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                                                                  EXHIBIT 10.18



                             EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT ("Agreement") made as of the 5th day of
January, 1999 (the "Effective Date"), by and between First Sierra Financial,
Inc., a Delaware corporation, (the "Employer"), and Fred Van Etten (the
"Employee"). Employer and Employee may be referred to herein collectively as
the "Parties" and individually as a "Party."


                                  ARTICLE I

                                     TERM

         Employer hereby employs Employee and Employee hereby accepts
employment with Employer for a period beginning on the Effective Date and
ending on the third anniversary of the Effective Date (as extended pursuant to
the following provisions, the "Term"). As of the first day of any month
following the Effective Date, the Term shall be extended for an additional one
(1) month period unless either Employee or Employer gives the other party
written notice at least ninety (90) days prior to the first day of such month
that this Agreement shall terminate on the then scheduled expiration date of
the Term. If such notice is given, this Agreement shall automatically terminate
on such expiration date. If this Agreement is extended, the terms in effect
under this Agreement immediately preceding such extension shall apply during
the extension period. If Employee's employment hereunder is terminated by
either Employer or Employee at any time for any reason, the expiration date
shall thereupon no longer be automatically extended. This Agreement replaces
all prior agreements between the parties, oral or written regarding employment
of Employee by Employer and all such prior agreements are void upon the
Effective Date of this Agreement.


                                   ARTICLE II

                               DUTIES OF EMPLOYEE

         2.01 Duties. Employee is engaged to be an Executive Vice President.
Employee's duties and powers shall be determined from time to time by the Chief
Executive Officer of Employer. Employee shall perform and discharge such duties
in a businesslike manner, and faithfully as an officer of Employer, and shall
be subject to the supervision and direction of the Chief Executive Officer of
Employer and the Employer's Board of Directors.

         2.02 Full Time Employment. Subject to the provisions set forth below,
Employee shall devote his productive time, ability, and attention to the
business of Employer during the Term. Employee shall not, directly and
indirectly, during the Term render any services of a business, commercial or
professional nature to any other period, corporation, firm or organization,
whether for compensation or otherwise, without the prior written consent of the
Chief Executive Officer of Employer.

         Notwithstanding the foregoing, Employee may continue to engage in
personal and family investing; provided, however, unless prior approval is
given by Employer's

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Chief Executive Officer, such investments may not include equipment leases or
interests in non-publicly traded entities engaged in equipment leasing.


                                  ARTICLE III

                           COMPENSATION AND BENEFITS

         3.01 Base Compensation. As compensation for services rendered and
Employee's covenants and agreements under this Agreement, Employee shall be
entitled to receive from Employer a base salary of one hundred seventy five
thousand and no/100ths dollars ($175,000) per year, payable in equal
semi-monthly installments from Employer's headquarters in Texas. The salary of
Employee may be increased from time to time at the sole discretion of Employer.

         3.02 Bonus. Employee may be entitled to an annual bonus paid by
Employer if and as determined in the sole discretion of the Board of Directors.

         3.03 Benefit Plans. During the Term, and thereafter, to the extent
provided in the applicable plan or under applicable law, Employer agrees to
include Employee in any retirement, insurance and health benefit plans adopted
by Employer for the benefit of the senior employees of Employer. Employer may
enter into and revise these plans in its sole discretion. Employee will have
four weeks paid vacation each year.

         3.04 Expenses. Employer, in accordance with the rules and regulations,
Employer shall issue and may revise from time to time, shall reimburse Employee
for business expenses directly and reasonably incurred in the performance of
his duties. The Employer acknowledges that the Employee will require a travel
and entertainment budget and reimbursement for reasonable travel and
entertainment expenses. Any amounts advanced or reimbursed by Employer to
Employee for travel and entertainment expenses shall be in addition to any
other amounts payable to Employee hereunder.


                                   ARTICLE IV

                                  TERMINATION

         This Agreement shall terminate prior to the expiration of its Term
upon the occurrence of any one of the following events:

         4.01 Disability. In the event that Employee is unable fully to perform
his duties and responsibilities with reasonable accommodation hereunder to the
full extent required by Employer due to illness, injury or incapacity for
ninety (90) consecutive days (during such ninety (90) day period, Employee
shall continue to be compensated as provided in Section 3.01 hereof), this
Agreement may be terminated by Employer, and Employer and Employee shall have
no further liability or obligations hereunder; provided, however, that Employer
shall continue to pay Employee the base compensation specified in Section 3.01
hereof for the duration of the Term at the same time specified in Section 3.01
(as reduced by any payments received by Employee under any Employer sponsored
disability benefits plan in which Employee was participating). In the event of
any dispute under this Section 4.01, Employee shall submit to a physical
examination by

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a licensed physician selected by Employer, and acceptable to Employee. If the
physician retained by Employer is not acceptable to Employee, then physicians
selected by the Employer and the Employee shall jointly select a third
physician to perform the examination. All costs related to the physical
examination of the Employee shall be paid by the Employer.

