EXHIBIT 10.22

TERMS OF AMENDED EMPLOYMENT AND CHANGE IN CONTROL AGREEMENT

This TERMS OF EMPLOYMENT AND CHANGE IN CONTROL AGREEMENT (“Agreement”) by and
among Lithia Motors, Inc., an Oregon corporation (the “Employer”), and Sidney B.
DeBoer (“Executive”), is dated as of January 15, 2009.

1. Terms of Employment. Employer, either directly or through one of its wholly
owned subsidiaries, employs Executive and Executive accepts that employment on
the terms and conditions contained in this Agreement. The employment of
Executive by Employer is “at will” and Executive’s employment may be terminated
at any time for any lawful reason or for no reason at all.

2. Termination Related to Change in Control. A “Change in Control” occurs on the
date: (i) the Employer merges or consolidates with another entity and as a
result less than 50% of the combined voting power of the resulting entity
immediately after the merger or consolidation is held by persons who were the
holders of the Employer’s voting securities immediately before the merger or
consolidation; (ii) any person, entity, or group of persons or entities, other
than through merger or consolidation, acquires 50% or more of the total fair
market value or total voting power of Employer’s outstanding stock or acquires
substantially all of the Employer’s assets; (iii) any one person, or more than
one person acting as a group acquires (or has acquired during the 12-month
period ending on the date of the most recent acquisition by such person or
persons) ownership of stock of the Employer possessing 50% or more of the total
voting power of the stock of the Employer, or (iv) a majority of the Employer’s
Board of Directors is removed from office by a vote of the Employer’s
shareholders over the recommendation of the Board or replaced during any
12-month period by directors whose appointment or election is not endorsed by a
majority of the Employer’s board of directors before the date of the appointment
or election. Notwithstanding the preceding, a “Change in Control” will not be
deemed to have occurred if Sid DeBoer, Lithia Holding Company, LLC or an
“affiliate” of either (as that term is defined by SEC rules and regulations),
owns, votes or controls more than 20% of the resultant entity, directly or
indirectly.

After announcement of a proposed Change in Control and for a period continuing
for one year following a Change in Control, in the event Employer terminates
Executive’s employment without Cause or Executive terminates his employment for
Good Reason, Executive shall receive (i) 24 months of base salary, based on
Executive’s then base salary, and (ii) continuing health insurance benefits for
the shorter of 24 months or the full COBRA period, (collectively the “Change in
Control Benefit”). Subject to Section 4 (if applicable), the cash Change in
Control Benefit shall be paid in installments over 24 months, starting the first
day of the month following termination, in accordance with Employer’s standard
payroll procedures and subject to statutory payroll deductions. Further,
notwithstanding the terms of any bonus or incentive plan (unless such plan by
its specific terms references this Agreement and provides to the contrary),
Executive is entitled to receive a pro rata payout under such plans within 30
days of termination (subject to Section 4, if applicable) based upon the then
performance level achieved under such plans. The pro rata payout will reflect
the proportion of the service period completed by the Executive prior to
termination. Receipt of the Change in Control Benefit and any pro rata bonus or
incentive payment is conditioned on Executive having executed the Separation
Agreement in substantially the form attached hereto as Exhibit A and the
revocation period having expired without Executive having revoked the Separation
Agreement. Receipt and continued receipt of the Change in Control Benefit is
further conditioned on Executive not being in violation of any material term of
this Agreement or in violation of any material term of the Separation Agreement.

“Cause” for termination of employment means any one or more of the following:
(i) willful misfeasance, gross negligence, or conduct involving dishonesty in
the performance of Executive’s duties, as determined by the board of directors
of Employer; (ii) conviction of a crime in connection with Executive’s duties,
or of any felony; (iii) conduct significantly harmful to Employer, as reasonably
determined by the Boards of Directors, including but not limited to intentional
violation of law or of any significant policy or procedure of the Employer;
(iv) refusal or failure to act in accordance with a stipulation, requirement, or
directive of the Boards of Directors (provided such directive is lawful); or
(v) failure to faithfully or diligently perform any of the duties of Executive’s
employment which are specified in this Agreement, articulated by the Boards of
Directors, or are usual and customary duties of Executive’s employment, if
Executive has not corrected the problem or formulated a plan for its correction
with the Board (if such failure is not susceptible to immediate correction)
within thirty (30) days after notice to Executive.

