Exhibit 10.7

EMPLOYMENT
AGREEMENT

THIS
EMPLOYMENT AGREEMENT (Agreement), to become effective as set forth
below, is entered into by and between SAN Holdings Inc., a Colorado corporation
(Employer) and John Jenkins (Employee). In consideration
of the mutual covenants contained in this Agreement, Employer agrees to employ
Employee, and Employee agrees to be employed by Employer, upon the terms and
conditions hereinafter set forth.

WHEREAS,
Employer believes Employee has particular knowledge and expertise concerning the
industry and business in which Employer is engaged, and desires to employ
Employee to serve as the President and Chief Executive Officer of Employer
and Employee desires to be so employed;

THEREFORE,
in consideration of the mutual covenants contained in this Agreement, Employer
agrees to employ Employee and Employee agrees to be employed by Employer upon
the terms and conditions hereinafter set forth.

SECTION ITERM OF EMPLOYMENT

1.1
Initial Term. The initial term of this Agreement shall be three years (unless
sooner terminated under Section V) and will commence on February 1, 2001(such
date hereafter referred to as the Commencement Date.

1.2
Renewal; Notice of Non-Renewal. At the end of the initial term of this
Agreement, and on each anniversary thereafter, the term of this Agreement
automatically will be extended for one additional year unless, at least 180 days
before such anniversary, Employer or Employee shall have delivered to the other
written notice that this Agreement will not be extended.

SECTION IIDUTIES OF THE EMPLOYEE

2.1
Duties. Employee shall be employed as President and Chief Executive Officer of
Employer, with such duties, responsibilities and authority as are customarily
delegated to such position and those as may from time to time be assigned to
Employee by Employers Board of Directors (the Board). Employee
shall have full responsibility and authority for formulating policies and for
the management and operation of Company, subject to the general direction and
control of the Board.

2.2
Full Time  Employment.  Employee shall devote  substantially  all of his working
time, efforts, attention and energies to the business of Employer.

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SECTION IIICOMPENSATION OF THE EMPLOYEE

3.1
Base Compensation. As compensation for services rendered under this Agreement,
Employee will be paid an annual base salary of not less than $225,000, to be
paid in accordance with Employers normal payroll practices. On each
anniversary of the Commencement Date, the annual base salary specified herein
shall be reviewed for increase by the Board of Directors but shall not be
decreased during the term of this Agreement without the consent of Employee.
Employees annual base salary shall not be deemed exclusive compensation
and shall not prevent Employee from participating in any other compensation or
benefit plan of Employer.

3.2
Short-Term Incentive Compensation Program. The Board shall establish for
Employee an annual bonus program, which shall provide the reasonable
opportunity, to earn a bonus of up to at least 50% of base salary on an annual
basis. The elements of this bonus program will vary from year to year depending
on company objectives.

Participation
in any such bonus programs shall not preclude Employee from receiving additional
bonus or incentive compensation granted in accordance with Employer programs or
in the discretion of the Board. Such bonuses shall be paid on a quarterly basis.

3.3
Long-Term Incentive Compensation Program. Executive shall receive incentive
compensation for his services through the grant of stock purchase options (the
Options). Executive understands that the Options and underlying
Shares are restricted securities under the Securities Act of 1933
and applicable state statutes. Executive agrees to execute an investment
representation letter to acknowledge his understanding of the terms of the grant
and the characteristics of this investment in securities.

