Document:

EMPLOYMENT AGREEMENT

EXHIBIT 10.4

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the “Agreement”) is entered into effective the 13th day of May 2008, by and between Amerityre Corporation (the “Company”), and Anders A. Suarez (the “Executive”).

PREMISES

A.

The Board of Directors of the Company (the “Board”), desires to employ the Executive as the Company’s Chief Financial Officer and Secretary/Treasurer.

B.

The Executive desires to perform all of such services as the Company’s Chief Financial Officer and Secretary/Treasurer and both the Company and the Executive want to enter into a written agreement as to their understanding of the employment relationship.

C.

The Board has determined that it is in the best interests of the Company and its shareholders to assure that the Company will have the continued dedication of the Executive, notwithstanding the possibility, threat or occurrence of a Change of Control (as defined below) of the Company.  The Board believes it is imperative to diminish the inevitable distraction of the Executive by virtue of the personal uncertainties and risks created by a pending or threatened Change of Control and to encourage the Executive’s full attention and dedication to the Company currently and in the event of any threatened or pending Change of Control, and to provide the Executive with compensation and benefits arrangements upon a Change of Control which ensure that the compensation and benefits expectations of the Executive will be satisfied and which are competitive with those of other corporations.

FOR AND IN CONSIDERATION of the mutual covenants contained herein and of the mutual benefits to be derived hereunder, the parties agree as follows:

1.

Definitions.   Whenever used in this Agreement, the following terms shall have the meanings set forth below:

(a)

“Accrued Benefits” shall mean the amount payable not later than ten (10) days following an applicable Termination Date and which shall be equal to the sum of the following amounts:

(i)

All salary, options, bonus or stock awards, earned or accrued through the Termination Date;

(ii)

Reimbursement for any and all monies advanced in connection with the Executive’s employment  for reasonable and necessary expenses incurred by the Executive and approved by the Company through the Termination Date; and    

(iii)

All other payments and benefits to which the Executive may be entitled under the terms of any benefit plan of the Company.       

(b)

“Board” shall mean the board of directors of the Company.

(c)

“Cause” shall mean any of the following:

(i)

The engagement by the Executive in fraudulent conduct, which the Board determines, in its reasonable discretion, has a significant adverse impact on the Company in the conduct of the Company’s business; 

(ii)

 Conviction of a felony, as evidenced by a binding and final judgment, order or decree of a court of competent jurisdiction, which the Board determines, in its sole discretion, has a significant adverse impact on the Company in the conduct of the Company’s business;

(iii)

Neglect or refusal by the Executive to perform his duties or responsibilities, which neglect or refusal, if capable of correction, is not corrected by Executive after seven (7) days’ notice in writing to Executive from the Board which specifies the neglect or refusal; or

(iv)

Material violation by the Executive of the Company’s established policies and procedures, which violation, if capable of correction, is not corrected by Executive after seven (7) days’ notice in writing to Executive from the Board which specifies the violation.

(d)

“Change of Control” shall mean:

(i)

The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (1) the then outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (2) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (d), the following acquisitions shall not constitute a Change of Control:  (1) any acquisition directly from the Company, (2) any acquisition by the Company, (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (4) any acquisition by any corporation pursuant to a transaction which complies with clauses (1), (2) and (3) of subsection (iii) of this Section 1; or

(ii)

(1) Individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board or (2) a majority of the members of the Board ceases to be comprised of Directors whose most recent election to the Board was approved by at least a majority of the Incumbent Board prior to such election; or

(iii)

Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”), in each case, unless, following such Business Combination, (1) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (2) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (3) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or

(iv)

Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

(e)

“Change of Control Period” shall mean the term of this Agreement and any renewal or extension thereof.

(f)

“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

(g)

“Confidential Information” means information (i) disclosed to or known by the Executive as a consequence of or through his/her employment with the Company, (ii) not generally known outside the Company, and (iii) which relates to the Company’s business.  Confidential Information includes, but is not limited to, information of a technical nature, such as methods and materials, trade secrets, inventions, processes, formulas, systems, computer programs, and studies, and information of a business nature such as business plans, market information, costs, customer lists, and so forth.

(h)

“Developments” means all Inventions, whether or not patentable, computer programs, copyright works, trademarks, Confidential Information, Works of Authorship, and other intellectual property, made, conceived or authored by the Executive, alone or jointly with others, while employed by the Company; whether or not during normal business hours or on the Company’s premises, that are within the present or reasonably contemplated scope of the Company’s business at the time such Developments are made, conceived, or authored, or which result from or are suggested by any work the Executive or others may do for or on behalf of the Company.

(i)

“Invention” means discoveries, concepts, and ideas, whether or not patentable or copyrightable, including but not limited to improvements, know-how, data, processes, methods, formulae, and techniques, as well as improvements thereof, or know-how related thereto, concerning any past, present or prospective activities of the Company which the Executive makes, discovers or conceives (whether or not during the hours of his engagement of with the use of the Company’s facilities, materials or personnel), either solely or jointly with others during his engagement by the Company or any affiliate and, if based on or related to Proprietary Information, at any time after termination of such engagement.

(j)

“Intellectual Property” means Inventions, Confidential Information, Works of Authorship, patent rights, trademark rights, service mark rights, copyrights, know-how, Developments and rights of like nature arising or subsisting anywhere in the world, in relation to all of the foregoing, whether registered or unregistered.

(k)

“Notice of Termination” shall mean the notice described in Section 13 hereof.

