Exhibit 10.1


 


UNITED STATES DISTRICT COURT FOR THE




EASTERN DISTRICT OF VIRGINIA


 


(Newport News Division)


 


 


	
        In re LUMBER LIQUIDATORS
        HOLDINGS, INC. SECURITIES LITIGATION,

         

         

        This Document Relates To:

         

        Lead Case No. 4:15cv16 and Consolidated

        Case Nos. 4:15cv25 and 4:15cv30

         
	
        )

        )

        )

        )

        )

        )

        )

        )

        
	
        Master No. 4:13-cv-00157-AWA-DEM

        

        Hon. Arenda L. Wright Allen

         

         



 


STIPULATION OF SETTLEMENT


 


This Stipulation of
Settlement, dated July 18, 2016 (“Stipulation” or “Settlement”), is made and entered into by and among
the following parties, and by and through their respective counsel: (i) Lead Plaintiff Amalgamated Bank, as Trustee for the Longview
600 Small Cap Index Fund in the action captioned Amalgamated Bank, as Trustee for the Longview 600 Small Cap Index Fund v. Macon
F. Brock, Jr., et al., Civil Action No. 4:15-cv-30; Plaintiff R. Andre Klein in the action captioned R. Andre Klein v. Macon
F. Brock, Jr., et al., Civil Action No. 4:15-cv-16; and Plaintiff Phuc Doan in the action captioned Phuc Doan v. Macon F.
Brock, Jr., et al., Civil Action No. 4:15-cv-25 (on behalf of themselves and derivatively on behalf of Lumber Liquidators Holdings,
Inc.) (“Lumber Liquidators” or the “Company”) (collectively, the “Actions”); (ii) Defendants
Thomas D. Sullivan, Douglas T. Moore, John M. Presley, Macon F. Brock, Jr., Peter B. Robinson, Martin F. Roper, Jimmie L. Wade,
Nancy M. Taylor, Daniel E. Terrell, Carl R. Daniels, Robert M. Lynch, Jeffrey W. Griffiths, and William K. Schlegel (the “Settling
Defendants”); and (iii) Nominal Party Lumber Liquidators Holdings, Inc. (Plaintiffs, Settling Defendants and Lumber Liquidators
collectively, the “Settling Parties”). The Stipulation is intended by the Settling Parties to fully, finally and forever
resolve, discharge and settle the Released Claims (as defined below in ¶1.24) upon Court approval and subject to the terms
and conditions hereof.


 






    	 	1.	 



     


    

 


		I.	BRIEF OVERVIEW OF THE ACTIONS
		 	 



		A.	Commencement and Consolidation of the Federal Derivative Actions



 


On March 11, 2015,
plaintiffs Amalgamated Bank, Doan and Klein filed shareholder derivative actions on behalf of Lumber Liquidators for breach of
fiduciary duty, corporate waste, unjust enrichment and other relief in the United States District Court for the Eastern District
of Virginia. On May 27, 2015, the District Court consolidated these actions into the In re Lumber Liquidators Holdings, Inc.
Shareholder Derivative Litigation, Civil Action No. 4:13-cv-00157-AWA-LRL and appointed Amalgamated Bank as Lead Plaintiff
and Robbins Geller Rudman & Dowd LLP as Lead Counsel for the Federal Derivative Actions. See Dkt. No. 11.


 


On June 26, 2015, plaintiffs
filed a Consolidated Shareholder Derivative Complaint for Breach of Fiduciary Duty of Loyalty, Corporate Waste, Unjust Enrichment
and Conspiracy (“Consolidated Complaint”). See Dkt. No. 24. The Consolidated Complaint alleges that defendants
are liable to Lumber Liquidators for causing the Company to violate the law by selling wood containing toxic levels of formaldehyde
in violation of the California Air Resources Board’s Regulations (“CARB Regulations”), and wood sourced from
the Russian Far East, a protected habitat, in violation of the Lacey Act. Id., ¶¶64-121. The Consolidated Complaint
further alleges that a pre-suit demand upon the Board of Directors of Lumber Liquidators (the “Board”) is unnecessary
because a majority of the directors face a substantial likelihood of liability for knowingly causing the Company to seek profits
in violations of the law as described above. Id., ¶¶148-187.


 


		B.	Defendants’ Motions to Dismiss



 


On July 24, 2015,
the Company filed a motion to dismiss the Consolidated Complaint on the grounds that a pre-suit demand upon the Lumber Liquidators’
Board would not have been a useless and futile act, and therefore, is not excused. See Dkt. No. 45. Defendants also filed
a motion to dismiss the Consolidated Complaint, arguing, among other things, that defendants did not breach their fiduciary duties
owed to Lumber Liquidators and its shareholders but instead acted in good faith and in the best interest of Lumber Liquidators.
Dkt. No. 42.


 






    	 	2.	 



     


    

 


On the same day, the
Demand Review Committee filed a separate motion to stay the Federal Derivative Actions until such time the Demand Review Committee
was able to “complete its work and the Board may act on the [Demand Review] Committee’s recommendation.” See
Dkt. No. 37.


 


Plaintiffs filed their
Oppositions to the Company and defendants’ motions to dismiss the Consolidated Complaint on August 14, 2015. See Dkt.
Nos. 69, 71. In the Oppositions, plaintiffs argued, among other things, that demand futility existed because a majority of the
Lumber Liquidators’ Board suffer from conflicts that render them unable to fairly and objectively consider a pre-suit demand.
Id. The Oppositions argued that each defendant is liable to Lumber Liquidators for breach of fiduciary duty of loyalty,
corporate waste, unjust enrichment, and conspiracy. Id.


 


On December 21, 2015,
the District Court entered an Order in the related In re Lumber Liquidators Holdings, Inc. Securities Litigation, Civil
Action No. 4:13-cv-157 denying the motion to dismiss filed by defendants in that action.


 


Thereafter, on February
29, 2016, the District Court denied the Company and defendants’ motions to dismiss the derivative claims in the Actions without
prejudice. See Dkt. No. 155 at 4.


 


		C.	Settlement Negotiations



 


On March 29, 2016,
the parties engaged in mediation, overseen by the Hon. Daniel Weinstein (Ret.). The mediation involved the parties’ extended
effort to settle the claims through extensive negotiations and consultation with experienced legal counsel who were fully competent
to assess the strengths and weaknesses of their respective clients’ claims or defenses. The parties exchanged substantial
mediation statements prior to participating in the mediation session with Judge Weinstein. Following lengthy, arm’s-length,
and mediated negotiations, on May 16, 2016, the parties reached an agreement-in-principle to settle the Actions that was memorialized
in a Memorandum of Understanding (the “MOU”) executed that day.


 


		II.	CLAIMS OF PLAINTIFFS AND BENEFITS OF SETTLEMENT



 


Plaintiffs and Plaintiffs’
Counsel believe that the claims asserted in the Actions have merit. However, Plaintiffs and Plaintiffs’ Counsel recognize
and acknowledge the expense and length of continued proceedings necessary to prosecute the Actions against the Settling Defendants
through trial and potential appeals. Plaintiffs and Plaintiffs’ Counsel also have taken into account the uncertain outcome
and the risk of any litigation, especially in complex actions such as the Actions, as well as the difficulties and delays inherent
in such litigation. Plaintiffs and Plaintiffs’ Counsel also are mindful of the inherent problems of proof of, and possible
defenses to, the claims asserted in the Actions. Based on their evaluation, Plaintiffs and Plaintiffs’ Counsel have determined
that the Settlement set forth in this Stipulation is in the best interests of Lumber Liquidators and its stockholders.


 






    	 	3.	 



     


    

 


		III.	THE SETTLING DEFENDANTS’ DENIALS OF WRONGDOING AND LIABILITY



 


The Settling Defendants
have denied and continue to deny each and every one of the claims and contentions alleged by the Plaintiffs in the Actions. The
Settling Defendants expressly have denied and continue to deny all allegations of wrongdoing or liability against them or any of
them arising out of, based upon, or related to, any of the conduct, statements, acts or omissions alleged, or that could have been
alleged, in the Actions. Without limiting the foregoing, the Settling Defendants have denied and continue to deny, among other
things, that they breached their fiduciary duties or any other duty owed to Lumber Liquidators or its stockholders, or that Plaintiffs,
Lumber Liquidators, or its stockholders suffered any damage or were harmed as a result of any conduct alleged in the Actions or
otherwise. The Settling Defendants have further asserted and continue to assert that at all relevant times, they acted in good
faith and in a manner they reasonably believed to be in the best interests of Lumber Liquidators and its stockholders.


 


Nonetheless, the Settling
Defendants also have taken into account the expense, uncertainty and risks inherent in any litigation, especially in complex cases
like the Actions, and that the proposed Settlement would, among other things: (a) bring to an end the expenses, burdens and uncertainties
associated with continued litigation of the claims asserted in the Actions, (b) finally put to rest those claims and the underlying
matters, and (c) confer benefits upon them, including further avoidance of disruption of their businesses and lives due to the
pendency and defense of the Actions. Therefore, the Settling Defendants have determined that it is desirable and beneficial that
the Actions, and all of the Settling Parties’ disputes related thereto, be fully and finally settled in the manner and upon
the terms and conditions set forth in this Stipulation. Pursuant to the terms set forth below, this Stipulation (including all
of the Exhibits hereto) shall in no event be construed as or deemed to be evidence of an admission or concession by the Settling
Defendants with respect to any claim of fault, liability, wrongdoing, or damage whatsoever.


 






    	 	4.	 



     


    

 


		IV.	BOARD APPROVAL OF THE SETTLEMENT



 


On April 27, 2016,
the Demand Review Committee of the Board of Directors of the Company, assisted by independent counsel, reviewed the Federal Derivative
Actions, the State Derivative Actions, and the claims of the Demanding Stockholder and determined that pursuit of any of these
claims was not in the best interests of the Company and its stockholders. On April 28, 2016, the Demand Review Committee of the
Board of Directors of the Company, through its independent counsel, recommended that the full Board reach the same conclusion.
On May 6, 2016, the full Board, advised by the Demand Review Committee's independent counsel, reviewed the report of the Demand
Review Committee, and exercising its business judgment and mindful of its duties to stockholders, adopted the report of the Demand
Review Committee. The full Board also reviewed the derivative settlement parameters, and exercising its business judgment and mindful
of its duties to stockholders, approved the settlement. The full Board further resolved that the President and Chief Executive
Officer, Chief Compliance and Legal Officer and any Senior Vice President of the Company were authorized and directed, in the name
and on behalf of the Company, to negotiate and execute and deliver, or caused to be executed and delivered, any and all documents,
agreements, certificates and instruments that may be necessary to or in furtherance of a settlement or final resolution of the
Derivative Actions within the settlement parameters presented to the Board, and resolved that any such documents, agreements, certificates
and instruments should be provided to the Chair of the Board prior to execution and delivery thereof. On July 11, 2016, Jill Witter,
Chief Compliance and Legal Officer of the Company, confirmed that the Settlement set forth by the Stipulation is within the derivative
settlement parameters approved by the Board. Before the Stipulation was executed or delivered, Nancy M. Taylor, Chair of the Board,
received a copy of the Stipulation.


 






    	 	5.	 



     


    

 


		V.	TERMS OF STIPULATION AND AGREEMENT OF SETTLEMENT



 


NOW, THEREFORE, IT
IS HEREBY STIPULATED AND AGREED by and among the Plaintiffs (for themselves and derivatively on behalf of Lumber Liquidators),
by and through their respective attorneys of record, the Settling Defendants and Lumber Liquidators, by and through their respective
attorneys of record, that in exchange for the consideration set forth below, the Actions and Released Claims shall be fully, finally
and forever compromised, settled, discharged, relinquished and released, and the Actions shall be dismissed with prejudice as to
the Settling Defendants, upon and subject to the terms and conditions of this Stipulation, as follows:


 


		1.	Definitions



 


As used in this Stipulation
the following terms have the meanings specified below:


 


1.1      “Actions”
means, collectively, the Federal Derivative Actions.


 


1.2      “Approval
Date” means the date on which the Court enters the Judgment.


 


1.3      “Cash”
means the cash payment of twenty-six million dollars ($26,000,000.00) to Lumber Liquidators, subject to the release by the Court
of that amount of funds as the result of the Interpleader Action brought by the Insurers (described below in ¶1.14), to be
used in the resolution of the Federal Class Action.


 


1.4      “Court”
means the United States District Court for the Eastern District of Virginia.


 


1.5      “Defendants’
Counsel” means any counsel that has appeared of record or rendered legal services to any of the Settling Defendants in connection
with any of the Actions.


 


1.6      “Demand
Review Committee” means the independent Demand Review Committee established by Lumber Liquidators, consisting of Lumber Liquidators’
Directors Martin F. Roper, Nancy M. Taylor and Jimmie L. Wade.


 


1.7      “District
Court Approval Order” means the Order Approving Derivative Settlement and Order of Dismissal with Prejudice, substantially
in the form attached as Exhibit B hereto.


 






    	 	6.	 



     


    

 


1.8      “Effective
Date” means the first date by which all of the events and conditions specified in ¶7.1 of this Stipulation have been
met and have occurred.


 


1.9      “Federal
Class Action” means the related securities class action captioned In re Lumber Liquidators Holdings, Inc. Securities Litigation,
No. 4:13-cv-00157-AWA-DEM pending in the United States District Court for the Eastern District of Virginia, Newport News Division.


 


1.10      “Federal
Derivative Actions” means the consolidated proceedings entitled Amalgamated Bank, as Trustee for the Longview 600 Small
Cap Index Fund v. Macon F. Brock, Jr., et al., Civil Action No. 4:15-cv-30; R. Andre Klein v. Macon F. Brock, Jr., et al.,
Civil Action No. 4:15-cv-16; Phuc Doan v. Macon F. Brock, Jr., et al., Civil Action No. 4:15-cv-25, pending in the United
States District Court for the Eastern District of Virginia, Newport News Division.


 


1.11      “Final,”
with respect to the Judgment, means the time when the Judgment has not been reversed, vacated, or modified in any way and is no
longer subject to appellate review, either because of disposition on appeal and conclusion of the appellate process or because
of passage, without action, of time for seeking appellate review. More specifically, it is that situation when: (1) either no appeal
has been filed and the time has passed for any notice of appeal to be timely filed in the Actions; or (2) an appeal has been filed
and the court(s) of appeal has/have either affirmed the Judgment or dismissed that appeal and the time for any reconsideration
or further appellate review has passed and the appellate court mandate(s) has/have issued; or (3) a higher court has granted further
appellate review and that court has either affirmed the underlying Judgment or affirmed the court of appeal’s decision affirming
the Judgment or dismissing the appeal. However, any appeal or proceeding seeking subsequent review pertaining solely to an order
issued with respect to attorneys’ fees, costs or expenses shall not in any way delay or preclude the Judgment from becoming
Final.


 


1.12      “Insurance
Policies” means the insurance policies issued by the Insurers to Lumber Liquidators described in the Interpleader Action.


