<PAGE>

                                                                   EXHIBIT 10.27

                              AMENDMENT NUMBER ONE
                         TO LOAN AND SECURITY AGREEMENT

         This AMENDMENT NUMBER ONE TO LOAN AND SECURITY AGREEMENT (this
"Amendment") is entered into as of March 14, 2002, among FOOTHILL CAPITAL
CORPORATION, a California corporation (the "Lender"), PARADYNE NETWORKS, INC., a
Delaware corporation (the "Parent"), and PARADYNE CORPORATION, a Delaware
corporation (the "Borrower"), with reference to the following:

         WHEREAS, Parent and Borrower have previously entered into that certain
Loan and Security Agreement, dated as of July 16, 2001 (as so modified and as
otherwise heretofore amended, modified or supplemented from time to time, the
"Agreement"), with Lender, pursuant to which Lender has made certain loans and
financial accommodations available to Borrower. Terms used herein without
definitions shall have the meanings ascribed to them in the Agreement;

         WHEREAS, on or about December 27, 2001, Parent announced its intention
to acquire (the "Acquisition") Elastic Networks, Inc. ("Elastic") pursuant to an
Agreement and Plan of Merger, dated as of December 27, 2001, and amended January
4, 2002, among Parent, Elastic and Phoenix Merger Sub, Inc.;

         WHEREAS, the consummation of the Acquisition is prohibited by
Section 7.3(a) of the Agreement;

         WHEREAS, on or about January 1, 2002, Parent formed Paradyne Services,
LLC, a wholly-owned subsidiary of Parent (the "Subsidiary Formation"), Parent
and Borrower transferred most of their Florida based employees to Paradyne
Services, LLC, and Parent and Borrower agreed to lease such employees from
Paradyne Services, LLC (collectively, the "Subsidiary Activities");

         WHEREAS, the Subsidiary Formation and the Subsidiary Activities are
prohibited by Section 7.4 of the Agreement;

         WHEREAS, Parent and Borrower have requested that Lender waive Section
7.3(a) of the Agreement in connection with the Acquisition and Section 7.4 of
the Agreement in connection with the Subsidiary Formation and the Subsidiary
Activities; and

         WHEREAS, subject to the terms and conditions contained herein, Lender
is willing to (a) amend Section 2.11(c) of the Agreement to reduce the servicing
fee from $4,000 to $3,000 per month for the period from and including March 1,
2002 through and including May 31, 2003 (which amendment shall be effective for
the fifteen months beginning March 1, 2002), (b) consent to the consummation of
Acquisition, the Subsidiary Formation and the Subsidiary Activities, and (c)
waive Section 7.3(a) of the Agreement for purposes of the Acquisition and


<PAGE>

Section 7.4 of the Agreement for purposes of the Subsidiary Formation and the
Subsidiary Activities.

         NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:

         1.       Amendments To The Agreement.

                  (a)      The definition of "Eligible Inventory" contained in
Section 1.1 of the Agreement hereby is amended by adding the following as new
clause (f) immediately after existing clause (e):

                           (f)      it is out on consignment or was out on
         consignment and returned to Borrower.

                  (b)      Clause (d) of the definition of "Eligible Inventory"
contained in Section 1.1 of the Agreement hereby is amended by deleting the "or"
at the end of such clause.

                  (c)      Clause (e) of the definition of "Eligible Inventory"
contained in Section 1.1 of the Agreement hereby is amended by deleting the "."
at the end of such clause an inserting in its place ", or".

                  (d)      Section 2.11(c) of the Agreement hereby is amended
and restated in its entirety as follows (such amendment and restatement to be
effective as of March 1, 2002):

                           (c)      SERVICING FEE. On the first day of each
         month commencing with the first day of the month immediately following
         the date of this Agreement through the date on which all of the
         Obligations are paid in full in accordance with the terms of this
         Agreement and Lender's obligation to provide additional credit is
         hereby terminated, a servicing fee in an amount equal to $4,000;
         provided, however, that for the fifteen month period from March 1, 2002
         through May 31, 2003, the amount of the servicing fee shall be reduced
         to $3,000 for each month included within such period, and

                  (e)      Section 7.10 of the Agreement hereby is amended and
restated in its entirety as follows:

                           [Intentionally omitted].