         4.02 Death. In the event that Employee dies during the Term, Employer
shall pay to Employee's executors, legal representatives or administrators, the
base compensation specified in Section 3.01 hereof for the remainder of the
Term at the same time specified in Section 3.01 (as reduced by any payments
received by such executors, legal representatives and administrators under any
Employer sponsored death or disability benefits plan in which Employee was
participating).

         4.03 Cause. Nothing in this Agreement shall be construed to prevent
the termination of this Agreement by Employer at any time for "cause." For
purposes of this Agreement, "cause" shall mean the habitual neglect or willful
breach by Employee of his duties as the Executive Vice President of Employer
which results in a material loss or damage to Employer or embezzlement by
Employee of Employer funds. Upon termination for cause, Employer shall pay to
Employee all sums due to Employee through the date of such termination.
Following such a termination, Employer shall have no further duties or
obligations to Employee.

         4.04 Termination Without Cause by Employer. Employer, in its
discretion and for any reason, may terminate this Agreement at any time by
delivering written notice to Employee prior to such intended termination
("Termination Date"). This Agreement shall terminate on the Termination Date
and the Parties shall have no further duties or obligations to each other,
provided, however, that (i) Employer shall continue to pay Employee the base
compensation specified in Section 3.01 hereof for a period of three years from
the Termination Date at the same times specified in Section 3.01 (ii) Employer
shall pay Employee for each pay period in the three year period following the
Termination Date an amount equal to one/twenty-fourth of the bonus received by
Employee for the year prior to the Termination Date, and (iii) Employer shall
pay Employee at the end of the Term a lump sum amount equal to the bonus
received by Employee for the year prior to the Termination Date multiplied by a
fraction the numerator of which is the number of days in the year prior to the
Termination Date and the denominator is 365.

         4.05 Termination by Employee other than for Good Reason. Employee may
terminate this Agreement at any time by delivering written notice to Employer
of Employee's intent to terminate at least 30 days prior to such intended
termination ("Departure Date"). This Agreement shall terminate on the Departure
Date and the parties shall have no further duties or obligations to each other,
provided, however, that Employee shall remain subject to all of the provisions
of Article V and Employer shall pay to Employee all sums due to Employee
through the Departure Date.

         4.06 Termination by Employee for Good Reason. Employee may terminate
this Agreement at any time for Good Reason (as hereinafter defined) by a
delivering written notice to Employer of Employee's intent to terminate for
Good Reason at least 30 days prior to such intended termination ("Good Reason
Departure Date"). This Agreement shall terminate on the Good Reason Departure
Date and the parties shall have no further duties or obligations to each other,
provided, however, that Employer

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shall pay Employee in one lump sum payment within thirty (30) days of the Good
Reason Termination Date an amount equal to Employee's current base annual
compensation specified in Section 3.01 hereof plus the greater of (i) the
amount of bonus received by Employee for the year prior to Employee's
termination of employment or (ii) the amount of bonus received by Employee for
the year prior to a Change in Control (as hereinafter defined).

         "Good Reason" shall mean termination of employment by Employee within
one year after the occurrence of change in Control (as hereinafter defined);

         "Change in Control" shall mean any of the following: (i) the Employer
shall not be the surviving entity in any merger, consolidation or other
reorganization (or survives only as a subsidiary of any entity other than a
previously wholly-owned subsidiary of the Employer), (ii) the Employer sells,
leases or exchanges all or substantially all of its assets to any other person
or entity (other than a wholly-owned subsidiary of the Employer), (iii) the
Employer is dissolved and liquidated, (iv) any person or entity, included a
"group" as contemplated by Section 13(d)(3) of the Securities Exchange Act of
1934, as amended, other than any person, entity or group which owned shares of
Common Stock of the Company immediately prior to the initial public offering of
the Company's Common Stock, acquires or gains ownership or control (including,
without limitation, power to vote) of more than 50% of the outstanding shares
of the Employer's voting stock (based upon voting power), or (v) during any
consecutive two-year period, individuals who constituted the Board of Directors
of the Employer (together with any new directors whose election by the Board of
Directors or whose nomination for election by the shareholders of the Employer
was approved by a vote of at least three-quarters of the directors still in
office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason to constitute a majority of the Board of Directors then in office.


                                   ARTICLE V

                                PROPERTY RIGHTS


         5.01 Non-Competition. If this Agreement is terminated other than
pursuant to Sections 4.01 or 4.06, Employee shall not for a period of one year
after such termination or expiration (the "One Year Period"), directly or
indirectly, either as an employee, employer, consultant, agent, lender,
principal, partner, stockholder, corporate officer, director, or in any other
individual or representative capacity, engage or participate in any business
that is in competition in any manner whatsoever with the business engaged in by
Employer in the continental United States at the time of such termination or
resignation. The provisions of this Section 5.01 and those contained in Section
5.02 shall not apply to any termination occurring pursuant to Sections 4.04 or
4.06.