 


1.13      “Insurance
Proceeds” means $26,000,000, which constitutes the remaining limits of liability under the Insurance Policies.


 






    	 	7.	 



     


    

 


1.14      “Insurers”
means, collectively, Star Indemnity & Liability Co., Travelers Casualty and Surety Company of America, Liberty Insurance Underwriters,
Inc., ACE American Insurance Company, Continental Casualty Company, and Aspen American Insurance Company.


 


1.15      “Interpleader
Action” means the action to be filed by the Insurers as described in ¶¶4.5-4.6.


 


1.16      “Judgment”
means a judgment, substantially in the form and substance attached as Exhibit C hereto, rendered by the Court in the Actions upon
its final approval of the Settlement.


 


1.17      “Lead
Plaintiff” means Amalgamated Bank, as Trustee for the Longview 600 Small Cap Index Fund.


 


1.18      “Lumber
Liquidators” or the “Company” means Lumber Liquidators Holdings, Inc., including, but not limited to, its predecessors,
successors, partners, joint ventures, subsidiaries, affiliates, divisions, and assigns.


 


1.19      “Lumber
Liquidators’ Counsel” means any counsel that has appeared of record or rendered legal services to Lumber Liquidators
in connection with any of the Actions.


 


1.20      “Person”
or “Persons” means an individual, corporation, limited liability company, professional corporation, limited liability
partnership, partnership, limited partnership, association, joint venture, joint stock company, estate, legal representative, trust,
unincorporated association, government or any political subdivision or agency thereof, and any other business or legal entity,
and each of their spouses, heirs, predecessors, successors, representatives, or assignees.


 


1.21      “Plaintiffs”
means, collectively, Amalgamated Bank, as Trustee for the Longview 600 Small Cap Index Fund, R. Andre Klein, and Phuc Doan.


 


1.22      “Plaintiffs’
Counsel” means any counsel that has appeared of record or rendered legal services to any of the Plaintiffs in connection
with any of the Actions.


 






    	 	8.	 



     


    

 


1.23      “Related
Parties” means: (i) as to Lumber Liquidators, each and every one of Lumber Liquidators’ past or present directors,
officers, managers, employees, partners, agents, representatives, attorneys (including Lumber Liquidators’ Counsel), accountants,
advisors, administrators, auditors, banks, insurers, co-insurers, re-insurers, fiduciaries, consultants, experts, successors, subsidiaries,
predecessors, affiliates, divisions, joint ventures, assigns, assignees, general or limited partners or partnerships, limited liability
companies, any entity in which Lumber Liquidators has a controlling interest, and all officers, directors and employees of Lumber
Liquidators’ current and former subsidiaries, and (ii) as to the Settling Defendants, for each of them (1) each spouse, immediate
family member, heir, executor, estate, beneficiary, administrator, agent, attorney (including Defendants’ counsel), accountant,
auditor, bank, insurer, co-insurer, re-insurer, advisor, consultant, expert, or affiliate of any of them, (2) any trust in respect
of which any Settling Defendant, or any spouse or family member thereof serves as a settlor, beneficiary or trustee, and (3) any
entity in which a Settling Defendant, or any spouse or immediate family member thereof, holds a controlling interest or for which
a Settling Defendant has served as an employee, director, officer, managing director, advisor, general partner, limited partner,
or member and any collective investment vehicle which is advised or managed by any of them.


 


1.24      “Released
Claims” means all claims, demands, rights, liabilities and claims for relief of every nature and description whatsoever,
known or Unknown (as set forth in ¶1.32), whether arising under federal, state, common or foreign law brought by Plaintiffs,
Lumber Liquidators, or any Lumber Liquidators stockholder derivatively on behalf of Lumber Liquidators, (i) that were asserted
in any of the complaints in the Actions, or (ii) that could have been asserted in the Actions by Plaintiffs, Lumber Liquidators,
or any Lumber Liquidators stockholder derivatively on behalf of Lumber Liquidators against the Settling Defendants in any forum
that arise out of or are based upon the allegations, transactions, facts, matters or occurrence, representations or omissions,
or circumstances set forth, or referred to in the complaints in the Actions.


 


1.25      “Released
Persons” means the Settling Defendants, Lumber Liquidators and their respective Related Parties.


 


1.26      “Securities
Holders” means any and all individuals or entities that hold or beneficially own, directly or indirectly, common stock of
Lumber Liquidators on or before the Approval Date.


 


1.27      “Settlement”
means the terms and conditions contained in this Stipulation.


 






    	 	9.	 



     


    

 


1.28      “Settling
Defendants” means Defendants Thomas D. Sullivan, Douglas T. Moore, John M. Presley, Macon F. Brock, Jr., Peter B. Robinson,
Martin F. Roper, Jimmie L. Wade, Nancy M. Taylor, Daniel E. Terrell, Carl R. Daniels, Robert M. Lynch, Jeffrey W. Griffiths, and
William K. Schlegel.


 


1.29      “Settling
Parties” means, collectively, each of the Plaintiffs, the Settling Defendants and Lumber Liquidators.


 


1.30      “State
Derivative Actions” refers to the following purported derivative matters filed in the Virginia and Delaware state courts
alleging claims similar or identical to those made in the Actions and based upon the same facts and circumstances alleged in the
Actions: McBride v. Sullivan, et al., Case No. LCL15-000453-00 (Va. Cir. Ct.) and Costello v. Sullivan, et al., Case
No. CA10764 (Del. Ch.).


 


1.31      “Stipulation”
means this Stipulation of Settlement dated July 18, 2016 and its Exhibits.


 


1.32      “Unknown
Claims” means any and all Released Claims that any Plaintiff, Lumber Liquidators or any Lumber Liquidators stockholder does
not know or suspect to exist in his, her or its favor at the time of the release of the Released Persons, including claims which,
if known by him, her or it, might have affected his, her or its settlement with, and release of the Released Persons, or might
have affected his, her or its decision not to object to this Settlement. With respect to any and all Released Claims, the Settling
Parties stipulate and agree that, upon the Effective Date, Plaintiffs, Lumber Liquidators, and its stockholders shall be deemed
to have, and by operation of the Judgment shall have, expressly waived the provisions, rights and benefits of California Civil
Code §1542, which provides:


 


A GENERAL RELEASE
DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE
RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.


 






    	 	10.	 



     


    

 


Further, with respect to any and all claims
released pursuant to ¶¶5.1, 5.3 below, the Settling Parties stipulate and agree that, upon the Effective Date, each of
the Released Persons shall expressly waive, and by operation of the Judgment shall have expressly waived, any and all provisions,
rights and benefits conferred by any law of any jurisdiction or any state or territory of the United States, or principle of common
law, which is similar, comparable or equivalent to California Civil Code § 1542. Plaintiffs, Lumber Liquidators, and each
Lumber Liquidators stockholder may hereafter discover facts in addition to or different from those which he, she or it now knows
or believes to be true with respect to the subject matter of the Released Claims, known or unknown, suspected or unsuspected, contingent
or non-contingent, whether or not concealed or hidden, which now exist, or heretofore have existed, upon any theory of law or equity
now existing or coming into existence in the future, including, but not limited to, conduct which is negligent, intentional, with
or without malice, or a breach of any duty, law or rule, without regard to the subsequent discovery or existence of such different
or additional facts. The Settling Parties acknowledge, and the Lumber Liquidators stockholders shall be deemed by operation of
the Judgment to have acknowledged, that the foregoing waiver was separately bargained for and is a key element of the Settlement
of which this release is a part.


 


		2.	Consideration



 


2.1      The Settlement
will provide for the payment of $26,000,000 (the “Cash”) to Lumber Liquidators, for the resolution of the Federal Class
Action, pending in the Court, subject to the release by the Court of that amount of funds as the result of the Interpleader Action
(described in ¶4.5 below) brought by the Insurers. Settling Defendants and the Company agree that in no event shall any Lumber
Liquidators’ cash or Settling Defendants’ cash (beyond the net insurance proceeds Settling Defendants and Lumber Liquidators
receive from the Insurers) be paid to resolve the Federal Class Action.


 


2.2      The Cash is
to be paid to Lumber Liquidators by the registry of the Court. The Company will use the Cash for the resolution of the Federal
Class Action. Subject to the release of the funds from the registry of the Court, the amount is due and payable no later than ten
(10) calendar days after preliminary approval of the Settlement and shall be paid to Lumber Liquidators no later than five (5)
calendar days after final decision of the Interpleader Action pursuant to ¶4.5 below.


 






    	 	11.	 



     


    

 


2.3      The Settling
Defendants shall have no obligation for any portion of the Cash payments, which shall be paid solely by the Insurers. The Settling
Parties agree that the total monetary value of the Settlement, payable as set forth above, is $26,000,000.


 


2.4      Plaintiffs and
Lumber Liquidators have conducted extensive negotiations over an extended period of time regarding certain corporate governance
policies related to, among other things, the Company’s compliance with the Lacey Act, CARB Regulations, and other applicable
laws, rules and regulations regarding formaldehyde emissions. Lumber Liquidators shall, based upon those negotiations and in connection
with the prosecution and settlement of the Actions, within 60 days following final approval of the Settlement by the Court, adopt
and keep in place for a period of at least five (5) years the corporate governance policies in ¶3 below.


 


2.5      Lumber Liquidators
acknowledges and agrees that the Cash and corporate governance policies set forth in ¶¶2.1 and 3 confer substantial benefits
upon Lumber Liquidators and its stockholders. Lumber Liquidators also acknowledges that the commencement, prosecution, and settlement
of the Actions were material and substantial factors for the Company’s decision to use the $26,000,000 in insurance proceeds
(and no money from the Company) for the resolution of the Federal Class Action and to adopt, implement, and maintain the corporate
governance reforms set forth in in ¶3 below.


 


		3.	Corporate Governance Policies
	 	 	 



		a.	Board Composition and Practices



 


3.1      Modified
Plurality Voting. The Company will adopt a “modified plurality” approach to shareholder voting for directors. Under
this approach, a director who does not receive a majority vote would agree to submit his/her resignation. However, the Board is
not legally obligated to accept, and can take other factors into consideration, including (but not limited to) the individual’s
history on the Board, relevant outside work experience, knowledge of industry, and knowledge of regulatory requirements, and choose
to retain the director if the director otherwise received the highest number of shares voted.


 






    	 	12.	 



     


    

 


3.2      Separate
Chairman and Chief Executive Officer (“CEO”). The Board shall include a provision in the Company’s Bylaws
which requires the separation of the roles of CEO and Chairman of the Board and that the Chairman must be a fully independent director
of the Board.


 


3.3      In addition
to the duties of all Board members (which shall not be limited or diminished by the Chairman’s role), the Chairman shall
be responsible for the following functions: (i) timing and agendas for Board meetings; (ii) nature, quantity and timing of information
provided to the independent directors by the Company’s management; (iii) retention of counsel or consultants who report directly
to the Board; (iv) implementation of corporate governance policies and procedures, including assisting the chair of the various
Board committees as requested; (v) receiving reports from the Nominating and Corporate Governance Committee regarding compliance
with and implementation of corporate governance policies; (vi) receiving reports from the Nominating and Corporate Governance Committee
regarding governance policies; and (vii) evaluating, along with the Compensation Committee, CEO performance. The Chairman
should share any reports received by Board committees with the full Board as appropriate.


 


3.4      Limitation
on Other Boards. The Board shall include a provision in the Company’s Bylaws which requires that independent directors
may sit on no more than two other public boards, including Chairman. The CEO may sit on no more than one
other public board. Directors and officers may not serve as Board members for companies that directly compete with Lumber Liquidators.


 


3.5      Authorization
to Retain Counsel. The Board’s committees shall have standing authorizations, at their discretion, to obtain legal or
other advisors of their choice, who shall report directly to the Board or the committee.


 


3.6      Charters.
Each standing committee of the Board should have a written charter, which is made available to the public on Lumber Liquidators’
website, and requires that the committee meet no fewer than three times per year.


 






    	 	13.	 



     


    

 


3.7      Director
Education. Current directors shall attend a program specifically designed as directors’ education no later than the end
of their current term (if standing for reelection). New directors must attend within six (6) months of joining the Board. Thereafter,
the Nominating and Corporate Governance Committee in coordination with the Chief Compliance Officer (“CCO”) and Chief
Legal Officer (“CLO”) will develop and implement an ongoing annual education program for directors.


 


3.8      New Director.
The Company shall agree to the one-time appointment to the Board of Directors of a candidate agreeable to Lead Plaintiff and the
Company. The candidate shall meet the criteria for a Lumber Liquidators’ director as set forth in the Company’s Corporate
Governance Guidelines. If at least one of the candidate(s) already proffered by Lead Plaintiff are not agreed to by Lumber Liquidators
or, should all candidates decline to serve, the Company, utilizing mutually agreed upon search criteria, shall in good faith conduct
a search for new director candidate(s) through the following process:


 


		(a)	Employ a nationally recognized search firm to work together with Lead Plaintiff’s corporate
governance expert to engage in a general search for a slate of at least five (5) candidates. Lead Plaintiff, in consultation with
its corporate governance expert and Lumber Liquidators’ shareholders, as appropriate, shall propose a slate of at least five
(5) additional candidates. All candidates selected shall meet the qualifications identified by Lead Plaintiff’s corporate
governance expert and Lumber Liquidators.
	 	 	 



		(b)	If Lead Plaintiff and Lumber Liquidators are unable to, in good faith, mutually agree upon the
selection of one of these candidates, the selection shall be made by Judge Weinstein or Jed Melnick as the mediators of the settlement
of the Federal Derivative Actions.
	 	 	 



		(c)	At the conclusion of the search process, but in no event later than six (6) months after final
approval of this Settlement, Lumber Liquidators shall, in good faith, appoint a director candidate to the Lumber Liquidators’
Board identified pursuant to this process to serve for at least one (1) term.



 






    	 	14.	 



     


    

 


3.9      Board Evaluation
of Stockholder Proposals. The Board shall include a provision in the Company’s Bylaws which requires that stockholder
proposals be evaluated by the directors as follows:


 


		(a)	The Company shall distribute to the entire Board all proposals received by the Company. After the
distribution to the Board, and before the making of any recommendation to the Board or any of its members concerning a response,
approval or disapproval, Lumber Liquidators’ law department and senior management shall discuss with the Chair of any Board
committee responsible for oversight of the subject matter of the proposal, if applicable, the financial, legal, practical and social
implications of approval and implementation of the proposal;
	 	 	 



		(b)	Where a stockholder proposal has been made by any stockholder holding at least 2% of the Company’s
outstanding shares as of the Company’s last-filed Form 10-Q or 10-K, the Company shall timely contact the proponent of the
proposal to arrange a teleconference or an in-person meeting to discuss the proposal and its financial, legal, social and practical
implications. If the proponent agrees to a meeting or teleconference, the Chair of any Board committee responsible for the oversight
of the subject matter of the proposal shall attend;
	 	 	 



		(c)	Lumber Liquidators’ law department and senior management, shall make a recommendation to
the Board committee responsible for oversight of the subject matter of the proposal concerning whether to include or exclude the
shareholder proposal in the proxy and/or to submit a no-action request to the SEC pursuant to Securities Exchange Act of 1934 §14(a),
and SEC Rule 14a-8, promulgated thereunder;



 






    	 	15.	 



