<PAGE>
                                   (YAS LOGO)

                                                                   EXHIBIT 10.24

                                                                 JANUARY 9, 2004

TERAYON COMMUNICATION SYSTEMS, INC
4988 GREAT AMERICA PARKWAY
SANTA CLARA, CA  95054

Dear Zaki,

1)       INTRODUCTION

We look forward to the opportunity use our broadband expertise to work with your
organization and potentially create business value for your CMTS business unit.
In our consulting engagements, we believe it benefits both parties to describe
our respective obligations in advance and this engagement letter engages us as a
consultant to your organization and is designed to provide for our mutual
responsibilities during and after the consulting engagement.

2)       PROJECT SCOPE (STATEMENT OF WORK)

YAS Corporation, a Massachusetts Corporation ("YAS"), will provide to Terayon
Communication Systems, Inc., a Delaware corporation ("Client") the consulting
and other services with respect to the project (the "Project") described in the
Statement of Work attached as Annex A (the "SOW") on the terms and conditions
set forth below, in the SOW and in the Standard Engagement Terms attached as
Annex B. The SOW sets forth a general outline of the work to be performed and
may change over time. If either you or we believe the work to be performed
should be expanded, modified, or otherwise changed, the changes must be agreed
to by both parties in writing.

This letter is being delivered to you in duplicate. Kindly execute and return
one copy of this letter which (together with annexes hereto) will constitute our
agreement with respect to the subject matter of this letter, provided that the
parties acknowledge that this agreement is subject to the approval of Client's
Board of Directors, which approval shall be obtained by January 16, 2004 or the
terms of this agreement will be null and void.

Very truly yours,

YAS CORPORATION


By: /s/ Rouzbeh Yassini-Fard
    -------------------------
Name: Rouzbeh Yassini-Fard
Title: President and Chief Executive Officer

Accepted and agreed to:

TERAYON COMMUNICATION SYSTEMS, INC.


By: /s/ Zaki Rakib
    -------------------------
Name:  Zaki Rakib
Title: Chief Executive Officer
Tax Identification Number of Client:


<PAGE>


                                                                         Annex A

                                STATEMENT OF WORK

Client Project Manager is:  Doug Sabella

YAS Project Manager is:  Rouzbeh Yassini-Fard

Executive Summary: Terayon is seeking to maximize shareholder value. Securing a
sustainable competitive position for its (headend) CMTS business is a key
element in achieving this objective. Terayon wishes to retain YAS as a
consultant to assist in evaluating, developing, and where appropriate,
implementing, marketing, engineering and product development strategies,
tactical plans and priorities for the CMTS business. Terayon has selected YAS
for this engagement due to its members' long tenure, knowledge and expertise in
the broadband cable industry and the specific skill sets they possess in the
areas that Terayon is seeking assistance.

1.       YAS WORK MODEL AND DELIVERY

         The YAS Consulting Team will do the following, focusing primarily on
(i) supporting Client's major U.S. accounts (including Comcast), (ii) developing
voice, data and video strategy and (iii) assisting with Client's cost
optimization efforts:

         a.       YAS will provide industry assessment and knock down analysis,
                  CMTS deployment kit, and voice, data and video network
                  strategy that may be utilized by Terayon to train the Terayon
                  Sales and Marketing team on how Terayon can better, and more
                  successfully compete in market.

         b.       YAS will assist in specific U.S. account planning including
                  sales strategy development and tactical methodologies to help
                  assist Terayon in securing a winning value proposition.
                  Terayon will continue to do its own customer sales efforts and
                  YAS assistance will only be provided to members of the Terayon
                  executive team. YAS will assist in developing and executing
                  CMTS operational readiness planning with U.S. customers as
                  required.

         c.       Assist the Terayon architecture team, with the support of YAS
                  consulting team members, which will provide Terayon with
                  personnel working in areas such as IP, Security, and NMS.

         d.       Help evaluate the strategic voice, data and video options for
                  Terayon to drive the CMTS silicon road map and provide
                  assessment of overall voice, data and video architecture and
                  recommendations of make/buy decisions for current platform
                  components and CMTS.

         e.       Assist Terayon in developing a plan to successfully parlay its
                  expertise in RF, MPEG, DOCSIS, and IP into an Intelligent
                  Network Access company.

         f.       Work with Terayon to develop and implement a detailed voice,
                  data and video plan, including costs, for positioning the
                  Company's strategic focus, and value proposition to cable
                  operators.