         5.02 Solicitation. If this Agreement is terminated other than pursuant
to Sections 4.04 or 4.06 during the One Year Period, Employee agrees not to,
directly or indirectly, (i) call on or solicit, with respect to the activities
prohibited by Section 5.01 of this Agreement, any person, firm, corporation or
other entity who or which at the time of such termination, or within two years
prior thereto, was or had been a customer, referral source or distributor of
Employer or any of its affiliates or (ii) solicit, influence or
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recommend the employment of any person who was employed by Employer on a full
or part-time basis at the time of Employee's termination of employment;
provided, if requested by any employee of Employer, Employee shall have the
right to give a reference with respect to such employee.

         5.03 Confidentiality. In return for Employee's promises under this
Article V, Employee shall receive and be entrusted with certain confidential
and/or secret information of a proprietary nature, including without limitation
names and addresses of customers of the Employer and its affiliates and
business plans of the Employer. Employee shall not directly or indirectly
disclose or use, during the term of this Agreement or at any time thereafter,
any such information, which is not otherwise publicly available.

         5.04 Reasonableness of Restrictions. Employee agrees that (i) the
covenants contained in Sections 5.01, 5.02 and 5.03 hereof are necessary for
the protection of Employer's business goodwill, (ii) a portion of the
compensation paid to Employee under this Agreement is paid in consideration of
the covenants herein contained, the sufficiency of which consideration is
hereby acknowledged, (iii) Employee is not, and under this Agreement will not
be, engaged in a common calling, and (iv) if the scope of any restriction
contained in Sections 5.01, 5.02 and 5.03 hereof is too broad to permit
enforcement of such restriction to its full extent, then such restriction shall
be enforced to the maximum permitted by law, and the parties hereto hereby
consent that such scope may be judicially modified accordingly in any
proceeding brought to enforce such restriction. The existence of any claim or
cause of action of Employee against Employer, whether predicated on this
Agreement or otherwise, shall not constitute a defense to the enforcement by
Employer of these covenants.

         5.05 Enforcement. If Employee's employment is terminated pursuant to
Sections 4.03 or 4.05, Employer agree to pay Employee his base compensation
during the One Year Period plus for each pay period during the One Year Period
Employer will pay Employee one/twenty-fourth of the amount of the bonus
received by Employee for the year preceding Employee's termination of
employment. If this Agreement is not renewed at the end of its Term, Employer
agrees to pay Employee his salary during the One Year Period plus for each pay
period during the One Year Period Employer will pay employee one/twenty-fourth
of the amount of the bonus received by Employee for the year preceding
Employee's termination of employment. Employer reserves the right to waive the
provisions of Sections 5.01 and 5.02 if Employee terminates this Agreement
pursuant to Sections 4.03 or 4.05 and such waiver will release Employer from
any payment obligations under this Section 5.05. Employee acknowledges that the
restrictions contained in Sections 5.01, 5.02 and 5.03 hereof are reasonable
and necessary to protect the legitimate interests of Employer and its
affiliates, that Employer would not have entered into this Agreement in the
absence of such restrictions, and that any violation of any provision of the
convenants contained in Sections 5.01, 5.02 or 5.03 hereof will result in
irreparable injury to Employer. Employee also acknowledges that Employer shall
be entitled to preliminary and permanent injunctive relief without the
necessity of proving actual damages as well as an equitable accounting of all
earnings, profits and other benefits arising from any such violation, which
rights shall be cumulative and in addition to any other rights or remedies to
which Employer may be entitled.

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         5.06 Copy of Covenants. Until the expiration of the applicable
restrictions, Employee will provide, and Employer similarly may provide, a copy
of the covenants contained in Sections 5.01, 5.02 and 5.03 of this Agreement to
any business or enterprise which Employee may (ii) directly or indirectly own,
manage, operate, finance, join, control or participate in the ownership,
management, operation, financing, or control of, (ii) serve as an officer,
director, employee, partner, principal, agent, representative, consultant
leader or otherwise, or (iii) with which he may use or permit his name to be
used.


                                   ARTICLE VI

                               GENERAL PROVISIONS

         6.01 Arbitration. Employee and Employer agree that all disputes
concerning the terms of this Agreement or Employee's employment with Employer
will be subject solely to binding arbitration. The arbitrator selection and
conduct of the arbitration will be pursuant to the Commercial Arbitration Rules
of the American Arbitration Association. The place of the arbitration shall be
Houston, Texas and shall be governed by the laws of Texas.

