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                                                                   Exhibit 10.31

                         [SHORELINE PACIFIC LETTERHEAD]

May 2, 2001
Michael Parides
President and Chief Executive Officer
Gadzoox Networks, Inc.
5850 Hellyer Avenue
San Jose, CA 95138

Re:     Engagement of Shoreline Pacific Institutional Finance, the Institutional
        Division of Financial West Group ("Shoreline") as Placement Agent
        for Gadzoox Networks, Inc. ("Company")

Dear Michael:



This letter (the "Engagement Letter") will confirm the engagement of Shoreline
as exclusive placement agent to the Company as follows:

1. Engagement. Shoreline will act as exclusive placement agent in connection
with the proposed private placement (the "Offering") of the Company's
securities. We anticipate that the Offering will consist of up to Five Million
($5,000,000) U.S. Dollars of the Company's securities (the "Shares"), which may
be convertible into shares of common stock of the Company (the "Common Stock"),
in conjunction with an equity line for up to Twenty Million ($20,000,000) U.S.
Dollars of Common Stock, in each case subject to the satisfactory completion of
our continuing due diligence. Notwithstanding any other provision of this
Engagement Letter, nothing set forth herein shall be construed as a firm
commitment to place the full amount of the Offering, or any minimum portion
thereof. The Shares to be placed by Shoreline will be sold only to accredited
investors in compliance with Regulation D under the Securities Act of 1933.

2. Engagement Period. The term of Shoreline's engagement (the "Engagement
Period") will expire 60 days from the date we receive an executed copy of the
Engagement Letter from the Company. Following expiration of the initial
Engagement Period, the Engagement Period will be automatically extended for
additional 30 day periods or may be terminated upon 10 days' written notice to
the other party.



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Gadzoox Networks, Inc.                                                 Page 2

Notwithstanding any other provision of this Engagement Letter, if the Company
completes any securities transaction during the Engagement Period, Shoreline
will be paid the fees which would be due under Paragraph 4 hereof. In addition,
if at any time during the one year period following the end of the Engagement
Period the Company completes a securities transaction with an investor
introduced by Shoreline (or an affiliate of an investor introduced by
Shoreline), which investor shall be identified in writing following the end of
the Engagement Period, upon the closing of any such transaction Shoreline will
be paid the fees which would be due under Paragraph 4 hereof. All prospective
strategic investors shall be pre-approved prior to contact by Shoreline.

3.   Closing. Shoreline will assist with the closing of the Offering (the
"Closing"), which will occur through an escrow established with Chase Manhattan
Bank, N.A., or another escrow agent designated by Shoreline and reasonably
acceptable to the Company.

4.   Fees. A. Private Placement: The Company agrees to pay Shoreline a success
fee of five percent (5%) of the aggregate placement amount raised from
investors that are not introduced to Shoreline by the Company and two percent
(2%) of the aggregate placement amount raised from investors that are
introduced to Shoreline by the Company, which amounts shall be deducted from
the Company's gross proceeds from the Offering and paid to Shoreline from the
escrow upon Closing. Shoreline, or its designees, will also receive from the
Company at Closing three percent (3%) of the aggregate placement amount in
three-year Warrants to purchase shares of Common Stock at an exercise price per
share equal to 115% of the closing price. The shares of Common Stock
underlying the Warrants will have provisions for cashless exercise and will be
included in the Registration Statement filed in connection with the Offering.
The Company acknowledges that Shoreline may transfer some of the Warrants to
certain of its employees on or about the end of each calendar year and the
Company agrees to promptly amend the Registration Statement to include the
resale of shares by the new owner thereof.

B.   Equity Line: The Company agrees to pay Shoreline a success fee of one
percent (1%) of the aggregate commitment amount of the equity line, payable
upon execution of the purchase agreement. In addition, the Company agrees to
pay Shoreline a success fee equal to two percent (2%) of each draw down,
payable out of the escrow for each draw. A portion of the equity line fees may
be paid with warrants instead of cash at Shoreline's option.

5.   Expenses. In addition to any success fee payable to Shoreline hereunder
relating to a private placement or an equity line (and regardless of whether a
Closing occurs), the Company will reimburse Shoreline from time to time, upon
request, for Shoreline's reasonable out of pocket expenses incurred in
connection with the Offering (including reasonable legal fees and expenses),
not to exceed $25,000 without the Company's consent.