(l)

“Person” shall mean any individual, partnership, joint venture, association, trust, corporation or other entity, other than an executive benefit plan of the Company of an entity organized, appointed of established pursuant to the terms of any such benefit plan.

(m)

“Proprietary Information” shall mean any and all methods, inventions, improvements or discoveries, whether or not patentable or copyrightable, and any other information of a similar nature related to the business of the Company disclosed to the Executive or otherwise made known to him as a consequence of or through his engagement by the Company (including information originated by the Executive) in any technological area previously developed by the Company or developed, engaged in, or researched, by the Company during the term of the Executive’s engagement, including, but not limited to, trade secrets, processes, products, formulae, apparatus, techniques, know-how, marketing plans, data, improvements, strategies, forecasts, customer lists, and technical requirements of customers, unless such information is in the public domain to such an extent as to be readily available to competitors.

(n)

“Termination Date” shall mean, except as otherwise provided in Section 13 hereof, 

(i)

The Executive’s date of death;

(ii)

Thirty (30) days after the delivery of the Notice of Termination terminating the Executive’s employment on account of Illness or Incapacity pursuant to Section 17 hereof, unless the Executive returns on a full-time basis to the performance of his duties prior to the expiration of such period;

(iii)

Three (3) months after the delivery of the Notice of Termination if the Executive’s employment is terminated by the Executive voluntarily; and

(iv)

Three (3) months after the delivery of the Notice of Termination if the Executive’s employment is terminated by the Company for any reason other than death or Illness or Incapacity.

(o)

“Termination Payment” shall mean the payment described in Section 15 hereof.

(p)

“Works of Authorship” means an expression fixed in a tangible medium of expression regardless of the need for a machine to make the expression manifest, and includes but is not limited to, writings, reports, drawings, sculptures, illustrations, video recordings, audio recordings, computer programs, and charts.

2.

Employment.  The Company hereby employs the Executive to perform those duties generally described in this Agreement, and the Executive hereby accepts and agrees to such employment on the terms and conditions hereinafter set forth.

3.

Stated Term.   The term of this Agreement shall be from the effective date hereof until June 30, 2011, subject to the termination provision of Section 13 of this Agreement, or unless extended or renewed by the written agreement of the parties.

4.

Duties.  During the term of this Agreement, Executive shall be employed by Company as its Chief Financial Officer and Secretary/Treasurer to perform the following duties:

(a)  Direct and manage the financial programs and supporting information systems of the Company, to include budgeting, receipt of revenue, expenditure of funds, and conservation of assets;

(b)  Oversee the approval and processing of revenue, expenditure and position control documents, department budgets, salary updates, and the maintenance of accounts and ledgers, ensuring compliance with appropriate regulations and policies, and ensuring maintenance of appropriate internal control safeguards;

(c)  Establish and maintain financial records systems in accordance with generally accepted auditing standards and accounting principles;

(d)  Coordinate the preparation of financial statements, financial reports, special analyses, and information reports; presents recommendations for programmatic and fiscal changes to management; 

(e)  Develop, implement, interpret, and coordinates the application of finance, accounting, billing, and audit procedures;

(f)  Provide strategic consultation and representation to management on financial issues, to include financial analysis and projections, cost identification and allocation, and revenue and expense analysis;

(g)  Provide consultative support to management in planning initiatives, through management and financial information analyses, reports, and recommendations;

(h)  Oversee the supervision of personnel, which includes work allocation, training, and problem resolution; evaluates performance and makes recommendations for personnel actions; motivates employees to achieve peak productivity and performance; 

(i)  Establish and implement short- and long-range organizational goals, objectives, policies, and operating procedures; monitor and evaluate operational effectiveness, as well as effect changes required for improvement;

(j)  Develop and direct the implementation of strategic business and/or operational plans, projects, programs, and systems, as appropriate to the objectives of the Company; 

(k)  Perform miscellaneous job-related duties as assigned; and

(l)  Serve in such other office or position with Company or any subsidiary of Company and such as shall, from time to time, be determined by Company's board of directors.

Executive shall devote substantially all of his working time and efforts to the business of Company and its subsidiaries and shall not during the term of this Agreement be engaged in any other substantial business activities which will significantly interfere or conflict with the reasonable performance of his duties hereunder.

5.

Compensation.

(a)

Salary.  For all services rendered by the Executive, the Company shall pay to the Executive a salary of $175,000 per year (“Annual Salary”) throughout the term of this Agreement, payable in equal installments bi-weekly.  All salary payments shall be subject to withholding and other applicable taxes. The rate of salary may be increased at any time as the Board may determine, based on earnings, increased business activities of the Company, or such other factors as the Board may deem appropriate.

(b)

Stock Award.  In connection with the execution of this Agreement, the Company award Executive with 5,555 shares of the Company’s common stock (the “Stock Award”). The Stock Award shall be issued from the authorized shares under the Company’s 2005 Stock Option and Award Plan and shall be valued at $1.80 per share, which amount represents the closing price of the Company’s common stock as quoted on the NASDAQ Stock Market on April 29, 2008. 