 

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“Good Reason” for Executive’s resignation means (i) any one or more of the
following occurs without Executive’s consent: (A) a material diminution of
Executive’s base compensation (unless consistent with an across the board pay
reduction for all senior management and not in excess of 20%); (B) a material
change in the geographic location at which Executive must perform services for
the Employer; (C) a material diminution in the Executive’s authority, duties or
responsibilities as its relates to the Employer’s operations acquired, or
(D) any other action or inaction by Employer that constitutes a material breach
of this Agreement; (ii) Executive provides notice to Employer of the existence
of the condition within 90 days of the initial existence of the condition;
(iii) Employer has 30 days following receipt of such notice to remedy the
condition and fails to do so; and (iv) Executive resigns within twelve months of
such event occurring.

3. “Excess Parachute Payment” Restrictions; Limitation on Change in Control
Benefit. If the benefits under Section 2, either alone or together with other
payments or compensation benefits to which Executive is entitled to receive from
Employer, would constitute an “excess parachute payment” as defined in
Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”),
these benefits shall be reduced to the largest amount that will result in no
portion of the benefits being subject to the excise tax imposed by Section 4999
of the Code. If any Change in Control Benefit exceeds the amount that might be
paid without invoking Section 280G, the Executive is given the right to decide
which particular benefits will be reduced in order to comply with this section.
The determination of the amount of reduction in the benefits required pursuant
to the foregoing provisions, shall be made by mutual agreement of Employer and
Executive or if no agreement is possible, by Employer’s accountants.

4. 409A. Notwithstanding any provision of this Agreement to the contrary, if, at
the time of Executive’s “separation of service” with the Employer, he or she is
a “specified employee” as such terms are defined in Section 409A of the Internal
Revenue Code and regulations promulgated thereunder, and one or more of the
payments or benefits received or to be received by Executive pursuant to this
Agreement would constitute “deferred compensation” subject to Section 409A, no
such payment or benefit will be provided under this Agreement until the earlier
of: (a) the date that is six (6) months following Executive’s termination of
employment with the Employer, or (b) the Executive’s death, unless the payment
or distribution is exempt from the application of Section 409A. In the event any
of Executive’s benefits that are paid in installments under this Agreement are
subject to the six-month delay set forth in this Section 4, the first
installment payment shall be made in the seventh month following termination of
employment and shall equal the aggregate installment payments Executive would
have received during the first six months plus the payment Executive is
otherwise entitled to receive for the seventh month.

5. Restrictive Covenants.

(a) Non-Solicitation of Lithia Employees. Except as may be consented to in
writing by Employer and signed by its Chief Executive Officer or President,
until a period of time expiring 24 months following Executive’s separation of
service, Executive will not, directly or indirectly, employ or offer employment
to, or assist or be affiliated with any other person in employing, any persons
employed by Employer or any of its subsidiaries in a management position (AVP or
manager or higher) on or after the date hereof (“Managers”), and will not,
either directly or indirectly, solicit, induce, recruit or encourage any
Managers to leave their employment, attempt to solicit, induce, recruit or
encourage any Managers to leave their employment, or cause or encourage any
person to directly or indirectly solicit, induce, recruit or encourage Managers
to leave their employment, either for him or herself or for any other person or
entity, unless such person has not been employed by Employer or any of its
subsidiaries for at least six months.

For purposes of this paragraph, the terms “solicit, induce, recruit and
encourage” means, direct and indirect communications of any kind and nature,
directed specifically to an individual for the purpose of causing the person to
leave their employment with Employer, but does not include general advertisement
or notice of job opportunities within an industry. For purposes of this
Agreement, the term “affiliated with” includes Executive’s ownership of 3% or
more of the equity of any person, lending money to any person, or serving as an
executive officer, director, manager or consultant to any person.

(b) Non Competition. Executive will not be “affiliated with” (as that term is
defined in Section 5(a) above) any person or company having a retail automotive
location within 50 miles of any dealership of Employer at the time of separation
of service, for 24 months following a separation of service for which Executive
is eligible for payments under Section 2 of this Agreement.