2.       TERAYON RESPONSIBILITIES

Terayon will work with the YAS consulting team to provide resources and the
information necessary for YAS to perform plan, and will, on a timely basis:

         a.       Provide access to Terayon executive team and CMTS business
                  unit management.

         b.       Participate in an open and dynamic dialogue with YAS
                  consulting team members to make the right strategic and
                  operational tradeoffs.

         c.       Unless previously agreed to in writing, or as required by SEC
                  or other regulatory disclosure requirements, provided Terayon
                  agrees to provide YAS with prior written notice of disclosure
                  of this Letter Agreement pursuant to SEC and regulatory
                  disclosure requirements, there will no public announcement
                  about this consulting engagement.


<PAGE>

                                                                         ANNEX B

                            STANDARD ENGAGEMENT TERMS

1)       ROLES

         a)       Client Support. Client support and cooperation is in the best
                  interests of both Client and YAS to ensure an efficient and
                  effective assignment result. YAS' ability to provide the
                  services set out in the SOW requires Client's good faith
                  support and cooperation, including Client's support and
                  cooperation in gaining access to key people and information.

         b)       Timetable. YAS will use all reasonable efforts to achieve the
                  deadlines, if any, set forth in any timetable and or dates for
                  delivery by YAS contained in the SOW attached as Annex A to
                  the letter agreement (the "Letter Agreement") to which this
                  Annex B is also attached. (The Letter Agreement and all
                  annexes thereto are referred to herein as the "Agreement.")

2)       FEES AND EXPENSES

         a)       Base Fee. For the Project, YAS will charge Client an aggregate
                  base fee of $1,680,000.00 (the "Base Fee"), unless changed by
                  mutual agreement. The Base Fee shall be paid in accordance
                  with the following schedule:

<Table>
<Caption>
         Base Fee Payment Due Date                    Payment Amount
         -------------------------                    --------------
<S>                                                   <C>
              January 9, 2004                          $140,000.00

             February 1, 2004                          $140,000.00

               March 1, 2004                           $140,000.00

               April 1, 2004                           $140,000.00

                May 1, 2004                            $140,000.00

               June 1, 2004                            $140,000.00

               July 1, 2004                            $140,000.00

              August 1, 2004                           $140,000.00

             September 1, 2004                         $140,000.00

              October 1, 2004                          $140,000.00

             November 1, 2004                          $140,000.00

             December 1, 2004                          $140,000.00

</Table>

         b)       Sales Commission. Beginning on the date hereof, Client hereby
                  agrees to pay YAS a cash commission of up to $6,000,000 on
                  sales of head-end CMTS equipment to North American customers
                  ("NA CMTS Sales"). Commission payments will be paid quarterly
                  and will be calculated as 10% of cumulative NA CMTS Sales
                  until $2,000,000 of commissions have been paid to YAS, after
                  such time commissions will be calculated as 7.5% of cumulative
                  NA CMTS Sales until a total $4,000,000 of commissions have
                  been paid to YAS, after such time commissions will be
                  calculated as 5% of cumulative NA CMTS Sales until a total
                  $6,000,000 of commissions have been paid to YAS, provided,
                  however, CMTS sales to Adelphia Communications will not be
                  included in NA CMTS Sales for purposes of calculating the YAS
                  sales commission. Client's obligation to pay sales commissions
                  shall survive this Letter Agreement until a cumulative
                  commission amount of $6,000,000 has been paid.

         c)       Invoices/Expenses. YAS will send all invoices for services
                  rendered to Client on a monthly basis to the attention of Doug
                  Sabella, Chief Operating Officer. Payments for services
                  rendered shall be made in the amounts and on the dates set for
                  the in Section 2(a) above. With each invoice for


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                  services, YAS will include the amount of its travel and
                  out-of-pocket expenses incurred in connection with the
                  provision of services under this Letter Agreement, along with
                  appropriate backup for such expenses, provided, YAS shall
                  obtain Client's prior approval of YAS' travel expenses in
                  excess $10,000 for a month during the Project. Client will
                  reimburse YAS for all of these expenses within thirty days of
                  the date of the invoice.

