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                                                                   EXHIBIT 10.33

                              [Terayon Letterhead]

July 22, 2004

Jerry Chase

Dear Jerry:

      On behalf of the Board of Directors of Terayon Communication Systems, Inc.
(hereafter referred to as "Terayon" or the "Company"), I am pleased to offer you
the position of Chief Executive Officer ("CEO") of the Company, pursuant to the
following terms.

      1. Title. As the Company's CEO, you report to the Company's Board of
Directors (the "Board") and your principal place of work will be at the
Company's headquarters, currently at 4988 Great America Parkway in Santa Clara,
California. You also will appointed to serve as a Director on the Company's
Board and shall serve as a Director, subject to the Company's bylaws.

      2. Salary and Benefits. Your annual base salary will be $400,000.00, less
payroll deductions and all required withholdings. This salary will be paid to
you semi-monthly, in accordance with the Company's normal payroll cycle. You
will be eligible to participate in the Company's standard employee benefit
programs (e.g., health insurance, 401(k) plan, life insurance, short and
long-term disability insurance, flexible spending accounts), subject to the
terms and conditions of those benefit plans. Details about these benefit plans
will be sent to you under separate cover. You also will be eligible for
Company-paid holidays, vacation and sick time, subject to Company policy.

      3. Annual Bonus. You will be eligible for an annual bonus of up to 75% of
your base salary (which shall be pro-rated for fiscal year 2004), the payment of
which will be based on the achievement of certain goals to be defined by the
Board.

      4. Relocation Assistance. The Company will assist you with the costs
associated with your relocation to California, and will reimburse you for
certain costs that you and your family will incur as a result of your
relocation, in accordance with the Company's standard policy and/or practices
for similarly-situated executives.

      5. Stock Options. Pursuant to Terayon's stock option plan and subject to
the approval of Terayon's Compensation Committee, you will be granted an option
to purchase 800,000 shares of the Company's Common Stock under the Company's
1997 Equity Incentive Plan (the "Plan"). The exercise price per share of the
stock granted subject to this option will be equal to the fair market value of
Terayon's Common Stock on the date of grant, as determined by the Compensation
Committee. The option grant will be subject to the terms and conditions of the
Plan and standard stock option agreement, and the option will vest over a four
(4) year period, with 1/4th or 25% of the total option shares vesting on the
first anniversary of your employment start date with the Company and 1/48th of
the total option shares vesting monthly thereafter.

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      6. At Will Employment. Your employment with Terayon will be at-will,
subject to paragraphs 7 and 8 below. This means that either you or the Company
may terminate your employment at any time for any reason, with or without notice
and with or without cause.

      7. Severance Protection. Notwithstanding the at-will employment
relationship between you and the Company, the Company agrees that, in the event
your employment is terminated by the Company without "Cause" or by you for "Good
Reason" (as those terms are defined in the Severance Agreement attached as
Exhibit B) at any time on or before the third anniversary of your employment
start date, you will be entitled to the following Severance Benefits: (a) a
severance payment equal to twelve (12) months of your then current base salary,
which will be payable in a lump sum or via salary continuation payments, in the
Company's sole discretion, and (b) continuation of your employee benefits, at
the Company's expense, for the duration of such twelve (12) month period, to the
extent such continuation is permissible under the Company's employee benefit
plans and subject to the terms and conditions of those benefit plans. If the
continuation of any employee benefit following your termination is not
permissible under the Company's employee welfare benefit plans, the Company
shall have no obligation to continue those benefits; however, you may continue
your health insurance coverage under COBRA and the Company will pay for your
COBRA premiums for a period of up to 12 months following your termination. Your
receipt of these Severance Benefits will be contingent upon you signing the
general release of claims attached hereto as Exhibit A, and these Severance
Benefits shall reduce the amount of any compensation or severance benefits that
you may be entitled to receive under the Severance Agreement described in
paragraph 8 below (which is also attached hereto as Exhibit B). For purposes of
this offer letter, a termination due to death or Disability (as defined in the
Severance Agreement attached as Exhibit B) shall not constitute a termination
without Cause or for Good Reason, and a termination for either of those reasons
shall be treated in a manner consistent with the Severance Agreement attached
hereto as Exhibit B.

      8. Severance Agreement. In addition to the severance protection described
in paragraph 7 above, you also will be given a change in control/severance
agreement (entitled "Severance Agreement," the form of which is attached hereto
as Exhibit B), which shall provide for, among other things, a severance payment
equal to 100% of your base salary and target bonus (defined as "Base Amount" and
"Bonus Amount" in the attached Severance Agreement) and 100% vesting of unvested
stock options upon a termination other than for "Cause" or with "Good Reason"
within 12 months after a "Change in Control" (as those terms are defined in the
Severance Agreement). However, the severance benefits to be provided to you
under the attached Severance Agreement shall be offset and reduced by the value
of the Severance Benefits that you may be entitled to receive under paragraph 7
above.

      9. Proprietary Information and Invention Assignment Agreement. As a
Terayon employee, you will be exepcted to abide by Company rules and
regulations, and will be required to sign and comply with a Proprietary
Information and Inventions Agreement (the "PIIAA"), a copy of which is attached
hereto as Exhibit C, that prohibits the unauthorized use or disclosure of
proprietary information of Terayon.

