EXHIBIT 10.24.1

FIRST LOAN MODIFICATION TO THE LOAN AND SECURITY AGREEMENT

      This First Loan Modification Agreement to the Loan and Security Agreement
(this “Loan Modification Agreement’) is entered into as of May 24, 2001, by and
between SILICON VALLEY BANK, a California-chartered bank, with its principal
place of business at 3003 Tasman Drive, Santa Clara, California 95054 and with a
loan production office located at One Newton Executive Park, Suite 200, 2221
Washington Street, Newton, Massachusetts 02462, doing business under the name
“Silicon Valley East” (“Bank”) and (i) VISUAL NETWORKS, INC., a Delaware
corporation (“Visual”), (ii) VISUAL NETWORKS OPERATIONS, INC., a Delaware
corporation (“VNO”), (iii) VISUAL NETWORKS INVESTMENTS, INC., a California
corporation (“VNI”), (iv) VISUAL NETWORKS TECHNOLOGIES, INC., a California
corporation (“VNT”), (v) VISUAL NETWORKS OF TEXAS, L.P., a Texas limited
partnership (“Visual Texas”), (vi) VISUAL NETWORKS INSURANCE, INC., a Vermont
corporation (“Visual Insurance”), (vii) INVERSE NETWORK TECHNOLOGY, a California
corporation (“INT”), and (viii) AVESTA TECHNOLOGIES, INC., a Delaware
corporation (“Avesta”) (hereinafter, Visual, VNO, VNI, VNT, Visual Texas, Visual
Insurance, INT, and Avesta are referred to jointly, severally and collectively
as the “Borrower” or “Borrowers” and Visual, as agent for each of Visual, VNO,
VNI, VNT, Visual Texas, Visual Insurance, INT, and Avesta is sometimes referred
to hereinafter in such capacity as the “Agent”).

1. DESCRIPTION OF EXISTING INDEBTEDNESS AND OBLIGATIONS. Among other
indebtedness and obligations which may be owing by Borrower to Bank, Borrower is
indebted to Bank pursuant to a loan arrangement dated as of February 28, 2001,
evidenced by, among other documents, (i) a certain Loan and Security Agreement
dated as of February 28, 2001, between Borrower and Bank, (as may be amended
from time to time, the “Loan Agreement”), and (ii) a certain Accounts Receivable
Financing Agreement dated as of February 28, 2001, between Borrower and Bank (as
may be amended from time to time, the “Financing Agreement”). The Loan Agreement
established: (i) an equipment line of credit in favor of Borrower in the maximum
principal amount of Two Million Dollars ($2,000,000.000) (the “Committed
Equipment Line”). Capitalized terms used but not otherwise defined herein shall
have the same meaning as in the Loan Agreement.

Hereinafter, all indebtedness and obligations owing by Borrower to Bank shall be
referred to as the “Obligations”.

2. DESCRIPTION OF COLLATERAL. Repayment of the Obligations is secured by the
Collateral as described in the Loan Agreement (together with any other
collateral security granted to Bank, the “Security Documents”).

Hereinafter, the Security Documents, together with all other documents
evidencing or securing the Obligations shall be referred to as the “Existing
Loan Documents”.

3. DESCRIPTION OF CHANGE IN TERMS.

A.   Modifications to Loan Agreement.

  1.   The Loan Agreement shall be amended by deleting the following, appearing
as Section 6.7 thereof, in its entirety:

  “6.7 Financial Covenants.     Borrowers shall maintain as of the last day of
each month unless otherwise noted:           (a) Quick Ratio. A ratio of Quick
Assets to Current Liabilities of at least .90 to 1.0 through June 30, 2001; and
ratio of Quick Assets to Current Liabilities of at least 1.0 to 1.0 thereafter.

