**Exhibit 10.1**
**INDEMNIFICATION AGREEMENT**
     This INDEMNIFICATION AGREEMENT (this “Agreement”) is made and entered into this ______day of ______, 20______(the “Effective Date”) by and between Terayon Communication Systems,Inc., a Delaware corporation (the “Company”), and ______ (the “Indemnitee”).
     WHEREAS, the Company believes it is essential to retain and attract qualified directors andofficers;
WHEREAS, the Indemnitee [is/has been asked to be] a director and/or officer of the Company;
     WHEREAS, both the Company and the Indemnitee recognize the increased risk of litigation andother claims being asserted against directors and officers of public companies;
     WHEREAS, the Company’s Certificate of Incorporation (the “Certificate ofIncorporation”) and Bylaws (the “Bylaws”) require the Company to indemnify and advanceexpenses to its directors and officers to the extent permitted by the DGCL (as hereinafter defined)and other applicable laws;
     [WHEREAS, the Indemnitee has been serving and intends to continue serving as a director and/orofficer of the Company in part in reliance on the Company’s obligation to indemnify and advanceexpenses, as set forth in this Agreement; and]
     WHEREAS, in recognition of the Indemnitee’s need for (i) substantial protection againstpersonal liability, (ii) protection against personal liability, regardless of, among other things,any amendment to or revocation of the Certificate of Incorporation or the Bylaws, any change in thecomposition of the Company’s Board of Directors (the “Board”) or acquisition transactionrelating to the Company, and (iii) an inducement to continue to provide effective services to theCompany as a director and/or officer thereof, the Company wishes to provide for the indemnificationof the Indemnitee and to advance expenses to the Indemnitee to the fullest extent permitted by lawand as set forth in this Agreement, and, to the extent insurance is maintained by the Company, toprovide for the continued coverage of the Indemnitee under the Company’s directors’ and officers’liability insurance policies; [and]
     [WHEREAS, the Indemnitee is relying upon the rights afforded under this Agreement in acceptingIndemnitee’s position as a director, officer or employee of the Company;]
     NOW, THEREFORE, in consideration of the premises contained herein and of the Indemnitee[agreeing/continuing] to serve the Company directly or, at its request, with another enterprise,and intending to be legally bound hereby, the parties hereto agree as follows:
1

 

     1. **Certain Definitions**.
          (a) An “Affiliate” is any entity that is controlled, controlled by or under commoncontrol with the Company. “Control” for the purposes of the foregoing means director or indirectownership interest or control of more than fifty percent (50%) of the outstanding voting securitiesof an entity.
          (b) A “Change in Control” shall be deemed to have occurred if:
               (i) any “person,” as such term is used in Sections 13(d) and 14(d) of the Securities ExchangeAct of 1934, as amended, and the rules and regulations thereunder (the “Exchange Act”),other than (a) a trustee or other fiduciary holding securities under an employee benefit plan ofthe Company; (b) a corporation owned, directly or indirectly, by the stockholders of the Company insubstantially the same proportions as their ownership of stock of the Company; or (c) any currentbeneficial stockholder or group, as defined by Rule 13d-5 of the Exchange Act, including the heirs,assigns and successors thereof, of beneficial ownership, within the meaning of Rule 13d-3 of theExchange Act, of securities possessing more than 50% of the total combined voting power of theCompany’s outstanding securities; hereafter becomes the “beneficial owner,” as defined in Rule13d-3 of the Exchange Act, directly or indirectly, of securities of the Company representing 20% ormore of the total combined voting power represented by the Company’s then outstanding VotingSecurities;
               (ii) during any period of two consecutive years, individuals who at the beginning of suchperiod constitute the Board and any new director whose election by the Board or nomination forelection by the Company’s stockholders was approved by a vote of at least two-thirds of thedirectors then in office who either were directors at the beginning of the period or whose electionor nomination for election was previously so approved, cease for any reason to constitute amajority thereof; or
               (iii) the stockholders of the Company approve a merger or consolidation of the Company withany other corporation, other than a merger or consolidation which would result in the VotingSecurities of the Company outstanding immediately prior thereto continuing to represent (either byremaining outstanding or by being converted into Voting Securities of the surviving entity) atleast 80% of the total voting power represented by the Voting Securities of the Company or suchsurviving entity outstanding immediately after such merger or consolidation, or the stockholders ofthe Company approve a plan of complete liquidation of the Company or an agreement for the sale ordisposition by the Company, in one transaction or a series of transactions, of all or substantiallyall of the Company’s assets.
          (c) “DGCL” shall mean the General Corporation Law of the State of Delaware, as thesame exists or may hereafter be amended or interpreted; provided, however, that in the case of anysuch amendment or interpretation, only to the extent that such amendment or interpretation permitsthe Company to provide broader indemnification rights than were permitted prior thereto.
2