     


    




	 	 	 



		(d)	Before the filing of a proxy statement, which makes a recommendation concerning any stockholder
proposal, a draft of the recommendation shall be reviewed and approved by the Board; and
	 	 	 



		(e)	The Board is authorized at its discretion to engage outside counsel or other advisors to assist
in their review of any shareholder proposal at the expense of the Company.



 


3.10      Stockholder
Meetings. Each member of the Board shall be expected to attend each annual stockholder meeting in person.


 


3.11      Stockholders
shall have the right in general meetings to ask questions, both orally and in writing and receive answers and discussion from the
CEO and Board. Such discussion shall take place regardless of whether questions have been submitted in advance.


 


3.12      Polls should
remain open at the annual meeting until all agenda items have been discussed.


 


		b.	Regulatory Affairs Committee



 


3.13      The Board shall
establish a Regulatory Affairs Committee focused on overseeing the regulatory affairs specific to Lumber Liquidators. The Committee
shall familiarize itself with all aspects of the applicable industry law.


 


3.14      The Regulatory
Affairs Committee shall oversee the processes by which Lumber Liquidators conducts its business so that the Company shall do so
in a manner that complies with laws and regulations and reflects the highest standards of integrity. The Committee shall review
and make recommendations regarding policies, practices, and procedures for compliance with industry laws.


 


3.15      The Regulatory
Affairs Committee shall review Company policy for contracts with contractors, suppliers, vendors and similarly situated persons
and the financial arrangements provided to ensure that such persons are not incentivized in a way that would cause Lumber Liquidators
to violate any applicable environmental laws, rules and/or regulations. The Board will have the authority to grant additional authority/oversight
to this Committee.


 






    	 	16.	 



     


    

 


		c.	Compensation Reforms



 


3.16      Ban on Stock
Pledges. The Board shall establish a ban on stock hedging and/or pledging prohibiting a director from hedging and/or pledging
any of the equity securities in connection with a margin or similar loan transaction.


 


3.17      Clawback
Policy. To the extent permitted by law, if the Board, or a Committee thereof, determines that any bonus, incentive payment,
equity award or other compensation has been awarded or received by an executive officer of the Company, as defined by Rule 16a-1(f)
of the Securities Exchange Act of 1934, as amended, and that such compensation was based on any financial results or operating
metrics that were satisfied as a result of such officer’s knowing or intentional fraudulent or illegal conduct, then the
Board or a Committee thereof shall recover from the officer such compensation (in whole or in part) as it deems appropriate under
the circumstances. Further, following a restatement of the Company’s financial statements, the Company shall recover any
compensation received by the CEO and CFO that is required to be recovered by Section 304 of Sarbanes-Oxley Act of 2002. In determining
whether to recover a payment, the Board shall take into account such considerations as it deems appropriate, including whether
the assertion of a claim may violate applicable law or prejudice the interests of the Company in any related proceeding or investigation.
The Board shall have sole discretion in determining whether an officer’s conduct has or has not met any particular standard
of conduct under law or Company policy.


 


3.18      Stock Holdings
Guidelines. The Board shall adopt a policy regarding stock holding guidelines for certain executives and directors with the
following provisions:


 


(a)      Company personnel
will be required to maintain the following minimum stock holdings: (i) CEO – 5 times base salary, (ii) Founder – 2.5
times base salary, (iii) Non-employee directors – 2.5 times annual cash retainer, and (iv) Executive officers – 1 times
base salary.


 


(b)      Shares can be
owned directly or indirectly through immediate family members in the same household or a trust. The shares can include vested shares
of restricted stock, shares underlying in-the-money options, or shares held in the outside director deferral plan.


 






    	 	17.	 



     


    

 


(c)      The time period
for implementing compliance is 5 years after adoption of policy or assuming a relevant position.


 


(d)      Once the required
level is reached, the individual must continuously own the shares. If the individual falls below the required holdings solely due
to a decline in the value of the shares, then they may be granted a hardship exemption at the discretion of the Board.


 


(e)      The Board shall
disclose in its annual Proxy statement filed with the SEC when an individual falls out of compliance with the stock holding provision
and when those individuals regain compliance with these provisions.


 


		d.	Corporate Discipline, Termination and Whistleblowers



 


3.19      Chief Compliance
Officer. The Chief Compliance Officer shall be responsible for promoting Lumber Liquidators’ worldwide compliance with
applicable laws and rules and with Lumber Liquidators’ Code of Business Conduct and Ethics. The Chief Compliance Officer
shall be responsible for overseeing development of a comprehensive legal compliance and ethics program designed to evaluate, to
maintain and, when needed, to correct compliance with federal and state rules and regulations and the Code of Conduct. The Chief
Compliance Officer shall be responsible for reviewing and suggesting improvements to Lumber Liquidators’ existing procedures
for receipt, retention and consideration of reports or evidence of violations of applicable federal or state law or the Code of
Business Conduct and Ethics, in consultation with the Audit Committee.


 


3.20      Except as would
be deemed the responsibility of the internal audit function, the Chief Compliance Officer shall be responsible for internal investigations
into violations of Lumber Liquidators’ policies or applicable laws. When a violation of federal or state law or the Code
of Business Conduct and Ethics appears to have occurred, the Chief Compliance Officer shall be responsible for determining whether
an investigation is necessary.


 


3.21      The Chief Compliance
Officer shall notify the Audit Committee of all material investigations that have been initiated and shall retain such assistance
as he/she deems necessary to conduct the investigation.


 






    	 	18.	 



     


    

 


3.22      At the conclusion
of any investigation, the Chief Compliance Officer (in consultation with the Audit Committee) shall:


 


(a)      Determine whether
a violation has occurred, is ongoing or is about to occur;


 


 (b)      Recommend (as necessary) that Lumber Liquidators implement appropriate responses to any violation; and


 




 (c)      Inform the Audit Committee of the results of any such material investigation and any recommended remedial measures.




 


3.23      The Chief Compliance
Officer will make quarterly reports to the Audit Committee (or other committee as directed by the Board) and annual reports to
the full Board.


 


3.24      The Chief Compliance
Officer shall be responsible for reviewing every situation in which a Lumber Liquidators’ employee is adjudicated by a court
of law to have violated a U.S. federal or state statute in connection with his/her employment by Lumber Liquidators. Presumptively,
any employee adjudicated to have violated a U.S. federal or state criminal statute in connection with his/her employment by Lumber
Liquidators shall be terminated for cause and receive no severance payments in connection with the termination. If the Chief Compliance
Officer determines that such termination is not warranted, he/she shall so recommend to the Audit Committee, which will act upon
his/her recommendation in its discretion.


 


3.25      Code of
Conduct. The Board shall cause the following clause to be inserted into the Company’s Code of Business Conduct and Ethics:


 


You are expected
to be familiar with all legal and regulatory provisions that relate to the performance of your job, and you must follow the spirit
as well as the letter of such laws and regulations in your business dealings. No officer, employee and/or director of Lumber Liquidators
has any authority to engage in conduct inconsistent with applicable U.S. laws and regulations, or to authorize, direct or condone
such conduct by any other person.


 


3.26      The Audit Committee
shall, within the next 3 years, review the current version of the Code of Business Conduct and Ethics and shall consider amendments
thereto that provide recipients with more detailed discussions of those laws and regulations that have a material effect on Lumber
Liquidators’ business and operations.


 






    	 	19.	 



     


    

 


3.27      Confidential
Whistleblower Program. The Board shall require management to adopt written policies protecting whistleblowers, and include
such policy on the Company’s website. The Company’s Whistleblower Policy shall:


 


		(a)	Encourage interested parties to bring forward ethical and legal violations and/or a reasonable
belief that ethical and legal violations have occurred to the Audit Committee and the Chief Compliance Officer so that action may
be taken to resolve the problem. Material complaints shall be reviewed by the Audit Committee.
	 	 	 



		(b)	The policy shall communicate effectively that Lumber Liquidators is serious about adherence to
its codes of conduct and that whistleblowing is an important tool in achieving this goal.



 


3.28      The Whistleblower
Program – with the endorsement of the Board and the most senior management of the Company – must adequately notify
employees, independent contractors and vendors of Lumber Liquidators of the following:


 


		(a)	executives may be subject to criminal penalties, including imprisonment, for retaliation against
whistleblowers;
	 	 	 



		(b)	whistleblower complaints may be directed to both the Audit Committee and the Chief Compliance Officer,
and the complaints will be handled by these parties anonymously and, to the extent possible, in confidence, unless requested by
the whistleblower;
	 	 	 



		(c)	if a whistleblower brings his or her complaint to an outside regulator or other governmental entity,
he or she will be protected by the terms of the Whistleblower Program just as if he or she directed the complaint to the Audit
Committee and/or the Chief Compliance Officer;
	 	 	 



		(d)	if an employee is subject to an adverse employment decision as a result of whistleblowing, the
employee must file a complaint with the Department of Labor within 90 days of the alleged violation (a failure to report such claims
within the 90 day window do not foreclose any other available legal remedy); and



 






    	 	20.	 



     


    




	 	 	 



		(e)	it is both illegal and against Lumber Liquidators’ policy to discharge, demote, suspend,
threaten, intimidate, harass or in any manner discriminate against an individual for engaging in the act of whistleblowing.



 


3.29      The Company
shall provide a Whistleblower Telephone Hotline to assist on matters pertaining to corruption, fraud or similar unlawful activities
at Lumber Liquidators, with alternative reporting mechanisms including suggestion boxes or email address.


 


3.30      The Company
will remind employees of whistleblowing options and whistleblower protections in employee communications provided at least twice
a year on the Company’s intranet.


 


		e.	Policy on Lobbying and Political Contributions



 


3.31      The Board shall
include a provision in the Company’s Bylaws which limits the use of corporate funds and other assets for governmental lobbying
and political campaigns as follows:


 


3.32      The Board shall
insure that any Company lobbying or political activity is conducted solely for promoting the commercial interests of Lumber Liquidators
as a whole and is in the interests of its stockholders. The Board shall insure that lobbying and political spending do not reflect
narrow political preferences of the Company’s executives that have little or no bearing on Lumber Liquidators’ own
commercial performance.


 


		4.	Settlement Procedures
	 	 	 



		a.	The Federal Derivative Actions



 


4.1      After execution
of this Stipulation, Lead Plaintiff shall submit the Stipulation together with its Exhibits to the Court and shall move for entry
of an order substantially in the form of Exhibit A hereto (the “Preliminary Approval Order”), requesting, among other
things, the preliminary approval of the Settlement set forth in the Stipulation, and approval for the filing and publication of
the Settlement Notice, substantially in the forms attached hereto as Exhibits A-1 (“Long-Form Notice”) and A-2 (“Short-Form
Notice”; the Long-Form Notice and Short-Form Notice collectively, the “Settlement Notice”), which shall include
the general terms of the Settlement set forth in the Stipulation and the date of the Settlement Hearing as described below.


 






    	 	21.	 



     


    

 


4.2      Within five
(5) business days following the Court’s entry of the Preliminary Approval Order, Lumber Liquidators shall cause the Stipulation
and Long-Form Notice to be filed with the SEC via a Form 8-K or other appropriate filing, and publish the Short-Form Notice one
time in Investor’s Business Daily. The SEC filing will be accessible via a link on the “Investor Relations”
page of http://investors.LumberLiquidators.com, the address of which shall be contained in the Settlement Notice.


 


4.3      Plaintiffs will
also request that on November 17, 2016, the Court hold a hearing in the Actions (the “Settlement Hearing”) to consider
and determine whether the District Court Approval Order and the Judgment, substantially in the forms of Exhibits B and C hereto,
should be entered: (a) approving the terms of the Settlement as fair, reasonable and adequate; and (b) dismissing with prejudice
the Actions against the Settling Defendants.


 


4.4      Pending the
Effective Date, all proceedings and discovery in the Actions shall be stayed except as otherwise provided herein, and the Settling
Parties shall not file or prosecute any other actions or proceedings relating to the Settlement. To the extent necessary, the Settling
Parties will take all reasonable steps to maintain the stay of proceedings in the State Derivative Actions as well.


 


		b.	The Interpleader Action



 


4.5      The Insurers
shall deposit into the registry of the Court the Insurance Proceeds as soon as practicable following the entry of an Order by the
Court in the Interpleader Action granting the Insurers’ Motion to Deposit the Insurance Proceeds and authorizing the Clerk
of the Court to accept the Insurance Proceeds (the “Motion to Deposit”). The Insurers shall file the Motion to Deposit
simultaneously with the filing of the Interpleader Action. The Insurance Proceeds shall be disbursed by the Clerk of the Court
to the escrow account established pursuant to the Federal Class Action settlement if and to the extent a Final decision in the
Interpleader Action authorizes such disbursement.


 






    	 	22.	 



     


    

 


4.6      In connection
with the Settlement of the Actions, within seven (7) business days of Lead Plaintiff’s filing the Stipulation with the Court,
the Insurers will file the Interpleader Action with the Court, provided that the Settling Parties notify the Insurers ten (10)
business days in advance of the date on which they intend to file the Stipulation with the Court. The Insurers will designate the
Interpleader Action as related to the Federal Derivative Actions and the Federal Class Action. The Insurers will submit to the
registry of the Court the remaining limits of the Insurance Proceeds, as required pursuant to the Interpleader Action and as provided
in ¶4.5 above, and will seek a complete discharge of their obligations under their respective Insurance Policies and at law.
The Insurers are and will remain neutral regarding an appropriate allocation of the Insurance Proceeds and the Settling Parties
will not oppose or otherwise object to the Insurers’ efforts to obtain a judicial discharge of their obligations under the
Insurance Policies and at law. The Settling Parties will request and advocate to the Court for payment of the Insurance Proceeds
to the Company subject to its use in settling the Federal Class Action. Lumber Liquidators will seek, in good faith and using best
efforts, releases from all persons or entities that might have a claim or entitlement to the Insurance Proceeds prior to the filing
of the Interpleader Action. Defendants and the Federal Class Action defendants will provide standard claims and policy releases
to the Insurers with respect to the Federal Derivative Actions, the Federal Class Action, the facts and matters alleged in or underlying
the Federal Derivative Actions or the Federal Class Action and the Insurance Policies.


 


4.7      Lead Plaintiff,
and all Insurers acting in unison, will each have the right to terminate the Settlement and this Stipulation if the Insurers do
not obtain in the Interpleader Action a full allocation of the $26,000,000 to the Company and a complete, final judicial discharge
of their obligations under the policies. Should the Insurers choose to terminate the settlement agreement pursuant to the terms
of this paragraph, they must simultaneously terminate the settlement agreement in both the Federal Class Action and the Federal
Derivative Actions.