                  (f)      Schedule 5.8(c) of the Agreement hereby is
amended and restated in its entirety as set forth on Amended and Restated
Schedule 5.8(c) hereto.

         2.       Lender Waiver and Consent. Lender hereby waives the provisions
of (a) Section 7.3(a) of the Agreement for purposes of the Acquisition, and (b)
Section 7.4 for purposes of the Subsidiary Formation and the Subsidiary
Activities, and consents to the Acquisition, the Subsidiary Formation and the
Subsidiary Activities.


                                       2

<PAGE>

         3.       Parent and Borrower Waiver and Consent. For purposes of this
Amendment, Parent and Borrower each hereby (a) waive the provision in clause (h)
of the definition of "Lender Expenses" contained in Section 1.1 of the Agreement
which provides that, in the case of any amendment, attorneys fees shall not
exceed $5,000, and (b) agree to pay all reasonable attorneys fees incurred by
Lender in connection with this Amendment.

         4.       Conditions Precedent to Amendment. The satisfaction of each of
the following, unless waived or deferred by Lender, shall constitute conditions
precedent to the effectiveness of this Amendment and each and every provision
hereof:

                  (a)      Lender shall have received this Amendment, duly
executed by the parties hereto, and the same shall be in full force and effect;

                  (b)      Lender shall have received the reaffirmation and
consent of Guarantors, attached hereto as Exhibit A, duly executed and delivered
by authorized officers of Guarantors;

                  (c)      The representations and warranties in this Amendment,
the Agreement as amended by this Amendment, and the other Loan Documents shall
be true and correct in all respects on and as of the date hereof as though made
on such date (except to the extent that such representations and warranties
relate solely to an earlier date);

                  (d)      After giving effect to this Amendment, no Default or
Event of Default shall have occurred and be continuing on the date hereof, or
shall result from the consummation of the transactions contemplated herein;

                  (e)      No injunction, writ, restraining order, or other
order of any nature prohibiting, directly or indirectly, the consummation of the
transactions contemplated herein shall have been issued and remain in force by
any governmental authority against Lender, Parent or Borrower; and

                  (f)      All other documents and legal matters in connection
with the transactions contemplated by this Amendment shall have been delivered
or executed or recorded and shall be in form and substance satisfactory to
Lender and its counsel.

         5.       Representations and Warranties. Each of Parent and Borrower
hereby represents and warrants to Lender that (a) the execution, delivery, and
performance of this Amendment and of the Agreement, as amended by this
Amendment, are within Parent's and Borrower's corporate powers, have been duly
authorized by all necessary corporate action, and are not in contravention of
any law, rule, or regulation, or any order, judgment, decree, writ, injunction,
or award of any arbitrator, court, or governmental authority, or of the terms of
Parent's or Borrower's charter or bylaws, or of any contract or undertaking to
which Parent or Borrower is a party or by which any of Parent's or Borrower's
properties may be bound or affected, and (b) this Amendment and the Agreement,
as amended by this Amendment, constitute Parent's and Borrower's legal, valid,
and binding obligation, enforceable against Parent and Borrower in accordance
with its terms, and (c) this Amendment has been duly executed and delivered by
Parent and Borrower.


                                       3

<PAGE>

         6.       Choice of Law. The validity of this Amendment, its
construction, interpretation and enforcement, and the rights of the parties
hereunder, shall be determined under, governed by, and construed in accordance
with the laws of the State of California.