| | 1. | On the Commencement Date, as a matter of separate inducement, Executive shall be
granted 300,000 Options, which shall vest immediately and become exercisable as
set forth below, subject to provisions for accelerated exercisability set forth
in Section 3.3(7). All Options shall be exercisable for a period of 10 years
from the initial exercise date specified below. All Options shall be exercisable
at a price of $2.25 per share. The number of shares underlying the Options and
the exercise price of the Options shall be subject to adjustment in accordance
with the terms of any plan pursuant to which they were granted or other standard
provisions. No Option shall become exercisable if the Executives
employment has been terminated by Employer for cause other than within one year
following a change in control of the Company, or if Notice of Termination
(hereafter defined) has been given by Executive other than pursuant to Section
5.1(a)(1&2) before the initial exercise dates specified below:
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| |  | a. | on the Commencement  Date,  100,000 Options shall become exercisable to purchase
100,000 shares of the Companys Common Stock;
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| |  | b. | on the first anniversary of the Commencement  Date, 100,000 Options shall become
exercisable  to  purchase  an  aggregate  of  100,000  shares of  Common  Stock;
and
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| |  | c. | on the second anniversary of the Commencement Date, 100,000 Options shall become
exercisable to purchase an aggregate of 100,000 shares of Common
Stock.
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| | 2. | On each anniversary of the Commencement Date, the Board will review the
Executives performance and consider the grant of additional Options to
Executive.
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| | 3. | To encourage Executive to acquire an additional stake in the Company, during the
one year period following the Commencement Date the Company shall make available
to Executive a maximum of $150,000 cash which Executive may borrow in whole or
in part, at any time or from time to time, at any time following his purchase of
shares of the Companys Common Stock in the open market [or in private
transactions with the Company or other parties who own shares. Following any
such purchase of Company shares by Executive, he may draw upon the available
funds in an amount equal to the purchase price of the shares. Any such funds
borrowed by Executive shall be due five years from the date of the loan, and
shall be evidenced by a non-recourse promissory note, secured by the shares
purchased by the Executive, with interest to accrue at the rate of prime plus
1%.
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| | 4. | The Company will include the shares underlying the Options granted in accordance
with paragraphs 1 and 2 above in a Form S-8 Registration Statement to be filed
no later than June 30, 2001.
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| | 5. | At each anniversary of the Commencement Date of this agreement, the Board of
Directors of the Employer shall consider additional grants of options for
Employee and shall advise Employee within thirty days of those dates whether
additional grants have been made.
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| | 6. | Subject to the provisions of Section 3.3(7) below, the Options shall
become exercisable on the exercise dates provided as above provided that no
Option shall be exercisable more than six months after Employees
employment has been terminated.
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| | 7. | Regardless of the exercise or vesting dates set forth in any Option Agreement,
all unexercised options shall vest and become immediately exercisable in the
event of a Change of Control. For purposes of this Agreement, a
Change in Control of the Company shall mean and shall be deemed to
have occurred if any of the following events shall have occurred:
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| |  |  | (i) | Any person (as defined in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended (the Exchange Act)) is or becomes the
beneficial owner (as defined in Rule 13d-3 of the Exchange Act), directly or
indirectly, of securities of Employer representing 30% or more of the combined
voting power of Employers then outstanding securities; or
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| |  |  | (ii) | there is consummated a merger or consolidation of Employer with any other
entity, accompanied by a change in executive management of Employer concurrently
with or within 180 days of such merger; or
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| |  |  | (iii) | the stockholders of Employer approve a plan of complete liquidation or
dissolution of Employer or there is consummated an agreement for the sale or
disposition by Employer of all or substantially all of Employers assets.
| |  |  | ----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 8. | The strike price for additional options (beyond the original 300,000 noted
above) awarded to Employee shall be determined by the Board in its sole
discretion, but in no event shall it be greater than the fair market value of
Employers common stock as of the date of grant.
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| | 9. | Employer shall provide Employee with a separate Option Agreement at the time of
each grant, incorporating the terms in this Article 3.3 standard registration
and piggy back rights in the event of a public offering or sale, and
standard anti-dilution rights.
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3.4
Benefits.

| |  | a. | Employee shall be entitled to all paid holidays customarily extended by Employer
to executive employees and a minimum of five weeks paid vacation during each
year this Agreement remains in effect. Employee shall be entitled to participate
in all of Employers employee benefit plans and employee benefits,
including any retirement, 401(k), pension, profit-sharing, stock option,
insurance, hospital or other plans and benefits which now may be in effect or
which may hereafter be adopted, it being understood that Employee shall have the
same rights and privileges to participate in such plans and benefits as any
other executive employee. Participation in any benefit plans shall be in
addition to the compensation otherwise provided for in this Agreement. For
calendar year 2001, employee shall have the right to elect either inclusion in
the Employers health plan or reimbursement for expenses incurred in
maintaining existing healthcare coverage under Employees COBRA plan from
his prior employer.
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| |  | b. | Employer shall provide Employee with reimbursement for fees and reasonable
expenses associated with Employees membership in customary trade
associations and associated with Employees appropriate and reasonable
continuing education.
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3.5
Expenses. Employee shall be reimbursed promptly for all reasonable expenses
incurred by Employee in the performance of his duties hereunder following
Employers customary practice.