 


		5.	Releases



 


5.1      Upon the Effective
Date, as defined in ¶7.1, Plaintiffs (acting on their own behalf and derivatively on behalf of Lumber Liquidators and its
stockholders), Lumber Liquidators, all other Securities Holders, and the Company, for good and sufficient consideration, the receipt
and adequacy of which are hereby acknowledged, shall be deemed to have, and by operation of law and of the Judgment shall have,
fully, finally, and forever compromised, settled, released, resolved, relinquished, waived and discharged and dismissed with prejudice
each and every one of the Released Claims against the Released Persons.


 






    	 	23.	 



     


    

 


5.2      Upon the Effective
Date, as defined in ¶7.1, Plaintiffs (acting on their own behalf and derivatively on behalf of Lumber Liquidators and its
stockholders), Lumber Liquidators and any Person acting on behalf of Lumber Liquidators, all other Securities Holders, and the
Company, for good and sufficient consideration, the receipt and adequacy of which are hereby acknowledged, shall be forever barred
and enjoined from commencing, instituting or prosecuting any of the Released Claims against any of the Released Persons. Nothing
herein shall in any way impair or restrict the rights of any Settling Party to enforce the terms of the Stipulation.


 


5.3      Upon the Effective
Date, as defined in ¶7.1, each of the Released Persons, for good and sufficient consideration, the receipt and adequacy of
which are hereby acknowledged, shall be deemed to have, and by operation of law and of the Judgment shall have, fully, finally,
and forever compromised, settled, released, resolved, relinquished, waived and discharged each and all of the Plaintiffs and Plaintiffs’
Counsel and all current Lumber Liquidators stockholders (solely in their capacity as Lumber Liquidators stockholders) from all
claims (including Unknown Claims) arising out of, relating to, or in connection with the institution, prosecution, assertion, settlement
or resolution of the Actions or the Released Claims. Nothing herein shall in any way impair or restrict the rights of any Settling
Party to enforce the terms of the Stipulation.


 






    	 	24.	 



     


    

 


5.4      Upon the Effective
Date, as defined in ¶7.1, Plaintiffs (acting on their own behalf and derivatively on behalf of Lumber Liquidators and its
stockholders), Lumber Liquidators and any Person acting on behalf of Lumber Liquidators additionally release and discharge the
Settling Defendants from any and all claims by the Plaintiffs (acting on their own behalf and derivatively on behalf of Lumber
Liquidators and its stockholders), Lumber Liquidators and any Person acting on behalf of Lumber Liquidators for: (a) the clawback
of any monies that have or will be advanced to the Settling Defendants for legal fees and expenses incurred through the date of
this Stipulation (subject to the Company’s right to seek a clawback of up to $50,000 in legal fees and expenses per Settling
Defendant incurred prior to such date and related to any governmental proceedings), and (b) the clawback of any monies that will
be advanced to the Settling Defendants for legal fees and expenses incurred after the date of this Stipulation to the extent such
legal fees and expenses are incurred in connection with or related to the Federal Derivative Actions or the Federal Class Action
(but not (i) any governmental proceedings, or (ii) proceedings unrelated to the facts and circumstances at issue in the Federal
Derivative Action or the Federal Class Action). Notwithstanding the release of the clawback rights set forth above, Lumber Liquidators
or anyone acting on behalf of the Company, including stockholders, do not release any right or claim, including derivative claims,
against the Settling Defendants or any other Person for the clawback of any other advancement for legal fees or expenses incurred
after the date of this Stipulation in the event circumstances arise where the payment of such legal fees or expenses by the Company,
or the Company’s failure to clawback such legal fees or expenses, would be illegal or impermissible under Delaware law.


 


5.5      Lumber Liquidators
acknowledges that it has pre-existing indemnification and advancement obligations to its current and former officers, directors
and employees, including everyone who has filed claims under the policies. Following payment of the Cash into the escrow account,
Lumber Liquidators will continue to honor its pre-existing indemnification/advancement obligations for its directors, officers
and employees in all pending securities and derivative litigation, as well as all pending regulatory and government investigations;
and will pay legal costs incurred by its directors, officers and employees in all pending securities and derivative litigation,
as well as all pending regulatory and government investigations, consistent with its indemnification/advancement obligations and/or
authority under Lumber Liquidators’ Bylaws and the Delaware General Corporation Law. Nothing in this Stipulation should be
construed to limit the pre-existing indemnification and advancement obligations that Lumber Liquidators has to its current and
former officers, directors, and employees.


 






    	 	25.	 



     


    

 


		6.	Plaintiffs’ Counsel’s Separately Negotiated Attorneys’ Fees and Expenses



 


6.1      After negotiating
the principal terms of the Settlement, counsel for Lead Plaintiff and Lumber Liquidators, acting by and through its counsel, with
the assistance of the Honorable Daniel Weinstein (Ret.), separately negotiated the attorneys’ fees and expenses the Company
would pay to Plaintiffs’ Counsel based on the substantial benefits conferred upon Lumber Liquidators by the Settlement. In
light of the substantial benefits conferred by Plaintiffs’ Counsel’s efforts, Lumber Liquidators, acting by and through
its Board of Directors, has agreed to pay $5,000,000 in attorneys’ fees and expenses, subject to Court approval (the “Fee
and Expense Amount”). The Company and its primary Side A only insurer shall each contribute half of the Fee and Expense Amount.


 


6.2      Upon final approval
by the Court, the separately negotiated Fee and Expense Amount shall be paid to Robbins Geller Rudman & Dowd LLP, as receiving
agent for Plaintiffs’ Counsel, within five (5) business days after final approval of the Settlement by the Court, notwithstanding
the existence of any timely filed objections thereto, or potential for appeal therefrom, or collateral attack on the Settlement
or any part thereof, subject to Plaintiffs’ Counsel’s several obligation to make appropriate refunds or repayments
if, and when, as a result of any appeal and/or further proceedings on remand, or successful collateral attack, approval of the
Settlement is denied or overturned. Neither Lumber Liquidators nor any other Released Persons shall have any obligations with respect
to Plaintiffs’ Counsel’s fees and/or expenses beyond the Fee and Expense Amount.


 


		7.	Conditions of Settlement; Effect of Disapproval, Cancellation or Termination



 


7.1      The Effective
Date shall be conditioned on the occurrence of all of the following events:


 


(a) the Lumber Liquidators
Board of Directors has approved the Settlement and each of its terms, including the separately negotiated Fee and Expense Amount;


 






    	 	26.	 



     


    

 


(b)      $26,000,000 has
been transferred from the registry of the Court to via the Interpleader Action to the escrow account established pursuant to the
Federal Class Action settlement for payment in the Federal Class Action;


 


 (c)      the
Court has entered the District Court Approval Order, substantially in the form of Exhibit B attached hereto; and the Court has
entered the Judgment, substantially in the form of Exhibit C attached hereto; and


 


(d)      the Judgment
has become Final.


 


7.2      If any of the
conditions specified in ¶7.1 are not met, then the Stipulation shall be canceled and terminated subject to the provisions
of ¶7.4, unless counsel for the Settling Parties mutually agree in writing to proceed with an alternative or modified Stipulation
and submit it for Court approval.


 


7.3      The Settling
Parties shall each have the right to terminate the Settlement and this Stipulation, by providing written notice of their election
to do so (“Termination Notice”) to the other parties to this Stipulation within thirty (30) days of: (a) the Court’s
final refusal to enter the District Court Approval Order in any material respect; (b) the Court’s final refusal to enter
the Judgment in any material respect as to the Settlement; or (c) the date upon which the Judgment is modified or reversed in any
material respect by the United States Court of Appeals for the Fourth Circuit or the United States Supreme Court. The provisions
of ¶7.4 below shall apply to any termination under this paragraph. However, any decision or proceeding, whether in this Court
or any appellate court, with respect to an application for attorneys’ fees or payment of litigation expenses shall not affect
the finality of any Judgment and shall not be grounds for termination of the Settlement.


 


7.4      If for any reason
this Stipulation is terminated, or is cancelled, or otherwise fails to become effective for any reason:


 


(a)      The Settling Parties,
Released Persons and Related Parties shall be restored to their respective positions that existed immediately prior to the date
of execution of this Stipulation;


 






    	 	27.	 



     


    

 


(b)      All negotiations,
proceedings, documents prepared and statements made in connection with this Stipulation shall be without prejudice to the Settling
Parties, shall not be deemed or construed to be an admission by a Settling Party of any act, matter, or proposition and shall not
be used in any manner for any purpose (other than to enforce the terms remaining in effect) in any subsequent proceeding in the
Actions or in any other action or proceeding; and


 


(c)      The terms and
provisions of the Stipulation, with the exception of the provisions of ¶6.2, shall have no further force and effect with respect
to the Settling Parties and shall not be used in the Actions or in any other proceeding for any purpose, and any judgment or orders
entered by the Court in accordance with the terms of the Stipulation shall be treated as vacated, nunc pro tunc.


 


7.5      No order of
the Court or modification or reversal on appeal of any order of the Court concerning the amount of attorneys’ fees, costs,
expenses and interest awarded by the Court to Plaintiffs’ Counsel shall constitute grounds for cancellation or termination
of the Stipulation, affect the enforceability of the Stipulation, or delay or preclude the Judgment or Alternate Judgment, if applicable,
from becoming Final.


 


		8.	Miscellaneous Provisions



 


8.1      The Settling
Parties: (a) acknowledge that it is their intent to consummate the terms and conditions of this Stipulation; and (b) agree to cooperate
to the extent reasonably necessary to effectuate and implement all terms and conditions of the Stipulation and to exercise their
best efforts to accomplish the foregoing terms and conditions of the Stipulation.


 


8.2      Lead Plaintiff
agrees to use its best efforts, acting in good faith, to resolve as part of this Settlement the pending, related derivative actions
in Delaware Chancery Court and Virginia state court (the “State Derivative Actions”) and the formal demand letter sent
by stockholder Timothy Horton on May 20, 2015 to the Chairman of the Company’s Board of Directors (the “Demanding Stockholder”).
Should Lead Plaintiff be unable to resolve these related matters despite its best efforts, Lead Plaintiff agrees to cooperate with
the Company to seek the dismissal of the related derivative actions and any other derivative actions (including any action later
instituted by the Demanding Stockholder).


 






    	 	28.	 



     


    

 


8.3      The Settling
Parties intend this Settlement to be a final and complete resolution of all disputes between Plaintiffs and Lumber Liquidators
and its stockholders, on the one hand, and the Released Persons, on the other hand, arising out of, based upon, or related to,
the Released Claims. The Settlement compromises claims that are contested and shall not be deemed an admission by any Settling
Party or Released Person as to the merits of any claim, allegation or defense. The District Court Approval Order shall contain
a finding that during the course of the litigation, the parties and their respective counsel at all times complied with the requirements
of Rule 11 of the Federal Rules of Civil Procedure and all other similar laws relating to the institution, prosecution, defense
or settlement of the Actions. No party or Related Party shall assert any claims for violation of Rule 11 of the Rules of Civil
Procedure on any similar laws relating to the institution, prosecution, defense or settlement of the Actions. The Settling Parties
agree that the Released Claims are being settled voluntarily after consultation with an experienced mediator and competent legal
counsel who were fully competent to assess the strengths and weaknesses of their respective clients’ claims of defenses.


 


8.4      Pending the
Effective Date, the Settling Parties agree not to initiate any proceedings concerning the Released Claims other than those incident
to the settlement itself; provided, however, that Lumber Liquidators and the Settling Defendants may seek to prevent or stay any
other action or claims brought seeking to assert any Released Claims.


 


8.5      Neither the
Stipulation nor the Settlement, including any Exhibits attached hereto, nor any act performed or document executed pursuant to
or in furtherance of the Stipulation or the Settlement: (a) is or may be deemed to be or may be offered, attempted to be offered
or used in any way as a concession, admission or evidence of the validity of any Released Claims, or of any fault, wrongdoing or
liability of the Released Persons or Lumber Liquidators; or (b) is or may be deemed to be or may be used as a presumption, admission
or evidence of, any liability, fault or omission of any of the Released Persons or Lumber Liquidators in any civil, criminal, administrative,
or other proceeding in any court, administrative agency, tribunal or other forum. Neither this Stipulation nor the Settlement shall
be admissible in any proceeding for any purpose, except to enforce the terms of the Settlement, and except that the Released Persons
may file or use the Stipulation, the District Court Approval Order and/or the Judgment, in any action that may be brought against
them in order to support a defense or counterclaim based on principles of res judicata, collateral estoppel, full faith
and credit, release, good faith settlement, standing, judgment bar or reduction or any other theory of claim preclusion or issue
preclusion or similar defense or counterclaim.


 






    	 	29.	 



     


    

 


8.6      All designations
and agreements made (other than the MOU) and orders entered during the course of the Actions relating to the confidentiality of
documents or information shall survive this Settlement; provided that the terms of this Stipulation shall supersede the terms of
the MOU.


 


8.7      All Exhibits
to this Stipulation are material and integral parts hereof and are fully incorporated herein by this reference.


 


8.8      This Stipulation
may be amended or modified only by a written instrument signed by or on behalf of all Settling Parties or their respective successors-in-interest.


 


8.9      This Stipulation
and the Exhibits attached hereto constitute the entire agreement among the Settling Parties and no representations, warranties
or inducements have been made to any Settling Party concerning the Stipulation and/or any of its Exhibits, other than the representations,
warranties and covenants contained and memorialized in such documents. The Stipulation supersedes and replaces any prior or contemporaneous
writing, statement or understanding pertaining to the Actions and no parole or other evidence may be offered to explain, construe,
contradict or clarify its terms, the intent of the Settling Parties or their counsel, or the circumstances under which the Stipulation
was made or executed. It is understood by the Settling Parties that, except for matters expressly represented herein, the facts
or law with respect to which this Stipulation is entered into may turn out to be other than or different from the facts now known
to each party or believed by such party to be true; each party therefore expressly assumes the risk of facts or law turning out
to be different, and agrees that this Stipulation shall be in all respects effective and not subject to termination by reason of
any such different facts or law.


 






    	 	30.	 



     


    

 


8.10      Except as otherwise
expressly provided herein, all parties, including all Settling Defendants, their counsel, Lumber Liquidators and its counsel, and
Plaintiffs and Plaintiffs’ Counsel, shall bear their own fees, costs, and expenses.


 


8.11      Counsel for
the Settling Parties are expressly authorized by their respective clients to take all appropriate actions required or permitted
to be taken pursuant to the Stipulation to effectuate its terms and conditions.


 


8.12      Plaintiffs
represent and warrant they have not assigned or transferred, or attempted to assign or transfer, to any Person any Released Claim
or any portion thereof or interest therein.


 


8.13      Each counsel
or other Person executing this Stipulation or any of its Exhibits on behalf of any party hereto hereby warrants that such Person
has the full authority to do so.


 


8.14      Any failure
by any party to this Stipulation to insist upon the strict performance by any other party of any of the provisions of the Stipulation
shall not be deemed a waiver of any of the provisions, and such party, notwithstanding such failure, shall have the right thereafter
to insist upon the strict performance of any and all of the provisions of the Stipulation to be performed by such other party.


