Document:

exv10w1

 

EXHIBIT 10.1

Ideal International Plaza

Lease Agreement

Suite X, Floor Y, Ideal International Plaza

2 Zhongguancun High
– Tech Square, Beijing 100080, PR China

By and between

Lessor : Beijing Zhongwu Ideal Real Estate Development Co., Ltd

And

Lessee : AAA Co., Ltd.

Date: dd (Day) mm
(Month) yy (Year)

 

 

Lessor
: Beijing Zhongwu Ideal Real Estate Development Co., Ltd

(hereinafter referred to as “Party A”) 

Registered Address: North Court, No. 106, Zhichun Road, Haidian District, and
Beijing

Legal Representative: Wang Lixin

No. of Business License: 1101081510224

Lessee
: AAA Co., Ltd.

(Hereinafter
referred to as “Party B”) 

Legal
Representative: Legal Representative

This lease agreement (hereinafter referred to as “the agreement”) is signed by
and between both parties via amiable negotiation on April 16, 2004.

	1.	 	Lessee

Party A agrees to let, according to the rules of this contract, the
suites on the business floors (hereinafter referred to as
leasehold) of Idea International Plaza said in this contract
(hereinafter referred to as The Plaza), and Party B agrees to
accept the lease.

The leasehold which Party A leases and Party B accepts includes
Suite X, Floor Y, Idea International Plaza, 2, Zhongguancun
High–tech Square, Beijing, China, with a total the Building area of
Z sq.m, (detailed in the ichnography, Appendix 2 of this
contract, which is for defining the location and area of the
leasehold only).

Party B shall pay rent for the leasehold to Party A according to
the on–the–spot measured area conducted by the house

 

 

administration of Beijing or other agencies authorized by the
government. If the figure measured out by Beijing house
administration or other state approved agencies differs with that
stated in this contract, the rent shall be re-calculated according
to the actual measured area and then the specified amount of it
shall be modified.

	2.	 	Use of the Leasehold

The leasehold shall be used as offices only.

	3.	 	Term of Lease

	3.1	 	The lease term of the said leasehold in this contract shall
be 5 years, including 36 months of fixed lease commencing from
September 1, 2004 and ending on August 31, 2007 and 24 months of
unfixed lease from September 1, 2007 to August 31, 2009. For the
unfixed lease period, Party B has the right to decide whether to
extend the lease or not. If Party B decides to extend the lease, the
rent from September 1, 2007 to August 31, 2009 shall remain
unchanged, and Party B shall enjoy two months’ free rent, from
September 1 to September 30, 2007 and from September 1 to September
30, 2008.
	 
	3.2	 	The free rent period is six months, including:
In the first year, from September 1 to October 31, 2004;
In the second year, from September 1, to October 31, 2005;
In the third year, from September 1 to October 31, 2006.
During the free rent period, although exempted from rent of the leasehold to
Party A, Party B shall strictly obey each article and clause of this
contract, and pay property management fees and other fees related to
Party B, including but not limited to, electricity charges, phone
charges and fees for extra use of air conditioners.

	4.	 	Period of Fitment

	4.1	 	The fitment period shall be three months from June 1 to August
30, 2004, during which Party B shall be exempted from rent of

 

 

	 	 	the leasehold and the relevant property management fees. If Party B
moves into the leasehold before the end of fitment period (August
30, 2004), property management fees shall be counted since Party B
moves in.

	4.2	 	Party A shall provide Party B, before April 30, 2004, with
necessary conditions for fitment including areas for fitment,
provisional water, electricity, elevators and entrance for goods and
people. If the fitment is delayed due to Party A, the fitment period
and the lease term shall be counted since the day on which the
necessary conditions are actually provided.
	 
	4.3	 	If the fitment is delayed because Party B or the fitting
company on its commission fails to submit in time the fitting scheme
to Beijing fire department or other relevant departments, or the
fitting scheme fails examination by the fire department or other
relevant departments, or Party B fails to submit in time the said
scheme to the property management company of the Plaza, the fitting
period shall not be extended, and Party A shall not bear any
responsibility.
	 
	4.4	 	Party B shall begin its fitting after finishing formal
transfer procedure with the property management company of the Plaza.
The lessee shall take all legal responsibilities concerning the
lease, and pay management fees and public utility charges since the
day of formal transfer or fitment. If it is due to Party A that Party
B fails to finish the transfer procedure with the property management
company of the Plaza in time and thus causes any delay, the fitment
period shall be extended.

	5.	 	Rent, Deposit & Other Charges and Their Payment

	5.1	 	Rent

	5.1.1	 	The daily rent of the leasehold shall be RMB
4.14 Yuan per sq.m (building area) and the monthly rent totals
RMB C Yuan.
	 
	5.1.1	 	Party B shall pay, within the first 7 days of
each odd month (except months of rent exemption), RMB D
Yuan as two months’ rent for the odd month and the next.

 

 

	 	 	Party B shall not deduct or offset the rent without any
justification.

	5.2	 	Down Payment of Rent
	 
	 	 	Party B shall, within 7 days upon the conclusion of this contract,
pay a down payment of two months’ rent, RMB D Yuan for the
period from November 1 to December 31, 2004.
	 
	5.3	 	Adjustment of Rent
	 
	 	 	If Party B decides to relet the said leasehold after expiration of
this contract, the rent charges shall be determined via negotiation
by both parties referring to the market price of the time.
	 
	5.4	 	Deposit

	5.4.1	 	Party B shall pay a deposit of RMB D Yuan,
equal to two months’ rent, within 7 days upon the conclusion
of this contract as the caution money for its performance of
this contract.
	 
	5.4.2	 	If Party B breaches any clause of this contract,
Party A may use or hold back all or part of the deposit to
offset the loss on Party A caused by Party B’s breach of the
contract based on provision of a payment voucher and loss
evidence. When the deposit cannot compensate for Party A’s
losses, Party B shall cover any balance. After Party A makes
any deduction from the deposit, Party B shall restore the
deposit to the amount specified in Clause 4.1 within 7 days
upon notice.
	 
	5.4.3	 	Upon expiration of the contract or its
termination via negotiation by and between both parties, if
party B has carried out all its duties as stipulated by this
contract, Party A shall return the capital of the deposit
(excluding the interest) to Party B within 7 days of
retrocession of the leasehold to Party A by Party B.

	5.5	 	Interest on Deferred Payment
	 
	 	 	If Party B defers any payment that should be paid to Party A as
stipulated by this contract, Party A shall have the right

 

 

	 	 	to collect an interest of 0.24% of the deferred payment for the
period since the due date of such deferred payment till the day
when Party B pays off the capital and interest of the deferred
payment and other relevant fees. The said interest shall not affect
any other right of Party A or its remedial measures under this
contract. If Party B fails to pay rent on time due to Party A’s
failure to produce invoices in time or any other reason caused by
Party A, Party B need not pay any interest or other relevant fees.

