S-3/A, EX-5.1, 2001-01-19
Next: CLICK2LEARN COM INC, 8-K, 2001-01-19


                                                                     EXHIBIT 5.1


                      [LETTERHEAD OF COOLEY GODWARD LLP]

January 19, 2001

Terayon Communication Systems, Inc.
2952 Bunker Hill Lane
Santa Clara, CA 95054

Ladies and Gentlemen:

You have requested our opinion with respect to certain matters in connection
with the filing by Terayon Communication Systems, Inc. (the "Company") of a
Registration Statement on Form S-3 (the "Registration Statement") with the
Securities and Exchange Commission (the "Commission") covering the resale by the
holders thereof of a total of $500,000,000 aggregate principal amount of the
Company's 5% Convertible Subordinated Notes due August 2007 (the "Notes") and up
to 5,951,673 shares of common stock (the "Selling Holder Shares") issuable upon
conversion of the Notes. The Notes were issued pursuant to the Indenture, dated
as of July 26, 2000 (the "Indenture"), between the Company and State Street Bank
and Trust Company of California, N.A., as trustee.

In connection with this opinion, we have examined the Registration Statement,
the Company's Certificate of Incorporation and Bylaws, each as amended, the
Indenture, the Notes and such other documents, records, certificates, memoranda
and other instruments as we deem necessary as a basis for this opinion. We have
assumed the genuineness and authenticity of all documents submitted to us as
originals, the conformity to originals of all documents submitted to us as
copies thereof, and the due execution and delivery of all documents where due
execution and delivery are a prerequisite to the effectiveness thereof.

We express no opinion herein concerning any laws other than the federal laws of
the United States, the laws of the State of California and the Delaware General
Corporation Law, as well as applicable provisions of the Constitution of the
State of Delaware. We note that the Notes and the Indenture designate the laws
of the State of New York as the laws governing such securities or agreements.
Our opinion below as to the validity, binding effect and enforceability of the
Notes is premised upon the result that would be obtained if a California court
were to apply the internal laws of the State of California (notwithstanding the
designation of the laws of the State of New York) to govern the interpretation
and enforcement of such securities or agreements. Neither special rulings of any
governmental authorities nor opinions of counsel in any jurisdiction have been
obtained. We express no opinion as to whether the laws of any jurisdiction other
than those identified above are applicable to the subject matter hereof. We are
not rendering any opinion as to compliance with any antifraud law, rule or
regulation relating to securities or to the sale or issuance thereof.

On the basis of the foregoing, and in reliance thereon, and subject to the
qualifications herein stated, we are of the opinion that: (1) with the respect
to the offering of the Notes, the Notes are valid and binding obligations of the
Company, enforceable against the Company in accordance with their respective
terms, subject to (a) general equity principles and the limitations on the
availability of equitable relief, including, without limitation, specific
performance; (b) the effect of applicable bankruptcy, insolvency, fraudulent
transfer or conveyance, reorganization, arrangement, surteyship, dissolution,
moratorium, receivership or other similar laws relating to or affecting
creditors' rights generally; (c) limitations created by or arising under statute
or case law on the enforceability of certain covenants and provisions of
agreements where (i) the breach of such covenants or provisions imposes
restrictions or burdens upon the debtor and it cannot be demonstrated that the
enforcement of such restrictions or burdens is reasonably necessary for the
protection of the creditor or (ii) the creditor's enforcement of such covenants
or provisions under the circumstances would violate the creditor's implied
covenant of good faith and fair dealing; (d) limitations on the right of a
lender to impose added charges for late payments or defaults by the borrower,
where it is determined that such charges bear no reasonable relation to the
damage suffered by the lender as a result of such late payments or defaults or
where the requirements of California Civil Code Section 2954.5 are not met; (e)
the effect of California Civil Code Section 1717 on the recovery of attorneys'
fees in contract actions; (f) the effect of California Civil Code Section 3433;
(g) limitations imposed by law and public policy on indemnification and
exculpation; and (h) any other limitations which, in the event of any default by
the Company in its obligations under the Notes, would act as a limitation on the
rights of the creditor in accordance with California law, but which would not
prevent the creditor from exercising legally adequate remedies for realization
of the principal benefits intended to be provided by the Notes and (2) the
Selling Holder Shares, when sold and issued upon conversion of the Notes, will
be validly issued, fully paid and nonassessable, assuming the conversion or
exchange of the Notes in accordance with the terms of the Indenture and that a
sufficient number of the Selling Holder Shares are authorized or reserved and
available for issuance and that the consideration for the issuance of such
Selling Holder Shares is not less than the par value of the Selling Holder

We consent to the reference to our firm under the caption "Legal Matters" in the
Prospectus included in the Registration Statement and to the filing of this
opinion as an exhibit to the Registration Statement.

Very truly yours,

Cooley Godward LLP

By:  /s/ Karyn S. Tucker
     Karyn S. Tucker

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