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                                                                 Exhibit 10.18

 
                         Savoir Technology Group, Inc.
                           254 East Hacienda Avenue
                          Campbell, California 95008
                                                
                                         
                                      January 22, 1998

                                      
Mr. James W. Dorst
Savoir Technology Group, Inc.
254 East Hacienda Avenue
Campbell, California 95008

Dear Jim:

     This letter agreement sets forth the terms and conditions of your
employment with Savoir Technology Group, Inc. ("Company").

     In consideration of the mutual covenants and promises made in this letter
agreement, you and the Company agree as follows:


     1.   Employment.  Commencing as of January 1, 1998 (the "Effective Date"),
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you will continue to serve as the Company's Chief Financial Officer.  You will
be given such duties, responsibilities and authority as are appropriate to such
position.  Throughout the term of your employment, you will devote such business
time and energies to the business and affairs of the Company as needed to carry
out your duties and responsibilities as Chief Financial Officer, subject to the
overall supervision and direction of Chief Executive Officer of the Company.

     2.   Term.  Commencing as of the Effective Date, your employment with the
          ----                                                                
Company will be "at-will."  Either you or the Company can terminate your
employment at any time and for any reason, with or without cause and with or
without notice, in each case subject to the terms and provisions of paragraph 6
below.

     3.   Salary.  For your services to the Company as Chief Financial Officer,
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you will be paid a base salary, payable semi-monthly during each month of
employment, at an annualized rate of two hundred thousand dollars ($200,000) per
year.

     4.   Bonuses.  If you remain employed upon the closing of the Star Merger
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and achievement of Company revenue of seventy-five million dollars ($75,000,000)
in any quarter thereafter, you will receive a one-time special cash bonus of
$15,000 in recognition of your performance.  If you remain employed upon the
elimination of the Company's long term debt following the Star Merger you will
also receive a one-time special cash bonus of $15,000.  In addition, you will be
eligible to receive a regular annual bonus if the goals of the regular annual
bonus
<PAGE>
 
Mr. James W. Dorst
January 22, 1998
Page 2


program are achieved.  The terms of the regular annual bonus plan will be
determined by the Compensation Committee of the Board of Directors.  For the
purposes of such plan, your target bonus will be $60,000, of which $12,000 will
be the target bonus for each calendar quarter and will be paid quarterly upon
the attainment of certain quarterly performance criteria and $12,000 will be the
target bonus for the entire year and will be paid annually upon the attainment
of certain annual performance criteria.

     5.   Employee Benefit Programs.  During your employment, you will be
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entitled to participate in all Company employee benefit plans, executive
compensation and perquisite programs at the time or thereafter made available to
the Company's executives or salaried employees generally, including, without
limitation, savings or profit sharing plans, deferred compensation plans, stock
option incentive plans, group life insurance, accidental death and dismemberment
insurance, hospitalization, surgical, major medical and dental coverage, sick
leave (including salary continuation arrangements), long-term disability,
vacations, holidays and other employee benefit programs sponsored by the
Company.

     6.   Consequences of Termination of Employment.
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     (a)  For Cause.  Following the Effective Date, the Company may terminate
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your employment for "Cause."  "Cause" will exist in the event you are convicted
of a felony or,  in carrying out your duties, you are guilty of gross negligence
or gross misconduct resulting, in either case, in material harm to the Company.
In the event your employment is terminated for Cause you will be entitled to any
unpaid salary and bonus due you pursuant to paragraphs 3 and 4 above through the
date of termination and you will be entitled to no other compensation from the
Company.

     (b)  Without Cause.  Following the Effective Date, the Company may 
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terminate your employment without Cause. In such event, you will be entitled to
continue to receive your base salary, payable on a salary continuation basis,
for a period of nine (9) months following your termination.

     (c)  Change in Responsibilities Following a Change in Control.  Following
          --------------------------------------------------------            
the Effective Date, in the event your responsibilities are substantially
reduced, without Cause, within 12 months following a "change in control" of the
Company (as such term is defined in the 1994 Stock Option Plan), your resulting
resignation of employment within such 12 months will be treated as a termination
of employment by the Company without Cause in accordance with subparagraph (b)
above.
<PAGE>
 
Mr. James W. Dorst
January 22, 1998
Page 3 


     (d)  Voluntary Termination, Death or Disability.  In the event you
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terminate your employment with the Company of your own volition or as a result
of death or disability, such termination will have the same consequences as a
termination for Cause under subparagraph (a) above.

