Exhibit 10.16

EMPLOYMENT AGREEMENT

     This Employment Agreement (“Agreement”) is between Williams Controls, Inc.
("Employer") and Gary Hafner (“Employee”).

     1. Position and Duties. Employee hereby agrees to continue working for
Employer as Vice President of Manufacturing. Employee’s duties include all those
duties usually associated with this position, as well as any other duties
reasonably assigned to Employee by Employer. The Employee agrees to devote his
best efforts and full business time to his work for Employer and to comply with
Employer's scheduling, policies, rules and regulations.

     2. Base Compensation. Employer shall pay Employee a base salary of $122,000
per year (“Base Salary”) for all work performed under this Agreement. Employee
is an exempt employee for purposes of federal and state wage and hour laws and
is therefore not entitled to overtime pay. Employer may adjust Employee’s Base
Compensation without formally amending this Agreement in writing.

     3. Bonus Compensation. Employee will continue to participate in Employer’s
annual bonus program at the same level as similarly situated employees. Employer
reserves the right to modify or eliminate the bonus program in its sole
discretion.

     4. Benefits. Employee is entitled to such employee benefits generally
available to similarly situated employees of Employer to the extent and on the
same terms generally available to similarly situated employees of Employer.

     5. Term. Employee is employed by Employer “at-will,” meaning either
Employer or Employee may terminate Employee’s employment at any time, for any or
no reason. If Employee’s employment is terminated for Cause or due to death, or
if Employee resigns without Good Reason, Employee will be paid compensation and
benefits through his last day of employment and no further compensation or
benefits will be due Employee, except for statutory benefits, such as COBRA
coverage, or previously earned but unpaid benefits, such as an account balance
in a qualified retirement plan, or benefits under the Employer’s short or long
term disability programs or life insurance benefits, if applicable. If Employee
is terminated without Cause or due to Disability or if Employee resigns with
Good Reason, and provided Employee first executes a Release of Claims in a form
satisfactory to Employer, Employee shall receive compensation and benefits
through his last day of work plus severance benefits of (a) severance pay equal
to six (6) month’s Base Salary paid at the highest rate of Base Salary
(pro-rated) Employee earned at any time during his employment with Employer)
less deductions and withholdings required by law or authorized by Employee, paid
in equal installments over six (6) months on the Employer’s regular paydays, and
(b) if Employee elects COBRA coverage, Employer-paid COBRA for the six (6)
months for which Employee receives severance pay; except that in the event of
termination due to Disability, Employee’s severance pay will be reduced by the
amount Employee receives from any short or long-term disability plans, social
security disability and/or unemployment compensation. If Employee provides less
than thirty (30) days’ notice of his resignation for any reason, he will not
receive any severance benefits to which he might otherwise have been entitled.

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          For purposes of this Agreement, “Cause” means: (a) Employee’s
continued refusal or failure to perform the duties assigned to him ten (10) days
after receiving notice from the Employer of such refusal or failure to perform;
(b) chemical or alcohol dependency which interferes with Executive’s performance
of his employment duties; (c) any act of disloyalty or breach of
responsibilities to the Employer by the Executive, such as theft, breach of the
Confidentiality Agreements executed on January 26, 2000 and May 9, 2006, or
other unauthorized disclosure or use of confidential information for other than
the Employer’s interest, or competing with the Employer while employed by the
Employer; (d) conduct which causes harm or may reasonably be expected to cause
harm to the Employer’s reputation, such as arrest or indictment for, conviction
of or a plea of guilty or nolo contendre to a felony or a conviction of a
misdemeanor involving theft or resulting in incarceration for more than one
week; (e) sexual harassment or discrimination by Employee; and (f) violation of
state or federal securities laws, rules or regulations relating to the
Employer’s stock.

          For purposes of this Agreement, “Good Reason” means: (a) relocation of
Employee’s place of work to more than fifty (50) miles from Tigard, Oregon, if
Employee does not consent to relocating; (b) a material reduction Employee’s
compensation or benefits, unless agreed to by Employee; or (c) a material
reduction in Employee’s duties, responsibilities or authority. If Employee
intends to resign for Good Reason, he must notify the Employer in writing of his
intention to resign and the specific circumstances he believes constitutes Good
Reason at least ninety (90) days before the effective date of his resignation.
If the Employer cures the circumstances giving rise to Good Reason before the
end of the ninety (90) days, Employee may not resign with Good Reason.

          For purposes of this Agreement, “Disability” means a termination of
employment due to Employee’s inability to perform one or more of the essential
functions of his position, with or without reasonable accommodation, for a
period of more than ninety (90) consecutive days, as a result of a physical or
mental condition as determined in good faith by the Employer and consistent with
the Employer’s rights and obligations under applicable law.

     6. Noncompetition, Nonsolicitation and Nondisparagement. Employee agrees
that during the period he is receiving the severance benefits described in
Paragraph 5 (a) he will not compete with the Employer for himself or on behalf
of another as an employee, owner, consultant or in any other capacity, in any
geographic area in which the Employer conducts business, and (b) he will not
solicit any customer, supplier, contractor, vendor or employee of Employer to
change its relationship with Employer. Employee further agrees that he will not
disparage Employer or its related entities, or any of their officers, directors,
shareholders, members or employees at any time during or after his employment
with Employer. The Employer’s obligation to pay severance benefits to Employee
terminates on the first day Employee violates any of his obligations under this
paragraph and Employee must return to Employer any severance benefits paid to
him by the Employer on or after the first day Employee violates any of his
obligations under this paragraph.

     7. Governing Law and Dispute Resolution. This Agreement shall be governed
by the laws of the State of Oregon. Any action to enforce, interpret or construe
this Agreement or otherwise arising from the employment relationship between
Employer and Employee must be brought in the Circuit Court of Oregon or U.S.
District Court for the District of Oregon.

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     8. Scope of Agreement. Except for Employer policies, procedures and plans
referenced in this Agreement or as otherwise provided herein, this Agreement
supersedes all prior verbal and written agreements between the parties
concerning the terms and conditions of Employee’s employment, termination and
post-termination rights and benefits, except to the extent any prior agreements
protect the Employer’s intellectual property, trade secrets, proprietary or
confidential information and/or restrictions on Employee’s post-employment
activities (non-compete) such as the Confidentiality Agreements executed by
Employee on January 26, 2000 and May 9, 2006.

IT IS SO AGREED:

WILLIAMS CONTROLS, INC. GARY HAFNER                By:          Title:         
Date:      Date:     

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