 

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        (b) Maximum Net Loss/Minimum Net Profit. (i) quarterly Net Losses not to
exceed (A) Nineteen Million Five Hundred Thousand Dollars ($19,500,000.00) for
the quarter ending December 31, 2000, (B) Seven Million Two Hundred Fifty
Thousand Dollars ($7,250,000.00) for the quarter ending March 31, 2001,
(C) Three Million Five Hundred Thousand Dollars ($3,500,000.00) for the quarter
ending June 30, 2001; (D) One Million Two Hundred Fifty Thousand Dollars
($1,250,000.00) for the quarter ending September 30, 2001; (ii) quarterly Net
Profit of at least One Million Dollars ($1,000,000.00) for the quarter ending
December 31, 2001; and (iii) a quarterly Net Profit of at least One Dollar
($1.00), for each quarter thereafter.”     and inserting in lieu thereof the
following:     “6.7 Financial Covenants.     Borrowers shall maintain as of the
last day of each month unless otherwise noted:           (a) Quick Ratio. A
ratio of Quick Assets to Current Liabilities of at least .70 to 1.0.    
      (b) Maximum Net Loss/Minimum Net Profit. (i) quarterly Net Losses not to
exceed (A) Nineteen Million Five Hundred Thousand Dollars ($19,500,000.00) for
the quarter ending December 31, 2000, (B) Seven Million Two Hundred Fifty
Thousand Dollars ($7,250,000.00) for the quarter ending March 31, 2001, (C) Four
Million Five Hundred Thousand Dollars ($4,500,000.00) for the quarter ending
June 30, 2001; (D) One Million Two Hundred Fifty Thousand Dollars
($1,250,000.00) for the quarter ending September 30, 2001; (ii) quarterly Net
Profit of at least One Million Dollars ($1,000,000.00) for the quarter ending
December 31, 2001; and (iii) a quarterly Net Profit of One Dollar ($1.00), for
each quarter thereafter.”           (c) Debt Service Coverage Ratio. The
Borrower shall maintain, as of the last day of each month, a Debt Service
Coverage Ratio of not less than 2.50 to 1.0. For purposes hereof “Debt Service
Coverage Ratio” shall be defined as: (i) during any month in which no
Obligations were outstanding or requested under the Financing Agreement, Eighty
Percent (80%) of the amount calculated by dividing the outstanding Obligations
under the Committed Equipment Line into the following: accounts receivable, less
accounts over ninety (90) days past invoice date, less deferred revenue offsets
and customer deposit offsets, or (ii) during any month in which Obligations were
outstanding under the Financing Agreement, the remaining amount of borrowing
ability available determined pursuant to the terms of the Financing Agreement,
divided by all outstanding Obligations under the Committed Equipment Line.”

  2.   The Loan Agreement shall be amended by deleting the following definition
appearing in Section 13.1 thereof:

              “Committed Equipment Line” represents the Equipment Advances of up
to Two Million Dollars ($2,000,000.00).”

  and inserting in lieu thereof the following:

              “Committed Equipment Line” represents Equipment Advances of up to
Four Hundred Fifty Thousand Dollars ($450,000.00).”

  3.   The Loan Agreement shall be amended by deleting the following definitions
appearing in Section 13.1 thereof:

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              “Net Loss” is a reconciled amount that is calculated as the net
loss of Borrowers (on a consolidated basis) as determined by GAAP, and adjusted
by (i) non-cash charges including, without limitation, intangible amortization
and depreciation, and (ii) non-recurring costs including, without limitation,
restructuring charges and asset write-downs.”                 “Net Profit” is a
reconciled amount that is calculated as the net income of Borrowers (on a
consolidated basis) as determined by GAAP, and adjusted by (i) non-cash charges
including, without limitation, intangible amortization and depreciation, and
(ii) non-recurring costs including, without limitation, restructuring charges
and intangible asset write-downs.”

  and inserting in lieu thereof the following:

              “Net Loss” is a reconciled amount that is calculated as the net
loss of Borrowers (on a consolidated basis) as determined by GAAP, and adjusted
by (i) non-cash charges including, without limitation, intangible amortization
and depreciation, and (ii) non-cash non-recurring costs including, without
limitation, restructuring charges and asset write-downs.”

              “Net Profit” is a reconciled amount that is calculated as the net
income of Borrowers (on a consolidated basis) as determined by GAAP, and
adjusted by (i) non-cash charges including, without limitation, intangible
amortization and depreciation, and (ii) non-cash non-recurring costs including,
without limitation, restructuring charges and asset write-downs.”