 

          (d) “Expense” shall mean attorneys’ fees and all other costs, expenses and obligationspaid or incurred in connection with investigating, defending, being a witness in or participatingin (including on appeal), or preparing for any of the foregoing, any Proceeding relating to anyIndemnifiable Event.
          (e) “Indemnifiable Event” shall mean any event or occurrence that takes place eitherprior to or after the execution of this Agreement, related to the fact that the Indemnitee is orwas a director or officer of the Company, or is or was serving at the request of the Company as adirector, officer, employee, or agent of an Affiliate, another corporation or of a partnership,joint venture, trust or other enterprise, including service with respect to employee benefit plans,or by reason of anything done or not done by the Indemnitee in any such capacity.
          (f) “Proceeding” shall mean any threatened, pending or completed action, suit,investigation or proceeding, and any appeal thereof, whether civil, criminal, administrative orinvestigative and/or any inquiry or investigation, whether conducted by the Company or any otherparty, that the Indemnitee in good faith believes might lead to the institution of any such action.
          (g) “Reviewing Party” shall mean any appropriate person or body consisting of a memberor members of the Company’s Board or any other person or body appointed by the Board (including thespecial independent counsel referred to in Section 6) who is not a party to the particularProceeding with respect to which the Indemnitee is seeking indemnification.
          (h) “Voting Securities” shall mean any securities of the Company, which vote generallyin the election of directors.
     2. **Indemnification.**In the event the Indemnitee was or is a party to or is involved (as aparty, witness, or otherwise) in any Proceeding by reason of (or arising in part out of) anIndemnifiable Event, whether the basis of the Proceeding is the Indemnitee’s alleged action in anofficial capacity as a director or officer or in any other capacity while serving as a director orofficer, the Company shall indemnify the Indemnitee to the fullest extent permitted by the DGCLagainst any and all Expenses, liability, and loss (including judgments, fines, ERISA excise taxesor penalties, and amounts paid or to be paid in settlement, and any interest, assessments, or othercharges imposed thereon, and any federal, state, local, or foreign taxes imposed on any director orofficer as a result of the actual or deemed receipt of any payments under this Agreement)(collectively, “Liabilities”) reasonably incurred or suffered by such person in connectionwith such Proceeding. The Company shall provide indemnification pursuant to this Section 2 as soonas practicable, but in no event later than 30 days after it receives written demand from theIndemnitee. Notwithstanding anything in this Agreement to the contrary and except as provided inSection 5 below, the Indemnitee shall not be entitled to indemnification pursuant to this Agreement(i) in connection with any Proceeding initiated by the Indemnitee against the Company or anydirector or officer of the Company unless the Company has joined in or consented to the initiationof such Proceeding or (ii) on account of any suit in which judgment is rendered against theIndemnitee pursuant to Section 16(b) of the Exchange Act for an accounting of profits made from thepurchase or sale by the Indemnitee of securities of the Company.
3

 

     3. **Advancement of Expenses.**The Company shall advance Expenses to the Indemnitee within 30business days of such request (an “Expense Advance”); provided, however, that if requiredby applicable corporate laws such Expenses shall be advanced only upon delivery to the Company ofan undertaking by or on behalf of the Indemnitee to repay such amount if it is ultimatelydetermined that the Indemnitee is not entitled to be indemnified by the Company; and providedfurther, that the Company shall make such advances only to the extent permitted by law.
     4. **Review Procedure for Indemnification.**Notwithstanding the foregoing, (i) the obligationsof the Company under Sections 2 and 3 above shall be subject to the condition that the ReviewingParty shall not have determined (in a written opinion, in any case in which the special independentcounsel referred to in Section 6 hereof is involved) that the Indemnitee would not be permitted tobe indemnified under applicable law, and (ii) the obligation of the Company to make an ExpenseAdvance pursuant to Section 3 above shall be subject to the condition that, if, when and to theextent that the Reviewing Party determines that the Indemnitee would not be permitted to be soindemnified under applicable law, the Company shall be entitled to be reimbursed by the Indemnitee(who hereby agrees to reimburse the Company) for all such amounts theretofore paid; provided,however, that if the Indemnitee has commenced legal proceedings in a court of competentjurisdiction pursuant to Section 5 below to secure a determination that the Indemnitee should beindemnified under applicable law, any determination made by the Reviewing Party that the Indemniteewould not be permitted to be indemnified under applicable law shall not be binding and theIndemnitee shall not be required to reimburse the Company for any Expense Advance until a finaljudicial determination is made with respect thereto (as to which all rights of appeal therefromhave been exhausted or have lapsed). The Indemnitee’s obligation to reimburse the Company forExpense Advances pursuant to this Section 4 shall be unsecured and no interest shall be chargedthereon. If there has not been a Change in Control, the Reviewing Party shall be selected by theBoard, and if there has been such a Change in Control, other than a Change in Control which hasbeen approved by a majority of the Company’s Board who were directors immediately prior to suchChange in Control, the Reviewing Party shall be the special independent counsel referred to inSection 6 hereof.
     5. **Enforcement of Indemnification Rights.**If the Reviewing Party determines that theIndemnitee substantively would not be permitted to be indemnified in whole or in part underapplicable law, or if the Indemnitee has not otherwise been paid in full pursuant to Sections 2 and3 above within 30 days after a written demand has been received by the Company, the Indemniteeshall have the right to commence litigation in any court having subject matter jurisdiction thereofand in which venue is proper to recover the unpaid amount of the demand (an “EnforcementProceeding”) and, if successful in whole or in part, the Indemnitee shall be entitled to bepaid any and all Expenses in connection with such Enforcement Proceeding. The Company herebyconsents to service of process for such Enforcement Proceeding and to appear in any suchEnforcement Proceeding. Any determination by the Reviewing Party otherwise shall be conclusive andbinding on the Company and the Indemnitee.
     6. **Change in Control**. The Company agrees that if there is a Change in Control of the Company,other than a Change in Control which has been approved by a majority of the
4