3)       CONFIDENTIAL INFORMATION

         a)       Client Confidential Information. YAS recognizes that in the
                  course of performing services pursuant to the Agreement, YAS
                  will have access to certain of Client's Confidential
                  Information (as defined below), and YAS agrees that, without
                  Client's prior written consent, YAS will not disclose any such
                  Confidential Information to any third party, unless disclosure
                  is required by law or the lawful order of a court or
                  government agency, in which case, YAS shall notify Client of
                  the required disclosure and reasonably cooperate with Client
                  if Client chooses to seek a protective order maintaining the
                  confidentiality of such information. YAS will also:

                  i)       prior to disclosing any Client Confidential
                           Information to any YAS employee, consultant or agent,
                           advise such employee, consultant or agent of the
                           confidentiality of such Confidential Information and
                           of the restrictions contained herein regarding the
                           disclosure and use of such Confidential Information;

                  ii)      use Client Confidential Information only for
                           performing the services described in the SOW in
                           connection with the Project;

                  iii)     at Client's request, or upon termination or
                           expiration of this Agreement, promptly deliver to
                           Client all copies of Confidential Information
                           furnished to YAS by Client in tangible form and
                           destroy all copies of any analyses, compilations,
                           studies or other documents or materials prepared by
                           YAS and embodying any Client Confidential
                           Information, provided that YAS may retain for
                           archival purposes a copy of any report and/or
                           presentation and any supporting documents which YAS
                           develops for Client and may retain a copy of such
                           report and/or presentation and any supporting
                           documents and use them for reference in any future
                           consulting sales efforts.

         b)       Confidential Information. "Confidential Information" means any
                  and all tangible and intangible information hereinbefore or
                  hereinafter provided by Client or Client representatives to
                  YAS as long as all tangible materials that disclose or embody
                  Confidential Information are marked as "confidential,"
                  "proprietary" or the substantial equivalent thereof and
                  Confidential Information that is disclosed orally or visually
                  shall be identified by Client as confidential at the time of
                  disclosure and is followed up with a written statement of
                  confidentiality within 30 days of disclosure, other than
                  information which (i) may be known to YAS or any of its
                  employees, consultants or agents prior to disclosure to YAS by
                  Client, (ii) may at any time become available to the general
                  public without fault of YAS, (iii) is disclosed or lawfully
                  available to YAS by a third party with no obligation of
                  confidentiality to Client, (iv) is disclosed by Client to
                  third parties without restrictions on disclosure or use, or
                  (v) is independently developed by YAS or any of its employees,
                  consultants or agents without reference to Client's
                  Confidential Information. YAS' obligations under this Section
                  3 shall survive for the three-year period following
                  termination of its engagement under the Agreement.

         c)       Use of Client Name. YAS will not use Client's name in any of
                  its sales promotion material or activities without Client's
                  prior written approval.

         d)       Use of YAS Name. Client agrees (i) not to publish or otherwise
                  disclose to any third party any study, report or other
                  material prepared for Client by YAS without the prior written
                  consent of YAS and (ii) except for internal purposes, not to
                  use, identify, publish or otherwise reveal YAS'



                                      -2-
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                  name or the name of any officer, employee or consultant of YAS
                  without the prior written consent of YAS in each instance.

4)       OWNERSHIP AND LICENSE.