  4.   The Compliance Certificate appearing as Exhibit C to the Loan Agreement
is hereby replaced with the Compliance Certificate attached as Exhibit A hereto.

4. RATIFICATION OF INTELLECTUAL PROPERTY SECURITY AGREEMENT. Borrower hereby
ratifies, confirms and reaffirms, all and singular, the terms and conditions of
a certain Intellectual Property Security Agreement dated as of February 28,
2001, between Borrower and Bank, and acknowledges, confirms and agrees that said
Intellectual Property Security Agreement (including all Exhibits attached
thereto) shall remain in full force and effect and contain an accurate and
complete listing of all Intellectual Property Collateral as defined in said
Intellectual Property Security Agreement.

5. ADDITIONAL COVENANTS: RATIFICATION OF PERFECTION CERTIFICATE. Borrower shall
not, without providing the Bank with thirty (30) days prior written notice:
(i) relocate its principal executive office or add any new offices or business
locations or keep any Collateral in any additional locations, or (ii) change its
state of formation, or (iii) change its organizational structure, (iv) change
its legal name, or (v) change any organizational number (if any) assigned by its
state of formation. Borrower hereby ratifies, confirms and reaffirms, all and
singular, the terms and disclosures contained in certain Perfection Certificates
dated as of February 20, 2001, between Borrower and Bank, and acknowledges,
confirms and agrees that the disclosures and information above Borrower provided
to Bank in the Perfection Certificates have not changed, as of the date hereof.

6. AUTHORIZATION TO FILE. Borrower hereby authorizes Bank to file financing
statements without notice to Borrower, with all appropriate jurisdictions, as
Bank deems appropriate, in order to further perfect or protect Bank’s interest
in the Collateral.

7. CONCERNING REVISED ARTICLE 9 OF THE UNIFORM COMMERCIAL CODE. The Borrower
affirms and reaffirms that notwithstanding the terms of the Security Documents
to the contrary, (i) that the definition of “Code”, “UCC” or “Uniform Commercial
Code” as set forth in the Security Documents shall be deemed to mean and refer
to “the Uniform Commercial Code as adopted by The Commonwealth of Massachusetts
(presently, Mass. Gen. Laws. Ch. 106), may be amended and in effect from time to
time and (ii) the Collateral is all assets of the Borrower. In connection
therewith, the Collateral shall include, without limitation, the following
categories of assets as defined in the Code: goods (including inventory,
equipment and any accessions thereto), instruments

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(including promissory notes), documents, accounts (including
health-care-insurance receivables, and license fees), chattel paper (whether
tangible or electronic), deposit accounts, letter-of-credit rights (whether or
not the letter of credit is evidenced by a writing), commercial tort claims,
securities and all other investment property, general intangibles (including
payment intangibles and software), supporting obligations and any and all
proceeds of any thereof, wherever located, whether now owned or hereafter
acquired.

8. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever
necessary to reflect the changes described above.

9. RATIFICATION OF LOAN DOCUMENTS. Borrower hereby ratifies, confirms, and
reaffirms all terms and conditions of all security or other collateral granted
to the Bank, and confirms that the indebtedness secured thereby includes,
without limitation, the Obligations.

10. NO DEFENSES OF BORROWER. Borrower agrees that, as of this date, it has no
defenses against the obligations to pay any amounts under the Obligations.

11. CONTINUING VALIDITY. Borrower understands and agrees that in modifying the
existing Obligations, Bank is relying upon Borrower’s representations,
warranties, and agreements, as set forth in the Existing Loan Documents. Except
as expressly modified pursuant to this Loan Modification Agreement, the terms of
the Existing Loan Documents remain unchanged and in full force and effect.
Bank’s agreement to modifications to the existing Obligations pursuant to this
Loan Modification Agreement in no way shall obligate Bank to make any future
modifications to the Obligations. Nothing in this Loan Modification Agreement
shall constitute a satisfaction of the Obligations. It is the intention of Bank
and Borrower to retain as liable parties all makers of Existing Loan Documents,
unless the party is expressly released by Bank in writing. No maker will be
released by virtue of this Loan Modification Agreement.

