(Senior Executives, 2019 Performance- and Time-vesting)

LITHIA MOTORS, INC.
RESTRICTED STOCK UNIT AGREEMENT
(2019 Performance- and Time-vesting)

This Restricted Stock Unit Agreement (“Agreement”) is entered into pursuant to
the 2013 Amended and Restated Stock Incentive Plan (the “Plan”) adopted by the
Board of Directors and shareholders of Lithia Motors, Inc., an Oregon
corporation (the “Company”), as amended from time to time. Unless otherwise
defined herein, capitalized terms in this Agreement have the meanings given to
them in the Plan. Any inconsistency between this Agreement and the terms and
conditions of the Plan will be resolved in favor of the Plan.

“Recipient”                        [ ]
    
Number of Restricted Stock Units (“RSUs”)        [ ]            

“Date of Grant”                    [ ]

1.    GRANT OF RESTRICTED STOCK UNIT AWARD

1.1    The Grant. The Company hereby awards to Recipient, and Recipient hereby
accepts, the RSUs specified above on the terms and conditions set forth in this
Agreement and the Plan (the “Award”). Each RSU represents the right to receive
one share of Class A Common Stock of the Company (a “Share”) on an applicable
Settlement Date, as defined in Section 1.3 of this Agreement, subject to the
terms of this Agreement and the Plan.

1.2    Forfeiture; Vesting; Clawback. The RSUs are subject to forfeiture in
accordance with the performance criteria specified in Section 1.2(a) of this
Agreement. Any RSUs not forfeited will vest according to the schedule set forth
in Section 1.2(b) of this Agreement. The RSUs, the Shares issued upon vesting of
the RSUs and any proceeds received upon the sale of the Shares are subject to
recovery by the Company as specified in Section 1.2(c) of this Agreement.

(a)     Forfeiture.

(i)
The RSUs are subject to forfeiture based on the Company’s 2019 pro forma
earnings per share, calculated as specified in Section 1.2(a)(iii) of this
Agreement (the “2019 Pro Forma EPS”). The number of RSUs that will be forfeited
is determined according to the highest earnings per share threshold set forth on
the table below (each, an “EPS Threshold”) that the 2019 Pro Forma EPS meets or
exceeds. The table below specifies the applicable percentage of RSUs that will
be retained (the “Earned RSUs”), subject to adjustment as provided in Section
1.2(a)(ii), at the specified EPS Threshold. When the Committee certifies the
number of Earned RSUs as provided in Section 1.2(a)(iii), all RSUs that are not
Earned RSUs will be forfeited.

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(Senior Executives, 2019 Performance- and Time-vesting)

EPS Threshold
Percentage of Earned RSUs
$11.60 (highest)
150.0%
Any amount between $9.80 and $10.50 (inclusive)
100.0%
$7.60
75.0%
Any amount between $0.01 and $7.59 (inclusive)
50.0%
$ 0.00 or negative 2019 Pro Forma EPS (lowest)
0.0%

(ii)    If the 2019 Pro Forma EPS is at least $7.60 and less than $9.80, the
percentage of Earned RSUs will be determined on a pro-rata basis and the number
of Earned RSUs will be rounded to the nearest whole RSU. If the 2019 Pro Forma
EPS is at least $10.50 and less than $11.60, the percentage of Earned RSUs will
be determined on a pro-rata basis and the number of Earned RSUs will be rounded
to the nearest whole RSU. If the 2019 Pro Forma EPS is positive but less than
$7.60, the percentage of Earned RSUs will be 50.0%.
 
Example 1: If the 2019 Pro Forma EPS is $7.75, the percentage of Earned RSUs
would be 75.0% plus an additional percentage calculated as follows: (a) 25%,
multiplied by a fraction, (i) the numerator of which is the amount by which 2019
Pro Forma EPS exceeds $7.60 and (ii) the denominator of which is $1.20:

 
25% ($0.15/1.20) = 3.1%

The resulting percentage of Earned RSUs correlating to an EPS of $7.75 would be
78.1%. If the Award were 1,000 RSUs, the number of Earned RSUs would be 78.1% of
1,000, or 781 RSUs. The number of forfeited RSUs would be 1,000 minus 781, or
219. The Earned RSUs would be subject to the vesting according to the schedule
specified in Section 1.2(b) of this Agreement.