 

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(c) No Disparagement. Executive shall not take any action or make any statement
that disparages Employer, its operation, business, or reputation, or any of its
officers or directors, or their reputation, and shall not encourage or induce
any third parties to disparage such persons (“Disparaging Acts”) for a period of
three (3) years following a separation of service. “Disparaging Acts” means any
statement, communication or publication, oral or written, regardless of whether
such statement, communication or publication is true, made about such persons or
their reputation, that is vilifying and/or derogatory in nature and that
reasonably would be expected to result in a negative perception of such person,
or that otherwise may have a material adverse effect on such person or their
reputation.

(d) Disclosure of Confidential Information. During the course of Executive’s
employment with Employer, Executive will have access to and become familiar with
certain proprietary and confidential information of Employer and its
subsidiaries not known to the public generally, or by its actual or potential
competitors (“Confidential Information”). Executive acknowledges that such
information constitutes valuable, special, and unique assets of Employer’s
business, even though such information may not be of a technical nature and may
not be protected under trade secret or related laws.

“Confidential Information” means any company proprietary information, technical
data, trade secrets or know-how, including, but not limited to research,
strategic and marketing plans, product plans, products, services, markets,
processes, policies, financial or other business information disclosed to, or
discovered by, Executive either directly or indirectly, during Executive’s
employment with the Employer. Executive further understand that Confidential
Information does not include any of the foregoing items which has become
publicly known and made generally available through no wrongful act or omission
of his/her or of others who were under confidentiality obligations as to the
item or items involved or improvements or new versions thereof.

For a period of three (3) years following a separation of employment, Executive
will not, without the prior written approval from an authorized officer of
Employer, directly or indirectly (i) reveal, report, publish, disclose or
transfer any Confidential Information, other than information that constitutes
“trade secrets” under applicable state law (“Company Trade Secrets”), to any
person, firm, corporation or entity, or (ii) use any Confidential Information
for any purpose or for the benefit of any person, firm, corporation or entity.
Further, for so long as such information remains Company Trade Secrets under
applicable state laws, Executive shall not, without the prior written approval
from an authorized officer of the Employer, directly or indirectly (i) reveal,
report, publish, disclose or transfer any information that constitutes Company
Trade Secrets to any person, firm, corporation or entity, or (ii) use any of the
Company Trade Secrets for any purpose or for the benefit of any person, firm,
corporation or entity.

(e) Injunctive Relief. Executive acknowledges that it may be impossible to
measure in money the damages that will accrue to Employer if Executive fails to
observe the covenants in this Section 5 (the “Restrictive Covenants”);
therefore, in addition to any action at law for damages, the Restrictive
Covenants may be enforced by an injunction to prohibit the restricted activity.
Executive hereby waives the claim or defense that an adequate remedy at law is
available to Employer. Nothing set forth herein shall prohibit Employer from
pursuing all remedies available to it.

(f) Reasonableness. The parties agree that this Agreement in its entirety, and
in particular the Restrictive Covenants, is reasonable both as to time and as to
area. The parties additionally agree (i) that the Restrictive Covenants are
necessary for the protection of Employer’s business and goodwill; (ii) that the
Restrictive Covenants are not any greater than are reasonably necessary to
secure Employer’s business and goodwill; and (iii) that the degree of injury to
the public due to the loss of the service and skill of Executive or the
restrictions placed upon Executive’s opportunity to make a living with
Executive’s skills upon enforcement of said restraints, does not and will not
warrant non-enforcement of said restraints. The parties agree that if any
portion of the Restrictive Covenants is adjudged unreasonably broad, then the
parties authorize said court or arbitrator to narrow same so as to make it
reasonable, given all relevant circumstances, and to enforce the same.

(g) Return of Property. If and when Executive ceases for any reason to be
employed by Employer, Executive must return to Employer all keys, pass cards,
identification cards and any other property of Employer. At the same time,
Executive also must return to Employer all originals and copies (whether in hard
copy, electronic or other form) of any documents, drawings, notes, memoranda,
designs, devices, diskettes, tapes, manuals, and specifications which constitute
proprietary information or material of Employer. The obligations in this
paragraph include the return

 

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of documents and other materials that may be in Executive’s desk at work,
Executive’s car or place of residence, or in any other location under
Executive’s control.