6. Confidentiality. This Engagement Letter is for the confidential use of the
Company and Shoreline only and may not be disclosed by the Company to any
person other than its attorneys, accountants and financial advisors and only
on a confidential basis in connection with the proposed Offering, except where
disclosure is required by law or is previously consented to in writing by
Shoreline.

7.   Governing Law/Arbitration. The terms of this Engagement Letter shall be
governed by and interpreted in accordance with the internal laws of the State
of California, without regard to the principles of conflict of laws. Any
controversy, dispute or claim between the parties relating

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Gadzook Networks, Inc.                                                    Page 3

to this Engagement Letter shall be resolved by binding arbitration in San
Francisco, California in accordance with the rules of the American Arbitration
Association. The parties agree that in the event that any controversy, dispute
or claim between the parties relating to this Engagement Letter is resolved by
binding arbitration, the prevailing party, if any, as determined by the
arbitrators' award, shall be entitled to reimbursement of all expenses incurred
in the arbitration including reasonable attorneys' fees; provided, that in no
event shall the arbitrator have the authority to award punitive damages.
Judgment on the award may be entered in any court having jurisdiction over the
award

8. Disclosure. During the Engagement Period and for sixty days thereafter, you
and Shoreline agree not to issue any press releases or communications to the
public relating to the Offering without the other party's prior approval or
unless otherwise required by law, which will not be unreasonably withheld or
delayed, and each party agrees that such press release will state that the
Offering was arranged by Shoreline, unless we mutually agree otherwise or unless
otherwise required by law. You further agree that Shoreline may, at its own
expense, publicize its services to the Company hereunder including, without
limitation, issuing press releases, placing advertisements (tombstone or
otherwise) and referring to the Offering on Shoreline's website, provided that
the information included in any of such publications has previously been
disclosed to the public.

9. Miscellaneous. You undertake and represent to us that the number of Shares
necessary to fulfill the Offering will be available at Closing; that the number
of shares of Common Stock underlying the Shares will be available upon each
conversion of the Shares; that the shares of Common Stock underlying the
Warrants will be available upon exercise of the Warrants; and that you will
comply in all respects with the terms of each purchase agreement and
registration rights agreement entered into with the purchasers of the Shares.


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Gadzook Networks, Inc.                                                    Page 4

10. Indemnification. In consideration of Shoreline's identification of
investors, the Company agrees to be fully bound by the indemnification
provisions of Attachment A, which is attached hereto and is fully incorporated
herein by this reference.

If the foregoing is acceptable, please sign and return to us a copy of this
Engagement Letter which shall represent the entire agreement between us with
respect to the matters addressed herein. We look forward to working with you.

Sincerely,

Shoreline Pacific Institutional Finance,
The Institutional Division of Financial
West Group


--------------------------------------
Harlan P. Kleiman
Chief Executive Officer


ACCEPTED AND AGREED:

Gadzoox Networks, Inc.:

By: /s/ MICHAEL PARIDES
   -----------------------------------
Name:
Title: CEO & President
Date: 5/4/01


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Gadzook Networks, Inc.                                                    Page 5

                       Attachment A to Engagement Letter

                           Indemnification Provisions



Gadzoox Networks, Inc. (the "Company") agrees to indemnify and hold harmless
Shoreline Pacific Institutional Finance, the Institutional Division of Financial
West Group ("Shoreline") and its agents, employees, principals, affiliates,
control persons, successors and assigns (collectively, the "Indemnitees" and
each individually an "Indemnitee") from and against any and all expenses,
losses, claims, demands, causes of action (actual and threatened), obligations,
damages and liabilities, arising in law, equity or otherwise, of any and every.
kind, nature and character whatsoever or arising from any investigation, and any
and all Legal, accounting, investigative and other professional fees and related
costs and disbursements and other costs, expenses, or disbursements relating
thereto (collectively, "Liabilities") directly or indirectly arising in any
manner out of or in connection with (a) Shoreline's rendering of services
pursuant to the engagement letter between Shoreline and the Company attached
hereto (the "Engagement Letter"); (b) any untrue or alleged untrue statement of
material fact contained in, or omissions or alleged omissions from, information
furnished by the Company to any Indemnitee or to any person to whom securities
of the Company were offered or sold pursuant to the Engagement Letter (each, an
"Investor"); (c) any actual, threatened or anticipatory breach by the Company of
the terms of the Engagement Letter or any purchase agreement, registration
rights agreement or other agreement between the Company and any Investor, or of
the terms of the securities purchased or issuable pursuant thereto; and (d) to
the same extent provided to any Investor in the registration rights agreement
between the Company and the Investors, the registration of the securities issued
to Shoreline or its designees as compensation pursuant to the Engagement Letter;
provided however, that if it is determined, in a final judgment by a court of
competent jurisdiction (not subject to further appeal), that the Liabilities
arose directly and primarily from the gross negligence or willful misconduct of
the Indemnitees, the Company shall not be liable under these indemnification
provisions to the extent that the Liabilities are attributable to such gross
negligence or willful misconduct by Indemnitees.