(iii)    The 2019 Pro Forma EPS will be calculated by deducting from the
Company’s consolidated diluted income (loss) per share, as set forth in the
audited consolidated statement of income for the Company and its subsidiaries
for the 2019 fiscal year, non-operational transactions or disposal activities,
for example:

i.          asset impairment and disposal gain;
ii.         gains or losses on the sale of real estate or stores;
iii.        gains or losses on equity investment;
iv.
reserves for real estate leases, Company-owned service contracts (e.g., lifetime
oil), and legal matters; and

v.         related income tax adjustments for any of the above.

As soon as practicable, the Director of Internal Audit of the Company shall
calculate the 2019 Pro Forma EPS, and shall submit those calculations to the
Committee. At or prior to the regularly scheduled meeting of the Committee held
in the first fiscal quarter of 2020, the Committee shall certify in writing
(which may consist of approved minutes of the meeting) the 2019 Pro Forma EPS
and the number of Earned RSUs. Unless otherwise required under this Agreement,
no Shares or other amounts shall be delivered or paid unless

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(Senior Executives, 2019 Performance- and Time-vesting)

the Committee certifies the 2019 Pro Forma EPS and the number of Earned RSUs.
The Committee may reduce the amount of the compensation payable upon the
attainment of the performance goals based on such factors as it deems
appropriate, including subjective factors.

(b)    Vesting. Subject to the continued employment of Recipient with the
Company or any Subsidiary, (i) 0% of the Earned RSUs shall vest on the date that
the Committee certifies the number of Earned RSUs and (ii) the remaining Earned
RSUs shall vest on the dates set forth in the table below (each, a “Vesting
Date”). The number of Shares to which Recipient is entitled on each Vesting Date
shall be rounded up to the nearest whole Share (except for the last Vesting
Date, on which all remaining RSUs shall vest).

Vesting Date
Vesting of
Award
January 1, 2021
33%
January 1, 2022
33%
January 1, 2023
34%

Example 2: If there are 781 Earned RSUs, and the Committee certifies the number
of Earned RSUs on February 1, 2020, the Earned RSUs would vest and entitle
Recipient to receive Shares, subject to continued employment, as follows.

(c)    Clawback. If the Company’s financial statements are restated at any time
within three years after the Committee certifies the number of Earned RSUs under
Section 1.2(a)(iii) of this Agreement, the 2019 Pro Forma EPS shall be
recalculated (the resulting number, the “Recalculated 2019 Pro Forma EPS”) based
on the restated financial statements. If, based on the Company’s restated
financial statements, the Recalculated 2019 Pro Forma EPS is less than the 2019
Pro Forma EPS that the Committee previously certified, (i) any Earned RSUs
subject to vesting shall be adjusted to reflect the number of RSUs that would
have been Earned RSUs based on the Recalculated 2019 Pro Forma EPS and (ii)
Recipient shall repay to the Company (1) a number of Shares calculated by
subtracting the number of Shares Recipient should have received based on the
Recalculated 2019 Pro Forma EPS from the number of Shares Recipient received
under this Award (the “Excess Shares”) and (2) any dividend paid on the Excess
Shares (the “Excess Dividends”). If any Excess Shares are sold by Recipient
before the Company’s demand for repayment (including any Shares withheld for
taxes under Section 4 of this Agreement), in lieu of repaying the Company the
Excess Shares that were sold Recipient shall repay to the Company 100% of the
proceeds of such sale or sales. The Committee may, in its sole discretion,
reduce the amount to be repaid by Recipient to take into account the tax
consequences of such repayment for Recipient. No additional RSUs shall be deemed
Earned RSUs based on Recalculated 2019 Pro Forma EPS.
If any portion of the Excess Shares and Excess Dividends was deferred under the
RSU Deferral Plan effective January 1, 2012 (the “Deferral Plan”), that portion
shall be recovered by canceling the amounts so deferred under the Deferral Plan
and any dividends or other earnings credited under the Deferral Plan with
respect to such cancelled amounts. The Company may seek direct repayment from

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(Senior Executives, 2019 Performance- and Time-vesting)