	5.6	 	Taxes and Fees
	 
	 	 	Party A shall pay all taxes and fees, including but not limited to,
those on housing property, land use in cities and towns, sales,
maintenance and construction of cities and additional tax on
education, and provide, upon reasonable requirements by Party B,
certificate of tax payment for housing property and land use in
cities and towns.
	 
	5.7	 	Type of Payment
	 
	 	 	Party B shall pay in time the rent and other payment to Party A in
check. Party A shall produce legitimate invoices to Party B before
receiving the check, and Party B shall pay on sight of invoices.
	 
	8.	 	Management of the Plaza and the Relevant Fees

	5.8.1	 	The management of the Plaza shall be conducted
by the property management company (hereinafter referred to as
the manager) entrusted by Party A or by Party A itself. Party
A shall guarantee implementation of duties by the manager
according to the contract concluded between the two, handle
the relationship between the manager and itself properly and
make sure that Party B shall not be obstructed from using the
leasehold properly during the lease term for any reason.
	 
	5.8.2	 	Party A warrants that the manager of the Plaza
shall be CB Richard Ellis or other property management
companies of the same service level. Otherwise Party B shall
have the right to reduce property management fees according to
the actual situation.

 

 

	5.8.3	 	The monthly charges on property management shall
be RMB 25 Yuan per sq.m (building area) and the monthly total
amount shall be RMB F Yuan. Party B shall pay RMB G
Yuan no later than the 7th day every odd month as two months’
(the odd month’s and that of the next month) management fees.
Party B shall not deduct or offset management fees without any
justification.
	 
	5.8.4	 	Party B agrees to follow all regulations of the
property management (lessee manual) (see appendix 8), and pay
RMB G Yuan as deposit and another RMB G Yuan as
the management fees for the first two months to the manager
within 7 days upon conclusion of this contract. Party A shall
produce legitimate invoice for such payment in advance.
	 
	5.8.5	 	Within the lease term, Party B shall pay all
charges on electricity, water and other relevant fees
concerning the leasehold according to the public utility
account produced by Party A or the manager.
	 
	5.8.6	 	Within the lease term, Party B shall pay monthly
management fees and public utility fees to the manager within
7 days upon the manager’s notice of payment.
	 
	5.8.7	 	When this contract expires and Party B decides
not to relet the leasehold, if Party B has carried out all
duties as stipulated by this contract, Party A shall return
the deposit of management fees (excluding interest) to Party B
within 7 working days upon retrocession of the leasehold by
Party B.

	6.	 	Commitments & Rights

	6.1	 	Commitments & Rights of Party A

	6.1.1	 	Commitments
	 
	6.1.1.1	 	Party A pledges to acquire legally the Title Deed of Idea
International Plaza within a reasonable time and shall have
the right to let the leasehold, and if any

 

 

	 	 	damage occurs to Party B because Party A delays acquirement of
the Title Deed, Party A shall make full indemnity.

	6.1.1.2	 	Party A is legally incorporated and engaged in rental
services concerning foreign nationals as stated in its
registered scope of businesses.
	 
	6.1.1.3	 	Party A enjoys legal proprietorship of the leasehold leased
by Party B. If any damage occurs to Party B because of
incompleteness of relevant proprietary document of Party A,
Party A promises to make full compensation to Party B.
	 
	6.1.1.4	 	Party A guarantees that the leasehold complies with
national laws, regulations and relevant designing standard of
the trade, and meet the requirements of office use as well as
normal business operations of Party B
	 
	6.1.1.5	 	Party A shall transfer the leasehold to Party B for use as
stipulated by this contract within 5 working days upon
execution of this contract.
	 
	6.1.1.6	 	Party A shall provide all necessary documents (including
but not limited to its ID certificate, Title Deed, Certificate
of Right to Use State–Owned Land, certificate of payment,
certificate of tax payment, etc.) for the newly established
company or institution of Party B, or any company or
institution that relet the leasehold from Party B for the
convenience of registration and annual review.
	 
	6.1.1.7	 	Party A shall ensure that the manager keeps all public
equipment and systems in good condition and working order, the
public area clean and tidy, so as to provide Party B with good
environment for business and protect it from any disturbance.
	 
	6.1.1.8	 	Party A shall ensure that the manager undertakes the
greening of the public area of the Plaza, joint defense of
public security and its costs.

 

 

	6.1.1.9	 	Party A promises to provide the leasehold with the ceiling
shown in appendix 5, and supply the fitting materials free of
charge.
	 
	6.1.1.10	 	Within the lease term, Party A shall be responsible, as
stipulated by the state regulations on house management, for
the maintenance and repair of the main structure, walls,
drainage, pipelines and cables of the Plaza, and undertake
these costs.
	 
	6.1.1.11	 	Except for Force majeure or consequences resulting from
government departments, Party A guarantees to keep the
electricity, air–conditioning and telecommunication in good
condition and able for normal use upon execution of this
contract.
	 
	6.1.1.12	 	Party A shall not set up any facilities that may influence
the daylighting or scope of vision of the leasehold, including
but not limited to any scrolls, neon lamps, billboards, light
boxes, lighting devices, accompaniments and etc. Should Party
A, the property management company or any other third parties
conduct the aforesaid actions, the lessor shall assist the
lessee to solve the relevant disputes arising therefrom.
	 
	6.1.1.13	 	Party A shall provide Party B with H unfixed underground
parking lots at the cost of RMB I Yuan per month for each
and preserve L aboveground parking lots free of charge.
	 
	6.1.1.14	 	Party B shall pay the fees for extra use of air
conditioners to Party A in a fixed form with RMB J Yuan
per year on September 1 every year within the lease term.
Party A promises to supply 24–hour service of air conditioning
for the whole office area of Party B.
	 
	6.1.1.15	 	Party A or the property management company entrusted by
party A shall set up uniform corporation signboards for Party
B in the place designated by Party A or its entrusted property
management company in the

 

 

	 	 	elevator hall on Party B’s floor and in the entrance hall of
the Plaza, and Party B shall afford the reasonable cost of it.
	 
	6.1.1.16	 	Party A agrees to keep secrete the abovementioned
articles, and not to reveal them to any third party but Party
A and Party B as well as Party A’s lawyer and/or consultant
unless it is required by law, verdict of court, executive
order or permitted by Party B.
	 
	6.1.2	 	Rights
	 
	6.1.2.1	 	Party A shall enjoy the access to all passages and public
areas of the Plaza.
	 
	6.1.2.2	 	Party A shall enjoy the right to fixing, examining and
maintaining all devices, systems and piping of the Plaza.
	 
	6.1.2.3	 	Party A or its entrusted person, including the property
management company of the Plaza, shall have the right to send
persons into the leasehold for purposes of security, patrol,
repair or maintenance of the leasehold or the Plaza, with a
written notice given to Party B one day in advance. However,
Party A or its entrusted person, including the property
management company of the Plaza, may enter the leasehold
without Party B’s permission immediately in case of any
emergency or danger. In any case, Party A shall try its best
not to obstruct Party B in using the leasehold for business
purpose.
	 