         a)       Ownership of YAS Materials. In connection with the performance
                  of the Project hereunder, YAS may utilize or provide certain
                  materials and information proprietary to YAS, including, but
                  not limited to, methods, procedures, programs, systems,
                  inventions, know-how, software, and other information
                  (collectively, "YAS Materials"). Client acknowledges that all
                  right, title and interest in and to all YAS Materials is and
                  remains the exclusive property of YAS or its licensors. Client
                  will not, and will not allow any employee, consultant or agent
                  of Client to, copy, reverse engineer, modify, enhance, improve
                  and/or create derivative works of YAS Materials, or copy,
                  reverse engineer, or retrieve or read all or any portion of
                  the source code of the YAS Materials. In the event that
                  Client, any of its employees, consultants or agents modifies,
                  enhances, improves or creates derivative works of the YAS
                  Materials, whether or not in violation of this Agreement,
                  Client agrees that all intellectual property rights and all
                  ownership of any ideas, modifications, enhancements,
                  improvements, inventions, derivative works, works of
                  authorship, or any other suggestions it or any of its
                  personnel proposes, creates, authors or develops relating to
                  the YAS Materials and all embodiments thereof (collectively,
                  "Enhancements") are hereby assigned to YAS, and Client will
                  provide, and will use commercially reasonable efforts to cause
                  its employees, agents, consultants and contractors to provide,
                  all reasonable cooperation which YAS determines is reasonably
                  necessary to accomplish the complete transfer to YAS of the
                  Enhancements and the Intellectual Property relating thereto,
                  including without limitation executing further assignments,
                  consents, releases and other commercially reasonable
                  documentation, and at YAS' expense, using its commercially
                  reasonable efforts to provide, and to cause any such third
                  party to provide, good faith testimony by affidavit,
                  declaration, deposition, in-person or other proper means in
                  support of any effort by YAS to establish, perfect or defend
                  its rights acquired pursuant to this Agreement through
                  prosecution of patents or other governmental recordings,
                  registrations or filings, and through regulatory proceedings,
                  litigation, or other means. Subject to third-party rights and
                  Client's payment of YAS's fees and expenses for the Project,
                  YAS grants to Client a royalty-free, fully-paid, non-exclusive
                  and non-transferable license to use the Enhancements during
                  the term of this Agreement and thereafter in the normal course
                  of Client's business.

         b)       Ownership of Client Materials. The parties acknowledge and
                  agree that all right, title and interest in and to all
                  materials and information supplied by Client for use in the
                  performance of the Project (collectively, "Client Materials")
                  will be owned exclusively by Client. YAS acknowledges that all
                  right, title and interest in and to all Client Materials is
                  and remains the exclusive property of Client or its licensors.
                  YAS will not, and will not allow any employee, consultant or
                  agent of YAS to, copy, reverse engineer, modify, enhance,
                  improve and/or create derivative works of Client Materials, or
                  copy, reverse engineer, or retrieve or read all or any portion
                  of the source code of the Client Materials. In the event that
                  YAS, any of its employees, consultants or agents modifies,
                  enhances, improves or creates derivative works of the Client
                  Materials, whether or not in violation of this Agreement, YAS
                  agrees that all intellectual property rights and all ownership
                  of any ideas, modifications, enhancements, improvements,
                  inventions, derivative works, works of authorship, or any
                  other suggestions it or any of its personnel proposes,
                  creates, authors or develops relating to the Client Materials
                  and all embodiments thereof (collectively, "Client
                  Enhancements") are hereby assigned to Client, and YAS will
                  provide, and will use commercially reasonable efforts to cause
                  its employees, agents, consultants and contractors to provide,
                  all reasonable cooperation which Client determines is
                  reasonably necessary to accomplish the complete transfer to
                  Client of the Client Enhancements and the Intellectual
                  Property relating thereto, including without limitation
                  executing further assignments, consents, releases and other
                  commercially reasonable documentation, and at Client's
                  expense, using its commercially reasonable efforts to provide,
                  and to cause any such third party to provide, good faith
                  testimony by affidavit, declaration, deposition, in-person or
                  other proper means in support of any effort by Client to
                  establish, perfect or defend its rights acquired pursuant to
                  this Agreement through prosecution of patents or other
                  governmental recordings,