Recipient of any Excess Shares, Excess Dividends and proceeds not so recovered
and may, to the extent permitted by applicable law, offset such amounts against
any compensation or other amounts owed by the Company to Recipient. In
particular, such amounts may be recovered by offset against the after-tax
proceeds of deferred compensation payouts under the Company’s Deferred
Compensation Plan, the Company’s Supplemental Executive Retirement Plan at the
times such deferred compensation payouts occur under the terms of those plans.
Amounts that remain unpaid for more than 60 days after demand by the Company
shall accrue interest at the rate used from time to time for crediting interest
under the Deferred Compensation Plan.
1.3    Settlement of Earned RSUs. There is no obligation for the Company to make
payments or distributions with respect to RSUs except, subject to the terms and
conditions of this Agreement, the issuance of Shares to settle vested RSUs after
the applicable Vesting Date. The Company’s issuance of one Share for each vested
Earned RSU (“Settlement”) may be subject to such conditions, restrictions and
contingencies as the Committee shall determine. Unless receipt of the Shares is
validly deferred pursuant to the Deferral Plan, and except as otherwise provided
in any Amended Employment and Change in Control Agreement between the Company
and Recipient (as the same may be amended and/or restated from time to time),
Earned RSUs shall be settled as soon as practicable after the applicable Vesting
Date (each date of Settlement, a “Settlement Date”), but in no event later than
March 15 of the calendar year following the calendar year in which the Vesting
Date occurs. Notwithstanding the foregoing, the payment dates set forth in this
Section 1.3 have been specified for the purpose of complying with the short-term
deferral exception under Section 409A of the Internal Revenue Code of 1986 (the
“Code”), and to the extent payments are made during the periods permitted under
Code Section 409A (including applicable periods before or after the specified
payment dates set forth in this Section 1.3), the Company shall be deemed to
have satisfied its obligations under the Plan and shall be deemed not to be in
breach of its payment obligations hereunder.

1.4    Termination of Recipient’s Employment.

(a)    Voluntary or Involuntary Termination. Except as otherwise provided in
this Section 1.4, if Recipient’s employment with the Company or any Subsidiary
terminates as a result of a voluntary or involuntary termination, all
outstanding unvested RSUs (whether or not determined to be Earned RSUs) shall
immediately be forfeited. Recipient shall not be treated as terminating
employment if Recipient is on an approved leave of absence.

(b)    Death. If Recipient’s employment with the Company or any Subsidiary
terminates as a result of Recipient’s death that occurs on or after January 1,
2020, Earned RSUs shall continue to vest as scheduled in Section 1.2 of this
Agreement.

(c)    Disability. If Recipient becomes Disabled while employed by the Company
or a Subsidiary, Earned RSUs shall continue to vest as scheduled in Section 1.2
of this Agreement for so long as Recipient remains Disabled.

Qualified Retirement. If Recipient terminates employment due to a Qualified
Retirement that occurs on or after January 1, 2020, RSUs shall continue to vest
as scheduled in Section 1.2 of this Agreement. A “Qualified Retirement” means
Recipient voluntarily terminates employment on or after such time as Recipient
is at least 55 years of age and the sum of Recipient’s attained age and
completed years of Service at the time of such termination equals or exceeds
seventy (70) years.

Notwithstanding anything in this Agreement to the contrary, in no event will any
Settlement occur prior to the applicable Vesting Date.

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(Senior Executives, 2019 Performance- and Time-vesting)

2.    REPRESENTATIONS AND COVENANTS OF RECIPIENT

2.1    No Representations by or on Behalf of the Company. Recipient is not
relying on any representation, warranty or statement made by the Company or any
agent, employee or officer, director, shareholder or other controlling person of
the Company regarding the RSUs or this Agreement.

2.2    Tax Considerations. The Company has advised Recipient to seek Recipient’s
own tax and financial advice with regard to the federal and state tax
considerations resulting from Recipient’s receipt of the Award, the vesting of
the Award and Recipient’s receipt of the Shares upon Settlement of the vested
portion of the Award. Recipient understands that the Company, to the extent
required by law, will report to appropriate taxing authorities the payment to
Recipient of compensation income upon the grant, vesting and/or Settlement of
RSUs under the Award and Recipient shall be solely responsible for the payment
of all federal and state taxes resulting from such grant, vesting and/or
Settlement.