	6.1.2.4	 	Party A shall have the right to transfer, within the valid
period of this contract, the Plaza or part of the Plaza,
including the leasehold, to a third party, and Party A shall
guarantee that the transferee shall undertake the commitment
and enjoy the rights of Party A designated by this contract.
	 
	6.1.2.5	 	Party A shall enjoy exclusively the right to decorate,
arrange, maintain, remove and change the signboards, placards,
posters and advertisements in any

 

 

	 	 	public area of the Plaza; Party B shall be mandated by Party A
to enjoy exclusively the right to decorate, arrange, maintain,
remove and change the signboards, placards, posters and
advertisements within the leasehold.
	 
	6.1.2.6	 	Party A shall have the right to change the name of the
Plaza without consulting Party B or compensating Party B for
its relevant losses; however, Party A shall give Party B a
written notice about the details of change one month in
advance.
	 
	6.1.2.7	 	Within the six months before the expiration of this
contract, Party A or its entrusted persons may enter the
leasehold anytime to inspect it provided that Party A or its
entrusted persons has/have noticed Party and is /are permitted
by Party B.
	 
	6.1.2.8	 	Party A shall have the right to set up any mortgage or any
other security right on the Plaza, including the leasehold and
any part of its equipment, within the valid period of this
contract without Party B’s permission. If the mortgage leads
to any transfer of property rights, Party A shall guarantee
that the transferee should undertake the commitments and enjoy
the rights of Party A designated by this contract.
	 
	6.1.2.9	 	Party A or its entrusted person, including the property
management company of the Plaza, may enter the leasehold
without Party B’s permission immediately in case of emergency
or danger. However, Party A shall try its best not to bring
losses to Party B.
	 
	6.1.2.10	 	Party A shall compensate Party B, other owners, users or
third parties for the losses resulting from Party A’s fault.
	 
	6.1.2.11	 	Party A’s not exercising or delaying exercising the rights
or remedies that it enjoys under this contract shall not make
renunciation; Party A’s exercising any individual right or
part of the rights shall not hamper it in further exercising
(other) rights or remedies.

 

 

	6.2	 	Commitments & Rights of Party B

	6.2.1	 	Commitments
	 
	6.2.1.1	 	Pay the rent, management fees & fees related to Party B to
Party A as stated during the period of validity of this
contract.
	 
	6.2.1.2	 	Be liable for its electricity fee, water fee, communication
fee, phone fee & other utility fees related to Party B within
the leasehold.
	 
	6.2.1.3	 	Upon signing the contract, before the start of the fitment,
Party B shall hand over all of the interior fitment drawings
to Party A or the manager commissioned by Party A. Party B
shall carry on the fitment in the leasehold following the
articles & restrictions of Fitment Manual (see Appendix 9)
given by Party A or the manager commissioned by Party A and
the drawings as well as specifications approved by Beijing
fire department in written form.
	 
	6.2.1.4	 	The fitment team employed by Party B shall be qualified
with construction certificate or related business operation
certificate & grade certificate approved by Administrative
department to carry on the interior fitment of the leasehold
in the Plaza.
	 
	6.2.1.5	 	Within the period of validity of this contract, Party B
shall inform Party A and its authorized person, including the
property management company, of the fitment work in written
form before fitment, which shall not be rejected by Party A
and its authorized person without any reason.
	 
	6.2.1.6	 	Be liable for compensating Party A, any other owner, user
or third party for the total losses due to Party B’s fault.
	 
	6.2.1.7	 	Use facilities provided by Party A in the leasehold &
utility facilities/system/equipment of the

 

 

	 	 	Plaza, including but not limited to, air conditioner/heating
equipment, fire fighting/alarming device, lighting equipment,
cable, wire, cabling lines) in a reasonable manner and protect
them from manmade damage.
	 
	6.2.1.8	 	Any damage resulted due to Party B’s mistakes in the
leasehold shall be informed timely by Party B to Party A or
the property management company. If Party B fails to repair or
repair completely the aforesaid damages within one month since
the date when receiving written notice from Party A, Party A
shall have the right to arrange repair itself with the cost
incurred payable by Party B and provide Party B with the
relevant payment invoice.
	 
	6.2.1.9	 	Party B shall adopt reasonable measures to prevent the
leasehold from being damaged by natural disaster, such as
rainstorm and sand-blown wind. Should the leasehold suffer
such damages, Party B shall timely inform Party A or the
manager.
	 
	6.2.1.10	 	Should the leasehold suffer any structural damage due to
negligence or mistakes by Party B, Party B shall restore it to
the state before the damage within one month since the date
when receiving written notice from Party A or the property
management company.
	 
	6.2.1.11	 	Agree that Party A or the manager commissioned by Party A
shall have the right to enter and carry out routine
maintenance or emergency repair in the leasehold, and inform
Party B of the routine maintenance in advance only.
	 
	6.2.1.12	 	Timely inform Party A or the manager commissioned by Party
A of the property damage & staff injury in the leasehold.
	 
	6.2.1.13	 	Without written approval of the Party A or the property
management company commissioned by Party A, Party B shall not
install or change the equipment, partition and exceed the
load-bearing standard of the floor of the leasehold.

 

 

	6.2.1.14	 	Party B shall not make any noise or conduct any action or
affair in the leasehold that may bother other people in or out
of the Plaza.
	 
	6.2.1.15	 	Party B shall not carry on any activities that do harm to
Party A or other lessees in the Plaza, or deal with any
business/conduct that may damage the image of the Plaza as an
office mansion. Party B shall not carry on illegal operations
in the leasehold.
	 
	6.2.1.16	 	Party B shall not store in the leasehold any dangerous
goods that endanger the plaza or any other people, including
but not limited to, weapon, cartridge, saltpeter, gunpowder,
kerosene or any other inflammable, explosive, dangerous goods
or that are against the law.
	 
	6.2.1.17	 	Party B shall not manufacture or store goods/commodities
in the leasehold except for a small amount of
goods/commodities used as sample or displaying articles
related to Party B’s business or activities with written
approval obtained from Party A or the manager commissioned by
Party A in advance.
	 
	6.2.1.18	 	Party B shall not raise any poultry or pet in the
leasehold.
	 
	6.2.1.19	 	Party B shall not itself, or allow others to carry out any
activities making the insurance of the Plaza completely or
partly ineffective or causing the rise of the insurance fees.
Should Party B breach this sub-clause and make Party A have to
insure again or suffer rise of insurance, Party B shall refund
Party A the extra insurance fees and any other related
expenses induced at once.
	 
	6.2.1.20	 	Party B shall not use public areas such as the Plaza
lobby, elevator, stairway, passage, great hall, stairway
platform, display window etc. to pile, discard or leave
chests, furniture, garbage and any other staff, causing
inconvenience or obstruct to other lessees or users of the
Plaza.

 

 

	6.2.1.21	 	Party B shall not set up, display or exhibit any
advertisement, signboard settings in the Plaza out of the
leasehold, except that the locations are approved by Party A
and the Plaza manager in written form in advance.
	 