 

Company’s Board who were directors immediately prior to such Change in Control, then withrespect to all matters thereafter arising concerning the rights of the Indemnitee to indemnitypayments and Expense Advances under this Agreement or any other agreement or under applicable lawor the Company’s Certificate of Incorporation or Bylaws now or hereafter in effect relating toindemnification for Indemnifiable Events, the Company shall seek legal advice only from specialindependent counsel selected by the Indemnitee and approved by the Company, which approval shallnot be unreasonably withheld. Such special independent counsel shall not have otherwise performedservices for the Company or the Indemnitee, other than in connection with such matters, within thelast five years. Such independent counsel shall not include any person who, under the applicablestandards of professional conduct then prevailing, would have a conflict of interest inrepresenting either the Company or the Indemnitee in an action to determine the Indemnitee’s rightsunder this Agreement. Such counsel, among other things, shall render its written opinion to theCompany and the Indemnitee as to whether and to what extent the Indemnitee would be permitted to beindemnified under applicable law. The Company agrees to pay the reasonable fees of the specialindependent counsel referred to above and to indemnify fully such counsel against any and allexpenses (including attorneys’ fees), claims, liabilities and damages arising out of or relating tothis Agreement or the engagement of special independent counsel pursuant to this Agreement.
     7. **Partial Indemnity**. If the Indemnitee is entitled under any provision of this Agreement toindemnification by the Company for some or a portion of the Expenses and Liabilities, but not,however, for all of the total amount thereof, the Company shall nevertheless indemnify theIndemnitee for the portion thereof to which the Indemnitee is entitled. Moreover, notwithstandingany other provision of this Agreement, to the extent that the Indemnitee has been successful on themerits or otherwise in defense of any or all Proceedings relating in whole or in part to anIndemnifiable Event or in defense of any issue or matter therein, including dismissal withoutprejudice, the Indemnitee shall be indemnified against all Expenses incurred in connectiontherewith. In connection with any determination by the Reviewing Party or otherwise as to whetherthe Indemnitee is entitled to be indemnified hereunder, the burden of proof shall be on the Companyto establish that the Indemnitee is not so entitled.
     8. **Non-exclusivity**. The rights of the Indemnitee hereunder shall be in addition to any otherrights the Indemnitee may have under any statute, provision of the Company’s Certificate ofIncorporation or Bylaws, vote of stockholders or disinterested directors or otherwise, both as toaction in an official capacity and as to action in another capacity while holding such office. Tothe extent that a change in the DGCL permits greater indemnification by agreement than would beafforded currently under the Company’s Certificate of Incorporation and Bylaws and this Agreement,it is the intent of the parties hereto that the Indemnitee shall enjoy by this Agreement thegreater benefits so afforded by such change.
     9. **Liability Insurance**. To the extent the Company maintains an insurance policy or policiesproviding directors’ and officers’ liability insurance, the Indemnitee shall be covered by suchpolicy or policies, in accordance with its or their terms, to the maximum extent of the coverageavailable for any director or officer of the Company.
5

 