(c)

Stock Options. In connection with the Executive’s employment as Chief Executive Officer, the Company shall grant the Executive an option to purchase up to 75,000 shares of the Company’s common stock (the “Executive Options”) at an exercise price of $1.80 per share, which amount represents the closing price of the Company’s common stock as quoted on the NASDAQ Stock Market on April 29, 2008. The Executive Options will be granted from the authorized option pool under the Company’s 2005 Stock Option and Award Plan and be exercisable for a term of five (5) years from the date of Grant, provided Executive is employed by the Company on the vesting dates specified below. The vesting of the Executive Option shall be as follows: 

(i)­

25,000 on June 30, 2009; 

(ii)

25,000 on June 30, 2010;

(iii)

25,000 on June 30, 2011

(iv)

In the event of a Change in Control, all of the Executive Options, not previously vest, shall vest immediately.

(d)

Bonus Compensation. In connection with Executive’s employment, Executive will be eligible to earn bonus compensation up to 50% of Annual Salary under Section 5(a) based on the Company meeting the following financial performance objectives:

Fiscal  Years Ending June 30, 2009, 2010 and 2011:

(i)

If at June 30, 2009 or 2010 or 2011, the Company’s actual cash loss is reduced at least 50% from the Company’s actual cash loss at June 30, 2007; or if the Company has Net Income at June 30, 2008 less than $999,999.99; then Executive will earn a performance cash bonus of 12.5% of Annual Salary; and if at June 30, 2009 or 2010 or 2011, the Company has Net Income between $1.00 and $999,999.99; then Executive will earn a performance cash bonus of 25% of Annual Salary; or

(ii)

If at June 30, 2009 or 2010 or 2011, the Company has Net Income between $1,000,000 and $1,999,999.99; then Executive will earn a performance cash bonus of 25% of Annual Salary; or

(iii)

If at June 30, 2009 or 2010 or 2011, the Company has Net Income between $2,000,000 and $3,999,999.99; then Executive will earn a performance cash bonus of 37.5% of Annual Salary; or

(iv)

If at June 30, 2009 or 2010 or 2011, the Company has Net Income of $4,000,000 or above; then Executive will earn a performance cash bonus of 50% of Annual Salary. 

(v)

“Actual cash loss” as used above means Net Cash Used by Operating Activities per the Company’s fiscal year Statement of Cash Flow.  “Net Income” as used above means Net Income, per the Company’s fiscal year Profit and Loss Statement.

(e)

Executive Benefits.  The Company shall provide such health and medical insurance for the Executive in the form and program chosen by the Company for such full-time employees.  In addition to the stock option plan specified in subsection (b) above, the Executive shall be entitled to participate in any retirement, pension, profit-sharing, stock option, or other plan as in effect from time to time on the same basis as other employees.

6.

Expenses.  The Company will reimburse the Executive for expenses incurred in connection with the Company’s business, including expenses for travel, lodging, meals, beverages, entertainment, and other items on the Executive’s periodic presentation of an account of such expenses.

7.

Vacations.  Executive shall be entitled each year during the term hereof to a paid vacation of at least four (4) weeks.  Vacation shall be taken by Executive at a time and with starting and ending dates mutually convenient to the Company and Executive.  Vacation or portions of vacations not used in one employment year shall not carry over to the succeeding employment year.

8.

Nevada Residence/Working Facilities.  During the term of this Agreement Executive agrees to make his official residence within Clark County Nevada.  The Company shall provide the Executive with offices and facilities appropriate to the Executive’s position and suitable for the performance of the Executive’s duties.

9.

Nondisclosure of Proprietary and Confidential Information.  Recognizing that the Company is presently engaged, and may hereafter continue to be engaged, in the research and development of processes and the performance of services which involve experimental and inventive work; and that the success of the Company=s business depends upon the protection of the processes, products and services by patent, copyright or by secrecy; and that the Executive has had, or during the course of  his engagement may have, access to Proprietary and Confidential Information of the Company, as herein defined, or other information and data of a secret or propriety nature of the Company which the Company desires to keep confidential and the Executive has furnished, or during the course of his engagement may furnish, such information to the Company, the Executive agrees and acknowledges that:

(a)

The Company has exclusive property rights to all Proprietary and Confidential Information and the Executive hereby assigns all rights he might otherwise possess in any Proprietary and Confidential Information to the Company.  Except as required in the performance of his duties to the Company, the Executive will not at any time during or after the term of his engagement, which term shall include any time in which the Executive may be retained by the Company as a consultant, directly or indirectly use, communicate, disclose or disseminate any Proprietary or Confidential Information of a secret, proprietary, confidential or generally undisclosed nature relating to the Company, its products, customers, processes and services, including information relating to testing, research, development, manufacturing, marketing and selling.

(b)

All documents, records, notebooks, notes, memoranda and similar repositories of, or containing, Proprietary and Confidential Information or any other information of a secret, proprietary, confidential or generally undisclosed nature relating to the Company or its operations and activities made or complied by the Executive at any time or made available to him prior to or during the term of his engagement by the Company, including any and all copies thereof, shall be the property of the Company, shall be held by him in trust solely for the benefit of the Company, and shall be delivered to the Company by him on the termination of his engagement or at any other time on the request of the Company.

(c)

The Executive will not assert any rights under any inventions, trademarks, copyrights, discoveries, concepts or ideas, or improvements thereof, or know-how related thereto, as having been made or acquired by him prior to his being engaged by the Company or during the term of his engagement if based on or otherwise related to Proprietary or Confidential Information.

10.

Assignment Of Inventions.

(a)

All Inventions shall be the sole property of the Company, and the Executive agrees to perform the provisions of this Section 10 with respect thereto without the payment by the Company of any royalty or any consideration therefor other than the regular compensation paid to the Executive in the capacity of an the Executive or consultant.