2.3    Agreement to Enter into Lock-Up Agreement with an Underwriter. Recipient
understands and agrees that whenever the Company undertakes a firmly
underwritten public offering of its securities, Recipient will, if requested to
do so by the managing underwriter in such offering, enter into an agreement not
to sell or dispose of any securities of the Company owned or controlled by
Recipient, including any of the RSUs or the Shares, provided that such
restriction will not extend beyond 12 months from the effective date of the
registration statement filed in connection with such offering.

3.    GENERAL RESTRICTIONS OF TRANSFERS OF RSUS

3.1    No Transfers of RSUs. Recipient agrees for himself or herself and his or
her executors, administrators and other successors in interest that none of the
RSUs, nor any interest therein, may be voluntarily or involuntarily sold,
transferred, assigned, donated, pledged, hypothecated or otherwise disposed of,
gratuitously or for consideration.

3.2    Award Adjustments. The number of RSUs granted under this Award shall, at
the discretion of the Committee, be subject to adjustment under the Plan in the
event the outstanding shares of Common Stock are hereafter increased, decreased,
changed into or exchanged for a different number or kind of shares of Common
Stock or for other securities of the Company or of another corporation, by
reason of any reorganization, merger, consolidation, reclassification, stock
split up, combination of shares of Common Stock, or dividend payable in shares
of Common Stock or other securities of the Company. If Recipient receives any
additional RSUs pursuant to the Plan, such additional (or other) RSUs shall be
deemed granted hereunder and shall be subject to the same restrictions and
obligations on the RSUs as originally granted as imposed by this Agreement.

3.3    Invalid Transfers. Any disposition of the RSUs other than in strict
compliance with the provisions of this Agreement shall be void.

4.    PAYMENT OF TAX WITHHOLDING AMOUNTS. To the extent the Company is
responsible for withholding income taxes, Recipient must pay to the Company or
make adequate provision for the payment of all Tax Withholding. If any RSUs are
scheduled to vest during a period in which trading is not permitted under the
Company’s insider trading policy, to satisfy the Tax Withholding requirement,
Recipient irrevocably elects to settle the Tax Withholding obligation by the
Company withholding a number of Shares otherwise deliverable upon vesting having
a market value sufficient to satisfy the statutory minimum tax withholding of
Recipient. If the Company later determines that additional Tax Withholding was
or has become

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(Senior Executives, 2019 Performance- and Time-vesting)

required beyond any amount paid or provided for by Recipient, Recipient will pay
such additional amount to the Company immediately upon demand by the Company. If
Recipient fails to pay the amount demanded, the Company may withhold that amount
from other amounts payable by the Company to Recipient.

5.    MISCELLANEOUS PROVISIONS

5.1        Amendment and Modification. Except as otherwise provided by the Plan,
this Agreement may be amended, modified and supplemented only by written
agreement of all of the parties hereto.

5.2    Assignment. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, but neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by Recipient
without the prior written consent of the Company.

5.3    Governing Law. To the extent not preempted by federal law, this Agreement
and the rights and obligations of the parties hereunder shall be governed by and
construed in accordance with the internal laws of the State of Oregon applicable
to the construction and enforcement of contracts wholly executed in Oregon by
residents of Oregon and wholly performed in Oregon. Any action or proceeding
brought by any party hereto shall be brought only in a state or federal court of
competent jurisdiction located in the County of Multnomah in the State of Oregon
and all parties hereto hereby submit to the in personal jurisdiction of such
court for purposes of any such action or procedure.