     10. **Settlement of Claims**. The Company shall not be liable to indemnify the Indemnitee underthis Agreement (a) for any amounts paid in settlement of any action or claim effected without theCompany’s written consent, which consent shall not be unreasonably withheld; or (b) for anyjudicial award if the Company was not given a reasonable and timely opportunity, at its expense, toparticipate in the defense of such action.
     11. **No Presumption**. For purposes of this Agreement, to the fullest extent permitted by law,the termination of any Proceeding, action, suit or claim, by judgment, order, settlement (whetherwith or without court approval) or conviction, or upon a plea of nolo contendere, or itsequivalent, shall not create a presumption that the Indemnitee did not meet any particular standardof conduct or have any particular belief or that a court has determined that indemnification is notpermitted by applicable law.
     12. **Period of Limitations**. No legal action shall be brought and no cause of action shall beasserted by or on behalf of the Company or any affiliate of the Company against the Indemnitee, theIndemnitee’s spouse, heirs, executors or personal or legal representatives after the expiration oftwo years from the date of accrual of such cause of action, or such longer period as may berequired by state law under the circumstances, and any claim or cause of action of the Company orits affiliate shall be extinguished and deemed released unless asserted by the timely filing of alegal action within such period; provided, however, that if any shorter period of limitations isotherwise applicable to any such cause of action, such shorter period shall govern.
     13. **Amendment of this Agreement**. No supplement, modification or amendment of this Agreementshall be binding unless executed in writing by both of the parties hereto. No waiver of any of theprovisions of this Agreement shall be deemed or shall constitute a waiver of any other provisionshereof (whether or not similar), nor shall such waiver constitute a continuing waiver. Except asspecifically provided herein, no failure to exercise or any delay in exercising any right or remedyhereunder shall constitute a waiver thereof.
     14. **Subrogation**. In the event of payment under this Agreement, the Company shall besubrogated to the extent of such payment to all of the rights of recovery of the Indemnitee, whoshall execute all papers required and shall do everything that may be necessary to secure suchrights, including the execution of such documents necessary to enable the Company effectively tobring suit to enforce such rights.
     15. **No Duplication of Payments**. The Company shall not be liable under this Agreement to makeany payment in connection with any claim made against Indemnitee to the extent the Indemnitee hasotherwise actually received payment (under any insurance policy, Bylaw, vote, agreement orotherwise) of the amounts otherwise indemnifiable hereunder.
     16. **Binding Effect**. This Agreement shall be binding upon and inure to the benefit of and beenforceable by the parties hereto and their respective successors, assigns, including any direct orindirect successor by purchase, merger, consolidation or otherwise to all or substantially all ofthe business and/or assets of the Company, spouses, heirs, and personal and legal representatives.The Company shall require and cause any successor (whether direct or indirect by purchase, merger,consolidation or otherwise) to all, substantially all, or a substantial part, of
6

 

the business and/or assets of the Company, by written agreement in form and substancesatisfactory to the Indemnitee, expressly to assume and agree to perform this Agreement in the samemanner and to the same extent that the Company would be required to perform if no such successionhad taken place. This Agreement shall continue in effect regardless of whether the Indemniteecontinues to serve as a director or officer of the Company or of any other enterprise at theCompany’s request.
     17. **Severability**. The provisions of this Agreement shall be severable in the event that anyof the provisions hereof (including any provision within a single section, paragraph or sentence)is held by a court of competent jurisdiction to be invalid, void or otherwise unenforceable, andthe remaining provisions shall remain enforceable to the fullest extent permitted by law.Furthermore, to the fullest extent possible, the provisions of this Agreement (including, withoutlimitation, each portion of this Agreement containing any provision held to be invalid, void orotherwise unenforceable, that is not itself invalid, void or unenforceable) shall be construed soas to give effect to the intent manifested by the provision held invalid, illegal or unenforceable.
     18. **Governing Law**. This Agreement shall be governed by and construed and enforced inaccordance with the laws of the State of Delaware applicable to contracts made and to be performedin such State without giving effect to the principles of conflicts of laws.
     19. **Counterparts**. This Agreement may be executed in one or more counterparts, each of whichshall be deemed an original, but all of which together shall constitute one and the sameinstrument.
     20. **Notices**. All notices, demands, and other communications required or permitted hereundershall be made in writing and shall be deemed to have been duly given if delivered by hand, againstreceipt, or mailed, postage prepaid, certified or registered mail, return receipt requested, andaddressed to the Company at:           Terayon Communication Systems, Inc.     4988 Great America Parkway     Santa Clara, CA 95054     Attn: General Counsel     Fax: 408.486.5271           and to the Indemnitee at:                             
     Notice of change of address shall be effective only when done in accordance with this Section.All notices complying with this Section shall be deemed to have been received on the date ofdelivery or on the third business day after mailing.
7

 

     IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Agreement as ofthe day first set forth above.         **THE COMPANY:**           TERAYON COMMUNICATION SYSTEMS, INC.          By:                  Name:                  Title:                   **INDEMNITEE:**                 Signature           Print Name:        
8