         7.       Counterparts; Telefacsimile Execution. This Amendment may be
executed in any number of counterparts and by different parties and separate
counterparts, each of which when so executed and delivered, shall be deemed an
original, and all of which, when taken together, shall constitute one and the
same instrument. Delivery of an executed counterpart of a signature page to this
Amendment by telefacsimile shall be effective as delivery of a manually executed
counterpart of this Amendment. Any party delivering an executed counterpart of
this Amendment by telefacsimile also shall deliver a manually executed
counterpart of this Amendment but the failure to deliver a manually executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Amendment.

         8.       Effect on Loan Documents.

                  (a)      The Agreement, as amended hereby, and the other Loan
Documents shall be and remain in full force and effect in accordance with its
respective terms and hereby is ratified and confirmed in all respects. The
execution, delivery, and performance of this Amendment shall not, except as
expressly set forth herein, operate as a waiver of or, except as expressly set
forth herein, as an amendment of, any right, power, or remedy of Lender as in
effect prior to the date hereof. The waivers, consents, and modifications herein
are limited to the specifics hereof, shall not apply with respect to any facts
or occurrences other than those on which the same are based, shall not excuse
future non-compliance with the Agreement, and shall not operate as a consent to
any further or other matter, under the Loan Documents.

                  (b)      Upon and after the effectiveness of this Amendment,
each reference in the Agreement to "this Agreement", "hereunder", "herein",
"hereof" or words of like import referring to the Agreement, and each reference
in the other Loan Documents to "the Agreement", "thereunder", "therein",
"thereof" or words of like import referring to the Agreement, shall mean and be
a reference to the Agreement as modified and amended hereby.

                  (c)      Upon and after the effectiveness of this Amendment,
each reference in the Agreement to "Schedule 5.8(c)" shall be a reference to
"Amended and Restated Schedule 5.8(c)" attached hereto.

                  (d)      To the extent that any terms and conditions in any of
the Loan Documents shall contradict or be in conflict with any terms or
conditions of the Agreement, after giving effect to this Amendment, such terms
and conditions are hereby deemed modified or amended accordingly to reflect the
terms and conditions of the Agreement as modified or amended hereby.

         9.       Further Assurances. Parent and Borrower shall send a copy of
the Form S-4 and any other documents reasonably requested by Lender to Lender,
and take all actions as Lender may reasonably request from time to time, to
perfect and maintain the perfection and priority of Lender's security interests
in the Collateral and to fully consummate the transactions contemplated under
this Amendment and the Agreement, as amended by this Amendment.


                                       4

<PAGE>

         10.      Entire Agreement. This Amendment, together with all other
instruments, agreements, and certificates executed by the parties in connection
herewith or with reference thereto, embody the entire understanding and
agreement between the parties hereto and thereto with respect to the subject
matter hereof and thereof and supersede all prior agreements, understandings,
and inducements, whether express or implied, oral or written.


                            [Signature page follows.]


                                       5

<PAGE>

         IN WITNESS WHEREOF, the parties have entered into this Amendment as of
the date first above written.



                                       PARADYNE NETWORKS, INC.,
                                       a Delaware corporation



                                       By /s/ Patrick M. Murphy
                                         ---------------------------------------
                                       Title: Senior Vice President



                                       PARADYNE CORPORATION,
                                       a Delaware corporation



                                       By /s/ Patrick M. Murphy
                                         ---------------------------------------
                                       Title: Senior Vice President



                                       FOOTHILL CAPITAL CORPORATION,
                                       a California corporation



                                       By /s/ Greg Gentry
                                         ---------------------------------------

                                       Title: Vice President
                                             -----------------------------------


                                       6

<PAGE>
                                 CAPITALIZATION


                      AMENDED AND RESTATED SCHEDULE 5.8(C)

<TABLE>
<CAPTION>

                                                                  Shares Authorized             Shares Outstanding
                                                            ---------------------------    ----------------------------
                                                             Preferred         Common       Preferred        Common
         Entity                              Jurisdiction      Stock            Stock         Stock           Stock
--------------------------------------       ------------   ----------       ----------    -----------   --------------
<S>                                          <C>            <C>             <C>           <C>           <C>
Paradyne Networks, Inc.                      Delaware        5,000,000       80,000,000                  41,250,334