	6.2.1.22	 	Party B shall comply with the related regulations of
Lessee Manual (see Appendix 8) prepared by Party A at the same
time after signing this contract.
	 
	6.2.1.23	 	Guarantee that effective commercial license plate,
operation license, authorization or permit issued by relevant
government department or bureau are on hand before commencing
its business operation inside the leasehold.
	 
	6.2.1.24	 	Upon expiration of the contract, Party B shall keep the
office area in applicable state and retrocede it to Party A.
Whether the public area is to restore to its original
condition or not shall be determined via negotiation by both
parties.
	 
	6.2.1.25	 	If Party B decides to extend the lease after expiry of
this contract, it shall inform Party A with written notice 6
months before the expiry date of this contract. Party B has
the priority to re-let the leasehold under equal price
condition.
	 
	6.2.1.26	 	Party B shall empty out and move away from the leasehold
within 14 days after expiry date of this contract and return
all keys of the leasehold upon expiration or early termination
of this contract.
	 
	6.2.1.27	 	Perform other obligations on lessee regulated by the
national laws.
	 
	6.2.1.28	 	Except for written approval of Party A, such not be laid
aside without any righteous reason, Party B shall not share
all or partial of the leasehold with any third parties via
transfer of the contract or sublease or any other means.

 

 

	6.2.1.29	 	During the lease period under this contract, if Party B
normally uses leasehold and enjoys property management service
as stated in the contract, it shall not ask for deduction to
any of the fees as stipulated in the contract from Party A or
the property management company.
	 
	6.2.1.30	 	If Party B intends to install any air conditioning
equipment in the leasehold for its own use, an approval must
be obtained from Party A and the property management company
in written form. Party A shall not reject such intention
without any reason and Party B shall be liable for any
expenses arising therefrom.
	 
	6.2.1.31	 	Party B agrees to keep secrete the abovementioned
articles, and not to reveal them to any third party but Party
A and Party B as well as Party B’s lawyer and/or consultant
unless it is required by law, verdict of court, executive
order or permitted by Party B.
	 
	6.2.2	 	Rights:
	 
	6.2.2.1	 	Party A agrees that Party B may share all or partial of the
leasehold with its affiliated institutions with the subject of
the lease remaining unchanged, which shall enjoy the equal
rights of a lessee as Party B, including Beijing Sina Internet
Information Service Co., Ltd, Beijing Sina Interactive
Advertising Co., Ltd, Beijing Sina Internet Technology Service
Co., Ltd, Beijing Starvi Online Cultural Development Co., Ltd,
Starvi Online Internet Science & Technology (Beijing) Co.,
Ltd, Beijing Xingchao Xunjie Information Technology Co., Ltd,
Beijing Sina Wuxian Advertising Co., Ltd, Beijing Sina
Wireless Information Technology Co., Ltd, Beijing Miaoxun
Information Service Co., Ltd and any other institution that
Party B has informed the Party A in the written form in
advance.
	 
	6.2.2.2	 	Party B shall have the right to use the leasehold at will
according to aforesaid articles set forth by this

 

 

	 	 	contract within its validity period free from any illegal
interference from Party A.
	 
	6.2.2.3	 	Should Party B is unsatisfied with the service of the
manager, it may make a complaint to Party A under reasonable
condition, and Party A shall urge the manager to improve as
soon as possible.
	 
	6.2.2.4	 	Party B shall have the rights to use any public facilities
within the Plaza.
	 
	6.2.2.5	 	Party B shall enjoy the rights to use the fitment materials
provided by Party A free of charge to lessees accordingly (See
Appendix 5).
	 
	6.2.2.6	 	Party B shall have the priority to re-let the leasehold on
the 17th floor under the equal conditions. Party A shall give
notice to Party B 15 days in advance of leasing the aforesaid
leasehold to any third party, and Party B shall give an
explicit response for its intention to re-let the aforesaid
leasehold from Party A within 15 days.

	7.	 	Modification & Termination of the Contract

	7.1	 	Party A and Party B may revise, modify or terminate the
contract in advance by unanimous agreement in written form via
negotiation.
	 
	7.2	 	Should any force majeure stated in the Article 9 of this
contract occur that makes the performance of this contract
impossible, both Parties may terminate the contract in advance via
negotiations.
	 
	7.3	 	Party A shall have the right to terminate or rescind this
contract unilaterally without rendering any indemnification to Party
B if any of the following situations occurs to Party B. The written
notice of termination from Party A shall become effective after 30
days since its delivery date by Party A:

 

 

	7.3.1	 	Conduct business operations against the laws or
regulations of PRC.
	 
	7.3.2	 	Apply the leasehold for other purposes without
authorization of Party A.
	 
	7.3.3	 	Relet all or partial of the leasehold to any
third party or transfer or share the leasehold to/with any
third party without written approval of Party A.
	 
	7.3.4	 	Fail to pay the rent as stipulated in the
Article 4 and to make such payment after 14 days since the
date when receiving written notice from Party A.
	 
	7.3.5	 	Breach its obligations specified in Clause 2,
Article 6 of this contract or any other obligation stated in
the contract and fail to make any corrections to its breaching
in 14 days since the date when receiving written notice from
Party A

	7.4	 	Party B may terminate or rescind this contract unilaterally
by informing Party A in written form 30 days in advance without
rendering any indemnification to Party A if any of the following
situations occurs, in which case, Party A shall refund the paid
rent, rent deposit, property management fees, property management
deposit and any other refundable fee to Party B:

	7.4.1	 	Party A makes severe mistakes or takes
liabilities for mistakes in its management so that Party B
cannot carry out business operations.
	 
	7.4.2	 	Party A breaches its obligations regulated in
Clause 1, Article 6 of this contract or any other obligation
stated in the contract and fails to make any corrections to
its breaching in 14 days since the date when receiving written
notice from Party B.
	 
	7.4.3	 	The leasehold cannot be normally used for 14
days due to other reasons not caused by Party B.

	8.	 	Breaching & Indemnification Liabilities

 

 

	8.1	 	If Party B fails to pay the rent, management fees or any
other fees in time as stipulated in the contract, Party A may send a
written notice asking Party B to pay back within 14 days. If Party B
fails to pay back those payments within 14 days since the date when
receiving the written notice from Party A, Party A shall have the
right to rescind the contract and ask Party B to compensate for the
losses and relevant interests arising therefrom.
	 
	8.2	 	Should Party B apply the leasehold for other purposes without
any authorization from Party A, Party A shall have the right to ask
Party B to make corrections within a reasonable term appointed. If
Party B fails to make corrections complying with the contract, Party
A shall have the right to rescind the contract and held Party B
responsible for the indemnification according to this Clause.
	 
	8.3	 	Within the lease term of this contract, if Party B leases
or sub-leases the leasehold without written authorization from Party
A in advance, Party A shall have the right to rescind this contract
and Party B shall eliminate the influence caused by the third party
to Party A within an appointed term.
	 