                                      -3-
<PAGE>

                  registrations or filings, and through regulatory proceedings,
                  litigation, or other means. In addition, the performance of
                  the Project may include reports, information and analysis as
                  described in the SOW (collectively, "Reports") which may be
                  created by YAS specifically for Client. All right, title and
                  interest in and to all Reports will be owned exclusively by
                  Client and Client shall have the right to use any such Reports
                  for Client's own internal purposes, provided YAS does not
                  convey nor will Client obtain any right, title, or interest in
                  YAS Materials used, provided or developed by YAS, or obtained
                  by Client from YAS, in the performance of YAS's services, all
                  of which are and will at all times remain the property of YAS
                  and Client agrees that YAS retains the right to re-use,
                  distribute and license to any of its current and future
                  clients or any broadband industry organizations any of its YAS
                  Materials, Enhancements, know-how, ideas, concepts, or similar
                  information, however characterized, whether in tangible or
                  intangible form, and whether used by YAS in the performance of
                  the Project or not, at any time as long as such use,
                  distribution or license does not disclose Client's
                  Confidential Information. Client shall not disclose any YAS
                  Materials, or any know-how, ideas or concepts to any third
                  parties without the prior written consent of YAS, unless
                  required by applicable law or legal process.

5)       PERSONNEL

         a)       Independent Contractor. YAS' and its employees' and
                  consultants' relationship to Client is that of an independent
                  contractor. Nothing in this Agreement shall be deemed to
                  create any form of partnership, principal-agent relationship,
                  employer-employee relationship, or joint venture between the
                  parties hereto and YAS shall have no authority to commit
                  Client contractually, or otherwise, to any third party.

         b)       Non-Solicitation, Non-Hiring. Client and YAS agree that,
                  except as otherwise hereafter agreed in writing, each party
                  shall not directly or indirectly, individually, or together
                  with, or through any other person, firm, corporation, or
                  entity: (i) during and for two (2) years after the term of
                  this Agreement, in any manner, approach, counsel, or attempt
                  to induce any person who is then in the employ of or an
                  independent contractor of the other party, to leave the other
                  party's employ or engagement, or employ, engage or attempt to
                  employ or engage any such person.

6)       INDEMNIFICATION AND LIMITATION OF LIABILITY

         a)       Indemnification. Client agrees to indemnify YAS and its
                  affiliates and respective directors, officers, employees,
                  agents and controlling persons (YAS and each such person being
                  hereinafter referred to as an "Indemnified Party") from and
                  against any and all losses, claims, damages and liabilities,
                  joint or several, to which such Indemnified Party may become
                  subject under any applicable federal or state law, or
                  otherwise and related to or arising out of YAS' engagement
                  with Client or any services provided by YAS to Client ("YAS'
                  Engagement") and will reimburse any Indemnified Party for all
                  reasonable expenses (including reasonable counsel fees and
                  disbursements) as they are incurred in connection with the
                  investigation of, preparation for or defense of any pending or
                  threatened claim or any action or proceeding arising
                  therefrom; provided, however, if any Indemnified Party is
                  specifically found in a final judgment by a court of competent
                  jurisdiction to not be entitled to indemnification from Client
                  for any loss, claim, damages, liability or expense, then that
                  Indemnified Party shall repay to Client that portion of such
                  Indemnified Party's expenses that had been reimbursed by
                  Client, and that is the express subject of such final
                  judgment.

                  i)       Client will not be liable under the foregoing
                           indemnification provision to the extent that any
                           loss, claim, damage, liability or expense is
                           specifically found in a final judgment by a court of
                           competent jurisdiction to have resulted from YAS'
                           willful misconduct or gross negligence. Client also
                           agrees that no Indemnified Party shall have any
                           liability (whether direct or indirect, in contract or
                           tort or otherwise) to Client related to or arising
                           out of the YAS's Engagement except to the extent that
                           any loss, claim, damage or liability is specifically
                           found in a final judgment by a court of competent
                           jurisdiction to have resulted from YAS's willful
                           misconduct or gross negligence.



                                      -4-
<PAGE>

                  ii)      If the indemnification of an Indemnified Party
                           provided for herein is for any reason unavailable,
                           Client agrees to contribute to the losses, claims,
                           damages and liabilities for which such
                           indemnification is unavailable in such proportion as
                           is appropriate to reflect the relative fault of
                           Client, on the one hand, and YAS, on the other hand,
                           as well as any other relevant equitable
                           considerations.

                  iii)     Client agrees that, without YAS's prior written
                           consent, Client will not settle, compromise or
                           consent to the entry of any judgment in any pending
                           or threatened claim, action or proceeding in respect
                           of which indemnification could be sought hereunder
                           unless such settlement, compromise or consent
                           includes an unconditional release of each Indemnified
                           Party from all liability arising out of such claim,
                           action or proceeding.