3.6
Term Life Insurance. Employer will pay the premiums on a term life insurance
policy on Employees life with a death benefit of at least $500,000.
Employer shall be the owner of such policy. However, Employee shall have right
to designate the beneficiary under such policy.

3.7
D&O Insurance. During the term of this Agreement, Employer shall maintain in
effect (to the extent available in the market) and pay the premiums for a
directors and officers liability insurance policy covering Employee
with coverage in amount and scope at least equivalent to that in place at the
Commencement Date of this agreement. Such coverage shall also include an
endorsement providing tail coverage extending the policy to cover actions or
omissions by Employee during all periods in which Employee has served as a
director or officer of Employer

3.8
Non-Exclusive Provisions. None of the provisions of this Section III shall be
deemed to limit additional compensation which the Employers Board of
Directors may, in its sole discretion, grant to Employee.

SECTION IVNON-COMPETITION; CONFIDENTIALITY, INVENTIONS

4.1
Employee will offer to Employer any investment or other opportunity of which he
becomes aware in the data storage management or in the other areas of business
in which the Company operates. If the Board takes no action for 90 days from the
date of receipt of the offer, or refuses the opportunity during such 90 day
period, to participate in such investment or other opportunity, the Employee may
pursue such opportunity.

4.2
Notwithstanding anything else in this Section IV, the Employee may make passive
investments in companies involved in data storage management or other industries
in which Employer operates, provided any such investment does not exceed a 5%
equity interest. Employee may acquire an equity interest exceeding 5% only if a
majority of the Board consents thereto.

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4.3
Except as provided in Sections 4.1 and 4.2 hereof, during the term of this
Agreement, the Employee may not participate in the data storage management
industry or any other Competitive Industry (as defined below) except through and
on behalf of the Company. For purposes of this Agreement, a Competitive
Industry shall mean an industry in which, at the time of the termination
of this Agreement, Employer either is substantially engaged or has defined plans
to engage in as a substantial part of its business in the future.

4.4
Employee promises to protect Employers Confidential Information as
described in the Employers Proprietary Information and Inventions
Agreement, the terms and conditions of which are incorporated herein by this
reference and which shall survive the termination of this Agreement and the
termination of Employees employment with Employer.

4.5
During Employees employment with the Employer, and for a period of 6
months thereafter, Employee shall not:

| |  | a. | own, manage, operate, control, be employed by, participate in, or be connected
in any manner with the ownership, management, operation or control of any
business operating in the United States which is engaged in the type of business
conducted by the Employer at the time this Agreement terminates. Nevertheless,
Employee may own less than five percent of the outstanding equity securities of
a Employer that is engaged in such business if the equity securities of such
Employer are registered under the Securities Exchange Act of 1934. In the event
of Employees actual or threatened breach of this paragraph, the Employer
shall be entitled to a preliminary restraining order and injunction restraining
Employee from violating its provisions. Nothing in this Agreement shall be
construed to prohibit the Employer from pursuing any other available remedies
for such breach or threatened breach, including the recovery of damages from
Employee.
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| |  | b. | induce or attempt to persuade any former, current or future employee, agent,
manager, consultant, or other participant in the Employers business to
terminate such employment or other relationship in order to enter into any
relationship with Employee, any business organization in which Employee is a
participant in any capacity whatsoever, or any other business organization in
competition with the Employers business; or
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| |  | c. | use contracts, proprietary information, trade secrets, confidential information,
customer lists, mailing lists, goodwill, or other intangible property used or
useful in connection with the Employers business.
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4.6
Consideration. Employer and Employee acknowledge and agree that the
Employers promise to pay severance to Employee in the event Employer
terminates his employment without cause, whether or not such compensation
becomes due under the terms of this Agreement, is given as additional and
sufficient consideration for the covenant contained in this Section. Should
Employer fail to make such severance payments on a timely basis, such will
constitute an immediate breach of this agreement, which among other things will
free Employee immediately from the provisions of 4.5a above.