	8.4	 	If Party B is subject to bankrupt or liquidation, Party A
may rescind the contract. Under such circumstances, Party A shall
not ask Party B for other expenses according to Clause 9, Article 8
of this contract after deducting the deposit & property management
deposit of Party B.
	 
	8.5	 	Any party who breaches the contract fails to make corrections
to its breaching within 14 days since the date when receiving the
written notice from the other party, the non–breaching party shall
ask it for the indemnification and rescind the contract.
	 
	8.6	 	Party B shall empty out and move away from the leasehold at
the expiry date or within 14 days after termination date of this
contract and keep the office area in applicable state after
inspection and confirmation by Party A and retrocede it at the time
returning every key of the leasehold to Party A.

 

 

	8.7	 	In case that Party B doesn’t retrocede the leasehold in
accordance with the aforesaid clause, Party A shall have the right
to empty out the leasehold and restore it to its original condition.
The reasonable expenses occurred to Party A due to the aforesaid
reason, including but not limited to the expenses induced from
emptying out the leasehold, restoring to its original condition &
keeping the stuff left in the leasehold by Party B in other places
shall be payable by Party B, and Party A shall provide Party B with
relevant invoices for the actual expenses. The Party A shall have
the right to deduct the aforesaid expenses from Party B’s deposit,
and Party B shall make up for the balance at once when receiving the
notice from Party A if the deposit is insufficient. If Party B
continues to use the leasehold before Party A exerts the aforesaid
right, Party B shall pay the rent for the occupied period to Party A
on the basis of the rent stipulated in this contract.
	 
	8.8	 	After moving out of the leasehold and restoring it to its
original conditions, Party B shall inform Party A to proceed the
inspection and both parties sign a Transfer Sheet on the basis of
inspection condition of the leasehold. Unless Party A stipulates in
the sheet that it agrees to accept the leasehold, the sheet shall
only act as an account of the status of the leasehold but not be
considered as that Party A has accepted Party B’s retrocession and
the leasehold. In the period when Party B handles the existing
problems listed in Transfer Sheet, it shall be considered as that
Party B doesn’t retrocede the leasehold as stipulated in the
contract and Party A enjoys the right stated in Clause 7, Article 8
of this contract.
	 
	8.9	 	Except those reasons for early termination stipulated by
this contract, Party A shall not refund the paid deposit to Party B
if the early termination occurs due to the reasons caused
unilaterally by Party B without written approval of Party A in
advance. If such circumstance occurs within 2 years of the lease
term, Party B shall make up for the free rent it has enjoyed. Party
A shall have the right to make other lease contract for the said
leasehold in order to lessen the losses caused by the violation of
Party B.

	9.	 	Force Majeure

 

 

	9.1	 	Force Majeure refers to those severe natural disasters and
those that both parties of this contract cannot foresee, or control
or avoid its process or results. The affected party shall bear no
responsibilities for not undertaking its obligations of this
contract due to any force majeure.
	 
	9.2	 	The party that can not undertake all or partial of its
obligations or can not undertake them in time due to any force majeure
shall give notice of the circumstances to the other party timely and
shall provide legal certifications that are issued by the relevant
institutions for the force majeure within a reasonable time.
	 
	9.3	 	In case that any force majeure occurs in the leasehold so as to
make it out of use or become a leasehold shut down by the property
management office, or the leasehold declared as dangerous structure by
the government is not due to the reason that Party A shall control and
is not the result that Party B fails to perform its obligations stated
in the contract, the rent shall be deducted in proportion to the extent
of the useless and free from payment until the leasehold can be used
again, but Party A shall neither have responsibilities to restore the
leasehold to its original conditions, nor have responsibilities to
render indemnification to Party B during the useless period of the said
leasehold. If the leasehold remains to be useless for a consecutive
period of 20 days or an accumulative period of 30 days, any party shall
rescind the contract with written notice to the other party, which
shall not affect the rights & responsibilities that bound to both
parties before the rescission.

	10.	 	Settlement Of Dispute & Governing Law

	10.1	 	Laws and regulations of PRC shall be applied for the conclusion,
effectiveness, performances, explanations and settlement of disputes
concerning this contract.
	 
	10.2	 	Both parties shall seek settlement for any disputes over the
contract via negotiation, which if fails, any party shall submit the
disputes to the Beijing Arbitrary Commission for settlement that
will carry out arbitration pursuant to the

 

 

	 	 	present arbitrary rules in Beijing. The arbitrament is final with
the same binding force to both parties.
	 
	10.3	 	During the arbitration of the contract, the contract shall
continue to be effective with the rest articles and clauses except
for the disputed articles.
	 
	10.4	 	The contract is made in Chinese and the Chinese version shall
be the original.

	11.	 	Miscellaneous

	11.1	 	Contract registration

	11.1.1	 	This contract shall be registered to Beijing Real Estate
Administration after being signed by both parties.
	 
	11.1.2	 	Party B shall assist Party A in the registration of the contract
to the relevant government department after signing the contract
pursuant to the relevant laws and regulations of Beijing with all
the relevant charges payable by Party A. Should Party A fail to
conduct the registration and cause any loss to Party B, Party A
shall be held liable for such losses to Party B.

	11.2	 	All appendixes of this contract shall have the same legal
binding force as this contract.
	 
	11.3	 	This contract shall become effective on the date of being
signed and sealed by both parties.

This agreement is signed by and between both parties in Beijing, China on dd (Day) mm (Month) yy (Year).

 

 

	 	 	 
	Party A: Beijing Zhongwu Ideal Real Estate Development Co., Ltd
	 
	 	 
	Authorized Representative:
	 
	 	 
	Signature/Seal             /s/                            

	 
	 
	 	 
	Party B: AAA Co., Ltd.
	 
	 	 
	Authorized Representative:
	 
	 	 
	Signature/Seal             /s/                            

	 

 

 

			
	SINA Corporation — List of the lease agreements

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Down	 	Annual fee of
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Monthly	 	Payment of	 	additional use
	 	 	Total	 	 	 	 	 	 	 	 	 	 	 	Charges on	 	Charges on	 	of air
	 	 	Building	 	 	 	Monthly	 	Down Payment	 	Property	 	Property	 	conditioning
	Lessee
	 	Area
	 	Suite
	 	Rent
	 	of Rent
	 	Management
	 	Management
	 	services

