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SILICON VALLEY BANK                                                 EXHIBIT 10.2


                                  SCHEDULE TO

                          LOAN AND SECURITY AGREEMENT
                                        
BORROWER:   TERAYON COMMUNICATION SYSTEMS, INC.
ADDRESS:    2952 BUNKER HILL LANE
            SANTA CLARA, CALIFORNIA  95054

DATE:       AUGUST 10, 1998

This Schedule forms an integral part of the Loan and Security Agreement between
Silicon Valley Bank and the above-borrower of even date.

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1. CREDIT LIMIT
   (Section 1.1):      An amount not to exceed the lesser of $5,000,000 at any
                       one time outstanding (the "Maximum Credit Limit") or the
                       sum of (A) and (B) below:

                       (A)  RECEIVABLE LINE. 80% of the amount of Borrower's
                            ---------------    
                            Eligible Receivables (as defined in Section 8
                            above) (the "Receivable Line"); plus

                       (B)  PURCHASE ORDER LINE. An amount equal to the lesser
                            -------------------    
                            of $2,000,000 or 25% of "Eligible Purchase Orders"
                            (as defined below) (the "Purchase Order Line").

                       As used herein, "Eligible Purchase Orders" means, at any
                       date, firm purchase orders held by Borrower which are
                       acceptable to Silicon in its sole discretion in all
                       respects and are for products due to be shipped within
                       the following six months.

                       Upon the next issuance of equity or subordinated debt
                       securities by Borrower, the proceeds thereof shall be
                       used to repay in full all sums due under the Purchase
                       Order Line, and thereafter no further Loans will be
                       available under the Purchase Order Line.

                       In the event the Commitment which the Borrower has
                       received from Silicon dated July 7, 1998 for mezzanine
                       financing terminates or is terminated for any reason, all
                       sums due under the Purchase Order Line shall become due
                       and payable, and thereafter no further Loans will be
                       available under the Purchase Order Line.

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2. INTEREST.

     INTEREST RATE (Section 1.2):

                       A rate equal to the "Prime Rate" in effect from time to
                       time, plus 2% per annum. Interest shall be calculated
                       on the basis of a 360-day year for the actual number of
                       days elapsed. "Prime Rate" means the rate announced
                       from time to time by Silicon as its "prime rate;" it is
                       a base rate upon which other rates charged by Silicon
                       are based, and it is not necessarily the best rate
                       available at Silicon. The interest rate applicable to
                       the Obligations shall change on each date there is a
                       change in the Prime Rate.

     MINIMUM MONTHLY INTEREST (Section 1.2):  none
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3. FEES (Section 1.4):

     Loan Fee:         $50,000, payable concurrently herewith. (any commitment
                       fee previously paid by the borrower in connection with
                       this loan shall be credited against this fee.)

 
     Purchase Order
     Facility Fee:     $10,000, payable on the date of the first Loan with
                       respect to Eligible Purchase Orders.

 
     Unused Line Fee:  Commencing on the first anniversary date of this
                       Agreement, in the event, in any calendar month (or
                       portion thereof at said date and at the end of the term
                       hereof), the average daily principal balance of the Loans
                       outstanding during the month is less than $5,000,000,
                       Borrower shall pay Silicon an unused line fee in an
                       amount equal to 0.25% per annum on the difference between
                       $5,000,000 and the average daily principal balance of the
                       Loans outstanding during the month, which unused line fee
                       shall be computed and paid monthly, in arrears, on the
                       first day of the following month.

     Collateral 
     Monitoring
     Fee:              $500 per month, payable in arrears, for the first four
                       full calendar months during the term hereof and
                       prorated for any partial calendar month at the
                       beginning of the term hereof, and thereafter $1,000 per
                       month, payable in arrears (prorated for any partial
                       calendar month at end of the term of this Agreement).

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4. MATURITY DATE 
   (Section 6.1):   Two years from the date of this Agreement, subject to   
                    automatic renewal as provided in Section 6.1 above, and 
                    early termination as provided in Section 6.2 above.         
                       
                       

                                      -2-
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5. FINANCIAL COVENANTS
   (Section 5.1):      Borrower shall comply with all of the following
                       covenants. Compliance shall be determined as of the end
                       of each month, except as otherwise specifically
                       provided below:

     MINIMUM TANGIBLE
     NET WORTH:        Borrower shall maintain a Tangible Net Worth of not
                       less than a deficit $1,000,000.