(b)

The Executive shall maintain written notebooks in which he shall set forth, on a current basis, information as to all Inventions, describing in detail the procedures employed and the results achieved as well as information as to any studies or research projects undertaken on the Company’s behalf.  The written notebooks shall at all times be the property of the Company and shall be surrendered to the Company upon termination of his engagement or, upon the request of the Company, at any time prior thereto. 

(c)

The Executive shall apply, at the Company’s request and expense, for United States and foreign letters patent or copyrights either in the Executive’s name or otherwise as the Company shall desire.

(d)

The Executive hereby assigns to the Company all of his rights to such Inventions, and to applications for United States and/or foreign letters patent or copyrights and to United States and/or foreign letters patent or copyrights granted upon such Inventions.

(e)

The Executive shall acknowledge and deliver promptly to the Company, without charge to the Company, but at its expense, such written instruments (including applications and assignments) and do such other acts, such as giving testimony in support of the Executive’s inventorship, as may be necessary in the opinion of the Company to obtain, maintain, extend, reissue and enforce United States and/or foreign letters patent and copyrights relating to the Inventions and to vest the entire right and title thereto in the Company of its nominee.  The Executive acknowledges and agrees that any copyright developed or conceived of, by the Executive during the term of his employment which is related to the business of the Company shall be a “work for hire” under the copyright law of the United States and other applicable jurisdictions.

(f)

The Executive represents that his performance of all the terms of this Agreement and as an Executive of or consultant to the Company does not and will not breach any trust prior to his employment by the Company.  The Executive agrees not to enter into any agreement either written or oral in conflict herewith and represents and agrees that he has not brought and will not bring with him to the Company or use in the performance of his responsibilities at the Company any materials or documents of a former Company which are not generally available to the public, unless he has obtained written authorization from the former Company for their possession and use, a copy of which has been provided to the Company.

(g)

No provisions of the Paragraph shall be deemed to limit the restrictions applicable to the Executive under Section 9 and 10.

11.

Shop Rights.  The Company shall also have the royalty-free right to use in its business, and to make, use and sell products, processes and/or services derived from any inventions, discoveries, concepts and ideas, whether or not patentable, including but not limited to processes, methods, formulas and techniques, as well as improvements thereof or know-how related thereto, which are not within the scope of Inventions as defined herein but which are conceived of or made by Executive during the period he is engaged by the Company or with the use or assistance of the Company’s facilities, materials, or personnel.

12.

Non-Compete.  The Executive hereby agrees that during the term of this Agreement and any renewal or extension term thereof, and for the period of two years from the termination thereof, that the Executive will not:

(a)

Own, manage, operate, or control any business of the type and character engaged in and competitive with the Company or any subsidiary thereof.  For purposes of this paragraph, ownership of securities of not in excess of two and one-half percent (2.5%) of any class of securities of a public company listed on a national securities exchange or on the National Association of Securities Dealers Automated Quotation System (NASDAQ) shall not be considered to be competition with the Company or any subsidiary thereof;

(b)

Act as, or become employed as, an officer, director, executive, consultant or agent of any business of the type and character engaged in and competitive with the Company or any of its subsidiaries;

(c)

Solicit any similar business to that of the Company’s for, or sell any products or services that are in competition with the Company’s products and services to, which is, as of the date hereof, a customer or client of the Company or any of its subsidiaries, or was such a customer or client thereof; or

(d)

Solicit the employment of, or hire, any full time the Executive employed by the Company or its subsidiaries as of the date of termination of this Agreement.

13.

Termination.  The Company may terminate this Agreement without Cause.  If this Agreement is so terminated, then Company will be obligated to pay the Executive three (3) months of the Executive’s Annual Salary, a pro rata share of earned Bonus Compensation through the termination date, and four months of the Executive Benefits. Executive may terminate this Agreement with three (3) months advance notice to the Company. Any termination by the Company or the Executive of the Executive’s employment during the term hereof shall be communicated by written Notice of Termination to the Executive, if such Notice of Termination is delivered by the Company, and to the Company, if such Notice of Termination is delivered by the Executive, all in accordance with the following procedures:

(a)

The Notice of termination shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances alleged to provide a basis for termination;

(b)

Any Notice of Termination by the Company shall be approved by a resolution duly adopted by a majority of the members of the Board;

(c)

Any Notice of Termination by the Executive shall be provided to the Board at least three (3) months prior to leaving the employment of the Company.  Upon the end of the three (3) months, all compensation provisions of this Agreement shall cease.

14.

Termination Upon Change of Control.  Notwithstanding any provision of this Agreement to the contrary, the Executive may terminate this Agreement upon a Change of Control, provided the Executive has been given ninety (90) days to consider whether to continue in the same capacity with the acquiring entity or accept Termination Payments consistent with Section 15 below.

15.

Termination Payments. In the event the Executive’s employment is terminated by the Company during the term hereof for reasons other than Cause, the Executive shall be paid four (4) months severance, which includes four months of the Executive’s Annual Salary, pro rata share of earned Bonus Compensation through the termination date and three (3) months of the Executive Benefits as set forth in Section 5 as full settlement of any sums owed under this Agreement and for any potential actions for breach of this Agreement by the Company.  Other than any payments set forth in this Section 15, the Executive shall be entitled to no further compensation nor any other payments after such termination.  The Executive shall receive no further payments if terminated for Cause other than Accrued Benefits.

16.

Death During Employment.  If the Executive dies during the term of this Agreement, the Company shall have no further obligations to pay the Executive other than any Accrued Benefits.