(h) Creative Work. Executive agrees that all creative work and work product,
including but not limited to all technology, business management tools,
processes, software, patents, trademarks, and copyrights developed by Executive
during employment with Employer, regardless of when or where such work or work
product was produced, constitutes work made for hire, all rights of which are
owned by Employer. Executive hereby assigns to the Employer all rights, title,
and interest, whether by way of copyrights, trade secret, trademark, patent, or
otherwise, in all such work or work product, regardless of whether the same is
subject to protection by patent, trademark, or copyright laws.

(i) Survival. This Section 5 shall survive the termination of this Agreement.

6. Dispute Resolution. In the event a dispute arises pursuant to this Agreement,
the parties agree to resolve all disputes by submitting such dispute to binding
arbitration as set forth below. The parties confirm that by agreeing to this
alternate dispute resolution process, they intend to give up their right to have
any dispute decided in court by a judge or jury.

Any and all disputes, claims, or controversies between the parties (“parties”
specifically including, but not being limited to, any assignee of a party)
arising out of or relating to this Agreement that are not otherwise resolved by
their mutual agreement shall be submitted to final and binding arbitration
before JAMS, or its successor, at JAMS’ office in Medford, Oregon (or, if none,
at JAMS’ office in the United States which is closest to Medford, Oregon),
pursuant to the United States Arbitration Act, 9 U.S.C. Sec. 1, et seq. The
dispute shall be submitted to one Arbitrator, who shall have sole authority to
determine procedural questions, such as arbitrability, standing, and real party
in interest, as well as the merits of the claim.

Any party may commence the arbitration process by filing a written demand for
arbitration with JAMS at the designated office and concurrently sending a copy
to the other party or parties. The arbitration will be conducted in accordance
with the provisions of JAMS’ Comprehensive Arbitration Rules and Procedures in
effect when the demand is filed. The parties to the dispute, claim, or
controversy will cooperate with JAMS and each other in selecting an arbitrator
from JAMS’ panel of neutrals and in scheduling the arbitration proceedings. The
costs and fees of JAMS and of the arbitrator shall be borne equally by the
parties to the dispute, claim, or controversy. The provisions of this paragraph
are specifically enforceable by any court with subject matter jurisdiction
sitting in Jackson County, Oregon. The prevailing party or parties shall be
entitled to an award of its reasonable attorney fees and costs through every
stage of the proceeding and in obtaining and enforcing any judgment. The
arbitrator shall have sole discretion to determine which is the prevailing party
or parties and the amount of reasonable attorney fees and costs.

7. Notices. Any notice to be delivered under this Agreement shall be given in
writing and delivered, personally or by certified mail, postage prepaid,
addressed to the Employer or to Executive at their last known addresses.

8. Governing Law. The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of Oregon.

9. Waiver/Amendment. This Agreement may not be amended, released, discharged,
abandoned, changed, or modified in any manner, except by an instrument in
writing signed by each of the parties hereto. The failure of any party hereto to
enforce at any time any of the provisions of this Agreement shall in no way be
construed to be a waiver of any such provision, nor in any way to affect the
validity of this Agreement or any part thereof or the right of any party
thereafter to enforce each and every such provision. No waiver or any breach of
this Agreement shall be held to be a waiver of any other or subsequent breach.

10. Severability. If any provision of this Agreement shall be held by a court or
arbitrator to be invalid or unenforceable, the remaining provisions shall
continue to be fully effective. If any part of this Agreement is held to be
unenforceable as written, it shall be enforced to the maximum extent allowed by
applicable law.

11. Entire Agreement. This Agreement represents the entire employment agreement
between the parties regarding the subject matter hereof and together with
Employer’s employee handbook and Code of Business Conduct, governs the terms of
Executive’s employment. Where there is a conflict between this Agreement and the
employee handbook or

 

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code, the terms of this Agreement shall govern. This Agreement supersedes any
other prior oral or written employment agreement between the parties on the
subject matter hereof. This Agreement does not supersede any incentive
compensation agreement (including stock option or restricted share grant
agreements) entered into separately by the parties to this Agreement, except as
the same may be impacted by the provisions of Sections 3 or 4.