 


8.15      The Stipulation
and Exhibits may be executed in one or more counterparts. A faxed or PDF signature shall be deemed an original signature for purposes
of this Stipulation. All executed counterparts including facsimile and/or PDF counterparts shall be deemed to be one and the same
instrument. A complete set of counterparts, either originally executed or copies thereof, shall be filed with the Court.


 


8.16      This Stipulation
shall be binding upon, and inure to the benefit of, the Settling Parties and the Released Persons and their respective successors,
assigns, heirs, spouses, marital communities, executors, administrators, trustees in bankruptcy and legal representatives.


 


8.17      Without affecting
the finality of the Judgment, entered in accordance with this Stipulation, the Court shall retain jurisdiction with respect to
implementation and enforcement of the terms of the Stipulation, the District Court Approval Order, and the Judgment, and the Settling
Parties hereto submit to the jurisdiction of the Court for purposes of implementing and enforcing the Settlement embodied in the
Stipulation, the District Court Approval Order, and the Judgment, and for matters arising out of, concerning or relating thereto.


 






    	 	31.	 



     


    

 


8.18      This Stipulation
and the Exhibits hereto shall be considered to have been negotiated, executed and delivered, and to be wholly performed, in the
State of Virginia, and the rights and obligations of the Settling Parties to the Stipulation shall be construed and enforced in
accordance with, and governed by, the internal substantive laws of the State of Virginia without giving effect to Virginia’s
choice-of-law principles.


 


8.19      The headings
herein are used for the purpose of convenience only and are not meant to have legal effect.


 


8.20      Nothing in
this Stipulation, or the negotiations relating thereto, is intended to or shall be deemed to constitute a waiver of any applicable
privilege or immunity, including, without limitation, the attorney-client privilege, the joint defense privilege, or work product
protection.


 


8.21      Without further
order of the Court, the parties may agree to reasonable extensions of time to carry out any of the provisions of this Stipulation.


 




    	 	32.	 



     


    

 


IN WITNESS WHEREOF,
the Settling Parties have caused the Stipulation to be executed, by themselves and/or by their duly authorized attorneys, dated
July 18, 2016.


 


 


 


/s/ Benny C. Goodman III                                                            


Darren J. Robbins


Benny C. Goodman III (admitted
pro hac vice)


Erik W. Luedeke (admitted
pro hac vice)


ROBBINS GELLER RUDMAN &
DOWD LLP


655 West Broadway, Suite 1900


San Diego, CA 92101


Telephone: 619/231-1058


Facsimile 619/231-7423


darrenr@rgrdlaw.com


bennyg@rgrdlaw.com


eluedeke@rgrdlaw.com


 


Brett A. Spain (Va. Bar No.
44567),


WILLCOX & SAVAGE, P.C.


440 Monticello Avenue, Suite
2200


Norfolk, Virginia 23510


Telephone: (757) 628-5500


Facsimile: (757) 628-5569


bspain@wilsav.com


 


Attorneys for Lead Plaintiff Amalgamated Bank, as

 Trustee
for the Longview 600 Small Cap Index Fund


 




    	 	33.	 



     


    

  


/s/ Lyle Roberts                                                            


Lyle Roberts (VSB No. 45808)


George E. Anhang


COOLEY LLP


1299 Pennsylvania Avenue, NW


Suite 700


Washington, DC 20004


Telephone: 202/842-7800


202/842-7899 (fax)


lroberts@cooley.com


ganhang@cooley.com


       -and-


COOLEY LLP


Jonathan P. Bach


1114 Avenue of the Americas


New York, NY 10036-7798


Telephone: 212/479-6000


212/479-6275


 


Attorneys for Defendants Lumber Liquidators Holdings,
Inc.,

 Macon F. Brock, Jr., Douglas T. Moore, John M. Presley,

 Peter B. Robinson, Martin F. Roper, Jeffrey W. Griffith,

 and Nancy
M. Taylor and Jimmie L. Wade


 


 


 


/s/ Brian L. Whisler                                                            


Brian L. Whisler (Va. Bar No. 30435)


Jennifer Ancona Semko


BAKER & MCKENZIE LLP


815 Connecticut Avenue, N.W.


Washington, DC 20006


Telephone: (202) 452-7019


Facsimile: (202) 416-6937 brian.whisler@bakermckenzie.com


jennifer.semko@bakermckenzie.com


 


Counsel for Thomas D. Sullivan


 




    	 	34.	 



     


    

 


/s/ Jonathan R. Tuttle                                                            


Jonathan R. Tuttle (Va. Bar No. 34465)


DEBEVOISE & PLIMPTON LLP


801 Pennsylvania Ave., N.W.


Washington, DC 20004


Telephone: (202) 383-8124


Facsimile: (202) 383-8118


jrtuttle@debevoise.com


 


Counsel for Daniel E. Terrell


 


  


/s/ Elizabeth C. Solander                                                            


Elizabeth C. Solander (Va. Bar No. 73335)


Kevin T. Abikoff


John F. Wood


HUGHES HUBBARD & REED LLP


1775 I Street, N.W., Suite 600


Washington, DC 20006-2401


Telephone: (202) 721-4600


Facsimile. (202) 721-4646


solander@hugheshubbard.com

 kevin.abikoff@hugheshubbard.com


john.wood@hugheshubbard.com


 


Counsel for William K. Schlegel


 




    	 	35.	 



     


    

  


/s/ Ann M. Ashton                                                            


Connie N. Bertram (Va. Bar No. 31713)


Ralph C. Ferrara


Ann M. Ashton


PROSKAUER ROSE LLP


1001 Pennsylvania Avenue, N.W.


Suite 600 South


Washington, DC 20004


Telephone: (202) 416-6810


Facsimile: (202) 416-6899


cbertram@proskauer.com


rferrara@proskauer.com


aashton@proskauer.com


       -and-


Jonathan Richman


PROSKAUER ROSE LLP


11 Times Square


New York, NY 10036


Telephone: (212) 969-3000


Facsimile: (212) 969-2900


jerichman@proskauer.com


 


Counsel for Robert M. Lynch


 




    	 	36.	 



     


    

 


/s/ Dallas Kaplan                                                            


Dallas Kaplan (Va. Bar No. 80537)


MORGAN, LEWIS & BOCKIUS LLP


1111 Pennsylvania Ave., N.W.


Washington, DC 20004


Telephone: 202/739-5407


Fax: 202/739-3001


dkaplan@morganlewis.com


       -and-


MORGAN, LEWIS & BOCKIUS LLP


Laura Hughes McNally


Marc J. Sonnenfeld


1701 Market St.


Philadelphia, PA 19103


Telephone: 215/963-5000


Fax: 215/963-5001


lmcnally@morganlewis.com


msonnenfeld@morganlewis.com


 


Counsel for Carl R. Daniels, Jr.


 








    	 	37.	 



     


    

 





 


EXHIBIT A


 


 






     


     


    

 


UNITED STATES DISTRICT COURT FOR THE



EASTERN DISTRICT OF VIRGINIA



(Newport News Division)


 


 


	
        In re LUMBER LIQUIDATORS HOLDINGS,

        INC. SECURITIES LITIGATION

        

         

         

        This Document Relates To:

         

        Lead Case No. 4:15cv16 and Consolidated

Case Nos. 4:15cv25 and 4:15cv30 

        
 

        
	
        Master No. 4:13-cv-00157-AWA-DEM

         

        Hon. Arenda L. Wright Allen

         



 




 


[PROPOSED]
ORDER PRELIMINARILY APPROVING DERIVATIVE SETTLEMENT AND

PROVIDING FOR NOTICE


 

EXHIBIT
A

 


WHEREAS, a consolidated
derivative action is pending in the Court entitled In re Lumber Liquidators Holdings, Inc. Shareholder Derivative Litigation,
Lead Case No. 4:13-cv-00157-AWA-DEM (the “Actions”);


 


WHEREAS, the Plaintiffs
having moved, pursuant to Federal Rule of Civil Procedure 23.1, for an order:  (i)
preliminarily approving the proposed settlement of the derivative Actions, in accordance with a Stipulation of Settlement, dated
July 18, 2016 (the “Stipulation” or “Settlement”), which, together with the Exhibits annexed thereto, set
forth the terms and conditions for a proposed Settlement and dismissal of the Actions with prejudice; and (ii) approving the dissemination
of the Notice of Proposed Derivative Settlement and Summary Notice of Proposed Derivative Settlement;


 


WHEREAS, all capitalized
terms contained herein shall have the same meanings as set forth in the Stipulation (in addition to those capitalized terms defined
herein); and


 


WHEREAS, this Court,
having considered the Stipulation and the Exhibits annexed thereto and having heard the arguments of the Settling Parties at the
preliminary approval hearing:


 






    	 	- 1 -	 



     


    

 


NOW,
THEREFORE, IT IS HEREBY ORDERED:


 


1.           This Court does
hereby preliminarily approve, subject to further consideration at the Settlement
Hearing described below, the Stipulation and the Settlement set forth therein, including the terms and conditions for settlement
and dismissal with prejudice of the Actions.


 


2.           A hearing (the
“Settlement Hearing”) shall be held before this Court on  ________________,
2016, at ___: _.m., at 600 Granby Street, Norfolk, VA 23510, to determine whether the Settlement of the Actions on the terms and
conditions provided for in the Stipulation is fair, reasonable and adequate to Lumber Liquidators Holdings, Inc. (“Lumber
Liquidators” or the “Company”) and its Securities Holders and should be approved by the Court; whether the District
Court Approval Order and a Judgment as provided in ¶¶1.7 and 1.16 of the Stipulation should be entered herein; and whether
to award attorneys’ fees and expenses to Plaintiffs’ Counsel.


 


3.           The Court approves,
as to form and content, the Notice of Proposed Derivative Settlement annexed
as Exhibit A-1 hereto (the “Long-Form Notice”) and the Summary Notice of Proposed Derivative Settlement annexed as
Exhibit A-2 hereto (the “Summary Notice”), and finds that the publication of the Long-Form Notice, Summary Notice and
Stipulation, substantially in the manner and form set forth in this Order, meets the requirements of Federal Rule of Civil Procedure
23.1 and due process, is the best notice practicable under the circumstances, and shall constitute due and sufficient notice to
all Persons entitled thereto.


 


4.           Not later than
five (5) business days following entry of this Order, Lumber Liquidators shall:
(a) cause a copy of the Long-Form Notice, substantially in the form annexed as Exhibit A-1 hereto, and the Stipulation to be filed
with the U.S. Securities and Exchange Commission (“SEC”) along with an SEC Form 8-K or other appropriate filing; (b)
create a link to the SEC filing on the Company’s “Investor Relations” page of http://investors.LumberLiquidators.com,
the address of which shall be contained in the Long-Form Notice and Summary Notice; and (c) cause a copy of the Summary Notice,
substantially in the form annexed as Exhibit A-2 hereto, to be published once in Investor’s Business Daily.


 






    	 	- 2 -	 



     


    

 


5.           All costs incurred
in the filing, publishing and posting of the Long Form Notice and Summary
Notice shall be paid by Lumber Liquidators and Lumber Liquidators shall undertake all administrative responsibility for such filing,
publication and posting.


 


6.           Not later than
thirty-five (35) days before the Settlement Hearing, Lumber Liquidators’
Counsel shall serve on Plaintiffs’ Counsel and file with the Court proof, by affidavit or declaration, that it has complied
with ¶4 above.


 


7.           All Lumber Liquidators
Securities Holders shall be bound by all orders, determinations and judgments
of the Court in the Actions concerning the Settlement, whether favorable or unfavorable to Lumber Liquidators Securities Holders.


 


8.           Pending final
determination by the Court of whether the Settlement should be approved, this
Court preliminarily bars and enjoins Plaintiffs, all other Securities Holders, and the Company, on behalf of themselves, from commencing,
instituting, filing, intervening in, participating in (as a nominal defendant or otherwise), receiving any benefit from, or prosecuting
any of the Released Claims against any of the Released Persons. All proceedings and discovery in the Actions shall be stayed except
as otherwise provided for in the Stipulation, and no party to the Actions or any Lumber Liquidators Securities Holder shall file
or prosecute any action or proceeding in any court or tribunal relating to the Settlement or asserting any of the Released Claims
against the Released Persons.


 


9.           All papers in
support of the Settlement and the separately negotiated attorneys’ fees and
expenses shall be filed with the Court and served on or before ____________, 2016 and
any reply briefs shall be filed with the Court on or before _____________, 2016.


 






    	 	- 3 -	 



     


    

 


10.           Any current
Lumber Liquidators Securities Holder may appear and show cause, if he, she
or it has any reason why the terms of the Settlement of the Actions, including the negotiated amount of attorneys’ fees and
expenses, should not be approved as fair, reasonable and adequate, or why the District Court Approval Order and Judgment should
not be entered thereon, provided, however, that, unless otherwise ordered by the Court, no current Lumber Liquidators Securities
Holder shall be heard or entitled to contest the approval of all or any of the terms and conditions of
the Settlement, or, if approved, the District Court Approval Order and the Judgment to be entered thereon approving
the same, unless that Person has, at least twenty-one (21) calendar days before the Settlement Hearing, filed with the Clerk of
the Court appropriate proof of Lumber Liquidators stock ownership, along with written objections, including the basis therefore,
and copies of any papers and briefs in support thereof. All written objections and supporting papers must be submitted to the Court
either by mailing them to:


 


Clerk
of the Court 


UNITED
STATES DISTRICT COURT 


EASTERN
DISTRICT OF VIRGINIA 


600
Granby Street 


Norfolk,
VA 23510


 


OR by filing them in
person at any location of the United States District Court for the Eastern District of Virginia. Any current Lumber Liquidators
Securities Holder who does not make an objection in the manner provided herein shall be deemed to have waived such objection and
shall forever be foreclosed from making any objection to the fairness, reasonableness or adequacy of the Settlement as incorporated
in the Stipulation and to the award of attorneys’ fees and expenses to Plaintiffs’ Counsel, unless otherwise ordered
by the Court, but shall otherwise be bound by the District Court Approval Order and the Judgment to be entered and the releases
to be given.


 


11.           Any attorney
hired by a Securities Holder for the purpose of objecting to the Settlement must file a notice of appearance with the Clerk of
the Court no later than twenty-one (21) calendar days before the Settlement Hearing.


 


12.           Plaintiffs’
Counsel and Defendants’ Counsel are directed to promptly furnish each other with copies of any and all objections that are
served upon them or otherwise come into their possession.


