Exhibit 10.12 

EMPLOYMENT AGREEMENT 

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

    
1. Position and Duties. Employee hereby agrees to continue working for Employer as
Executive Vice President and Chief Financial Officer. 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 $165,000 per
annum, payable in installments according to the Employer’s usual payroll
practices, but no less than monthly (“Base Salary”) for all work performed under
this Agreement. $5,000 of the base compensation shall be paid in the form of
Williams Controls, Inc. stock each May 1. The stock shall be valued at the
average price for the month of April. 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 upward without
formally amending this Agreement in writing. 

    
3. Bonus Compensation. Employee will continue to participate in Employer’s annual
bonus program. The target bonus shall be 50% of Base Salary based on target
parameters to be set annually by the Board , provided that the bonus may be
adjusted upward to 83% of Base Salary if the Board determines that extraordinary
performance has been achieved for the year. 

    
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, Disability or 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, as applicable. If Employee
is terminated without Cause or if Employee resigns with Good Reason, Employee
shall receive compensation and benefits through his last day of work plus
severance benefits of (a) severance pay equal to one year’s Base Salary, less
deductions and withholdings required by law or authorized by Employee, paid in
equal installments over twelve (12) months on the Employer’s regular paydays,
and (b) if Employee elects COBRA coverage, Employer-paid COBRA for the twelve
(12) months for which Employee receives severance pay. 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
Agreement or any Employee Invention and Disclosure Agreement , 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 in Employee’s duties,
responsibilities or authority or (c) the Employer breaches any material
provision of the Agreement, and such breach is not remedied within 30 days after
the receipt of notice from the Employee. 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 thirty
(30) 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 (30)
days, Employee may not resign with Good Reason. The Employer may terminate the
employee at any time following the Employee’s notice of resignation for Good
Reason, provided, however, that the Employer will be obligated to pay the
employee for the remainder of the 30 day notification period in addition to the
benefits described in Section 4 and Sections 5(a) and 5(b).

          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.

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     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.

     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, except to the
extent any prior agreements protect the Employer’s intellectual property, trade
secrets or proprietary or confidential information.

     9. Successors and Assigns. This Agreement is intended to bind and
inure to the benefit of, and be enforceable by and against the Employee, the
Employer their heirs, successors and assigns, except that Employee may not
assign his rights or delegate his duties or obligations hereunder without the
prior written consent of the Employer.

IT IS SO AGREED:

	WILLIAMS CONTROLS, INC.		DENNIS
      BUNDAY	 
	 	 	 	 
	 		
	By: 	 	 	 
		 		
	Title: 	 	 	 
			 	
	Date: 	 	 	Date: 	 	 



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