      10. Integration. The employment terms in this offer letter and the
attached Exhibits supersede any other agreements or promises made to you by
anyone, whether written or oral. No modification or amendment to this letter,
nor any waiver of any rights under this letter, will be

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effective unless in writing signed by a Director of Terayon (other than you).
This offer letter and the attached Exhibits are to be construed in accordance
with and governed by the internal laws of the State of California without regard
to principles of conflicts of laws.

As required by law, this offer is subject to satisfactory proof of your right to
work in the United States. Please sign and date this letter, and return it to me
by July 22, 2004, if you wish to accept this offer of employment. We would you
like to start as soon as possible. We look forward to your favorable reply and
to a productive and enjoyable work relationship.

Sincerely,

/s/ Zaki Rakib

Zaki Rakib

Accepted by: /s/ Jerry Chase                     Date: July 22, 2004
             ------------------
                 Jerry Chase

Start Date: September 2004


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                                    EXHIBIT A

                          RELEASE AND WAIVER OF CLAIMS

      In exchange for providing me with the Severance Benefits described in
Section 7 of my offer letter from Terayon Communications Systems, Inc. (the
"Company"), to which this form is attached, I, Jerry Chase, hereby furnish the
Company with the following release and waiver ("Release"):

      I (on behalf of myself and my heirs, successors and assigns) hereby
release, covenant not to sue, and forever discharge the Company, its
subsidiaries, divisions, parent and/or affiliated corporations or entities, and
each of their current and former directors, officers, shareholders, agents,
employees, attorneys, heirs, assigns, predecessors and successors, (the
"Released Parties"), of and from any and all claims, demands, actions and causes
of action, liabilities, losses, costs, attorneys fees or expenses, known or
unknown, suspected or unsuspected, that I now have, or may ever have against the
Released Parties, or any of them, that arise out of, or are in any way related
to: (1) my employment by the Company; (2) the termination of my employment with
the Company for any reason; and (3) any transactions, occurrences, acts or
omissions by the Released Parties, or any of them, occurring prior to my
execution of this Release. Without limiting the foregoing, I understand and
agree that the foregoing release provisions waive and release claims alleging
violations of any federal or state employment discrimination law, including
without limitation Title VII of the Civil Rights Act of 1964, the Americans with
Disabilities Act, the Family Medical Leave Act, the California Fair Employment
and Housing Act, as well as claims arising out of or related to any alleged
violations of state and federal wage and hour laws, all common law and statutory
claims, including without limitation, breach of contract, fraud, violation of
public policy, unfair competition and business practices, defamation, infliction
of emotional distress, invasion of privacy, wrongful termination, or any other
state or federal law, rule, or regulation, and any claims for attorneys' fees
and costs.

      I understand and agree this Release specifically covers known and unknown
claims, and hereby waive my rights under Section 1542 of the California Civil
Code or under any other comparable law of another jurisdiction that limits a
general release to claims that are known to exist at the date of this agreement.
Section 1542 of the California Civil Code states as follows: "A general release
does not extend to claims which the creditor does not know or suspect to exist
in his favor at the time of executing the release, which if known by him must
have materially affected his settlement with the debtor."

      I acknowledge that I am also waiving and releasing any rights I may have
under the Age Discrimination in Employment Act (the "ADEA"), that this waiver
and release is knowing and voluntary. I also acknowledge by this writing that:
(a) I am waiving rights or claims for age discrimination under the ADEA in
exchange for the payments described herein, which are in addition to anything of
value to which I otherwise am entitled; (b) I have been given an opportunity to
consider fully the terms of this Release for twenty-one (21) days, although I am
not required to wait twenty-one (21) days before signing this Release; (c) I
have been advised to consult with an attorney of my choosing before signing this
Release; (d) I understand I have

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seven (7) days in which to revoke my release of ADEA claims within seven (7)
days of signing this Release, provided, however, that my release and waiver of
all other claims will become effective when I execute this Release, and provided
further, that I shall not be entitled to the Severance Benefits under paragraph
7 of my offer letter if I revoke my release of ADEA claims under this Release.

      I understand and agree that I shall continue to be bound by my obligations
under my Proprietary Information and Inventions Agreement with the Company, and
that my receipt of the Severance Benefits under paragraph 7 of my offer letter
is contingent upon my fulfillment of and continued adherence to those
obligations.

      Finally, I acknowledge that (a) I have read this Release or have been
afforded every opportunity to do so, (b) I am fully aware of the its contents
and legal effect, and (c) I have chosen to enter into it freely, without
coercion and based upon my own judgment and not in reliance upon any promises
made by the Company other than those contained therein.

Date: July 22, 2004                                       /s/ Jerry Chase
                                                          ----------------------
                                                          Jerry Chase

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                                    EXHIBIT B

                              [SEVERANCE AGREEMENT]

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                                    EXHIBIT C

          [PROPRIETARY INFORMATION AND INVENTION ASSIGNMENT AGREEMENT]