	Beijing SINA
Information
Technology Co.,
Ltd.
	 	 	2269.7	 	 	2001-2012	 	 	281897	 	 	 	563794	 	 	 	56743	 	 	 	113486	 	 	 	142014	 
	Beijing SINA
Internet Technology
Service Co., Ltd.
	 	 	2000	 	 	1901-1911	 	 	248400	 	 	 	496800	 	 	 	50000	 	 	 	100000	 	 	 	125139	 
	Beijing SINA
Infinity
Advertising Co.,
Ltd.
	 	 	1200	 	 	1912-1918	 	 	149040	 	 	 	298080	 	 	 	30000	 	 	 	60000	 	 	 	75083	 
	Beijing New Media
Information
Technology Co. Ltd.
	 	 	1000	 	 	2013-2018	 	 	124200	 	 	 	248400	 	 	 	25000	 	 	 	50000	 	 	 	62570	 
	Beijing SINA
Internet
Information Service
Co., Ltd.
	 	 	500	 	 	1811-1813	 	 	62100	 	 	 	124200	 	 	 	12500	 	 	 	25000	 	 	 	31285	 
	Beijing
Star-Village Online
Cultural
Development Co.
Ltd.
	 	 	500	 	 	1814-1816	 	 	62100	 	 	 	124200	 	 	 	12500	 	 	 	25000	 	 	 	31285	 
	Beijing SINA Mobile
Information
Technology Co. Ltd.
	 	 	500	 	 	1801/17/18	 	 	62100	 	 	 	124200	 	 	 	12500	 	 	 	25000	 	 	 	31285	 
	Beijing Miaoxun
Information Service
Co. Ltd.
	 	 	500	 	 	1802-1804	 	 	62100	 	 	 	124200	 	 	 	12500	 	 	 	25000	 	 	 	31285	 
	Star-Village
Internet Technology
(Beijing) Co. Ltd.
	 	 	500	 	 	1805-1807	 	 	62100	 	 	 	124200	 	 	 	12500	 	 	 	25000	 	 	 	31285	 
	Beijing SINA
Interactive
Advertising Co.,
Ltd.
	 	 	300	 	 	1808-1809	 	 	37260	 	 	 	74520	 	 	 	7500	 	 	 	15000	 	 	 	18771	 
	Beijing SINA
Infinity
Advertising Co.,
Ltd.
	 	 	601.41	 	 	1712/13/16	 	 	74695.12	 	 	 	149390.24	 	 	 	15035.25	 	 	 	30070.5	 	 	 	37766.05	 
	Beijing SINA Internet Technology Service Co., Ltd.

	 	 	2031.63	 	 	1501/02/03/1513
to 1518 and
1708/15/17/18	 	 	252328.45	 	 	 	504656.9	 	 	 	50790.75	 	 	 	101581.5	 	 	 	125828.95	 
	Beijing SINA
Internet
Information Service Co., Ltd.
	 	 	1494.58	 	 	1701/02/03/05/
07/09/10/14	 	 	185626.84	 	 	 	371253.68	 	 	 	37364.5	 	 	 	74729	 	 	 	94342.77	 
	Beijing
Star-Village Online
Cultural
Development Co.
Ltd.
	 	 	507.23	 	 	1704/06/11	 	 	62997.97	 	 	 	125995.94	 	 	 	12680.75	 	 	 	25361.5	 	 	 	31457.24	 
	Total
	 	 	13904.55	 	 	 	 	 	1726945.38	 	 	 	3453890.76	 	 	 	347614.25	 	 	 	695228.5	 	 	 	869397.01<PAGE>

                                                                   Exhibit 10.32

                              EMPLOYMENT AGREEMENT

      THIS EMPLOYMENT AGREEMENT (the "Agreement"), made as of the 2nd day of
August, 2004 (the "Effective Date"), by and between Terayon Communications
Systems, Inc., a Delaware corporation (the "Company"), and Edward Lopez (the
"Executive");

                          W I T N E S S E T H   T H A T:

      WHEREAS, Executive is currently employed by the Company;

      WHEREAS, the Company and Executive desire for this Employment Agreement to
set forth certain terms and conditions that shall apply to Executive's
employment; and

      WHEREAS, the Executive has a Severance Agreement with the Company dated
January 14, 2003 (the "Change of Control Agreement");

      NOW, THEREFORE, in consideration of the mutual covenants and promises set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Executive
hereby agree as follows:

      1. Employment.

            (a) While employed by the Company, Executive shall devote his full
time and attention and his best efforts to the performance of his duties,
subject to direction by the Company, and to such other duties as may be
reasonably requested or assigned by the Company.

            (b) Executive's employment with the Company shall be on an at-will
basis and may be terminated by either the Company or Executive at any time, with
or without notice and with or without cause, subject to the provisions of
Section 3 below and/or Executive's Change of Control Agreement, as amended
herein. All benefits and perquisites of employment will cease as of the date
Executive's employment is terminated for any reason, subject to the provisions
of Section 3 below and/or Executive's Change of Control Agreement, as amended
herein.

      2. Compensation and Benefits. While employed by the Company, Executive's
annual base salary shall continue to be $230,000.00 ("Base Salary"), which shall
be paid in accordance with the Company's normal payroll cycle. Moreover,
Executive shall continue to be eligible to participate in the Company's
incentive compensation plan(s) if and when established by the Board of Directors
of the Company and on the terms and conditions set forth in any such plan.
During Executive's employment, Company will continue to provide Executive with
employee benefits under the Company's health and welfare benefit plans generally
provided to other similarly-situated employees, subject to the terms and
conditions of each such plan. Executive will accrue paid vacation and will be
granted paid sick leave, in accordance with the

<PAGE>

vacation and sick leave policies of Company in effect for similarly-situated
employees from time to time.

      3. Compensation and Benefits Following Termination. In the event that
Executive (y) voluntarily resigns from employment after October 1, 2004 for
"Good Reason" (as defined in Executive's Change of Control Agreement) or for any
other reason whatsoever, or (z) is involuntarily terminated by the Company
without "Cause" (as defined in Executive's Change of Control Agreement) at any
time following the Effective Date of this Agreement, the Company shall provide
Executive with the following compensation and benefits described in Sections
3(a)-(d) (collectively referred to as the "Severance Benefits") in consideration
for and subject to his having complied with the terms and conditions hereof, and
subject to Executive having first signed the Release attached hereto as Exhibit
A following the effective date of his resignation or termination (the
"Termination Date") and having not revoked his release of ADEA claims under that
Release:

            (a) The Company shall pay Executive a lump sum severance payment
(the "Severance Payment"), the gross amount of which will be equal to Three
Hundred Forty Five Thousand Dollars ($345,000.00), consisting of (i) twelve (12)
months' pay at Executive's current Base Salary ($230,000.00 per year), plus (ii)
an amount equal to Executive's target annual bonus for 2003 ($115,000.00). The
Severance Payment described in this paragraph shall be subject to required taxes
and withholdings, and shall be paid to Executive in a lump sum within ten (10)
business days after Executive signs the Release attached hereto as Exhibit A,
provided that Executive does not revoke his release of ADEA claims under that
Release.

            (b) For a period of one year following the Termination Date, the
Company will continue to provide Executive and Executive's dependents and
beneficiaries with the same employee benefits for which Executive was enrolled
immediately prior to the Termination Date under the Company's health,
disability, life insurance and other welfare benefit plans, and will continue to
pay for Executive's and Executive's dependents' and beneficiaries' participation
in such welfare benefit plans to the same extent as the Company did immediately
prior to the Termination Date; provided, however, Executive's health insurance
shall be continued through COBRA (so long as Executive properly elects continued
coverage under COBRA) and Company shall pay for Executive's COBRA premiums for
the foregoing one-year period following the Termination Date. The coverage and
benefits (including deductibles and costs) provided in this Section 3(b) during
the foregoing one-year period shall be no less favorable to Executive and
Executive's dependents and beneficiaries than the coverages and benefits at the
time immediately prior to the Termination Date.