5.4     Arbitration. The parties agree to submit any dispute arising under this
Agreement to final, binding, private arbitration in Portland, Oregon. This
includes not only disputes about the meaning or performance of this Agreement,
but disputes about its negotiation, drafting or execution. The dispute will be
determined by a single arbitrator in accordance with the then-existing rules of
arbitration procedure of Multnomah County, Oregon Circuit Court, except that
there shall be no right of de novo review in Circuit Court and the arbitrator
may charge his or her standard arbitration fees rather than the fees prescribed
in the Multnomah County Circuit Court arbitration procedures. The proceeding
will be commenced by the filing of a civil complaint in Multnomah County Circuit
Court and a simultaneous request for transfer to arbitration. The parties
expressly agree that they may choose an arbitrator who is not on the list
provided by the Multnomah County Circuit Court Arbitration Department, but if
they are unable to agree upon the single arbitrator within 10 days of receipt of
the Arbitration Department list, they will ask the Arbitration Department to
make the selection for them. The arbitrator will have full authority to
determine all issues, including arbitrability; to award any remedy, including
permanent injunctive relief; and to determine any request for costs and expenses
in accordance with Section 5.5 of this Agreement. The arbitrator’s award may be
reduced to final judgment in Multnomah County Circuit Court. The complaining
party shall bear the arbitration expenses and may seek their recovery if it
prevails. Notwithstanding any other provision of this Agreement, an aggrieved
party may seek a temporary restraining order or preliminary injunction in
Multnomah County Circuit Court to preserve the status quo during the arbitration
proceeding.

5.5    Attorney Fees. If any suit, action or proceeding is instituted in
connection with any controversy arising out of this Agreement or the enforcement
of any right hereunder, the prevailing party will be entitled to recover, in
addition to costs, such sums as the court or arbitrator may adjudge reasonable
as attorney fees, including fees on any appeal.

5.6    Headings. The headings of the sections and subsections of this Agreement
are inserted for convenience only and shall not constitute a part hereof.

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(Senior Executives, 2019 Performance- and Time-vesting)

5.7    Entire Agreement. This Agreement and the Plan embody the entire agreement
and understanding of the parties hereto in respect of the subject matter
contained herein and supersedes all prior written or oral communications or
agreements all of which are merged herein. There are no restrictions, promises,
warranties, covenants or undertakings, other than those expressly set forth or
referred to herein.

5.8    No Waiver. No waiver of any provision of this Agreement or any rights or
obligations of any party hereunder shall be effective, except pursuant to a
written instrument signed by the party or parties waiving compliance, and any
such waiver shall be effective only in the specific instance and for the
specific purpose stated in such writing.

5.9    Severability of Provisions. In the event that any provision hereof is
found invalid or unenforceable pursuant to judicial decree or decision, the
remainder of this Agreement shall remain valid and enforceable according to its
terms.

5.10    Incorporation by Reference, Etc. The provisions of the Plan are hereby
incorporated herein by reference. Except as otherwise set forth herein, this
Agreement shall be construed in accordance with the provisions of the Plan and
any interpretations, amendments, rules and regulations promulgated by the
Committee from time to time pursuant to the Plan. The Committee shall have the
final authority to interpret and construe the Plan and this Agreement and to
make any and all determinations under them, and its decision shall be final,
binding and conclusive upon Recipient and his or her legal representative in
respect to any questions arising under the Plan or this Agreement.

5.11    Notices. All notices or other communications pursuant to this Agreement
shall be in writing and shall be deemed duly given if delivered personally or by
courier service, or if mailed by certified mail, return receipt requested,
prepaid and addressed to the Company executive offices to the attention of the
Corporate Secretary, or if to Recipient, to the address maintained by the
personnel department, or such other address as such party shall have furnished
to the other party in writing.

5.12    Acceptance of Agreement. Unless Recipient notifies the Corporate
Secretary in writing within 14 days after the Date of Grant that Recipient does
not wish to accept this Agreement, Recipient will be deemed to have accepted
this Agreement and will be bound by the terms of this Agreement and the Plan.

5.13    No Right of Employment. Nothing contained in the Plan or this Agreement
shall be construed as giving Recipient any right to be retained, in any
position, as an employee of the Company or any Subsidiary.

[Remainder of this page left blank intentionally.]

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(Senior Executives, 2019 Performance- and Time-vesting)

Recipient and the Company have executed this Agreement effective as of the Date
of Grant.

RECIPIENT
                                            
Signature

Type or Print Name:                 

Social Security Number:                

COMPANY                LITHIA MOTORS, INC.

By:                        
Name: Chris Holzshu
Title: Executive Vice President

* Please take the time to read and understand this Agreement. If you have any
specific questions or do not fully understand any of the provisions, please
contact stockinfo@lithia.com.

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