If any action or investigation is brought or threatened against the Indemnitees
with respect to which indemnity may be sought against the Company, Shoreline
shall promptly notify the Company in writing but the omission to so notify the
Company will not relieve it from any liability which it may have to Indemnitee
unless such failure to notify materially prejudices the Company in its defense
of such action. The Company shall promptly assume the defense of any such action
or investigation thereof, including the employment of counsel reasonably
satisfactory to Shoreline and payment of all related fees and expenses. All such
fees and expenses shall be reimbursed as they are incurred. The Indemnitees
shall have the right to retain separate counsel, but the fees and expenses of
such counsel shall be at the expense of the Indemnitees, unless (i) the
employment of such counsel has been specifically authorized in writing by the
Company, (ii) the Company has failed to assume the defense and employ counsel as
required above or (iii) the Indemnitees shall have been advised by counsel that
there may be one or more legal defenses available to the Indemnitees which are
different from or additional to those available to the Company (in which case
the Company shall not have the right to assume the defense of such action on
behalf of the Indemnitees); it being understood, however, that the Company shall
not, in connection with any one such action or separate, substantially similar
or related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys for the Indemnitees. In


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Gadzook Networks, Inc.                                                    Page 6

no event shall the Company be liable in respect of any amounts paid in
settlement of any action unless the Company shall have approved the terms of
such settlement; provided that such consent shall not be unreasonably withheld,
The Company shall not, without the prior written consent of the Indemnitees,
effect any settlement of any pending or threatened proceeding in respect of
which Indemnitees are or could have been a party and indemnification could have
been sought hereunder by such Indemnitees, unless such settlement includes an
unconditional release of such Indemnitees from all liability on all claims that
are the subject matter of such proceeding,

In order to provide for just and equitable contribution, if a claim for on
pursuant to these indemnification provisions is made but it is found in a final
judgment by a court of competent jurisdiction (not subject to further appeal)
that such indemnification may not be enforced for any reason in such case, then
the Company, on the one hand, and the claiming Indemnitees on the other hand,
shall contribute to the losses, claims, damages, obligations, penalties,
judgments, awards, liabilities, costs, expenses and disbursements (collectively,
"Losses") to which such Indemnitees may be subject. Said contribution shall be
made in accordance with the relative benefits received by, and the fault of, the
Company on the one hand, and such Indemnitees on the other hand, in connection
with the statements, acts or omissions which resulted in such Losses, together
with the relevant equitable considerations. The amount paid or payable by an
Indemnitee as a result of Losses shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such Indemnitees in connection with investigating or defending any such action
or investigation. No person found liable for a fraudulent misrepresentation
shall be entitled to contribution from any person who is not also found liable
for such fraudulent misrepresentation. Notwithstanding the foregoing, the
Indemnitees shall not be obligated to contribute in the aggregate for all claims
made in an amount that exceeds the fees actually received by Shoreline pursuant
to the Engagement Letter. The remedies provided to Indemnitees in the foregoing
indemnification provisions are not exclusive and shall not limit the rights or
remedies which may otherwise be available to any Indemnitees at law or in
equity.

Neither termination nor completion of the engagement of Shoreline pursuant to
the Engagement Letter shall affect these indemnification provisions, which shall
survive any such termination or completion and remain operative and in full
force and effect.