<PAGE>
                                                                   EXHIBIT 10.25

(GE LOGO)                                      GE CAPITAL
                                               COMMERCIAL EQUIPMENT FINANCING

LEAH A. SMITH                                  2400 E. Katella Avenue
Senior Risk Analyst                            Suite 800
                                               Anaheim, CA  92806
                                               714-456-9449 / Fax:  714-456-9473
                                               Internet:  leah.smith@ge.com




December 31, 2003

Mr. Arthur T. Taylor
Chief Financial Officer
Terayon Communication Systems, Inc.
4988 Great America Parkway
Santa Clara, CA  95054


RE:      Aircraft Lease Agreement between General Electric Capital Corporation
         ("Lessor") and Terayon Communication Systems, Inc. ("Lessee") dated
         February 8, 2002 (the "Lease")


Dear Mr. Taylor:

Annex B to the Lease is hereby amended as follows:

<Table>
<S>                           <C>                              <C>
B. 1. Advance Rent (if any):  (a) Amount:    $179,225.93
                              (b)  Due Date: January 1, 2004   (Previously paid as part of
                                                               invoice # 10024489 dated
                                                               November 5, 2003.  No payment
                                                               due January 1, 2004.)

B. 15. Basic Term Lease Rate Factor:

                           Factor                             Rental No.

                           1.846198%                          9-19

 B. 16.  Base Index Rate:  1.03%
</Table>




<PAGE>



Exhibit I to Annex B to the Lease is hereby amended as follows:

<Table>
<Caption>

                                                      Floating
                                                          Rate
                             Payment                Adjustment
                              Number                    Factor
                             -------                ----------
<S>                                                 <C>
                                9                       8.7572
                                10                      7.9280
                                11                      7.3276
                                12                      6.7255
                                13                      6.2298
                                14                      5.7431
                                15                      5.2873
                                16                      4.8299
                                17                      4.4012
                                18                      3.8913
                                19                      3.4165
                                20                      2.0594
</Table>

Annex F to the Lease is hereby amended as follows:

<Table>
<Caption>

                                  # of
                                  Base             Termination
                              Payments                   Value
                              --------             -----------
<S>                                                <C>
                                     9                  97.449
                                    10                  96.391
                                    11                  95.142
                                    12                  93.854
                                    13                  92.642
                                    14                  91.530
                                    15                  90.452
                                    16                  89.350
                                    17                  88.225
                                    18                  87.078
                                    19                  85.905
                                    20                  84.711
</Table>

In addition, Lessor agrees that upon delivery to Lessor of a security deposit
pledge in the amount of Seven Million Four Hundred Ninety-Eight Thousand Nine
Hundred Eighty and 56/100 Dollars ($7,498,980.56), in the form and substance
acceptable to Lessor, Lessor shall release to Lessee all letters of credit
currently held by Lessor as security for obligations under the Lease.


<PAGE>

Except as expressly modified hereby, all terms and provisions of the Lease shall
remain in full force and effect.

If you have any questions or concerns regarding the above, please do not
hesitate to contact me at (714) 456-9449.


Sincerely,

/s/ Leah A. Smith

Leah A. Smith
Senior Risk Analyst



Accepted and agreed to:

Terayon Communication Systems, Inc.

By: /s/ Arthur T. Taylor
    -------------------------------


Name:    Arthur T. Taylor
      -----------------------------


Title: Chief Financial Officer
       ----------------------------


Date:  December 31, 2003
      -----------------------------


<PAGE>
(GE LOGO)                                      GE CAPITAL
                                               COMMERCIAL EQUIPMENT FINANCING

LEAH A. SMITH                                  2400 E. Katella Avenue
Senior Risk Analyst                            Suite 800
                                               Anaheim, CA  92806
                                               714-456-9449 / Fax:  714-456-9473
                                               Internet:  leah.smith@ge.com



December 31, 2003


Mr. Arthur T. Taylor
Chief Financial Officer
Terayon Communication Systems, Inc.
4988 Great America Parkway
Santa Clara, CA  95054


RE:      Aircraft Lease Agreement between General Electric Capital Corporation
         ("Lessor") and Terayon Communication Systems, Inc. ("Lessee") dated
         February 8, 2002 (the "Lease")


Dear Mr. Taylor:

Annex B to the Lease is hereby amended as follows:

G. AMENDMENTS TO LEASE.

     Lessee has the option to extend the Basic Term by one month without
     additional charge upon 30-days written notice to Lessor.

Except as expressly modified hereby, all terms and provisions of the Lease and
related documents shall remain in full force and effect. Indicate your agreement
to the terms hereof by signing this letter where indicated below. Failure to
return a signed original to Lessor shall render this letter null and void, and
of no further force or effect.

If you have any questions or concerns regarding the above, please do not
hesitate to contact me at (714) 456-9449.

Sincerely,

/s/ Leah A. Smith

Leah A. Smith
Senior Risk Analyst




<PAGE>

Accepted and agreed to:

Terayon Communication Systems, Inc.