 






    	 	- 4 -	 



     


    

 


13.           Neither the
Stipulation nor the Settlement, including the Exhibits attached thereto, nor any act performed or document executed pursuant to
or in furtherance of the Stipulation or the Settlement: (a) is or may be deemed to be or may be offered, attempted to be offered
or used in any way as a concession, admission, or evidence of the validity of any Released Claims or any fault, wrongdoing or liability
of the Released Persons or Lumber Liquidators; or (b) is or may be deemed to be or may be used as a presumption, admission, or
evidence of any liability, fault or omission of any of the Released Persons or Lumber Liquidators in any civil, criminal or administrative
or other proceeding in any court, administrative agency, tribunal or other forum. Neither the Stipulation nor the Settlement, nor
any act performed or document executed pursuant to or in furtherance of the Stipulation or the Settlement, shall be admissible
in any proceeding for any purpose, except to enforce the terms of the Settlement, and except that the Released Persons may file
or use the Stipulation, the District Court Approval Order and/or the Judgment in any action that may be brought against them in
order to support a defense or counterclaim based on principles of res judicata, collateral estoppel, full faith and credit,
release, standing, judgment bar or reduction or any other theory of claim preclusion or issue preclusion or similar defense or
counterclaim.


 


14.           The Court reserves
the right to adjourn the date of the Settlement Hearing or modify any other dates set forth herein without further notice to Lumber
Liquidators Securities Holders, and retains exclusive jurisdiction to consider all further applications arising out of or connected
with the Settlement. The Court may approve the Settlement, with such modifications as may be agreed to by the Settling Parties,
if appropriate, without further notice to Lumber Liquidators Securities Holders.


 


IT
IS SO ORDERED.


 





	DATED: 	 	 	 
	 	 	 	THE HONORABLE ARENDA WRIGHT ALLEN
	 	 	 	UNITED STATES DISTRICT JUDGE







 


 


 








    	 	- 5 -	 



     


    

 


 


 


 


EXHIBIT A-1


 


 


 


 


 



     


     


    

 


UNITED STATES DISTRICT COURT




EASTERN DISTRICT OF VIRGINIA




(Newport News Division)


 


 





	
        In re LUMBER LIQUIDATORS HOLDINGS, INC. SECURITIES LITIGATION,

         

 



          

        This Document Relates To:

         

        Lead Case No. 4:15cv16 and Consolidated

        Case Nos. 4:15cv25 and 4:15cv30

         

 



         
	
        )

        )

        )

        )

        )

        )

        )

        )

        )

         
	Master No. 4:13-cv-00157-AWA-DEM



Hon. Arenda L. Wright Allen




 





NOTICE OF PROPOSED DERIVATIVE SETTLEMENT


 





EXHIBIT A-1


 





		TO:	ALL RECORD HOLDERS AND BENEFICIAL OWNERS OF THE COMMON STOCK OF LUMBER LIQUIDATORS HOLDINGS,
INC. (“LUMBER LIQUIDATORS” OR THE “COMPANY”) AS OF JULY 18, 2016 (THE “RECORD DATE”)



 


PLEASE READ THIS NOTICE CAREFULLY
AND IN ITS ENTIRETY. THIS NOTICE RELATES TO A PROPOSED SETTLEMENT AND DISMISSAL OF THE ABOVE-CAPTIONED CONSOLIDATED DERIVATIVE
ACTION (THE “ACTIONS”) AND CONTAINS IMPORTANT INFORMATION REGARDING YOUR RIGHTS. YOUR RIGHTS MAY BE AFFECTED BY THESE
LEGAL PROCEEDINGS. IF THE COURT APPROVES THE SETTLEMENT, YOU WILL BE FOREVER BARRED FROM CONTESTING THE APPROVAL OF THE PROPOSED
SETTLEMENT AND FROM PURSUING THE RELEASED CLAIMS.


 


IF YOU HOLD LUMBER LIQUIDATORS
COMMON STOCK FOR THE BENEFIT OF ANOTHER, PLEASE PROMPTLY TRANSMIT THIS DOCUMENT TO SUCH BENEFICIAL OWNER.


 


Notice is hereby provided
to you of the proposed settlement (the “Settlement”) of this stockholder derivative litigation. This Notice is provided
by Order of the United States District Court for the Eastern District of Virginia (the “Court”). It is not an expression
of any opinion by the Court with respect to the truth of the allegations in the litigation or merits of the claims or defenses
asserted by or against any party. It is solely to notify you of the terms of the proposed Settlement, and your rights related thereto.
The terms of the proposed Settlement are set forth in a written Stipulation of Settlement dated July 18, 2016 (“Stipulation”).[1]
A link to the Form 8-K filed with the SEC containing the text of the Stipulation may be found on Lumber Liquidators’ website
at the Investor Relations page at http://investors.LumberLiquidators.com.


 






    	 	1.	 



     


    

 


		I.	WHY THE COMPANY HAS ISSUED THIS NOTICE



 


Your rights may be
affected by the settlement of the actions styled Amalgamated Bank v. Brock, et al., Civil Action No. 4:15-cv-30 (E.D. Va.);
Klein v. Brock, et al., Civil Action No. 4:15-cv-16 (E.D. Va.); and Doan v. Brock, et al., Civil Action No. 4:15-cv-25
(the “Actions”). Lead Plaintiff Amalgamated Bank, as Trustee for the Longview 600 Small Cap Index Fund and Plaintiffs
R. Andre Klein and Phuc Doan (“Plaintiffs”) (on behalf of themselves and derivatively on behalf of Lumber Liquidators);
Defendants Thomas D. Sullivan, Douglas T. Moore, John M. Presley, Macon F. Brock, Jr., Peter B. Robinson, Martin F. Roper, Jimmie
L. Wade, Nancy M. Taylor, Daniel E. Terrell, Carl R. Daniels, Robert M. Lynch, Jeffrey W. Griffiths and William K. Schlegel (the
“Settling Defendants”); and Nominal Party Lumber Liquidators have agreed upon terms to settle the above-referenced
litigation and have signed the Stipulation setting forth those settlement terms.


 


On ______________,
2016, at ___ _.m., the Court will hold a hearing (the “Settlement Hearing”) in the Actions. The purpose of the Settlement
Hearing is to determine: (i) whether the Settlement is fair, reasonable and adequate, including the separately negotiated amount
of attorneys’ fees and expenses for Plaintiffs’ Counsel, and should be finally approved; (ii) whether a final judgment
should be entered and the Actions dismissed with prejudice pursuant to the Stipulation; and (iii) such other matters as may be
necessary or proper under the circumstances.


 





 



 


1
Capitalized terms not otherwise defined shall have the same meanings as set forth in the Stipulation.


 






    	 	2.	 



     


    

 


		II.	THE LUMBER LIQUIDATORS DERIVATIVE LITIGATION



 


		A.	Commencement and Consolidation of the Federal Derivative Actions



 


On March 11, 2015,
plaintiffs Amalgamated Bank, Doan and Klein filed shareholder derivative actions on behalf of Lumber Liquidators for breach of
fiduciary duty, corporate waste, unjust enrichment and other relief in the United States District Court for the Eastern District
of Virginia. On May 27, 2015, the District Court consolidated these actions into the In re Lumber Liquidators Holdings, Inc.
Shareholder Derivative Litigation, Civil Action No. 4:13-cv-00157-AWA-LRL and appointed Amalgamated Bank as Lead Plaintiff
and Robbins Geller Rudman & Dowd LLP as Lead Counsel for the Federal Derivative Actions. See Dkt. No. 11.


 


On June 26, 2015, plaintiffs
filed a Consolidated Shareholder Derivative Complaint for Breach of Fiduciary Duty of Loyalty, Corporate Waste, Unjust Enrichment
and Conspiracy (“Consolidated Complaint”). See Dkt. No. 24. The Consolidated Complaint alleges that defendants
are liable to Lumber Liquidators for causing the Company to violate the law by selling wood containing toxic levels of formaldehyde
in violation of California Air Resources Board’s Regulations (“CARB Regulations”), and wood sourced from the
Russian Far East, a protected habitat, in violation of the Lacey Act. Id., ¶¶64-121. The Consolidated Complaint
further alleges that a pre-suit demand upon the Board of Directors of Lumber Liquidators (the “Board”) is unnecessary
because a majority of the directors face a substantial likelihood of liability for knowingly causing the Company to seek profits
in violations of the law as described above. Id., ¶¶148-187.


 


		B.	Defendants’ Motions to Dismiss



 


On July 24, 2015, the
Company filed a motion to dismiss the Consolidated Complaint on the grounds that a pre-suit demand upon the Lumber Liquidators’
Board would not have been a useless and futile act, and therefore, is not excused. See Dkt. No. 45. Defendants also filed
a motion to dismiss the Consolidated Complaint, arguing, among other things, that defendants did not breach their fiduciary duties
owed to Lumber Liquidators and its stockholders but instead acted in good faith and in the best interest of Lumber Liquidators.
Dkt. No. 42.


 






    	 	3.	 



     


    

 


On the same day, the
Demand Review Committee filed a separate motion to stay the Federal Derivative Actions until such time the Demand Review Committee
was able to “complete its work and the Board may act on the [Demand Review] Committee’s recommendation.” See
Dkt. No. 37.


 


Plaintiffs filed their
Oppositions to the Company and defendants’ motions to dismiss the Consolidated Complaint on August 14, 2015. See Dkt.
Nos. 69, 71. In the Oppositions, plaintiffs argued, among other things, that demand futility existed because a majority of the
Lumber Liquidators’ Board suffer from conflicts that render them unable to fairly and objectively consider a pre-suit demand.
Id. The Oppositions argued that each defendant is liable to Lumber Liquidators for breach of fiduciary duty of loyalty, corporate
waste, unjust enrichment, and conspiracy. Id.


 


On December 21, 2015,
the District Court entered an Order in the related In re Lumber Liquidators Holdings, Inc. Securities Litigation, Civil
Action No. 4:13-cv-157 denying the motion to dismiss filed by defendants in that action.


 


Thereafter, on February
29, 2016, the District Court denied the Company and defendants’ motions to dismiss the derivative claims in the Actions without
prejudice. See Dkt. No. 155 at 4.


 


		C.	Settlement Negotiations



 


On March 29, 2016,
the parties engaged in mediation, overseen by Hon. Daniel Weinstein (Ret.). The mediation involved the parties’ efforts to
settle the claims through extensive negotiations and consultation with experienced legal counsel who were fully competent to assess
the strengths and weaknesses of their respective clients’ claims or defenses. The parties exchanged substantial mediation
statements prior to participating in the mediation session with Judge Weinstein. Following lengthy, arm’s-length, and mediated
negotiations, on May 16, 2016, the parties reached an agreement-in-principle to settle the Actions that was memorialized in a Memorandum
of Understanding (the “MOU”) executed that day.


 






    	 	4.	 



     


    

 


		III.	TERMS OF THE PROPOSED DERIVATIVE SETTLEMENT



 


The principal terms,
conditions and other matters that are part of the Settlement, which is subject to approval by the Court, are summarized below.
This summary should be read in conjunction with, and is qualified in its entirety by reference to, the text of the Stipulation,
which has been filed with the Court and is available at a link on Lumber Liquidators’ website at the Investor Relations page
at http://investors.LumberLiquidators.com.


 


In connection with
the Settlement of the Actions, Lumber Liquidators shall receive a $26,000,000 cash payment from its Director and Officer Insurance
policies, to be used to resolve a related securities class action (the “Federal Class Action”) (subject to an interpleader
action) with no other Company cash to be used to settle the related securities class action, and the Lumber Liquidators’
Board shall adopt and maintain the corporate governance measures and funding requirements described below within sixty (60) days
after the Court’s approval of the proposed Settlement. The corporate governance reforms and funding commitments shall remain
in effect for not fewer than five (5) years from that date and shall not be altered without a Court order.


 


Lumber Liquidators
acknowledges and agrees that the cash and corporate governance policies set forth below confer substantial benefits upon Lumber
Liquidators and its stockholders. Lumber Liquidators also acknowledges that the commencement, prosecution, and settlement of the
Actions were material and substantial factors in the Company’s decision to use the $26,000,000 in insurance proceeds (and
no money from the Company) for the resolution of the Federal Class Action and to adopt, implement, and maintain the corporate governance
reforms set forth below.


 


CORPORATE GOVERNANCE POLICIES


 


Board Composition and Practices


 


Modified Plurality
Voting. The Company will adopt a “modified plurality” approach to shareholder voting for directors. Under this
approach, a director who does not receive a majority vote would agree to submit his/her resignation. However, the Board is not
legally obligated to accept, and can take other factors into consideration, including (but not limited to) the individual’s
history on the Board, relevant outside work experience, knowledge of industry, and knowledge of regulatory requirements, and choose
to retain the director if the director otherwise received the highest number of shares voted.


 






    	 	5.	 



     


    

 


Separate Chairman
and Chief Executive Officer (“CEO”). The Board shall include a provision in the Company’s Bylaws which requires
the separation of the roles of CEO and Chairman of the Board and that the Chairman must be a fully independent director of the
Board.


 


In addition to the
duties of all Board members (which shall not be limited or diminished by the Chairman’s role), the Chairman shall be responsible
for the following functions: (i) timing and agendas for Board meetings; (ii) nature, quantity and timing of information provided
to the independent directors by the Company’s management; (iii) retention of counsel or consultants who report directly to
the Board; (iv) implementation of corporate governance policies and procedures, including assisting the chair of the various Board
committees as requested; (v) receiving reports from the Nominating and Corporate Governance Committee regarding compliance
with and implementation of corporate governance policies; (vi) receiving reports from the Nominating and Corporate Governance Committee
regarding governance policies; and (vii) evaluating, along with Compensation Committee, CEO performance. The Chairman should share
any reports received by Board committees with the full Board as appropriate.


 


Limitation on Other
Boards. The Board shall include a provision in the Company’s Bylaws which requires that independent directors may sit
on no more than two other public boards, including Chairman. The CEO may sit on no more than one other
public board. Directors and officers may not serve as Board members for companies that directly compete with Lumber Liquidators.


 


Authorization to
Retain Counsel. The Board’s committees shall have standing authorizations, at their discretion, to obtain legal or other
advisors of their choice, who shall report directly to the Board or the committee.


 






    	 	6.	 



     


    

 


Charters. Each
standing committee of the Board should have a written charter, which is made available to the public on Lumber Liquidators’
website, and requires that the committee meet no fewer than three times per year.


 


Director Education.
Current directors shall attend a program specifically designed as directors’ education no later than the end of their current
term (if standing for reelection). New directors must attend within six (6) months of joining the Board. Thereafter, the Nominating
and Corporate Governance Committee in coordination with the Chief Compliance Officer (“CCO”) and Chief Legal Officer
(“CLO”) will develop and implement an ongoing annual education program for directors.


 


New Director.
The Company shall agree to the one-time appointment to the Board of Directors of a candidate agreeable to Lead Plaintiff and the
Company. The candidate shall meet the criteria for a Lumber Liquidators’ director as set forth in the Company’s Corporate
Governance Guidelines. If at least one of the candidate(s) already proffered by Lead Plaintiff are not agreed to by Lumber Liquidators
or, should all candidates decline to serve, the Company, utilizing mutually agreed upon search criteria, shall in good faith conduct
a search for new director candidate(s) through the following process:


 


		(a)	Employ a nationally recognized search firm to work together with Lead Plaintiff’s corporate
governance expert to engage in a general search for a slate of at least five (5) candidates. Lead Plaintiff, in consultation with
its corporate governance expert and Lumber Liquidators’ stockholders, as appropriate, shall propose a slate of at least five
(5) additional candidates. All candidates selected shall meet the qualifications identified by Lead Plaintiff’s corporate
governance expert and Lumber Liquidators.