     DEFINITIONS.      For purposes of the foregoing financial covenants, the
                       following terms shall have the following meanings:

                       "Tangible Net Worth" shall mean the excess of total
                       assets over total liabilities, determined in accordance
                       with generally accepted accounting principles, with the
                       following adjustments:

                         (A) there shall be excluded from assets: (i) notes,
                         accounts receivable and other obligations owing to the
                         Borrower from its officers or other Affiliates (except
                         that Shaw Communications shall not be deemed to be an
                         "Affiliate" for purposes of this clause), and (ii) all
                         assets which would be classified as intangible assets
                         under generally accepted accounting principles,
                         including without limitation goodwill, licenses,
                         patents, trademarks, trade names, copyrights,
                         capitalized software and organizational costs, licenses
                         and franchises
                         
                         (B) there shall be excluded from liabilities: all
                         indebtedness which is subordinated to the Obligations
                         under a subordination agreement in form specified by
                         Silicon or by language in the instrument evidencing the
                         indebtedness which is acceptable to Silicon in its
                         discretion.

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6. REPORTING.
  (Section 5.3):       Borrower shall provide Silicon with the following, in
                          such form as Silicon shall specify:
                       
                       1. Monthly Receivable agings, aged by invoice date,
                          within fifteen days after the end of each month.

                       2. Monthly accounts payable agings, aged by invoice date,
                          and outstanding or held check registers, if any,
                          within fifteen days after the end of each month.
                                              
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                    3. Monthly reconciliations of Receivable agings (aged by
                       invoice date), transaction reports, and general ledger,
                       within fifteen days after the end of each month.

                    4. Monthly lists of all extended term invoices and a
                       Backlog/Purchase Order Report, within fifteen days
                       after the end of each month.

                    5. Monthly unaudited financial statements, as soon as
                       available, and in any event within thirty days after the
                       end of each month.

                    6. Monthly Compliance Certificates, within thirty days after
                       the end of each month, in such form as Silicon shall
                       reasonably specify, signed by the Chief Financial Officer
                       of Borrower, certifying that as of the end of such month
                       Borrower was in full compliance with all of the terms and
                       conditions of this Agreement, and setting forth
                       calculations showing compliance with the financial
                       covenants set forth in this Agreement and such other
                       information as Silicon shall reasonably request,
                       including, without limitation, a statement that at the
                       end of such month there were no held checks.

                    7. Quarterly unaudited financial statements, as soon as
                       available, and in any event within forty-five days after
                       the end of each fiscal quarter of Borrower.

                    8. Annual operating budgets (including income statements,
                       balance sheets and cash flow statements, by month) for
                       the upcoming fiscal year of Borrower within thirty days
                       prior to the end of each fiscal year of Borrower.

                    9. Annual financial statements, as soon as available, and in
                       any event within 120 days following the end of Borrower's
                       fiscal year, certified by independent certified public
                       accountants acceptable to Silicon.

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7. COMPENSATION
   (Section 5.5):      [Intentionally omitted]

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8. BORROWER INFORMATION:

     PRIOR NAMES OF
     BORROWER
     (Section 3.2):    See Representations and Warranties of Borrower dated July
                       7, 1998. (Since said date, Borrower has re-incorporated
                       in Delaware under its current name.)

     PRIOR TRADE
     NAMES OF BORROWER
     (Section 3.2):    See Representations and Warranties of Borrower dated 
                       July 7, 1998

     EXISTING TRADE
     NAMES OF BORROWER
     (Section 3.2):    See Representations and Warranties of Borrower dated 
                       July 7, 1998

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     OTHER LOCATIONS AND
     ADDRESSES 
     (Section 3.3):    See Representations and Warranties of Borrower dated 
                       July 7, 1998

     MATERIAL ADVERSE
     LITIGATION 
     (Section 3.10):   None

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9. OTHER COVENANTS
   (Section 5.1):    Borrower shall at all times comply with all of the
                     following additional covenants:

                     (1)  BANKING RELATIONSHIP.  Borrower shall at all times
                          maintain its primary banking relationship with
                          Silicon.

Borrower:                                      Silicon:
TERAYON COMMUNICATION SYSTEMS, INC.            SILICON VALLEY BANK
 
 
By_______________________________              By_______________________________
    President or Vice President                Title____________________________
 
By_______________________________
    Secretary or Ass't Secretary

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                    EXHIBIT A TO LOAN AND SECURITY AGREEMENT

                       NONASSIGNABLE RIGHTS (SECTION 2.1)

Rights under that certain License No. 7881 between Borrower and Wind River
Systems, Inc., 1010 Atlantic Avenue, Alameda CA  94501