         b)       Covenant Not to Sue. Client agrees not to maintain any type of
                  action and agrees not to assist in maintaining any type of
                  action against YAS unless such action is premised on the
                  willful misconduct or gross negligence on YAS' part.

         c)       Limitation of Liability. In no event shall either party to
                  this Agreement have any liability, obligation or
                  responsibility for any indirect, incidental, consequential,
                  special or exemplary damages, or damages for loss of profits,
                  revenue, data or use, arising in any way in connection with
                  this Agreement, including, but not limited to, damage to
                  property, injury to persons, lost profits, or delays or
                  inconvenience, even if such party has been advised of the
                  possibility of such damages. To the maximum extent permitted
                  by applicable law, YAS' liability for damages hereunder shall
                  not exceed the amount of fees actually paid by Client to YAS
                  under the applicable SOW from which such claim arises.

         d)       Warranty Disclaimer and Limitation of Liability. YAS GIVES AND
                  MAKES NO REPRESENTATION OR WARRANTY OF ANY KIND, EXPRESS OR
                  IMPLIED, WITH RESPECT TO THE SERVICES TO BE PROVIDED IN
                  CONNECTION WITH THE PROJECT. NO REPRESENTATIVE OF YAS IS
                  AUTHORIZED TO GIVE OR MAKE ANY REPRESENTATION OR WARRANTY ON
                  BEHALF OF YAS. WITHOUT LIMITING THE FOREGOING DISCLAIMER, NO
                  IMPLIED WARRANTY OF MERCHANTABILITY, NO IMPLIED WARRANTY OF
                  FITNESS FOR ANY PARTICULAR PURPOSE, AND NO IMPLIED WARRANTY
                  ARISING BY USAGE OR TRADE, COURSE OF DEALING, OR COURSE OF
                  PERFORMANCE IS GIVEN OR MADE BY YAS OR SHALL ARISE BY OR IN
                  CONNECTION WITH THE TRANSACTION CONTEMPLATED BY THIS
                  AGREEMENT, AND IN NO EVENT SHALL YAS HAVE ANY LIABILITY OR
                  OBLIGATION WHATSOEVER IN CONNECTION WITH ANY SUCH WARRANTY.
                  ALL SERVICES AND MATERIALS PROVIDED BY YAS UNDER THIS
                  AGREEMENT, INCLUDING YAS MATERIALS ARE PROVIDED AS IS.

7)       OTHER MATTERS

         a)       Defined Terms. Terms defined elsewhere in the Agreement and
                  not otherwise defined herein are used herein with the meanings
                  so defined.

         b)       Term and Termination. YAS' consulting engagement pursuant to
                  this Agreement shall be in full force and effect on the date
                  of the Letter Agreement and shall continue thereafter until
                  December 31, 2004 or until the expiration of any SOW executed
                  hereunder, whichever is shorter, unless sooner terminated as
                  provided herein. Client may terminate YAS' consulting
                  engagement hereunder if Mr. Rouzbeh Yassini-Fard ceases to be
                  employed or affiliated with YAS or its affiliates during 2004,
                  except by reason of death or permanent disability. Either
                  party may terminate YAS' engagement under the Agreement if the
                  other party has materially breached any of the provisions of
                  the Agreement, on 10 days' prior written notice to the
                  breaching party unless such