Paradyne Corporation                         Delaware                             1,000                       1,000

Paradyne International Limited               UK                                     N/A                         100

Paradyne International Sales Limited         Barbados                             1,000                         100

Paradyne Worldwide Corporation               Delaware                             1,000                         100

Paradyne Finance Corporation                 Delaware                             1,000                       1,000

Paradyne Canada Limited                      Ontario                                N/A                       1,525

Paradyne Services LLC                        Delaware                               N/A                         N/A

Elastic Networks Inc                         Delaware       25,000,000      100,000,000                      1,000
</Table>
<PAGE>

                                    EXHIBIT A

                            REAFFIRMATION AND CONSENT

         All capitalized terms used herein but not otherwise defined herein
shall have the meanings ascribed to them in that certain Loan and Security
Agreement, dated as of July 16, 2001, by and among Paradyne Networks, Inc., a
Delaware corporation (the "Parent"), Paradyne Corporation, a Delaware
corporation (the "Borrower"), and Foothill Capital Corporation, a California
corporation (the "Lender") (as amended, restated, supplemented or otherwise
modified, the "Loan Agreement"), or in Amendment Number 1 to Loan and Security
Agreement, dated as of March 14, 2002, by and among Parent, Borrower and Lender
(the "Amendment"). The undersigned each hereby (a) represent and warrant to the
Lender that the execution, delivery, and performance of this Reaffirmation and
Consent are within its powers, have been duly authorized by all necessary
action, and are not in contravention of any law, rule, or regulation, or any
order, judgment, decree, writ, injunction, or award of any arbitrator, court, or
governmental authority, or of the terms of its charter or bylaws, or of any
contract or undertaking to which it is a party or by which any of its properties
may be bound or affected; (b) consents to the transactions contemplated by the
Amendment; (c) acknowledges and reaffirms its obligations owing to the Lender
under any Loan Documents to which it is a party; and (d) agrees that each of the
Loan Documents to which it is a party is and shall remain in full force and
effect. Although each of the undersigned has been informed of the matters set
forth herein and has acknowledged and agreed to same, it understands that Lender
has no obligations to inform it of such matters in the future or to seek its
acknowledgment or agreement to future amendments, and nothing herein shall
create such a duty. Delivery of an executed counterpart of this Reaffirmation
and Consent by telefacsimile shall be equally as effective as delivery of an
original executed counterpart of this Reaffirmation and Consent. Any party
delivering an executed counterpart of this Reaffirmation and Consent by
telefacsimile also shall deliver an original executed counterpart of this
Reaffirmation and Consent but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Reaffirmation and Consent. This Reaffirmation and Consent shall be governed
by the laws of the State of California.



                            [Signature page follows]


<PAGE>

         IN WITNESS WHEREOF, the undersigned have each caused this Reaffirmation
and Consent to be executed as of the date of the Amendment.



                                       PARADYNE NETWORKS, INC.,
                                       a Delaware corporation, as a Guarantor



                                       By /s/ Patrick M. Murphy
                                         ---------------------------------------

                                       Title:  Senior Vice President



                                       PARADYNE INTERNATIONAL, LTD.,
                                       a corporation organized under the laws of
                                       the United Kingdom, as a Guarantor



                                       By /s/ Patrick M. Murphy
                                         ---------------------------------------

                                       Title:  Director



                                       PARADYNE WORLDWIDE CORP.,
                                       a Delaware corporation, as a Guarantor



                                       By /s/ Patrick M. Murphy
                                         ---------------------------------------

                                       Title:  Vice President



                                       PARADYNE FINANCE CORP.,
                                       a Delaware corporation, as a Guarantor



                                       By /s/ Patrick M. Murphy
                                         ---------------------------------------

                                       Title: Vice President