12. Assignment. Executive shall not assign or transfer any of Executive’s rights
pursuant to this Agreement, wholly or partially, to any other person or to
delegate the performance of their duties under the terms of this Agreement. Upon
Executive’s death, Executive’s rights under this agreement shall inure to
Executive’s heirs, executors, administrators or assigns. The rights and
obligations of Employer under this Agreement shall inure to the benefit of and
be binding in each and every respect upon the direct and indirect successors and
assigns of Employer, regardless of the manner in which the successors or assigns
succeed to the interests or assets of Employer. This Agreement shall not be
terminated by the voluntary or involuntary dissolution of Employer, by any
merger, consolidation or acquisition where Employer is not the surviving
corporation, by any transfer of all or substantially all of Employer’s assets or
by any other change in Employer’s structure or the manner in which Employer’s
business or assets are held. Executive’s employment shall not be deemed
terminated upon the occurrence of one of the foregoing events. In the event of
any merger, consolidation or transfer of assets, this Agreement shall be binding
upon and shall inure to the benefit of the surviving corporation or the
corporation to which the assets are transferred.

13. Survival. If any benefits provided to Executive under this Agreement are
still owed or claims under the Agreement are still pending, at the time of
termination of this Agreement, this Agreement shall continue in force with
respect to those obligations or claims, until such benefits are paid in full or
claims are resolved in full. The Restrictive Covenants and dispute resolution
provisions of this Agreement shall survive after termination of this Agreement,
and shall be enforceable regardless of any claim Executive may have against
Employer.

14. Advice of Counsel. Executive acknowledges that, in executing this Agreement,
Executive has had the opportunity to seek the advice of independent legal
counsel, and has read and understood all of the terms and provisions of this
Agreement. This Agreement shall not be construed against any party be reason of
the drafting or preparation hereof.

IN WITNESS WHEREOF, the parties have signed this Agreement effective on the day
and year first above written.

 

EXECUTIVE: /s/ Sidney B. DeBoer Sidney B. DeBoer LITHIA MOTORS, INC. By:   /s/
Bryan B. DeBoer Bryan B. DeBoer

 

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Exhibit A

EMPLOYMENT SEPARATION AGREEMENT AND RELEASE OF CLAIMS

This is a confidential agreement (the “Separation Agreement”) between you,
Lithia Motors, Inc. and Lithia Support Services, Inc. (collectively,
“Employer”). This Separation Agreement is dated for reference purposes
                    , 20         (the “Delivery Date), which is the date we
delivered this Separation Agreement to you for your consideration.

1. Termination of Employment. Your employment terminates [or was terminated] on
                    , 20         (the “Separation Date”).

2. Payments. In exchange for your agreeing to the release of claims and other
terms in this Separation Agreement, we will pay you the Change in Control
Benefit, as appropriate, set forth in the Terms of Employment and Change in
Control Agreement between you and Employer dated                     , 2008 (the
“Change in Control Agreement”). Such provisions of the Change in Control
Agreement are incorporated herein by reference. You acknowledge that we are not
obligated to make these payments to you unless you comply with the material
terms of the Change in Control Agreement and of this Separation Agreement.

3. COBRA Continuation Coverage. Your normal employee participation in the
Employer’s group health coverage will terminate on the Separation Date and
continuation of group health coverage thereafter will be made available to you
and your dependents pursuant to federal law (COBRA) and, except as provided
under Section 2 of the Change in Control Agreement, at your expense as provided
under COBRA.

4. Termination of Benefits. Except as provided in Section 3 above, your
participation in all employee benefit plans and programs ended on the Separation
Date. Your rights under any pension benefit or other plans in which you may have
participated will be determined in accordance with the written plan documents
governing those plans.

5. Full Payment. You acknowledge having received full payment of all
compensation of any kind (including wages, salary, vacation, sick leave,
commissions, bonuses and incentive compensation) that you earned as a result of
your employment by us.

6. No Further Compensation. Any and all agreements to pay you bonuses or other
incentive compensation are terminated. You understand and agree that you have no
right to receive any further payments for bonuses or other incentive
compensation. We owe no further compensation or benefits of any kind, except as
described in Section 2 above.