SECTION VTERMINATION OF EMPLOYMENT

5.1
Termination. Employees employment hereunder may be terminated without any
breach of this Agreement only under the following circumstances:

| |  | a. | By Employee. Upon the occurrence of any of the following events, this Agreement
may be terminated by the Employee by written notice to Employer:
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| |  |  | (1) | Good Reason. Employee may immediately terminate this Agreement for Good Reason.
For purposes of this Agreement, Good Reason shall mean any of the
following events:
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| |  |  |  | (i) | A substantial and material alteration in the nature or status of Employees
responsibilities, or the assignment of duties inconsistent with, or a
substantial and material alteration in the nature or status of, Employees
responsibilities;
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| |  |  |  | (ii) | Employees job is eliminated other than by reason of termination for Cause
(as defined below);
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| |  |  |  | (iii) | Employer fails to pay Employee any amount or provide any option or stock
otherwise due hereunder or under any plan or policy of Employer, which failure
is not cured within ten business days of receipt by Employer of written notice
from Employee which describes in reasonable detail the amount which is
due;
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| |  |  |  | (iv) | A material reduction in Employee's aggregate level of benefits under
Employers pension, life insurance, medical, health and accident,
disability, deferred compensation or savings or similar plans;
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| |  |  |  | (v) | A material reduction in Employees reasonable opportunity to earn incentive
compensation under any plan in which Employee is a participant, including a
material alteration in the programs referred to in Sections 3.2 or
3.3.
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| |  |  |  | (vi) | Employee is requested by Employer to relocate outside of the Denver, Colorado
metropolitan area without his written consent or Employers executive
office is relocated outside of the Denver, Colorado metropolitan
area;
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| |  |  |  | (vii) | Employer discontinues or materially alters the business conducted by Employer
without the agreement of Employee;
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| |  |  |  | (viii) | The merger or consolidation of Employer with another entity or an agreement to
such a merger or consolidation or any other type of reorganization;
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| |  |  |  | (ix) | The failure of Employer to obtain an agreement to expressly assume this
Agreement from any successor to Employer (whether such succession is direct or
indirect by purchase, merger, consolidation or otherwise, to substantially all
of the business and/or assets of Employer or a controlling portion of Employer's
stock);
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| |  |  |  | (x) | If Employer makes a general assignment for the benefit of creditors, files a
voluntary bankruptcy petition, files a petition or answer seeking a
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any law, or any petition or application for the
involuntary bankruptcy of Employer, or other similar proceeding, has been filed
in which an order for relief is entered or which remains undismissed for a
period of thirty days or more, or Employer seeks, consents to, or acquiesces in
the appointment of a trustee, receiver, or liquidator of Employer or any
material part of its assets; or
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| |  |  |  | (xi) | The sale by Employer of substantially all of its assets; or
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| |  |  |  | (xii) | Employers material breach of any of the terms of this Agreement which
breach is not cured within 45 days by Employer after notice from
Employee.
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| |  |  | (2) | Change of Control. Employee may terminate this Agreement within the 12 months
following a Change of Control, as defined in 3.3(4).
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| |  |  | (3) | Other Than Good Reason. Employee may terminate this Agreement without Good
Reason upon not less than 60 days prior written notification. Provided
that, if Employee gives the requisite notice of termination, Employer is not
obligated to continue Employees employment during such period of notice,
and may, at its sole option, elect to terminate Employees employment at
any time during such notice period.
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| |  | b. | Death. This Agreement shall terminate upon the death of Employee.
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| |  | c. | By Employer. Upon the occurrence of any of the following events, this Agreement
may be terminated by the Employer by written notice to Employee:
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| |  |  | (1) | Disability. Employer may terminate this Agreement due to Employees
permanent disability only in accordance with Employer's policy applicable to
other employees.
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| |  |  | (2) | For Cause. The Employer may terminate Employees employment at any time for
Cause with immediate effect upon delivering written notice to
Employee. For purposes of this Agreement, Cause shall mean: (a)
embezzlement, theft, larceny, material fraud, or other similar acts of
dishonesty; (b) conviction of or entrance of a plea of guilty or nolo contendere
to a felony or other crime which has or may have a material adverse effect on
Employees ability to carry out his duties under this Agreement or upon the
reputation of the Employer; (c) conduct involving moral turpitude that has
material negative impact on the operations or value of the company; (d) gross
insubordination or repeated insubordination after written warning by the Board
of Directors; (e) unauthorized disclosure by Employee of the confidences of the
Employer that have material negative impact on the Employer; or (f)
Employees neglect or intentional disregard of a material duty; or material
and continuing failure by Employee to perform the duties described in Section 2
above in a quality and professional manner for at least thirty days after
written warning by the Board of Directors. In no event shall Cause
include simple negligence or disagreement over management strategy or
philosophy. Upon termination for Cause, the Employers sole and exclusive
obligation will be to pay Employee his compensation earned through the date of
termination, and Employee shall not be entitled to any compensation after the
date of termination.
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| |  |  | (3) | Other Than Cause. Employer shall have the right to terminate this Agreement
other than for Cause upon not less than 60 days prior written notification
to Employee.
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5.2
Delivery of Notice of Termination. Any termination of Employees employment
by Employer or by Employee (other than termination in the case of death pursuant
to subsection 5.1 (b) above) shall be communicated by written notice
(Notice of Termination) delivered to the other party in accordance
with Section 7.4 hereof.

