the address of such party
       set forth on the signature page hereto, with a copy to Mark J.
       Casper, Esq., Wilson, Sonsini, Goodrich & Rosati, P.C., 650
       Page Mill Road, Palo Alto, CA 94304-1050;

          if to any subsequent Shareholder of Shares, to it at such
       address as may have been 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 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
<PAGE>

                                     -11-

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 TranSwitch
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 TranSwitch.

                 [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: Vice President
                                    ------------------------------

                             SHAREHOLDERS:

                             /s/ Bennett J. Bauer and Cynthia L. Bauer
                             -----------------------------------------
                             Name: Bennett J. Bauer and Cynthia L. Bauer

                             /s/ Robert Brownell
                             -------------------------------------
                             Name: Robert Brownell

                             /s/ James Cansler
                             -------------------------------------
                             Name: James Cansler

                             /s/ Thomas Cushing
                             -------------------------------------
                             Name: Thomas Cushing

                             /s/ Current Ventures Group, Ltd.
                             -------------------------------------
                             Name: Current Ventures Group, Ltd.
                             By: Jerald P. Shaevitz
                                 Senior Vice President
                                 KLM Capital Management, Inc.

                             /s/ DPI 1999 Investment Partners
                             -------------------------------------
                             Name: DPI 1999 Investment Partners
                             By: Michael W. Scott, Partner

<PAGE>

                                     -13-

                             EDB VENTURES PTE LTD

                             /s/ Liow Voon Kheong
                             ------------------------------------
                             Name: Liow Voon Kheong
                             Title: General Manager

                             /s/ Raymond Grefe
                             -------------------------------------
                             Name: Raymond Grefe

                             /s/ Chang Sull Kang
                             -------------------------------------
                             Name: Chang Sull Kang

                             KLM CAPITAL PARTNERS FUND, L.P.

                             /s/ Jerald P. Shaevitz
                             -------------------------------------
                             Name: Jerald P. Shaevitz
                                   Senior Vice President
                                   KLM Capital Management, Inc.

                             /s/ Annie Liu
                             -------------------------------------
                             Name: Annie Liu

                             /s/ Allan Lin
                             -------------------------------------
                             Name: Allan Lin

                             /s/ Jiong Liu
                             -------------------------------------
                             Name: Jiong Liu

                             /s/ Zheng Liu
                             -------------------------------------
                             Name: Zheng Liu

                             /s/ Lee Teck Seng
                             -------------------------------------
                             Name: Lee Teck Seng

                             /s/ Baoxing Tang
                             -------------------------------------
                             Name: Baoxing Tang
<PAGE>

                                     -14-

                             TECHNOLOGY FUND PTE LTD

                             /s/ Chin Chao
                             --------------------------------------
                             Name: Chin Chao, Director

                             /s/ Dennis Tsurumaki
                             --------------------------------------
                             Name: Dennis Tsurumaki

                             TRIOPHY INVESTMENTS

                             /s/ K.S. Chay
                             -------------------------------------
                             Name: K.S. Chay, Investment Advisor

                             /s/ Ming Wu
                             -------------------------------------
                             Name: Ming Wu

                             /s/ Raymond S. Venoski and
                             -------------------------------------
                             Sara Jo Light
                             -------------------------------------
                             Name: Raymond S. Venoski and
                                   Sara Jo Light

                             /s/ Linda Yang
                             -------------------------------------
                             Name: Linda Yang

                             /s/ Zheng Liu and Linda Yang
                             -------------------------------------
                             Name: Zheng Liu and Linda Yang

                             /s/ Jun Zhu
                             -------------------------------------
                             Name: June Zhu

                             WS INVESTMENT COMPANY 96B

                             /s/ Larry A. Terrados
                             -------------------------------------
                             Name: Larry A. Terrados

                        EACH SHAREHOLDER MUST COMPLETE
                                         ----
                         THE "SHAREHOLDER INFORMATION"
                      PAGE FOLLOWING THIS SIGNATURE PAGE
<PAGE>

                                     -15-

                            SHAREHOLDER INFORMATION
                            -----------------------

Name of Shareholder: _____________________________________
--------------------

Principal Residence Address:
---------------------------
Note:  Non-principal residence addresses and post office boxes cannot be
accepted.

_______________________________________________
(Number and Street)

_______________________________________________
(City, State)       (Zip Code)

_______________________________________________
(Residence Telephone)

Mailing Address (if different from above):
-----------------------------------------

_______________________________________________
(Number and Street)

_______________________________________________
(City, State)       (Zip Code)

Citizenship:___________________________________

Social Security or Taxpayer I.D. No.:__________

                     *      *        *         *         *

     If the Shareholder is a natural person and is an accredited investor
described by category 12 or 13 (or both) set forth on the attached Exhibit A,
                                                                   ---------
please check this box.  [_]

     If the Shareholder has not checked the box above, please check this box if
at least one of the categories set forth on the attached Exhibit A describes
                                                         ---------
you. [_]

<PAGE>

                                     -16-

                                                                       Exhibit A
                                                to Registration Rights Agreement
                                                --------------------------------

     1.    A bank (as defined in Section 3(a)(2) of the Securities Act) or a
savings and loan association or other institution (as defined in Section
3(a)(5)(A) of the Securities Act), whether acting in regard to this investment
in its individual or a fiduciary capacity.

     2.   A broker or dealer registered pursuant to Section 15 of the Securities
Exchange Act of 1934.

     3.   An insurance company (as defined in Section 2(13) of the Securities
Act).

     4.   An investment company registered under the Investment Company Act.

     5.   A business development company (as defined in Section 2(a)(48) of the
Investment Company Act).

     6.   A Small Business Investment Company licensed by the U.S. Small
Business Administration under Section 301(c) or (d) of the Small Business
Investment Act of 1958.

     7.   A plan established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or its political
subdivisions, for the benefit of its employees, if the plan has total assets in
excess of $5,000,000.

     8.   An employee benefit plan within the meaning of Title I of the Employee
Retirement Income Security Act of 1974 (an "ERISA Plan") whose decision to
purchase the Interest was made by a plan fiduciary (as defined in Section 3(21)
of ERISA), which is either a bank, savings and loan association, insurance
company or registered investment adviser.

     9.   An ERISA Plan with total assets in excess of $5,000,000 or, if a self-
directed ERISA Plan, with investment decisions made solely by persons that are
"accredited investors."

     10.  A private business development company (as defined in Section
202(a)(22) of the Investment Advisers Act of 1940).

     11.  An organization described in Section 501(c)(3) of the Internal Revenue
Code of 1986, as amended, corporation, Massachusetts or similar business trust
or partnership, not formed for the specific purpose of acquiring the Interest,
with total assets in excess of $5,000,000.

     12.  A natural person whose net worth (either individually or jointly with
such person's spouse) at the time of the Effective Time exceeds $1,000,000.

     13.  A natural person who had an individual income in excess of $200,000 or
joint income with such person's spouse in excess of $300,000 in each of the last
two calendar years and who reasonably expects to reach the same income level in
the current calendar year.
<PAGE>

                                     -17-

     14.  A trust, with total assets in excess of $5,000,000, not formed for the
specific purpose of acquiring the Interest, whose purchase of the Interest is
directed by a sophisticated person as described in Rule 506(b)(2)(ii) under the
Securities Act.

     15.  An entity in which all of the equity owners fit into at least one of
the categories listed under paragraphs 1-14 above.

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