7. Release of Claims.

(a) You hereby release (i) Employer and its subsidiaries, affiliates, and
benefit plans, (ii) each of Employer’s past and present shareholders,
executives, directors, agents, employees, representatives, administrators,
fiduciaries and attorneys, and (iii) the predecessors, successors, transferees
and assigns of each of the persons and entities described in this sentence, from
any and all claims of any kind, known or unknown, that arose on or before the
date you signed this Separation Agreement.

(b) The claims you are releasing include, without limitation, claims of wrongful
termination, claims of constructive discharge, claims arising out of employment
agreements, representations or policies related to your employment, claims
arising under federal, state or local laws or ordinances prohibiting
discrimination or harassment or requiring accommodation on the basis of age,
race, color, national origin, religion, sex, disability, marital status, sexual
orientation or any other status, claims of failure to accommodate a disability
or religious practice, claims for violation of public policy, claims of
retaliation, claims of failure to assist you in applying for future position
openings, claims of failure to hire you for future position openings, claims for
wages or compensation of any kind (including overtime claims), claims of
tortious interference with contract or expectancy, claims of fraud or negligent
misrepresentation, claims of breach of privacy, defamation claims, claims of
intentional or negligent infliction of emotional distress, claims of unfair
labor practices, claims arising out of any claimed right to stock or stock
options, claims for attorneys’ fees or costs, and any other claims that are
based on any legal obligations that arise out of or are related to your
employment relationship with us.

(c) You release and forever discharge us, our subsidiaries and affiliates, all
predecessors and successors for such entities, and all officers, directors,
employees, agents, shareholders, representatives and insurers of the

 

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aforementioned (herein, collectively the “Released Parties”) from any and all
liability, damages or causes of action, claims, charges, judgments, or
obligations of whatever kind or character you have or may have against the
Released Parties, and you covenant that you shall not assist, participate or be
represented in, nor institute, submit or file, or permit to be instituted,
submitted or filed on the Released Parties, nor shall you voluntarily
participate or cooperate in the prosecution of, any lawsuit, charge, claim,
complaint or other proceeding against the Released Parties with any
administrative agency, court or other forum under any federal, state or local
laws or regulations, including, but not limited to, under Title VII of the Civil
Rights Act of 1964, as amended; Title VII of the Civil Rights Act of 1964;
claims under the Civil Rights Action of 1991; claims under the Age
Discrimination in Employment Act of 1967, as amended; claims under 42 USC §
1981, 1981a, 1983, 1985, or 1988; claims under the Family and Medical Leave Act
of 1993; claims under the Americans with Disabilities Act of 1990, as amended;
claims under the Fair Labor Standards Act of 1938 as amended; claims under the
Employee Retirement Income Security Act of 1974, as amended; the Worker
Adjustment and Retraining Notification Act; the Equal Pay Act of 1963; the
Consolidated Omnibus Budget Reconciliation Act of 1985; the applicable Workers’
Compensation statutes; and all amendments to each such Act as well as the
regulations issued; or any other federal, state, or local laws, rules or
regulations, including any insurance, human rights, civil rights, wage-hour,
pension, or labor laws, rules or regulations; public policy, contract or tort
laws, or any claim of retaliation under any law, or any claim arising under
common law, including, but not limited to, causes of action for wrongful
termination; discrimination on the basis of age, sex, race, or national origin
or any other basis; intentional or negligent infliction of emotional distress;
intentional or negligent misrepresentation; fraud; conspiracy to commit any act
mentioned herein; breach of the employment offer letter or of any other contract
(whether express or implied, oral or written); breach of the implied covenant of
good faith and fair dealing; interference with business advantage; interference
with prospective economic advantage; interference with contractual relationship;
defamation; failure to pay compensation of any kind, or to pay equal
compensation for equal work; or any other action whether cognizable in law or in
equity, based upon any conduct up to and including the date of this Separation
Agreement, and shall not, from any source or proceeding, seek or accept any
award or settlement therefrom.