5.3
Date of Termination. Date of Termination shall mean (i) if
Employees employment is terminated by his death, the date of his death;
(ii) if Employees employment is terminated due to notice of non-renewal
delivered in accordance with Section 1.2, the last day of the preceding term of
this Agreement; (iii) if Employee terminates this Agreement for Good Reason or
Employer terminates this Agreement for other than Cause, 60 days from the date
on which Notice of Termination is given.

5.4
Payments Following Termination or Non-renewal.

| |  | a. | Following the termination of this Agreement by Employee for other than Good
Reason or by Employer with Cause, Employee shall be entitled to compensation
only through the Date of Termination.
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| |  | b. | Notwithstanding Section 5.4.a, above, in the event Employee terminates this
Agreement without Cause within 90 days of a change of control as defined Section
3.3(7) or in the event Employer terminates this Agreement without Cause,
Employer shall pay Employee (i) base salary payments for 12 months following the
Date of Termination; (ii) payment of any accrued bonus, and (iii) a pro rata
share of any bonus for any period in which Employee was employed for all or part
of that period. (Bonus amounts shall be calculated as if all target criteria
were achieved.)
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| |  | c. | Following the termination of this Agreement by Employee for Good Reason, or by
Employer for other than Cause, Employer shall continue to pay to Employee his
base salary as then in effect for 12 months following the Date of Termination.
Additionally, in such event, the Company shall pay to Employee (i) any accrued
bonus, and (ii) a pro rata share of any bonus for any period in which Employee
was employed for all or part of that period. (Bonus amounts shall be calculated
using pro-rated target criteria.) Additionally, in such event, all outstanding,
unvested stock options shall immediately vest and become exercisable and all
vested stock options shall become immediately exercisable.
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| |  | d. | In the event that Employer elects not to renew this Agreement pursuant to
Section 1.2 above, Employer shall pay to Employee his base salary as then in
effect for 12 months following the date on which this Agreement terminates.
Payments under this Section 5.4(d) shall constitute severance pay.
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| |  | e. | In the event Employee  breaches the obligations set forth in Sections 4.4 or 4.5
(regarding  the  protection of  confidential  information  and  non-competition,
respectively),  Employer  shall  be  entitled  to  cease  any  payments  owed to
Employee.  In the event that payments were made prior to the discovery of such a
breach, Employer shall be entitled to recovery of amounts paid subsequent to the
breach.  Employer shall not withhold amounts pursuant to this Section unless and
until a breach is adjudged to have occurred.
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| |  | f. | Upon temporary or permanent disability of the Employee as described in Section
5.1(c) hereof, whether or not the Employer elects to terminate this Agreement,
Employee shall receive such compensation and benefits, if any, as are payable to
employees generally in accordance with the policy of Employer.
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5.5
Remedies. Any termination of this Agreement shall not prejudice any other remedy
to which the Employer or Employee may be entitled, either at law, equity, or
under this Agreement.