17.

Illness or Incapacity.   If the Executive is unable to perform the Executive’s services by reason of illness or incapacity for a period of more than three (3) consecutive months, the compensation thereafter payable to the Executive during the next three (3) consecutive months shall be 50% of the compensation provided for herein. During such period of illness or incapacity, the Executive shall be entitled to receive incentive compensation if any. Notwithstanding the foregoing, if such illness or incapacity does not cease to exist within a six (6) consecutive month period, the Executive shall not be entitled to receive any further compensation nor any payments for such illness or incapacity, and the Company may terminate this Agreement without further liability to the Executive.  Any existing options to purchase the Company’s common stock held by the Executive at the time of termination shall be governed by the terms of the option and not affected by this provision.  Notwithstanding any of the foregoing, if such illness or incapacity ceases prior to six (6) consecutive months, at the termination of such illness or incapacity, the Executive shall be entitled to receive the Executive’s full compensation payable pursuant to the terms of this Agreement.

18.

Non-transferability.  Any right to receive any payment due under this Agreement or any other rights hereunder are expressly declared nontransferable.

19.

Indemnification.  The Company shall indemnify the Executive and hold the Executive harmless from liability for acts or decisions made by the Executive while performing services for the Company to the greatest extent permitted by applicable law.  The Company shall use its best efforts to obtain coverage for the Executive under any insurance policy now in force or hereafter obtained during the term of this Agreement insuring officers and directors of the Company against such liability.

 

20.

Assignment.  This Agreement may not be assigned by either party without the prior written consent of the other party.

21.

Entire Agreement.  This Agreement is and shall be considered to be the only agreement or understanding between the parties hereto with respect to the employment of the Executive by the Company.  All negotiations, commitments, and understandings acceptable to both parties have been incorporated herein.  No letter, telegram, or communication passing between the parties hereto covering any matter during this contract period, or any plans or periods thereafter, shall be deemed a part of this Agreement; nor shall it have the effect of modifying or adding to this Agreement unless it is distinctly stated in such letter, telegram, or communication that is to constitute a part of this Agreement and is attached as an amendment to this Agreement and is signed by the parties to this Agreement.

22.

Enforcement.  Each of the parties to this Agreement shall be entitled to any remedies available in equity or by statute with respect to the breach of the terms of this Agreement by the other party.  The Executive hereby specifically acknowledges and agrees that a breach of the provisions of Sections 9, 10, 11 or 12 of this Agreement will cause irreparable harm and damage to the Company, that the remedy at law, for the breach or threatened breach of this Agreement will be inadequate, and that, in addition to all other remedies available to the Company for such breach or threatened breach (including, without limitation, the right to recover damages), the Company shall be entitled to injunctive relief for any breach or threatened breach of the provisions of  Sections 9, 10, 11 or 12 of this Agreement.

23.

Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada.  Venue for any subsequent legal proceeding involving disputes arising out of this Agreement shall lie exclusively in Nevada’s Eighth Judicial District Court, Clark County, Nevada.    

24.

Severability.  If and to the extent that any court of competent jurisdiction holds any provision or any part thereof of this Agreement to be invalid or unenforceable, such holding shall in no way affect the validity of the remainder of this Agreement.

25.

Waiver.  No failure by any party to insist upon the strict performance of any covenant, duty, agreement, or condition of this Agreement or to exercise any right or remedy consequent upon a breach hereof shall constitute a waiver of any such breach or of any covenant, agreement, term, or condition.

26.

Litigation Expenses.  In the event that it shall be necessary or desirable for the Executive or the Company to retain legal counsel and/or incur other costs and expenses in connection with the enforcement of any or all of the provisions of this Agreement, the prevailing party shall be entitled to recover from the other party reasonable attorneys’ fees, costs, and expenses incurred by the prevailing party in connection with the enforcement of this Agreement.  Payment shall be made upon the conclusion of such action.  

27.

Survivability.   The provisions of Sections 9, 10, 11, 12 and 22 shall survive termination of this Agreement.

AGREED AND ENTERED INTO as of the date first above written.

Company:

Executive:

AMERITYRE CORPORATION

By/s/Gary N. Benninger

/s/Anders A. Suarez

     Gary N. Benninger, President and C.E.O.

Anders A. SuarezForm of Transition Services Agreement

 Exhibit 10.1 
 TRANSITION SERVICES AGREEMENT 
 THIS TRANSITION SERVICES AGREEMENT (this
“Agreement”) is made as of [—], 2008, by and between Potlatch RetainCo LLC, a Delaware limited liability company (“Potlatch”), and Clearwater Paper Corporation, a Delaware
corporation (formerly named Potlatch Forest Products Corporation) (“Clearwater”) (each, a “Party,” and together, the “Parties”). 
 RECITALS: 
 WHEREAS, Potlatch Corporation and Clearwater have entered into that certain
Separation and Distribution Agreement, dated as of [—], 2008 (the “Separation and Distribution Agreement”), pursuant to which and subject to the terms and conditions set forth therein, the
Retained Business and the Pulp-Based Business shall be separated into two independent companies (the “Separation”), and the Clearwater Common Stock shall thereafter be distributed on a pro rata basis to Potlatch Corporation’s
shareholders (capitalized terms not otherwise defined in this Agreement shall have the meaning set forth in the Separation and Distribution Agreement); and 
 WHEREAS, in order to facilitate the Separation, the Parties have agreed that certain shared services and certain common uses of facilities and equipment should continue for a transitional period after the Effective
Time. 
 NOW, THEREFORE, in consideration of the mutual promises contained herein, the Parties hereby agree as follows: 
  

