Exhibit 10.18 

EMPLOYMENT AGREEMENT 

     This Employment
Agreement (“Agreement”) is between Williams Controls, Inc. ("Employer") and Ken
Hendrickson (“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 $130,000 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 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, accrued personal time,
and/or life insurance, if applicable. If Employee is terminated without Cause 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 twelve (12) month’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.


          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 Employee Invention and Disclosure Agreement
previously executed, 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. 

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          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 Agreement and Employee Invention and Disclosure Agreement
that may have previously been executed by Employee. 

	IT IS SO AGREED:	       	
	 		
	WILLIAMS CONTROLS, INC.		Ken Hendrickson
	 		 
	 
	By:	 		
		 		
	Title:	 	 	
	 			
	Date:   	 		Date:   	 



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