(d) You knowingly and voluntarily agree to waive any rights or claims arising
out of or relating to the federal Age Discrimination in Employment Act (29 USC)
Section 621 et seq.) (“ADEA”) and you represent and acknowledge that you have
been informed of the following: (i) you are waiving any and all rights or claims
that you may have arising under the ADEA; (ii) you understand that you are not
waiving any rights or claims that may arise after the date this Separation
Agreement is executed; (iii) you understand that in exchange for the waiver and
release of your rights under this Separation Agreement, you are receiving
consideration in addition to any consideration to which you are already
entitled; (iv) you understand that this Separation Agreement does not bar you
from bringing a claim under ADEA challenging the validity of the ADEA waiver set
forth herein; (v) you have been advised to seek legal counsel regarding this
waiver, to the extent you deem necessary or appropriate, and you have had ample
time to review and analyze this entire Separation Agreement, and understands its
final and binding effect; and (vi) you have seven (7) days to revoke this
Separation Agreement after signing and delivering it to us.

(e) You agree not to seek any personal recovery (of money damages, injunctive
relief or otherwise) for the claims you are releasing in this Separation
Agreement, either through any complaint to any governmental agency or otherwise.
You agree never to start any lawsuit or arbitration asserting any of the claims
you are releasing in this Separation Agreement. You represent and warrant that
you have not initiated any complaint, charge, lawsuit or arbitration involving
any of the claims you are releasing in this Separation Agreement. Should you
apply for future employment with Employer, Employer has no obligation to
consider you for future employment.

(f) You represent and warrant that you have all necessary authority to enter
into this Separation Agreement (including, if you are married, on behalf of your
marital community) and that you have not transferred any interest in any claims
to your spouse or to any third party.

(g) This Separation Agreement does not affect your rights, if any, to receive
pension plan benefits, medical plan benefits, unemployment compensation benefits
or workers’ compensation benefits. This Separation Agreement also does not
affect your rights, if any, under agreements, bylaw provisions, insurance or
otherwise, to be indemnified, defended or held harmless in connection with
claims that may be asserted against you by third parties.

(h) You understand that you are releasing potentially unknown claims, and that
you have limited knowledge with respect to some of the claims being released.
You acknowledge that there is a risk that, after signing this Separation
Agreement, you may learn information that might have affected your decision to
enter into this Separation Agreement. You assume this risk and all other risks
of any mistake in entering into this Separation Agreement. You agree that this
release is fairly and knowingly made.

 

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(i) You are giving up all rights and claims of any kind, known or unknown,
except for the rights specifically given to you in this Separation Agreement.

8. Acceptance and Revocation Period and Effective Date. You shall have
twenty-one (21) days after the Delivery Date in which to review this Separation
Agreement and deliver the Separation Agreement signed by you to us by such date.
The signed agreement must be delivered to Lithia Motors, Inc. to the attention
of the Chief Executive Officer, at 360 E. Jackson Street, Medford, Oregon 97501.
You shall have a period of seven (7) days after the date upon which you deliver
the signed Separation Agreement to us in which to revoke your acceptance (the
“Revocation Period”). This Separation Agreement shall become effective upon
expiration of the Revocation Period, provided you have not delivered a written
notice of revocation to us before such expiration (“Effective Date”). In the
event of any such revocation of this Separation Agreement, the obligations
contained in the Separation Agreement shall be null and void and of no further
force and effect, and there shall be no obligation by us to pay the sums, or
provide the benefits, otherwise provided for in this Separation Agreement or the
Change in Control Agreement. For purposes of this Section, “delivery” of the
Separation Agreement will be deemed given as of (i) the day the Separation
Agreement is delivered to us in person, or by a nationally recognized express
delivery service (such as Federal Express, UPS or DHL) to the above address;
(ii) the day the Separation Agreement is delivered via facsimile to us; or
(iii) the day the Separation Agreement is deposited in the U.S. mail system,
postage prepaid, certified or registered, return receipt requested, and
addressed as set forth above.

9. Non-solicitation; Non Competition. You will comply with Sections 5(a) and
5(b) of the Change in Control Agreement, incorporated herein by reference, and
Employer will have the right to enforce those provisions under the terms of
Section 5(e) of the Change in Control Agreement, incorporated herein by
reference. After the restrictive periods in Section 5(a) and 5(b) of the Change
in Control Agreement, you will not, apart from good faith competition, interfere
with our relationships with customers, employees, vendors, or others.