	 	1.	Description of Transition Services. 

 (a) Potlatch
shall (or shall cause its applicable Affiliate, as necessary, to), subject to the terms and provisions of this Agreement (including Exhibit A): 
 (i) provide Clearwater (or its Affiliate, as applicable) with general services of a financial, technical, commercial, administrative or advisory nature as set forth on Exhibit A (the “Potlatch
Services”); 
 (ii) where applicable, assist Clearwater (or its Affiliate, as applicable) in the efficient transfer of each of the
Potlatch Services, including training of the personnel primarily responsible for each of the Potlatch Services going forward; and 
 (iii)
render such other specific services as may be from time to time reasonably requested, within the scope of the services set forth on Exhibit A or, if such additional services are not contemplated by Exhibit A, at its discretion and its
reasonable ability to supply such additional services at the time of such request. 
 Unless otherwise specifically provided on Exhibit A, Potlatch
will provide each of the Potlatch Services until [—]. Clearwater may, at its option, upon no less than 30 days’ prior written notice (or such other period as the Parties may mutually agree), direct Potlatch
to no longer provide all or any category or portion of the Potlatch Services. 

 (b) Clearwater shall (or shall cause its applicable Affiliate, as necessary, to), subject to the terms
and provisions of this Agreement (including Exhibit B): 
 (i) provide Potlatch (or its Affiliate, as applicable) with general
services of a financial, technical, commercial, administrative or advisory nature as set forth on Exhibit B (the “Clearwater Services,” and together with the Potlatch Services, the “Transition Services”);

 (ii) where applicable, assist Potlatch (or its Affiliate, as applicable) in the efficient transfer of each of the provided Clearwater
Services, including training of the personnel primarily responsible for each of the Clearwater Services going forward; and 
 (iii) render
such other specific services as may be from time to time reasonably requested, within the scope of the services set forth on Exhibit B or, if such additional services are not contemplated by Exhibit B, at its discretion and its
reasonable ability to supply such additional services at the time of such request. 
 Unless otherwise specifically provided on Exhibit B, Clearwater
will provide each of the Clearwater Services until [—]. Potlatch may, at its option, upon no less than 30 days’ prior written notice (or such other period as the Parties may mutually agree), direct
Clearwater to no longer provide all or any category or portion of the Clearwater Services. 
 2. Consideration for Services. Each
Party receiving the services (the “Receiving Party”) shall pay the Party providing the services (the “Performing Party”) in accordance with this Section 2, and each Performing Party shall accept as
consideration for the services rendered hereunder, the following service charges: 
 (a) for the Transition Services rendered pursuant to
Section 1(a)(i) and Section 1(b)(i), the Receiving Party will be charged the fees set forth on Exhibit A or Exhibit B, as applicable; and 
 (b) for any additional services rendered pursuant to Section 1(a)(iii) and Section 1(b)(iii), the Receiving Party will be charged
certain fees to be negotiated and agreed to in good faith by the Parties at the time such services are requested. 
 3. Terms of
Payment. Each Performing Party shall submit in writing an invoice covering its charges for services it renders hereunder. Such invoice shall be submitted on a monthly basis and shall contain a summary description of the charges and services
rendered. Payment shall be made no later than 30 days after the invoice date. 
 4. Method of Payment. All amounts payable for
services shall be remitted in U.S. dollars to a bank to be designated in the invoice or otherwise in writing, unless otherwise provided for and agreed upon in writing by the Parties. Detailed billing information will be provided upon request.

 5. WARRANTIES. THIS IS A SERVICE AGREEMENT. EXCEPT AS EXPRESSLY STATED IN THIS AGREEMENT, THERE ARE NO EXPRESS WARRANTIES OR
GUARANTIES AND THERE ARE NO IMPLIED WARRANTIES OR GUARANTIES, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY, TITLE AND FITNESS FOR A PARTICULAR PURPOSE. 
  

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 6. Indemnity. Each Party shall indemnify, defend and hold harmless the other Party and its
Affiliates, directors, officers, employees and agents, and each of the successors and assigns of any of the foregoing, from and against any and all Third Party Claims relating to, arising out of or resulting from gross negligence or willful
misconduct of such Party in the performance of its obligations hereunder, or breach of this Agreement, other than to the extent such Third Party Claims are attributable to the gross negligence, negligence, willful misconduct or breach of this
Agreement by any Person so indemnified. 
  

	 	7.	Limitation on Liability. 

 (a) In no event shall
either Party have any liability, whether based on contract, tort (including, without limitation, negligence), warranty or any other legal or equitable grounds, for any punitive, consequential, special, indirect loss or damage suffered by the other
Party arising from or related to this Agreement, including without limitation, loss of data, profits (excluding profits under this Agreement), interest or revenue, or use or interruption of business, even if such Party is advised of the possibility
of such losses or damages. 
 (b) In no event shall a Party be liable for the acts or omissions of third party providers of equipment or
services. 
 (c) In no event will a Party’s liability, whether based on contract, tort (including without limitation, negligence),
warranty or any other legal or equitable grounds, exceed in the aggregate the amount of fees paid or owed to such Party for services provided pursuant to this Agreement for the six month period prior to the date the claim giving rise to such
liability occurred or, if six months has not elapsed between the Effective Time and the date giving rise to such liability, then the amount of aggregate monthly fees set forth on Exhibit A or Exhibit B, as applicable, multiplied by
six; provided, however, that in either case such fees shall exclude any amounts paid or to be paid to third party providers for equipment or services. 
 (d) The limitations set forth in Section 7(c) above shall not apply to liabilities which may arise as the result of (i) willful misconduct or gross negligence of a Party or its Affiliates;
(ii) indemnity obligations pursuant to Section 6; (iii) the other party’s breach of the confidentiality obligations set forth in this Agreement; (iv) amounts inadvertently overpaid by either Party, or (v) amounts
for charges otherwise due and payable under this Agreement. 
  