 


		(b)	If Lead Plaintiff and Lumber Liquidators are unable to, in good faith, mutually agree upon the
selection of one of these candidates, the selection shall be made by Judge Weinstein or Jed Melnick as the mediators of the settlement
of the Federal Derivative Actions.



 






    	 	7.	 



     


    

 


		(c)	At the conclusion of the search process, but in no event later than six (6) months after final
approval of this Settlement, Lumber Liquidators shall, in good faith, appoint a director candidate to the Lumber Liquidators’
Board identified pursuant to this process to serve for at least one (1) term.



 


Board Evaluation
of Stockholder Proposals. The Board shall include a provision in the Company’s Bylaws which requires that stockholder
proposals be evaluated by the directors as follows:


 


		(a)	The Company shall distribute to the entire Board all proposals received by the Company. After the
distribution to the Board, and before the making of any recommendation to the Board or any of its members concerning a response,
approval or disapproval, Lumber Liquidators’ law department and senior management shall discuss with the Chair of any Board
committee responsible for oversight of the subject matter of the proposal, if applicable, the financial, legal, practical and social
implications of approval and implementation of the proposal;



 


		(b)	Where a stockholder proposal has been made by any stockholder holding at least 2% of the Company’s
outstanding shares as of the Company’s last-filed Form 10-Q or 10-K, the Company shall timely contact the proponent of the
proposal to arrange a teleconference or an in-person meeting to discuss the proposal and its financial, legal, social and practical
implications. If the proponent agrees to a meeting or teleconference, the Chair of any Board committee responsible for the oversight
of the subject matter of the proposal shall attend;



 


		(c)	Lumber Liquidators’ law department and senior management, shall make a recommendation to
the Board committee responsible for oversight of the subject matter of the proposal concerning whether to include or exclude the
shareholder proposal in the proxy and/or to submit a no-action request to the SEC pursuant to Securities Exchange Act of 1934 §14(a),
and SEC Rule 14a-8, promulgated thereunder;



 






    	 	8.	 



     


    

 


		(d)	Before the filing of a proxy statement, which makes a recommendation concerning any stockholder
proposal, a draft of the recommendation shall be reviewed and approved by the Board; and



 


		(e)	The Board is authorized at its discretion to engage outside counsel or other advisors to assist
in their review of any shareholder proposal at the expense of the Company.



 


Stockholder Meetings.
Each member of the Board shall be expected to attend each annual stockholder meeting in person.


 


Stockholders shall
have the right in general meetings to ask questions, both orally and in writing and receive answers and discussion from the CEO
and Board. Such discussion shall take place regardless of whether questions have been submitted in advance.


 


Polls should remain
open at the annual meeting until all agenda items have been discussed.


 


Regulatory Affairs Committee


 


The Board shall establish
a Regulatory Affairs Committee focused on overseeing the regulatory affairs specific to Lumber Liquidators. The Committee shall
familiarize itself with all aspects of the applicable industry law.


 


The Regulatory Affairs
Committee shall oversee the processes by which Lumber Liquidators conducts its business so that the Company shall do so in a manner
that complies with laws and regulations and reflects the highest standards of integrity. The Committee shall review and make recommendations
regarding policies, practices, and procedures for compliance with industry laws.


 


The Regulatory Affairs
Committee shall review Company policy for contracts with contractors, suppliers, vendors and similarly situated persons and the
financial arrangements provided to ensure that such persons are not incentivized in a way that would cause Lumber Liquidators to
violate any applicable environmental laws, rules and/or regulations. The Board will have the authority to grant additional authority/oversight
to this Committee.


 






    	 	9.	 



     


    

 


Compensation Reforms


 


Ban on Stock Pledges.
The Board shall establish a ban on stock hedging and/or pledging prohibiting a director from hedging and/or pledging any of the
equity securities in connection with a margin or similar loan transaction.


 


Clawback Policy.
To the extent permitted by law, if the Board, or a Committee thereof, determines that any bonus, incentive payment, equity award
or other compensation has been awarded or received by an executive officer of the Company, as defined by Rule 16a-1(f) of the Securities
Exchange Act of 1934, as amended, and that such compensation was based on any financial results or operating metrics that were
satisfied as a result of such officer’s knowing or intentional fraudulent or illegal conduct, then the Board or a Committee
thereof shall recover from the officer such compensation (in whole or in part) as it deems appropriate under the circumstances.
Further, following a restatement of the Company’s financial statements, the Company shall recover any compensation received
by the CEO and CFO that is required to be recovered by Section 304 of Sarbanes-Oxley Act of 2002. In determining whether to recover
a payment, the Board shall take into account such considerations as it deems appropriate, including whether the assertion of a
claim may violate applicable law or prejudice the interests of the Company in any related proceeding or investigation. The Board
shall have sole discretion in determining whether an officer’s conduct has or has not met any particular standard of conduct
under law or Company policy.


 


Stock Holdings Guidelines.
The Board shall adopt a policy regarding stock holding guidelines for certain executives and directors with the following provisions:


 


(a)           Company personnel
will be required to maintain the following minimum stock holdings: (i) CEO – 5 times base salary, (ii) Founder – 2.5
times base salary, (iii) Non-employee directors – 2.5 times annual cash retainer, and (iv) Executive officers – 1 times
base salary.


 






    	 	10.	 



     


    

 


(b)           Shares can be
owned directly or indirectly through immediate family members in the same household or a trust. The shares can include vested shares
of restricted stock, shares underlying in-the-money options, or shares held in the outside director deferral plan.


 


(c)           The time period
for implementing compliance is 5 years after adoption of policy or assuming a relevant position.


 


(d)           Once the required
level is reached, the individual must continuously own the shares. If the individual falls below the required holdings solely due
to a decline in the value of the shares, then they may be granted a hardship exemption at the discretion of the Board.


 


(e)           The Board shall
disclose in its annual Proxy statement filed with the SEC when an individual falls out of compliance with the stock holding provision
and when those individuals regain compliance with these provisions.


 


Corporate Discipline, Termination and
Whistleblowers


 


Chief Compliance
Officer. The Chief Compliance Officer shall be responsible for promoting Lumber Liquidators’ worldwide compliance with
applicable laws and rules and with Lumber Liquidators’ Code of Business Conduct and Ethics. The Chief Compliance Officer
shall be responsible for overseeing development of a comprehensive legal compliance and ethics program designed to evaluate, to
maintain and, when needed, to correct compliance with federal and state rules and regulations and the Code of Conduct. The Chief
Compliance Officer shall be responsible for reviewing and suggesting improvements to Lumber Liquidators’ existing procedures
for receipt, retention and consideration of reports or evidence of violations of applicable federal or state law or the Code of
Business Conduct and Ethics, in consultation with the Audit Committee.


 


Except as would be
deemed the responsibility of the internal audit function, the Chief Compliance Officer shall be responsible for internal investigations
into violations of Lumber Liquidators’ policies or applicable laws. When a violation of federal or state law or the Code
of Business Conduct and Ethics appears to have occurred, the Chief Compliance Officer shall be responsible for determining whether
an investigation is necessary.


 






    	 	11.	 



     


    

 


The Chief Compliance
Officer shall notify the Audit Committee of all material investigations that have been initiated and shall retain such assistance
as he/she deems necessary to conduct the investigation.


 


At the conclusion of
any investigation, the Chief Compliance Officer (in consultation with the Audit Committee) shall:


 


		1.	Determine whether a violation has occurred, is ongoing or is about to occur;



 


		2.	Recommend (as necessary) that Lumber Liquidators implement appropriate responses to any violation;
and



 


		3.	Inform the Audit Committee of the results of any such material investigation and any recommended
remedial measures.



 


The Chief Compliance
Officer will make quarterly reports to the Audit Committee (or other committee as directed by Board) and annual reports to the
full Board.


 


The Chief Compliance
Officer shall be responsible for reviewing every situation in which a Lumber Liquidators’ employee is adjudicated by a court
of law to have violated a U.S. federal or state statute in connection with his/her employment by Lumber Liquidators. Presumptively,
any employee adjudicated to have violated a U.S. federal or state criminal statute in connection with his/her employment by Lumber
Liquidators shall be terminated for cause and receive no severance payments in connection with the termination. If the Chief Compliance
Officer determines that such termination is not warranted, he/she shall so recommend to the Audit Committee, which will act upon
his/her recommendation in its discretion.


 


Code of Conduct.
The Board shall cause the following clause to be inserted into the Company’s Code of Business Conduct and Ethics:


 


You are expected to be familiar with
all legal and regulatory provisions that relate to the performance of your job, and you must follow the spirit as well as the letter
of such laws and regulations in your business dealings. No officer, employee and/or director of Lumber Liquidators has any authority
to engage in conduct inconsistent with applicable U.S. laws and regulations, or to authorize, direct or condone such conduct by
any other person.


 






    	 	12.	 



     


    

 


The Audit Committee
shall, within the next 3 years, review the current version of the Code of Business Conduct and Ethics and shall consider amendments
thereto that provide recipients with more detailed discussions of those laws and regulations that have a material effect on Lumber
Liquidators’ business and operations.


 


Confidential Whistleblower
Program. The Board shall require management to adopt written policies protecting whistleblowers, and include such policy on
the Company’s website. The Company’s Whistleblower Policy shall:


 


		(a)	Encourage interested parties to bring forward ethical and legal violations and/or a reasonable
belief that ethical and legal violations have occurred to the Audit Committee and the Chief Compliance Officer so that action may
be taken to resolve the problem. Material complaints shall be reviewed by the Audit Committee.



 


		(b)	The policy shall communicate effectively that Lumber Liquidators is serious about adherence to
its codes of conduct and that whistleblowing is an important tool in achieving this goal.



 


The Whistleblower Program
– with the endorsement of the Board and the most senior management of the Company – must adequately notify employees,
independent contractors and vendors of Lumber Liquidators of the following:


 


		(a)	executives may be subject to criminal penalties, including imprisonment, for retaliation against
whistleblowers;



 


		(b)	whistleblower complaints may be directed to both the Audit Committee and the Chief Compliance Officer,
and the complaints will be handled by these parties anonymously and, to the extent possible, in confidence, unless requested by
the whistleblower;



 


		(c)	if a whistleblower brings his or her complaint to an outside regulator or other governmental entity,
he or she will be protected by the terms of the Whistleblower Program just as if he or she directed the complaint to the Audit
Committee and/or the Chief Compliance Officer;



 






    	 	13.	 



     


    

 


		(d)	if an employee is subject to an adverse employment decision as a result of whistleblowing, the
employee must file a complaint with the Department of Labor within 90 days of the alleged violation (a failure to report such claims
within the 90 day window do not foreclose any other available legal remedy); and



 


		(e)	it is both illegal and against Lumber Liquidators’ policy to discharge, demote, suspend,
threaten, intimidate, harass or in any manner discriminate against an individual for engaging in the act of whistleblowing.



 


The Company shall provide
a Whistleblower Telephone Hotline to assist on matters pertaining to corruption, fraud or similar unlawful activities at Lumber
Liquidators, with alternative reporting mechanisms including suggestion boxes or email address.


 


The Company will remind
employees of whistleblowing options and whistleblower protections in employee communications provided at least twice a year on
the Company’s intranet.


 


Policy on Lobbying and Political Contributions


 


The Board shall include
a provision in the Company’s Bylaws which limits the use of corporate funds and other assets for governmental lobbying and
political campaigns as follows:


 


The Board shall insure
that any Company lobbying or political activity is conducted solely for promoting the commercial interests of Lumber Liquidators
as a whole and is in the interests of its stockholders. The Board shall insure that lobbying and political spending do not reflect
narrow political preferences of the Company’s executives that have little or no bearing on Lumber Liquidators’ own
commercial performance.


 






    	 	14.	 



     


    

 


		IV.	PLAINTIFFS’ COUNSEL’S SEPARATELY NEGOTIATED ATTORNEYS’ FEES AND EXPENSES



 


After negotiating the
principal terms of the Settlement, counsel for Lead Plaintiff and Lumber Liquidators, acting by and through its counsel, with the
assistance of the Honorable Daniel Weinstein (Ret.), separately negotiated the attorneys’ fees and expenses the Company would
pay to Plaintiffs’ Counsel based on the substantial benefits conferred upon Lumber Liquidators by the Settlement. In light
of the substantial benefits conferred by Plaintiffs’ Counsel’s efforts, Lumber Liquidators, acting by and through its
Board of Directors, has agreed to pay $5,000,000 in attorneys’ fees and expenses, subject to Court approval (the “Fee
and Expense Amount”). The Fee and Expense Amount includes fees and expenses incurred by Plaintiffs’ Counsel in connection
with the prosecution and settlement of the Actions. To date, Plaintiffs’ Counsel have not received any payments for their
efforts on behalf of Lumber Liquidators stockholders. The Fee and Expense Amount will compensate Plaintiffs’ Counsel for
the results achieved in the litigation.


 


		V.	REASONS FOR THE SETTLEMENT



 


The Settling Parties
have determined that it is desirable and beneficial that the Actions, and all of their disputes related thereto, be fully and finally
settled in the manner and upon the terms and conditions set forth in the Stipulation and Plaintiffs’ Counsel believe that
the Settlement is in the best interests of the Settling Parties, Lumber Liquidators and its stockholders.


 


		A.	Why Did the Settling Defendants Agree to Settle?



 


The Settling Defendants
have denied and continue to deny each and every one of the claims and contentions alleged by the Plaintiffs in the Actions. The
Settling Defendants expressly have denied and continue to deny all allegations of wrongdoing or liability against them or any of
them arising out of, based upon, or related to, any of the conduct, statements, acts or omissions alleged, or that could have been
alleged, in the Actions. Without limiting the foregoing, the Settling Defendants have denied and continue to deny, among other
things, that they breached their fiduciary duties or any other duty owed to Lumber Liquidators or its stockholders, or that Plaintiffs,
Lumber Liquidators, or its stockholders suffered any damage or were harmed as a result of any conduct alleged in the Actions or
otherwise. The Settling Defendants have further asserted and continue to assert that at all relevant times, they acted in good
faith and in a manner they reasonably believed to be in the best interests of Lumber Liquidators and its stockholders.


 






    	 	15.	 



     


    

 


Nonetheless, the Settling
Defendants also have taken into account the expense, uncertainty and risks inherent in any litigation, especially in complex cases
like the Actions, and that the proposed Settlement would, among other things: (a) bring to an end the expenses, burdens and uncertainties
associated with continued litigation of the claims asserted in the Actions, (b) finally put to rest those claims and the underlying
matters, and (c) confer benefits upon them, including further avoidance of disruption of their businesses and lives due to the
pendency and defense of the Actions. Therefore, the Settling Defendants have determined that it is desirable and beneficial that
the Actions, and all of the Settling Parties’ disputes related thereto, be fully and finally settled in the manner and upon
the terms and conditions set forth in the Stipulation.