            (c) For a period of one year following the Termination Date, the
Company shall, at its expense, provide Executive with outplacement and career
counseling services of the Executive's choice (the "Outplacement Benefits"),
provided, however, that the Company's obligation to pay for the Outplacement
Benefits shall in no event exceed an aggregate amount equal to 25% of
Executive's Base Salary ($230,000.00 per year). Executive may elect not to use
the Outplacement Benefits to be provided to him under this Section 3(c), so long
as Executive provides the Company with written notice his election not to use
such Benefits within 30 days of

<PAGE>

his Termination Date. If Executive elects not to use the Outplacement Benefits
to be provided to him under this Section 3(c) and provides the Company with
timely notice of his election (as set forth above), the Company shall pay
Executive a lump sum payment equal to $57,500 (25% of Executive's Base Salary of
$230,000.00 per year) within ten (10) business days of Company's receipt of
Executive's written notice.

            (d) Vesting of Executive's outstanding unvested stock options for a
period of one year following the Termination Date (the "Vesting Acceleration
Period") shall be accelerated. The vesting of any unvested stock options not so
accelerated shall otherwise cease at the Termination Date. Following the
Termination Date, Executive shall be entitled to exercise any vested stock
options (inclusive of any stock options the vesting of which is accelerated
pursuant to the foregoing sentence) for a period not later than twelve (12)
months following the Termination Date, notwithstanding anything to the contrary
in the terms and conditions of the applicable stock option plan(s) and
agreement(s) for each such option (such stock option plan(s) and agreement(s)
collectively referred to hereinafter as the "Stock Option Documents").

            (e) Executive acknowledges and agrees that the Severance Benefits to
be provided to him under Sections 3(a)-(d) above constitute reasonable and
adequate consideration for his covenants and obligations under this Agreement.
Executive further acknowledges and agrees that he will not be entitled to
receive or accrue any right to any other compensation or employee benefits
following the Termination Date, except as otherwise set forth in this Agreement
or in his Change of Control Agreement (as amended herein). The Severance
Benefits to be provided to Executive under Sections 3(a)-(d) above shall offset
and reduce any severance payments or benefits that Executive is to receive or
has received pursuant to his Change of Control Agreement, and Executive shall
not receive any Severance Benefits pursuant to this Section 3 if Executive
already is to receive or already has received any severance payments or benefits
under his Change of Control Agreement.

            (f) Executive understands and agrees that he shall not be entitled
to the Severance Benefits described in Sections 3(a)-(d) above if he voluntarily
resigns from employment for any reason before October 1, 2004. Notwithstanding
the foregoing, the Company may, in its discretion, terminate Executive's
employment before October 1, 2004, subject to the terms and conditions of this
Section 3. In the event that Executive voluntarily terminates his employment for
any reason before October 1, 2004 or the Company terminates Executive's
employment for "Cause" (as defined in Executive's Change of Control Agreement)
at any time following the Effective Date of this Agreement, the Company shall
pay Executive all compensation due and owing through the date his employment is
terminated, and shall have no further obligations under this Agreement. For
purposes of this Agreement, a termination of Executive's employment due to death
or Disability (as defined in Executive's Change of Control Agreement) shall not
constitute a termination without "Cause" and a termination for either of those
reasons shall be treated in a manner consistent with the terms of Executive's
Change of Control Agreement.

<PAGE>

      4. Mutual Release of Claims.

            (a) In exchange for the consideration described above and subject to
Executive's right and the rights of his heirs, successors and assigns to enforce
Executive's Indemnity Agreement (as defined below), Change of Control Agreement
and Stock Option Documents, Executive (on behalf of himself and his heirs,
successors and assigns) hereby releases, covenants not to sue, and forever
discharges 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 "Company 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 Executive now has, or may ever have against the Company Released Parties,
or any of them, that arise out of, or are in any way related to: (1) Executive's
employment by the Company; (2) any changes or modifications as to the terms of
Executive's employment with the Company; and (3) any transactions, occurrences,
acts or omissions by the Company Released Parties, or any of them, occurring
prior to Executive's execution of this Agreement. Without limiting the
foregoing, Executive understands and agrees 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.

            (b) Executive further acknowledges that he is waiving and releasing
any rights he may have under the Age Discrimination in Employment Act ("ADEA")
and that this waiver and release is knowing and voluntary. Executive further
acknowledges by this writing that: (a) he is 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 he otherwise is entitled;
(b) he has been given an opportunity to consider fully the terms of this
Agreement for twenty-one (21) days, although he is not required to wait
twenty-one (21) days before signing this Agreement; (c) he has been advised by
an attorney of his choosing regarding the terms and conditions of this
Agreement; (d) he understands he has seven (7) days in which to revoke his
release of ADEA claims within seven (7) days of signing this Agreement,
provided, however, that his release and waiver of all other claims will become
effective when he executes this Agreement and, provided further, that Executive
shall not be entitled to receive the Severance Benefits under Section 3 above if
he revokes his release of ADEA claims under this Section 4(b).

            (c) Company on behalf of itself and the Company Released Parties
hereby releases Executive, covenants not to sue, and forever discharges
Executive, his heirs, successors, agents and attorneys (the "Executive 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 Company and the other Company Released

<PAGE>

Parties now has, or may ever have against the Executive Released Parties, or any
of them, that arise out of, or are in any way related to: (i) Executive's
employment by Company, (ii) any changes or modifications as to the terms of
Executive's employment with the Company, and (iii) any transactions,
occurrences, acts or omissions by the Executive Released Parties or any of them
occurring prior to the execution of this Agreement ("Claims"), and Company
agrees to indemnify and hold harmless Executive Released Parties from any Claims
made by any Company Released Party. Without limiting the foregoing, Company
understands and agrees that the foregoing provisions waive and release and
indemnify against 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 history,
invasion of privacy, or any other state or federal law, rule or regulation, and
any claim for attorneys' fees and costs.

            (d) Notwithstanding the foregoing, the above releases shall not
affect (i) any rights of the Executive to the enforcement of the terms of the
Indemnity Agreement (as hereafter defined), the Change of Control Agreement, the
Stock Option Documents and this Agreement or in respect of any malfeasance or
fraud on the part of the Company or the Company Released Parties, and (ii) any
rights of the Company to the enforcement of the terms of the PIIAA (as hereafter
defined) and this Agreement or in respect of any malfeasance or fraud on the
part of the Executive or the Executive Released Parties.

            (e) Section 1542 Waiver. Executive acknowledges that he is aware of
and familiar with the provisions of Section 1542 of the California Civil Code,
which provides 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." Executive hereby waives and relinquishes all rights
and benefits that he may have under Section 1542 of the California Civil Code,
or the law of any other state or jurisdiction, or common law principle, to the
same or similar effect.