By: /s/ Arthur Taylor
    -------------------------------


Name:    Arthur T. Taylor
      -----------------------------


Title: Chief Financial Officer
       ----------------------------


Date:  December 31, 2003
       -------------------------------------



<PAGE>




                        SECURITY DEPOSIT PLEDGE AGREEMENT
                                     (Lease)

       THIS SECURITY DEPOSIT PLEDGE AGREEMENT (this "AGREEMENT") is made and
entered into as of the 31st day of December, 2003 by and between TERAYON
COMMUNICATIONS SYSTEMS, INC., a Delaware corporation with its principal place of
business at 4988 Great America Parkway, Santa Clara, CA 95054 ("LESSEE") and
GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation, with its principal
place of business at 2400 E. Katella Avenue Suite 800 Anaheim, CA 92806
(together with its successors and assigns, if any, "LESSOR").

       In consideration of, and as an inducement for Lessor to continue leasing
to Lessee a certain Aircraft under the Aircraft Lease Agreement, dated as of
February 8, 2002, the AIRCRAFT LEASE AGREEMENT AND ALL SCHEDULES AND ANNEXES
THERETO BEING REFERRED TO AS THE "LEASE"), and to secure the payment and
performance of all of Lessee's obligations under the Lease, Lessee hereby agrees
that it shall deposit and pledge with Lessor on or before January 9, 2004, the
sum of Seven Million Four Hundred Ninety-Eight Thousand Nine Hundred Eighty and
56/100 Dollars ($7,498,980.56) (the "COLLATERAL"), such pledge to be upon the
terms and conditions set forth below:

       1. Lessee delivers the Collateral to Lessor on or before January 9, 2004,
to secure Lessee's performance of its obligations under the Lease, including,
but not limited to, the timely payment of Rent. Lessee's failure to deliver the
Collateral to Lessor on or before January 9, 2004 shall constitute a default
under the Lease.

       2. The Collateral deposited with Lessor will not accrue interest. Lessor
may commingle the Collateral with its other funds.

       3. After any default by Lessee under the Lease and while the same is
continuing, upon, or at any time after said default, Lessor may apply the
Collateral towards the satisfaction of Lessee's obligations under the Lease and
the payment of all costs and expenses incurred by Lessor as a result of such
default, including but not limited to, costs of repossessing said Aircraft and
attorneys' fees. Such application shall not excuse the performance at the time
and in the manner prescribed of any obligation of Lessee or cure a default of
Lessee. Upon the application by Lessor of any amount of the Collateral pursuant
to the terms of this paragraph, Lessee shall be obligated to immediately pay to
Lessor an amount sufficient to cause the Collateral to equal the amount first
set forth above.

       4. Lessor shall have no duty to first commence an action against or seek
recourse from Lessee, in the event of a default under the Lease, before
enforcing the provisions of, and proceedings under the provisions of this
Agreement. The obligations of Lessee under this Agreement shall be absolute and
unconditional and shall remain in full force and effect without regard to, and
shall not be released or discharged or in any way affected by:

       (a)    any amendment or modification of or supplement to the Lease;

       (b)    any exercise or non-exercise of any right, remedy or privilege
              under or in respect to this Agreement, the Lease, or any other
              instrument provided for in the Lease, or any waiver, consent,
              explanation, indulgence or actions or inaction with respect to any
              such instrument; or

       (c)    any bankruptcy, insolvency, reorganization, arrangement,
              readjustment, composition, liquidation or similar proceeding of
              Lessee.

       5. Upon the termination of the Lease and the satisfaction of all of the
obligations of Lessee thereunder, Lessor shall deliver to Lessee the Collateral
(less any portion of same cashed, sold, assigned or delivered pursuant to and
under the conditions specified in paragraph 3 hereof), and this Agreement shall
thereupon be without further effect.

       6. Lessor may, without the consent of Lessee, assign this Agreement.
Lessee agrees that if Lessee receives written notice of an assignment from
Lessor, Lessee will pay all amounts due hereunder to such assignee or as
instructed by Lessor. Lessee also agrees to confirm in writing receipt of the
notice of assignment as may be reasonably requested by assignee. Lessee hereby
waives and


<PAGE>

agrees not to assert against any such assignee any defense, set-off, recoupment
claim or counterclaim which Lessee has or may at any time have against Lessor
for any reason whatsoever.

       IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.

LESSOR:                                    LESSEE:

GENERAL ELECTRIC CAPITAL CORPORATION       TERAYON COMMUNICATIONS SYSTEMS, INC.

By: /s/ Leah A. Smith                      By: /s/ Arthur T. Taylor
    --------------------------------           ---------------------------------

Name: Leah A. Smith                        Name: Arthur T. Taylor
      ------------------------------             -------------------------------

Title: Senior Risk Analyst                 Title: Chief Financial Officer
       -----------------------------              ------------------------------