         6.01 Notices. Any notices to be given hereunder by either party to the
other may be effected by personal delivery in writing or by mail, registered or
certified, postage prepaid with return receipt requested:

                  If to Employer:

                           First Sierra Financial, Inc.
                           Chase Tower
                           600 Travis, Suite 7050
                           Houston, TX 77002
                           Attention:  Chief Executive Officer

                  If to Employee:

                           Fred Van Etten

                           ----------------
                           ----------------

Mailed notices shall be addressed to the parties at the addresses set forth
above, but each party may change his/her address by written notice in
accordance with this Section

         6.02. Notices delivered personally shall be deemed communicated as of
actual receipt; mailed notices shall be deemed communicated as of ten (10) days
after mailing.

         6.03 Entire Agreement. This Agreement supersedes any and all other
agreements, either oral or in writing, between the parties hereto with respect
to the employment of Employee by Employer and contains all of the covenants and
agreements between the parties with respect to such employment in any manner
whatsoever.

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         6.04 Certain Acknowledgements. Employee by his execution and delivery
of this Agreement represents to Employer as follows:

         (i)      Employee has been advised by Employer to have this Agreement
                  reviewed by an attorney representing Employee, and Employee
                  has either had this Agreement reviewed by such attorney or
                  has chosen not to have this Agreement reviewed because
                  Employee, after reading the entire Agreement, fully and
                  completely understands each provision and has decided not to
                  obtain the services of an attorney.

         (ii)     Employee either on his own or with the assistance and advice
                  of his attorney has in particular reviewed Article V and
                  understands and accepts (a) the restrictions imposed by
                  Article V and Sections 5.01 and 5.02 and (b) the restrictions
                  imposed upon Employee pursuant to these sections are
                  reasonable and necessary for the protection of the property
                  rights of Employer and its affiliates.

         6.05 Headings. The headings or titles to Sections or Articles in this
Agreement are intended solely for convenience of the parties and no provision
of this Agreement is to be construed by reference to the heading or title of
any section.

         6.06 Amendment or Modification; Waiver. No provision of this Agreement
may be amended, modified or waived unless such amendment, modification or
waiver is authorized by the Employer and is agreed to in writing, signed by
Employee and by the Chief Executive Officer of Employer thereunto duly
authorized. Except as otherwise specifically provided in this Agreement, no
waiver by any party hereto of any breach by any other party hereto of any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of a similar or dissimilar provision or condition at
the same or at any prior or subsequent time; nor shall the receipt or
acceptance of Employee's employment be deemed a waiver of any condition or
provision hereof. Employee acknowledges that from time to time, Employer may
establish, maintain and distribute employee manuals or handbooks or personnel
policy manuals, and officers or other representatives of Employer may make
written or oral statements relating to personnel policies or procedures. Such
manuals, handbooks and statements are intended only for general guidance. No
policies, procedures or statements of any nature by or on behalf of Employer
(whether written or oral, and whether or not contained in any employee manual
or handbook or personnel policy manual), and no acts or practices of any nature
shall be construed to modify this Agreement or to create express or implied
obligations of Employer.

         6.07. Assignability. Employee shall not assign, pledge or encumber any
interest in this Agreement or any part thereof without the express written
consent of Employer, this Agreement being personal to Employee. This Agreement
shall, however, inure to the benefit of Employee's estate, dependents,
beneficiaries and legal representatives. This Agreement shall not be assignable
by Employer without the written consent of Employee.

         6.8 Governing Law. THIS AGREEMENT HAS BEEN NEGOTIATED, EXECUTED AND
DELIVERED IN THE STATE OF TEXAS, AND SHALL IN ALL RESPECTS BE INTERPRETED,
CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW OF THE STATE OF TEXAS.

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         6.9 Severability. Each provision of this Agreement constitutes a
separate and distinct undertaking, covenant and/or provisions hereof. In the
event that any provisions of this Agreement shall finally be determined to be
unlawful, such provisions shall be deemed severed from this Agreement, but ever
other provision of this Agreement shall remain in full force and effect, and in
substitution for any such provision held unlawful, there shall be substituted a
provision of similar import reflecting the original intent of the parties
hereto to the maximum extent permissible under law.

         6.10 No Duress. Employee acknowledges that no force, fear or threats
or duress of any kind have been used to obtain the agreements and covenants
contained in this Agreement.

EXECUTED in Houston, Texas, on the day and year first above written.

                                            "EMPLOYER"
                                            First Sierra Financial, Inc.



                                            By: /s/ THOMAS J. DEPPING
                                                ----------------------------
                                                      Thomas J. Depping
                                                   Chief Executive Officer



                                            "EMPLOYEE"


                                                /s/ FRED VAN ETTEN
                                                ----------------------------
                                                       Fred Van Etten