      5. Proprietary Information and Invention Assignment Agreement. Executive
acknowledges he signed a Proprietary Information and Invention Assignment
Agreement ("PIIAA") as a condition of his employment with the Company, a copy of
which is attached hereto as Exhibit B. Executive further acknowledges that his
PIIAA shall continue to remain in effect following the effective date of this
Employment Agreement, and that he shall continue to be bound by the PIIAA
following the termination of his employment for any reason.

      6. Indemnity Agreement. Company acknowledges that it made and entered into
on July 7, 2004, an Indemnity Agreement with Executive ("Indemnity Agreement")
as a condition of his employment with the Company. Company further acknowledges
that, notwithstanding any other provision of this Agreement, Company shall
continue to be bound by the Indemnity Agreement following the effective date of
this Agreement and that the Indemnity Agreement shall survive such effective
date.

<PAGE>

      7. Assignment; Successors and Assigns. Executive agrees that he will not
assign, sell, transfer, delegate or otherwise dispose of, whether voluntarily or
involuntarily, or by operation of law, any rights or obligations under this
Agreement, nor shall Executive's rights be subject to encumbrance or the claims
of creditors. Any purported assignment, transfer, or delegation shall be null
and void. Nothing in this Agreement shall prevent the consolidation of the
Company with, or its merger into, any other corporation, or the sale by the
Company of all or substantially all of its properties or assets, or the
assignment by the Company of this Agreement and the performance of its
obligations hereunder to any successor in interest or any Affiliated Company.
Subject to the foregoing, this Agreement shall be binding upon and shall inure
to the benefit of the parties and their respective heirs, legal representatives,
successors, and permitted assigns, and shall not benefit any person or entity
other than those enumerated above.

      8. Entire Agreement. The terms of this Agreement and the attached Exhibits
are intended by the parties to be the final expression of their agreement with
respect to the subject matter hereof and may not be contradicted by evidence of
any prior or contemporaneous agreement, except to the extent that the provisions
of any such agreement are expressly referred to in this Agreement as having
continued effect. The parties further intend that this Agreement shall
constitute the complete and exclusive statement of its terms and that no
extrinsic evidence whatsoever may be introduced in any judicial, administrative,
or other legal proceeding involving this Agreement. This Agreement fully
supersedes any prior or contemporaneous agreements representations, or
understandings between Executive and the Company, whether written or oral.
Notwithstanding the foregoing, Executive's Change of Control Agreement shall
remain in effect as amended herein and as so amended the Severance Benefits to
be provided to Executive under this Agreement shall reduce the amount of any
compensation and severance benefits that Executive may be entitled to receive
under the Change of Control Agreement, as described more fully in Section 9
below.

      9. Amendment of Change of Control Agreement. Executive and Company hereby
amend Section 3.1(d) of Executive's Change of Control Agreement such that it
reads as follows: "Notwithstanding the provisions of Section 3.2(a) and (b)
below, Executive shall not be required to mitigate the amount of any payment
provided for in this Agreement by seeking other employment or otherwise,
provided, however, that the payments and benefits to be provided to Executive
under Sections 3.1(i)-(v) above shall be offset and mitigated by the Severance
Benefits that Executive is to receive or has received under Section 3 of the
Employment Agreement between him and the Company dated as of August 2, 2004."

      10. Amendments; Waivers. This Agreement may not be modified, amended, or
terminated except by an instrument in writing, signed by the Executive and by
the Chief Executive Officer of the Company. By an instrument in writing
similarly executed, either party may waive compliance by the other party with
any provision of this Agreement that such other party was or is obligated to
comply with or perform, provided, however, that such waiver shall not operate as
a waiver of, or estoppel with respect to, any other or subsequent failure. No
failure to exercise and no delay in exercising any right, remedy, or power
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, or power
<PAGE>

hereunder preclude any other or further exercise thereof or the exercise of any
other right, remedy, or power provided herein or by law or in equity.

      11. Severability. If any provision of this Agreement, or the application
thereof to any person, place, or circumstance, shall be held by a court of
competent jurisdiction to be invalid, unenforceable, or void, the remainder of
this Agreement and such provisions as applied to other persons, places, and
circumstances shall remain in full force and effect.

      12. Governing Law. This Agreement is 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. Any legal action or other legal proceeding
relating to this Agreement or the enforcement of any provision of this Agreement
may be brought or otherwise commenced in any state or federal court located in
the County of Santa Clara, California. Each party to this Agreement (a)
expressly and irrevocably consents and submits to the jurisdiction of the state
and federal courts located in County of Santa Clara, California in connection
with any such legal proceeding, (b) agrees that each state and federal court
located in the County of Santa Clara County, California shall be deemed to be a
convenient forum; and (c) agrees not to assert, by way of motion, as a defense
or otherwise, in any such legal proceeding commenced in any state or federal
court located in the County of Santa Clara, California, any claim that such
party is not subject personally to the jurisdiction of such court, that such
legal proceeding has been brought in an inconvenient forum, that the venue of
such proceeding is improper, or that this Agreement or the subject matter of
this Agreement may not be enforced in or by such court.

      13. Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original and all of which together
will constitute one and same document.

      14. Acknowledgments. Executive acknowledges, consents and agrees that (a)
he has consulted with independent counsel of his own choice or has had the
opportunity to consult with independent counsel of his own choice concerning
this Agreement and has been advised to do so by the Company, and (b) that he has
read and understands the Agreement, is fully aware of its legal effect, and has
entered into it freely based on his own judgment.

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

EXECUTIVE:                                  TERAYON COMMUNICATION SYSTEMS, INC.:

By: /s/Edward Lopez                         By: /s/David Woodrow
    --------------------                        --------------------------------
       Edward Lopez

<PAGE>

                                    EXHIBIT A

                          RELEASE AND WAIVER OF CLAIMS

      In exchange for providing me with the Severance Benefits described in
Section 3 of my Employment Agreement with Terayon Communications Systems, Inc.
(the "Company"), to which this form is attached, I, Edward Lopez, 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; 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

<PAGE>

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 Section 3
of my Employment Agreement if I revoke my release of ADEA claims under this
Release.

      Notwithstanding the foregoing, this releases shall not affect (i) any
rights I have to the enforcement of the terms of my Indemnity Agreement, Change
of Control Agreement, Stock Option Documents and Employment Agreement, each with
the Company, or in respect of any malfeasance or fraud on the part of the
Company or the Company Released Parties, and (ii) any rights of the Company to
the enforcement of the terms of my Proprietary Information and Invention
Assignment Agreement with the Company and my Employment Agreement or in respect
of any malfeasance or fraud on the part of the Executive or the Executive
Released Parties.

      I understand and agree that I shall continue to be bound by my obligations
under my Proprietary Information and Inventions Agreement with the Company
following the termination of my employment for any reason, and that my receipt
of the Severance Benefits under Section 3 of my Employment Agreement 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: _____________________________                  ___________________________
                                                            Edward Lopez

<PAGE>

                                    EXHIBIT B

          [PROPRIETARY INFORMATION AND INVENTION ASSIGNMENT AGREEMENT]

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