SECTION VIINDEMNIFICATION

6.1
Indemnification. To the fullest extent permitted by applicable law, Employer
agrees to indemnify, defend and hold Employee harmless from any and all claims,
actions, costs, expenses, damages and liabilities, including, without
limitation, reasonable attorneys fees, hereafter or heretofore arising out
of or in connection with activities of Employer or its employees, including
Employee, or other agents in connection with and within the scope of this
Agreement or by reason of the fact that he is or was a director or officer or
employee of Employer or any affiliate of Employer. To the fullest extent allowed
by applicable law, Employer shall advance to Employee expenses of defending any
such action, claim or proceeding, as incurred. However, Employer shall not
indemnify Employee or defend Employee against, or hold him harmless from any
claims, damages, expenses or liabilities, including attorneys fees,
resulting from the willful misconduct of Employee. The duty to indemnify shall
survive the expiration or early termination of this Agreement as to any claims
based on facts or conditions which occurred or are alleged to have occurred
prior to expiration or termination.

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SECTION VIIGENERAL PROVISIONS

7.1
Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Colorado.

7.2
Entire Agreement. This Agreement supersedes any and all other agreements,
whether oral or in writing, between the parties with respect to the employment
of the Employee by the Employer (with the exception of portions of such
agreements which have been expressly incorporated herein). Each party to this
Agreement acknowledges that no representations, inducements, promises, or
agreements, orally or otherwise, have been made by either party, or anyone
acting on behalf of any party, that are not embodied in this Agreement, and that
no agreement, statement, or promise not contained in this Agreement shall be
valid or binding.

7.3
Successors and Assigns. This Agreement, all terms and conditions hereunder, and
all remedies arising herefrom, shall inure to the benefit of and be binding upon
Employer, any successor in interest to all or substantially all of the business
and/or assets of Employer (whether by merger, consolidation or otherwise), and
the heirs, administrators, successors and assigns of Employee. Except as
provided in the preceding sentence, the rights and obligations of the parties
hereto may not be assigned or transferred by either party without the prior
written consent of the other party.

7.4
Notices. For purposes of this Agreement, notices, demands and all other
communications provided for in this Agreement shall be in writing and shall be
deemed given if delivered by hand or overnight courier or mailed by registered
or certified mail (return receipt requested) to the parties at the following
addresses (or at such other addresses for a party as shall be specified by like
notice), and shall be deemed given on the date on which so hand-delivered, or on
the business day following the day on which sent by overnight courier, or on the
third business day following the date on which so mailed:

If
to Employee:        John Jenkins
                
                
        5235 E. Princeton Avenue
                
                
        Englewood,  CO  80111

If
to Employer:        SAN Holdings, Inc.
                
                
        Attn: CFO
                
                
        900 W. Castleton Road, Ste. 100
                
                
        Castle Rock, CO 80104

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7.5
Severability. If any provision of this Agreement is prohibited by or is unlawful
or unenforceable under any applicable law of any jurisdiction as to such
jurisdiction, such provision shall be ineffective to the extent of such
prohibition without invalidating the remaining provisions hereof.

7.6
Section Headings. The section headings used in this Agreement are for
convenience only and shall not affect the construction of any terms of this
Agreement.

7.7
Survival of Obligations. Termination of this Agreement for any reason shall not
relieve Employer or Employee of any obligation accruing or arising prior to such
termination.

7.8
Amendments. This Agreement may be amended only by written agreement of both
Employer and Employee.

7.9
Counterparts. This Agreement may be executed in one or more counterparts, each
of which shall constitute an original but all of which, when taken together,
shall constitute only one legal instrument. This Agreement shall become
effective when copies hereof, when taken together, shall bear the signatures of
both parties hereto. It shall not be necessary in making proof of this Agreement
to produce or account for more than one such counterpart.

[Signature Page Follows]

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IN
WITNESS WHEREOF, the Employer and the Employee have executed this Agreement to
be effective as set forth above.

| | EMPLOYER
SAN Holdings, Inc.
By:_____________________________________
Name:
Title:
EMPLOYEE
By: /s/ John Jenkins
        John Jenkins
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