     (e)  Release of Claims.  As a condition to the receipt of the payments
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described in this Section 6 and any other post-termination benefits, e.g., any
continued vesting in stock options, you shall be required to execute a release
of all claims arising out of your employment or the termination thereof
including, but not limited to, any claim of discrimination under state or
federal law, but excluding claims for indemnification from the Company under any
indemnification agreement with the Company, its certificate of incorporation and
by-laws or applicable law or claims for directors and officers' insurance
coverage.

     (f)  Conditions to Receipt of Payments and Benefits.  In view of your
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position and access to confidential information, as a condition to the receipt
of payments described in this Section 6 and any other post-termination benefits,
e.g., any continued vesting in stock options, you shall not, without the
Company's written consent, directly or indirectly, alone or as a partner, joint
venturer, officer, director, employee, consultant, agent or stockholder (other
than a less than 5% stockholder of a publicly traded company) (i) engage in any
activity which is in competition with the business, the products or services of
the Company (a list of competitors and competitive products and services, which
may be updated, is attached hereto), (ii) solicit any of the Company's
employees, consultants or customers, (iii) hire any of the Company's employees
or consultants in an unlawful manner or actively encourage employees or
consultants to leave the Company, or (iv) otherwise breach your Confidential
Information obligations.

     7.   Assignability; Binding Nature.  Commencing on the Effective Date, this
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letter agreement will be binding upon you and the Company and your respective
successors, heirs, and assigns.  This letter agreement may not be assigned by
you except that your rights to compensation and benefits hereunder, subject to
the limitations of this letter agreement, may be transferred by will or
operation of law.  No rights or obligations of the Company under this letter
agreement may be assigned or transferred except by operation of law in the event
of a merger or consolidation in which the Company is not the continuing entity,
or the sale or liquidation of all or substantially all of the assets of the
Company provided that the assignee or
<PAGE>
 
Mr. James W. Dorst
January 22, 1998
Page 4


transferee is the successor to all or substantially all of the assets of the
Company and assumes the Company's obligations under this letter agreement
contractually or as a matter of law. The Company's failure to obtain the
successor's contractual assumption of this letter agreement prior to the
effectiveness of a succession shall be a breach of this agreement and shall
entitle you to all the compensation and benefits to which you would have been
entitled if you were terminated without Cause, on the date such succession
became effective.

     8.   Governing Law; Arbitration.  This letter agreement will be deemed a
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contract made under, and for all purposes shall be construed in accordance with,
the laws of California.  Any controversy or claim relating to this letter
agreement any breach thereof, and any claims you may have against the Company or
any officer, director or employee of the Company or arising from or relating to
your employment with the Company, will be settled solely and finally by
arbitration in San Jose, California accordance with the rules of the American
Arbitration Association ("AAA") then in effect in the State of California, and
judgment upon such award rendered by the arbitrator(s) may be entered in any
court having jurisdiction thereof.  The arbitrator may provide that the cost of
the arbitration (including reasonable legal fees) incurred by you or the Company
will be borne by the non-prevailing party.

     9.   Withholding.  Anything to the contrary notwithstanding, following the
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Effective Date all payments made by the Company hereunder to you or your estate
or beneficiaries will be subject to tax withholding pursuant to any applicable
laws or regulations.  In lieu of withholding, the Company may, in its sole
discretion, accept other provision for payment of taxes as required by law,
provided it is satisfied that all requirements of law affecting its
responsibilities to withhold such taxes have been satisfied.

     10.  Entire Agreement.  Except as otherwise specifically provided in this
          ----------------                                                    
letter agreement, this letter agreement contains all the legally binding
understandings and agreements between you and the Company pertaining to the
subject matter of this letter agreement and supersedes all such agreements,
whether oral or in writing, previously entered into between the parties.

     11.  Miscellaneous.  No provision of this letter agreement may be amended
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or waived unless such amendment or waiver is agreed to by you and the Board in
writing.  No waiver by you or the Company of the breach of any condition or
provision of this letter agreement will be deemed a waiver of a similar or
dissimilar provision or condition at the same or any prior or
<PAGE>

Mr. James W. Dorst
January 22, 1998
Page 5 
 
subsequent time. In the event any portion of this letter agreement is determined
to be invalid or unenforceable for any reason, the remaining portions shall be
unaffected thereby and will remain in full force and effect to the fullest
extent permitted by law.

     Please acknowledge your acceptance and understanding of this letter
agreement by signing and returning it to me by 5:00 p.m. on January __, 1998.  A
copy of the signed letter agreement will be sent to you for your records.
                                 
                                            Sincerely,

                                            ____________________________________

                                         
ACKNOWLEDGED AND AGREED:

________________________________
James W. Dorst

Dated:  January __, 1998