	 	8.	Termination. 

 (a) This Agreement shall terminate
on [—], but may be terminated earlier in accordance with the following: 
 (i) upon the mutual written
agreement of the Parties; 
 (ii) by either Party for material breach of any of the terms hereof by the other Party if the breach is not
cured within 30 calendar days after written notice of breach is delivered to the defaulting Party; or 
  

 3 

 (iii) by either Party upon written notice to the other Party if the other Party shall become insolvent or
shall make an assignment for the benefit of creditors, or shall be placed in receivership, reorganization, liquidation or bankruptcy. 
 (b)
Upon any termination, each Party shall be compensated for all Transition Services performed to the date of termination in accordance with the provisions of this Agreement. 
 (c) In the event of a termination and upon expiration of this Agreement (or one or more of the services), the Performing Party shall be entitled to the
payment or reimbursement of, and the Receiving Party shall pay and reimburse the Performing Party within 30 days of such termination or expiration for all amounts due to the Performing Party under this Agreement, including amounts incurred in
connection with the provision of services through the date of such termination or expiration that are not yet due and payable to the Performing Party under this Agreement. Upon termination by the Receiving Party of any service(s) hereunder pursuant
to the last sentence of Section 1(a) or the last sentence of Section 1(b), as applicable, the Receiving Party shall reimburse the Performing Party for any and all costs and expenses accruing after such termination and
incurred by the Performing Party as a result of the provision of the service(s) (e.g., additional license fees). 
 9. Performance of
Transition Services. The Performing Party shall perform its duties and discharge its obligations under this Agreement in a commercially reasonable manner based upon its current practices (including the software and equipment utilized by the
Performing Party) in providing analogous services for itself or its Affiliates as of the Effective Time (or prior practices in the absence of a current practice) and in accordance with any service levels and performance obligations specified in the
applicable section of Exhibit A or Exhibit B, as applicable. This obligation is subject to the following conditions: 
 (a) The
Performing Party shall not be required to perform any service in a manner that would constitute a violation of applicable law; 
 (b) The
Performing Party shall not be required to perform any service for the benefit of any Person other than the Receiving Party and its Affiliates; 
 (c) Except as set forth in Exhibit A or Exhibit B, as applicable, the Performing Party shall not be obligated to (i) hire or train additional employees, (ii) purchase, lease or license any additional equipment or
software (iii) use or make available to the Receiving Party any upgrades, improvements or other changes in the equipment or software used by the Performing Party to the extent that the Performing Party would incur additional cost or expense not
advanced by the Receiving Party in doing so, or (iv) pay any cost related to the transfer or conversion of information to the Receiving Party upon termination of the services; 
 (d) Except as set forth in Exhibit A or Exhibit B, the Performing Party shall be solely responsible for maintaining, during the applicable
service period, equipment, software, licenses, personnel, facilities and other resources reasonably necessary for its provision of the services for which it is responsible that are substantially equivalent to those resources that were available to
the Performing Party at the Effective Time; 
  

 4 

 (e) The Receiving Party shall, and shall cause its applicable Affiliates to, make available on a timely
basis to the Performing Party and to any third party provider, (i) information reasonably requested by such Person to enable the performance of services, and (ii) reasonable access to the premises of the Receiving Party and such Affiliates
and the systems, software and networks located therein, to the extent necessary for the purpose of providing the services; and 
 (f) The
Receiving Party shall use commercially reasonable efforts to reduce or eliminate its dependency on each service as soon as is reasonably practicable. 
 10. Independent Contractor. Each Performing Party is providing services pursuant to this Agreement as an independent contractor and the Parties hereby acknowledge that they do not intend to create a joint
venture, partnership or any other type of agency between them. 
 11. Confidentiality. Each Party shall keep confidential, and use
reasonable efforts to cause its Affiliates and each of their respective officers, directors, employees, agents and advisors to keep confidential, all information relating to the other Party, and its respective subsidiaries and businesses obtained in
connection with the provision or receipt of services under or pursuant to this Agreement, all in accordance with, and subject to the terms of the confidentiality provisions of the Separation and Distribution Agreement. Nothing in this
Section 11 shall be construed to prevent the Receiving Party from disclosing information relating to this Agreement or the services provided to the Receiving Party upon receipt of the written consent of the Performing Party, which
consent will not be unreasonably withheld or delayed, to the extent that such disclosure is required to permit the Receiving Party to arrange for the provision of such services after the termination of this Agreement. 
 12. Ownership of Information. Any information owned by one Party or any of its Affiliates that is provided to another Party or any of its
Affiliates pursuant to this Agreement shall remain the property of the providing Party. Except to the extent necessary for the Performing Party or any of its Affiliates to provide services to the Receiving Party or any of its Affiliates under this
Agreement, nothing contained in this Agreement shall be construed as granting or conferring rights of license or otherwise in any such information. Furthermore, each Receiving Party acknowledges that it will acquire no right, title or interest
(including any license rights or rights of use) in any intellectual property that is owned or licensed by any Performing Party, by reason of the provision of the services provided hereunder. No Receiving Party will remove or alter any copyright,
trademark, confidentiality or other proprietary notices that appear on any intellectual property owned or licensed by any Performing Party, and each Receiving Party shall reproduce any such notices on any and all copies thereof. No Receiving Party
will attempt to decompile, translate, reverse engineer or make excessive copies of any intellectual property owned or licensed by any Performing Party, and each Receiving Party shall promptly notify such Performing Party of any such attempt of which
it becomes aware. 
 13. Records. Each Performing Party shall maintain and retain records related to the provision of its services
under this Agreement consistent with its policies regarding its own retention of records. As needed from time to time during the period in which services are provided, and upon termination of the provision of any service, the Parties agree to
provide each other with records related to the provision of the services under this Agreement to the extent that (i) such records exist in the ordinary course of business, (ii) the Party providing such records is reimbursed for any costs
related to supplying such records, and (iii) such records are reasonably necessary for the requesting Party to comply with its obligations under this Agreement or applicable law. 
  