10. No Disparagement. You may not disparage us, our officers or directors or our
operation as set forth in Section 5(c) of the Change in Control Agreement.

11. Nondisclosure Agreement. You will comply with the covenant regarding
confidential information as set forth in Section 5(d) of the Change in Control
Agreement, which covenant is incorporated herein by reference.

12. Employer Materials. You represent and warrant that you have, or no later
than the Separation Date will have, returned all keys, credit cards, documents
and other materials that belong to us, in accordance with Section 5(g) of the
Change in Control Agreement, which is incorporated herein by reference.

13. Cooperation Regarding Other Claims. If any claim is asserted by or against
us as to which you have relevant knowledge, you will reasonably cooperate with
us in the prosecution or defense of that claim, including by providing truthful
information and testimony as reasonably requested by us.

14. No Admission of Liability. Neither this Separation Agreement nor the
payments made under this Separation Agreement are an admission of any liability
or wrongdoing by us.

15. Independent Legal Counsel. You are advised and encouraged to consult with an
attorney before signing this Separation Agreement. You acknowledge that you have
had an adequate opportunity to do so.

16. Governing Law. This Separation Agreement is governed by the laws of the
State of Oregon that apply to contracts executed and to be performed entirely
within the State of Oregon.

17. Dispute Resolution.

(a) Arbitration. In the event a dispute arises pursuant to this Separation
Agreement we both agree to resolve all disputes by submitting such dispute to
binding arbitration as set forth below. We confirm that by agreeing to this
alternate dispute resolution process, we both intend to give up our rights to
have any dispute decided in court by a judge or jury. Any and all disputes,
claims, or controversies between us arising out of or relating to this
Separation Agreement shall be submitted to final and binding arbitration before
JAMS, or its successor, at JAMS’ office in Medford, Oregon (or, if none, at
JAMS’ office in the United States which is closest to Medford, Oregon), pursuant
to the United States Arbitration Act, 9 U.S.C. Sec. 1, et seq. The dispute shall
be submitted to one Arbitrator, who shall have sole authority to determine
procedural questions, such as arbitrability, standing, and real party in
interest, as well as the merits of the claim.

 

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Either of us may commence the arbitration process by filing a written demand for
arbitration with JAMS at the designated office and concurrently sending a copy
to the other party or parties. The arbitration will be conducted in accordance
with the provisions of JAMS’ Comprehensive Arbitration Rules and Procedures in
effect when the demand is filed. Each of us will cooperate with JAMS and each
other in selecting an arbitrator from JAMS’ panel of neutrals and in scheduling
the arbitration proceedings. The costs and fees of JAMS and of the arbitrator
shall be borne equally by us. The provisions of this paragraph are specifically
enforceable by any court with subject matter jurisdiction sitting in Jackson
County, Oregon.

(b) Expenses/Attorneys’ Fees. The prevailing party shall be awarded all costs
and expenses of the proceeding, including but not limited to, attorneys’ fees,
filing and service fees, witness fees and arbitrator’s fees. If arbitration is
commenced, the arbitrator will have full authority and complete discretion to
determine the “prevailing party” and the amount of costs and expenses to be
awarded.

18. Saving Provision. If any part of this Separation Agreement is held to be
unenforceable, it shall not affect any other part. If any part of this
Separation Agreement is held to be unenforceable as written, it shall be
enforced to the maximum extent allowed by applicable law.

19. Final and Complete Agreement. Except for the Change in Control Agreement to
the extent it is expressly incorporated herein by reference, this Separation
Agreement is the final and complete expression of all agreements between us on
all subjects and supersedes and replaces all prior discussions, representations,
agreements, policies and practices. You acknowledge you are not signing this
Separation Agreement relying on anything not set out herein.

 

Lithia Motors, Inc. By:     Title:    

I, the undersigned, having been advised to consult with an attorney, hereby
agree to be bound by this Separation Agreement and confirm that I have read and
understood each part of it. I acknowledge that pursuant to Section 8, I have
twenty-one (21) days after delivery of this Separation Agreement within which to
review and consider this agreement, prior to signing and delivering to you.

 

   (Name)    (Signature)    Date

 

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