                                      -5-
<PAGE>

                  breach shall have been cured to the reasonable satisfaction of
                  the non breaching party within such 10 days. In the event of
                  any termination by either party pursuant to the previous
                  sentence, YAS will make reasonable efforts to bring closure to
                  any in-process work prior to the effective date of termination
                  of YAS' engagement and will be paid (1) fees to the effective
                  date of termination, pro rated for any portion of a month and
                  (2) a prorated portion of the commission then due and payable
                  through the effective date of the termination. Any such
                  termination by (i) YAS or (ii) Client after July 1, 2004, will
                  not terminate Client's obligation to pay commissions payable
                  in accordance with Section 2(b). All out-of-pocket expenses
                  reasonably incurred by YAS up to the effective date of
                  termination shall also be reimbursed by Client. Client will
                  pay YAS for any work performed by YAS at Client's request
                  after the stated end date of YAS' engagement or after the
                  termination of its engagement by either party at its customary
                  rates on a time incurred basis unless otherwise agreed to by
                  Client and Client and will reimburse YAS for all reasonable
                  expenses incurred in connection with the performance of such
                  work. In addition, subject to the limitation of liability in
                  section 6, in the event of a breach of this Letter Agreement
                  by the other party, a party hereto may seek such other legal
                  action and other remedies as the deem appropriate. The terms
                  and provisions of Sections 2(b) and (c), 3, 4, 5, 6 and 7 of
                  this Agreement shall survive in accordance with their terms
                  the expiration or termination of this Agreement by any party
                  for any reason.

         c)       Non-Assignment. Neither party shall assign its rights or
                  delegate its duties under the Agreement without the prior
                  written consent of the other party.

         d)       Amendment, Waiver or Modification of Agreement. No provision
                  of the Agreement shall be amended, modified or waived except
                  by written agreement executed by both parties. The Agreement
                  contains the entire agreement of the parties as to YAS'
                  services to Client with respect to the Project, and supersedes
                  all prior agreements, arrangements and understandings between
                  the parties regarding the Project.

         e)       No Third Party Beneficiaries. The Agreement is made solely for
                  the benefit of Client, YAS and the other Indemnified Parties
                  and their respective successors, permitted assigns, heirs and
                  personal representatives, and no other person shall acquire or
                  have any right under or by virtue of the Agreement.

         f)       Governing Law. The Agreement shall be governed by and
                  construed under the laws of The Commonwealth of Massachusetts
                  without reference to conflicts of laws principles.

         g)       Notices. All notices and other communications in connection
                  with this Agreement shall be in writing and shall be deemed to
                  have been received by a party when actually received in the
                  case of hand delivery or facsimile transmission with confirmed
                  receipt, or five (5) days after mailing by first class mail,
                  postage prepaid, or two (2) business days after being sent by
                  reputable overnight courier service, to each party at the
                  addresses shown below.

                  If to YAS, then to:
                  Name: Rouzbeh Yassini-Fard
                  Title: President and Chief Executive Officer
                  YAS Corporation
                  300 Brickstone Square
                  Andover, MA  01810
                  Facsimile: (978) 470-2670



                                      -6-
<PAGE>

                  If to the Client, then to:
                  Name: Doug Sabella
                  Chief Operating Officer
                  Terayon Communication Systems, Inc.
                  4988 Great America Parkway
                  Santa Clara, CA  95054
                  Facsimile:

         h)       Dispute Resolution. In the event of a dispute, either party
                  may submit the dispute to the Chief Executive Officer of
                  Client and Chief Executive Officer of YAS who shall negotiate
                  in good faith in an effort to resolve the dispute, if the
                  Chief Executive Officers determine in good faith that
                  resolution through continued discussions does not appear
                  likely, the matter shall be submitted to binding arbitration.
                  One arbitrator, provided by JAMS/ENDISPUTE and mutually
                  acceptable to the parties, shall preside over the matter. Any
                  such arbitration shall take place in Boston, Massachusetts and
                  be conducted in accordance with the then existing
                  Comprehensive Arbitration Rules and Procedures of JAMS (the
                  "Arbitration Rules"). In any arbitration, each party shall pay
                  its own attorneys' fees and one-half ( 1/2) of the other
                  arbitration costs, subject to final apportionment by the
                  arbitrator. The arbitrator or mediator shall apply the law set
                  forth herein and shall have the power to make any
                  recommendation available at law or in equity; provided,
                  however, that the arbitrator shall have no power to amend this
                  Letter Agreement and the arbitrator shall have no authority to
                  award any damages that are excluded by this Letter Agreement.

         i)       Injunctive Relief. The parties agree that any breach of the
                  provisions of this Agreement relating to intellectual property
                  rights, confidentiality or indemnification will cause the
                  aggrieved party irreparable harm, and that such party will be
                  entitled to injunctive relief for such unauthorized use or
                  breach, in addition to such other rights and remedies as may
                  be available to it.


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