 5 

 14. Amendment; Waiver. This Agreement may be modified or amended only by the agreement of the
Parties hereto in writing, duly executed by the authorized representatives of each Party. Any term or provision of this Agreement may be waived, or the time for its performance may be extended, by the Party or Parties entitled to the benefit
thereof. Any such waiver shall be validly and sufficiently given for the purposes of this Agreement if, as to any Party, it is in writing signed by an authorized representative of such Party. The failure of any Party to enforce at any time any
provision of this Agreement shall not be construed to be a waiver of such provision, or in any way to affect the validity of this Agreement or any part hereof or the right of any Party thereafter to enforce each and every such provision. No waiver
of any breach of this Agreement shall be held to constitute a waiver of any other or subsequent breach. 
 15. Force Majeure. Any
delays in or failure of performance by any Party hereto, other than the payment of money, shall not constitute a default hereunder if and to the extent such delays or failures of performance are caused by occurrences beyond the reasonable control of
such Party, including, but not limited to: acts of God or the public enemy; expropriation or confiscation of facilities; compliance with any order or request of any governmental authority; acts of war; riots or strikes or other concerted acts of
personnel; or any causes, whether or not of the same class or kind as those specifically named above, which are not within the reasonable control of such Party, and which by the exercise of reasonable diligence, such Party is unable to prevent.

 16. Assignment. This Agreement shall not be assignable by either Party hereto without the prior written consent of the other Party
hereto, which consent shall not be unreasonably withheld. When duly assigned in accordance with the foregoing, this Agreement shall be binding upon and shall inure to the benefit of the assignee. 
 17. Notices. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally or by facsimile
transmission or mailed by registered or certified mail (return receipt requested) to the Party at the following address for each Party (or at such other address for a Party as shall be specified by like notice to the other Party): 
 If to Potlatch, to: 
 Potlatch Corporation 
 601 W. First Avenue, Suite 1600 
 Spokane, WA 99201 
 Facsimile:          (509) 835-1561 
 Attention:
          General Counsel 
  

 6 

 If to Clearwater, to: 
 Clearwater Paper Corporation 
 601 W. Riverside Avenue, Suite 1100 
 Spokane, WA 99201 
 Facsimile:          [—] 
 Attention:           General Counsel 
 18. Governing Law. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Washington. 
 19. No Third Party Beneficiaries. Except as set forth in Section 6, nothing in this Agreement, express or implied, is intended to
confer on any Person other than the Parties, and their respective successors and permitted assigns, any rights or remedies of any nature whatsoever under or by virtue of this Agreement. 
 20. Responsible Parties. Each Party shall be responsible for its Affiliates’ compliance with the terms and conditions of this Agreement.

 21. Dispute Resolution. All disputes arising between the Parties relating to this Agreement shall be handled in accordance with
Article 11 of the Separation and Distribution Agreement. 
 22. Severability. The Parties agree that (i) the provisions of this
Agreement shall be severable in the event that for any reason whatsoever any of the provisions hereof are invalid, void or otherwise unenforceable, (ii) any such invalid, void or otherwise unenforceable provisions shall be replaced by other
provisions which are as similar as possible in terms to such invalid, void or otherwise unenforceable provisions but are valid and enforceable, and (iii) the remaining provisions shall remain valid and enforceable to the fullest extent
permitted by applicable law. 
 23. Counterparts. This Agreement may be executed in multiple counterparts (any one of which need not
contain the signatures of more than one Party), each of which shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. 
 [signature page follows] 
  

 7 

 IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date and year first above
written. 
  

			
	 POTLATCH RETAINCO LLC,
 a Delaware limited
liability company

		
	By:	 	 
	Name:	 	 Michael J. Covey

	Title:	 	 Authorized Officer

  

			
	 CLEARWATER PAPER CORPORATION,
 a Delaware corporation

		
	By:	 	 
	Name:	 	 Gordon L. Jones

	Title:	 	 President and Chief Executive Officer

  

 8 

 EXHIBIT A 
 SERVICES TO BE RENDERED BY AND FEES TO BE PAID TO 
 POTLATCH CORPORATION AFFILIATES 
  

 9 

 EXHIBIT B 
 SERVICES TO BE RENDERED BY AND FEES TO BE PAID TO 
 CLEARWATER PAPER CORPORATION 
  

 10

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