12. RIGHT OF SET-OFF. In consideration of Bank’s agreement to enter into this
Loan Modification Agreement, Borrower and any guarantor hereby reaffirm and
hereby grant to Bank, a lien, security interest and right of setoff as security
for all Obligations to Bank, whether now existing or hereafter arising upon and
against all deposits, credits, collateral and property, now or hereafter in the
possession, custody, safekeeping or control of Bank or any entity under the
control of Silicon Valley Bank or in transit to any of them. At any time after
the occurrence and during the continuance of an Event of Default, without demand
or notice, Bank may set off the same or any part thereof and apply the same to
any liability or obligation of Borrower and any guarantor even though unmatured
and regardless of the adequacy of any other collateral securing the loan. ANY
AND ALL RIGHTS TO REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT
TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS
RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF THE
BORROWER OR ANY GUARANTOR, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY
WAIVED.

13. JURISDICTION/VENUE. Borrower accepts for itself and in connection with its
properties, unconditionally, the non-exclusive jurisdiction of any state or
federal court of competent jurisdiction in the Commonwealth of Massachusetts in
any action, suit, or proceeding of any kind against it which arises out of or by
reason of this Loan Modification Agreement; provided, however, that if for any
reason Bank cannot avail itself of the courts of the Commonwealth of
Massachusetts, then venue shall lie in Santa Clara County, California.

14. COUNTERSIGNATURE. This Loan Modification Agreement shall become effective
only when it shall have been executed by Borrower and Bank (provided, however,
in no event shall this Loan Modification Agreement become effective until signed
by an officer of Bank in California).

15. AGED LISTING OF ACCOUNTS RECEIVABLE. The Bank agrees that the requirement of
Borrower to submit aged listings of accounts receivable, as set forth in
Section 6.2(a) of the Loan Agreement, shall exist only while there are
Obligations outstanding under the Financing Agreement or upon Bank’s request.

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      This Loan Modification Agreement is executed as a sealed instrument under
the laws of the Commonwealth of Massachusetts as of the date first written
above.

      AGENT: BANK:       VISUAL NETWORKS, INC SILICON VALLEY BANK, doing
business as
SILICON VALLEY EAST       By: /s/ Peter J. Minihane By: /s/ Justin J. Peterson  
    Name: Peter J. Minihane Name: Justin J. Peterson       Title: Chief
Financial Officer Title: Vice President       BORROWERS:       VISUAL NETWORKS,
INC SILICON VALLEY BANK       By: /s/ Peter J. Minihane By: /s/ Maggie Garcia  
    Name: Peter J. Minihane Name: Maggie Garcia       Title: Chief Financial
Officer Title: Loan Admin. Team Leader
(signed in Santa Clara County, California)       VISUAL NETWORKS OPERATIONS, INC
      By: /s/ Peter J. Minihane       Name: Peter J. Minihane       Title:
Treasurer       VISUAL NETWORKS INVESTMENTS, INC       By: /s/ Peter J. Minihane
      Name: Peter J. Minihane       Title: Treasurer       VISUAL NETWORKS
TECHNOLOGIES, INC       By: /s/ Peter J. Minihane       Name: Peter J. Minihane
      Title: Treasurer

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      BORROWERS: (cont.)       VISUAL NETWORKS OF TEXAS, L.P.,
by Visual Networks Texas Operations, Inc., its
General Partner       By: /s/ Peter J. Minihane       Name: Peter J. Minihane  
    Title: Treasurer       VISUAL NETWORKS INSURANCE, INC       By: /s/ Peter J.
Minihane       Name: Peter J. Minihane       Title: Treasurer       INVERSE
NETWORK TECHNOLOGY       By: /s/ Peter J. Minihane       Name: Peter J. Minihane
      Title: President       AVESTA TECHNOLOGIES, INC       By: /s/ Peter J.
Minihane       Name: Peter J. Minihane       Title: President

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