 


		B.	Why Did Plaintiffs Agree to Settle?



 


Plaintiffs and Plaintiffs’
Counsel believe that the claims asserted in the Actions have merit. However, Plaintiffs and Plaintiffs’ Counsel recognize
and acknowledge the expense and length of continued proceedings necessary to prosecute the Actions against the Settling Defendants
through trial and potential appeals. Plaintiffs and Plaintiffs’ Counsel also have taken into account the uncertain outcome
and the risk of any litigation, especially in complex actions such as the Actions, as well as the difficulties and delays inherent
in such litigation. Plaintiffs and Plaintiffs’ Counsel also are mindful of the inherent problems of proof of, and possible
defenses to, the claims asserted in the Actions. Based on their evaluation, Plaintiffs and Plaintiffs’ Counsel have determined
that the Settlement set forth in the Stipulation is in the best interests of Lumber Liquidators and its stockholders.


 


		VI.	SETTLEMENT HEARING



 


On _________________,
at _____ _.m., the Court will hold the Settlement Hearing at the United States District Court for the Eastern District of Virginia,
600 Granby Street, Norfolk, VA 23510. At the Settlement Hearing, the Court will consider whether the terms of the Settlement are
fair, reasonable and adequate and thus should be finally approved, whether the separately negotiated Fee and Expense Amount should
be approved, and whether the Actions should be dismissed with prejudice pursuant to the Stipulation.


 






    	 	16.	 



     


    

 


Pending determination
of whether the Settlement should be approved, no Lumber Liquidators stockholder, either directly, representatively, derivatively
or in any other capacity, shall commence or prosecute against any of the Released Persons, any action or proceeding in any court,
administrative agency or other tribunal asserting any of the Released Claims.


 


		VII.	RIGHT TO ATTEND SETTLEMENT HEARING



 


Any current Lumber
Liquidators stockholder may, but is not required to, appear in person at the Settlement Hearing. If you want to be heard at the
Settlement Hearing, then you must first comply with the procedures for objecting, which are set forth below. The Court has the
right to change the hearing date or time without further notice. Thus, if you are planning to attend the Settlement Hearing, you
should confirm the date and time before going to the Court. Current Lumber Liquidators stockholders who have no objection to the
Settlement do not need to appear at the Settlement Hearing or take any other action.


 


		VIII.	RIGHT TO OBJECT TO THE PROPOSED DERIVATIVE SETTLEMENT AND PROCEDURES FOR DOING SO



 


Any current Lumber
Liquidators stockholder may appear and show cause, if he, she or it has any reason why the Settlement of the Actions should not
be approved as fair, reasonable and adequate, or why a judgment should not be entered thereon, or why the separately negotiated
attorneys’ fees and expenses should not be approved. You must object in writing, and you may request to be heard at the Settlement
Hearing. If you choose to object, then you must follow these procedures.


 


		A.	You Must Make Detailed Objections in Writing



 


Any objections must
be presented in writing and must contain the following information:


 


1.           Your name, legal
address, and telephone number;


 


2.           The case name
and number (In re Lumber Liquidators Holdings, Inc. Shareholder Derivative Litigation, Lead Case No. 4:13-cv-00157-AWA-DEM);


 



    	 	17.	 



     


    

 


3.           Proof of being
a Lumber Liquidators stockholder as of the Record Date, July 18, 2016;


 


4.           The date(s) you
acquired your Lumber Liquidators shares;


 


5.            A statement of
each objection being made;


 


6.           Notice of whether
you intend to appear at the Settlement Hearing. You are not required to appear; and


 


7.           Copies of any
papers you intend to submit to the Court, along with the names of any witness(es) you intend to call to testify at the Settlement
Hearing and the subject(s) of their testimony.


 


The Court may not consider
any objection that does not substantially comply with these requirements.


 


		B.	You Must Timely Deliver Written Objections to the Court



 


All written objections
and supporting papers must be submitted to the Court either by mailing them to:


 


Clerk of the Court 


United States District
Court 


Eastern District of
Virginia 


600 Granby Street Norfolk,
VA 23510


 


OR by filing them in person at any location
of the United States District Court for the Eastern District of Virginia.


 


YOUR WRITTEN OBJECTIONS
MUST BE POSTMARKED OR ON FILE WITH THE CLERK OF THE COURT NO LATER THAN _________________________.


 


Unless the Court orders otherwise, your
objection will not be considered unless it is timely filed with the Court.


 


Any Person or entity
who fails to object or otherwise request to be heard in the manner prescribed above will be deemed to have waived the right to
object to any aspect of the Settlement as incorporated in the Stipulation or otherwise request to be heard (including the right
to appeal) and will be forever barred from raising such objection or request to be heard in this or any other action or proceeding,
and, unless otherwise ordered by the Court, shall be bound by the Judgment to be entered and the releases to be given.


 






    	 	18.	 



     


    

 


		IX.	HOW TO OBTAIN ADDITIONAL INFORMATION



 


This Notice summarizes
the Stipulation. It is not a complete statement of the events of the Actions or the Settlement contained in the Stipulation.


 


You may inspect the
Stipulation and other papers in the Actions at the United States District Clerk’s office at any time during regular business
hours of each business day. The Clerk’s office is located at the United States District Court for the Eastern District of
Virginia, 600 Granby Street, Norfolk, VA 23510. However, you must appear in person to inspect these documents. The Clerk’s
office will not mail copies to you. You may also view and download the Stipulation at http://investors.LumberLiquidators.com.


 


If you have any questions
about matters in this Notice you may contact by telephone at 1-800-449-4900 or in writing Rick Nelson, c/o Shareholder Relations,
Robbins Geller Rudman & Dowd LLP, 655 West Broadway, Suite 1900, San Diego, CA 92101.


 


PLEASE DO NOT CALL,
WRITE, OR OTHERWISE DIRECT QUESTIONS TO EITHER THE COURT OR THE CLERK’S OFFICE.


 





	DATED: ______________, 2016	BY ORDER OF THE COURT
	 	UNITED STATES DISTRICT COURT EASTERN DISTRICT OF VIRGINIA







 


 


 


 






    	 	19.	 



     


    

 





 


 


 


EXHIBIT A-2


 



     


     


    

 


UNITED STATES DISTRICT COURT
FOR THE



EASTERN DISTRICT OF VIRGINIA



(Newport News Division)






	
        In re LUMBER LIQUIDATORS HOLDINGS,

        INC. SECURITIES LITIGATION

         

        This Document Relates To:

        Lead Case No. 4:15cv16 and Consolidated

        Case Nos. 4:15cv25 and 4:15cv30

         

         

         
	
        Master No. 4:13-cv-00157-AWA-DEM

        Hon. Arenda L. Wright Allen





 SUMMARY NOTICE OF PROPOSED DERIVATIVE
SETTLEMENT


EXHIBIT
A-2


		TO:	ALL RECORD HOLDERS AND BENEFICIAL OWNERS
OF THE COMMON STOCK OF LUMBER LIQUIDATORS HOLDINGS, INC. (“LUMBER LIQUIDATORS” OR THE “COMPANY”) AS OF
JULY 18, 2016 (THE “RECORD DATE”)



 


PLEASE TAKE NOTICE that
the above-captioned shareholder derivative actions (the “Actions”) are being settled on the terms set forth in a Stipulation
of Settlement, dated July 18, 2016 (the “Stipulation” or “Settlement”).[1]
Under the terms of the Stipulation, as a part of the proposed Settlement, Lumber Liquidators shall receive a payment of $26,000,000
that it will use to resolve the related securities class action (subject to an interpleader action) and will adopt certain corporate
governance enhancements. These reforms are designed to address the claims asserted in the Actions and enhance Lumber Liquidators’
monitoring of, response to, and compliance with environmental, health and safety laws, rules and regulations, as well as addressing
stockholder concerns relating to the Company’s compliance with such laws, rules and regulations.


 





 



 


1           This
notice should be read in conjunction with, and is qualified in its entirety by reference to, the text of the Stipulation, which
has been filed with the United States District Court for the Eastern District of Virginia. A link to the Form 8-K filed with the
SEC containing the text of the Stipulation may be found on the Company’s website at the Investor Relations page at http://investors.LumberLiquidators.com.
All capitalized terms herein have the same meanings as set forth in the Stipulation.


 






    	 	- 1 -	 



     


    

 


The full Board reviewed
the derivative settlement parameters, and exercising its business judgment and mindful of its duties to stockholders, approved
the settlement. The Settling Defendants agree and acknowledge that the $26 million payment that will be used to resolve the related
securities class action and the corporate governance enhancements confer substantial benefits upon Lumber Liquidators and its stockholders.


 


In light of the substantial
benefits conferred upon Lumber Liquidators by Plaintiffs’ Counsel’s efforts, the Company, by and through its Board
of Directors, in exercising its business judgment, has agreed to pay Plaintiffs’ Counsel $5 million in attorneys’ fees
and expenses, subject to Court approval.


 


IF YOU WERE A RECORD OR
BENEFICIAL OWNER OF LUMBER LIQUIDATORS COMMON STOCK AS OF JULY 18, 2016, PLEASE READ THIS NOTICE CAREFULLY AND IN ITS ENTIRETY
AS YOUR RIGHTS MAY BE AFFECTED BY PROCEEDINGS IN THE ABOVE-REFERENCED LITIGATION.


 


On __________, 2016, at
_____ _.m., a hearing (the “Settlement Hearing”) will be held at the United States District Court for the Eastern District
of Virginia, 600 Granby Street, Norfolk, VA 23510, before the Honorable Arenda Wright Allen, to determine: (1) whether the terms
of the proposed Settlement, including the separately negotiated attorneys’ fees and expenses, should be approved as fair,
reasonable and adequate; and (2) whether the Actions should be dismissed on the merits and with prejudice on the terms set forth
in the Stipulation.


 


Any Lumber Liquidators
stockholder that objects to the Settlement shall have a right to appear and to be heard at the Settlement Hearing, provided that
he, she or it was a stockholder of record or beneficial owner as of July 18, 2016. Any Lumber Liquidators stockholder who satisfies
this requirement may enter an appearance through counsel of such stockholder’s own choosing and at such stockholder’s
own expense, or may appear on their own. However, no stockholder of Lumber Liquidators shall be heard at the Settlement Hearing
unless, no later than ____________, 2016, such stockholder has filed with the Court, a written notice of objection containing the
following information:


 






    	 	- 2 -	 



     


    

 


1.           Your name, legal
address, and telephone number;


 


2.           The case name and
number (In re Lumber Liquidators Holdings, Inc. Shareholder Derivative Litigation, Lead Case No. 4:13-cv-00157-AWA-DEM);


 


3.           Proof of being a
Lumber Liquidators stockholder as of the Record Date;


 


4.           The date(s) you acquired
your Lumber Liquidators shares;


 


5.           A statement of your
position with respect to the matters to be heard at the Settlement Hearing, including a statement of each objection being made;


 


6.           Notice of whether
you intend to appear at the Settlement Hearing (this is not required if you have lodged your objection with the Court); and


 


7.           Copies of any papers
you intend to submit to the Court, along with the names of any witness(es) you intend to call to testify at the Settlement Hearing
and the subject(s) of their testimony.


 


Only stockholders who have
filed and delivered valid and timely written notices of objection will be entitled to be heard at the Settlement Hearing unless
the Court orders otherwise.


 


If you wish to object to
the proposed Settlement, you must file the written objection described above with the Court on or before ____________, 2016.


 


Any Lumber Liquidators
stockholder as of July 18, 2016, who does not make his, her or its objection in the manner provided herein shall be deemed to have
waived such objection and shall be forever foreclosed from making any objection to the fairness, reasonableness or adequacy of
the Settlement as incorporated in the Stipulation and/or to the separately negotiated attorneys’ fees and expenses to Plaintiffs’
Counsel, unless otherwise ordered by the Court, but shall otherwise be bound by the Judgment to be entered and the releases to
be given.


 


Inquiries may be made to
Plaintiffs’ Counsel: Rick Nelson, c/o Shareholder Relations, Robbins Geller Rudman & Dowd LLP, 655 West Broadway, Suite
1900, San Diego, CA 92101; telephone 1-800-449-4900.


 






    	 	- 3 -	 



     


    

 


PLEASE
DO NOT CONTACT THE COURT REGARDING THIS NOTICE





	DATED: _________________, 2016	BY ORDER OF THE COURT
	 	UNITED STATES DISTRICT COURT
	 	EASTERN DISTRICT OF VIRGINIA







 


 


 


 


 






    	 	- 4 -	 



     


    




 


 


 


 


EXHIBIT B


 


 


 


 


 






     


     


    

 


UNITED STATES DISTRICT COURT FOR THE


 


EASTERN DISTRICT OF VIRGINIA


 


(Newport News Division)


 





	
        In re LUMBER LIQUIDATORS HOLDINGS,
        INC. SECURITIES LITIGATION,

         

         

        

        This Document Relates To:

         

        Lead Case No. 4:15cv16 and Consolidated

         

        Case Nos. 4:15cv25 and 4:15cv30

         
	
        )

        ) 

        )

        )

        )

        )

        )

        )

        )

        )

         
	
        Master No. 4:13-cv-00157-AWA-DEM

        

        Hon. Arenda L. Wright Allen

         

         

         





[PROPOSED] ORDER APPROVING DERIVATIVE SETTLEMENT
AND ORDER OF

DISMISSAL WITH PREJUDICE


 


EXHIBIT B


 


This matter came before
the Court for hearing pursuant to the Order of this Court, dated _____________, 2016 (“Order”), on Plaintiffs’
motion for final approval of the settlement (“Settlement”) set forth in the Stipulation of Settlement, dated July 18,
2016 (the “Stipulation”). Due and adequate notice having been given of the Settlement as required in said Order, and
the Court having considered all papers filed and proceedings had herein, and otherwise being fully informed in the premises and
good cause appearing therefor, IT IS HEREBY ORDERED, ADJUDGED AND DECREED that:


 


1.           This District
Court Approval Order incorporates by reference the definitions in the Stipulation, and all capitalized terms used herein shall
have the same meanings as set forth in the Stipulation (in addition to those capitalized terms defined herein).


 


2.           This Court has
jurisdiction over the subject matter of the Actions, including all matters necessary to effectuate the Settlement, and over all
parties to the Actions, including, but not limited to, the Plaintiffs, Lumber Liquidators Holdings, Inc. (“Lumber Liquidators”),
current Lumber Liquidators Securities Holders, and the Settling Defendants.


 






    	 	1.	 



     


    

 


3.           The Court finds
that the notice provided to Lumber Liquidators stockholders was the best notice practicable under the circumstances of these proceedings
and of the matters set forth therein, including the Settlement set forth in the Stipulation, to all Persons entitled to such notice.
The notice fully satisfied the requirements of Federal Rule of Civil Procedure 23.1 and due process.


 


4.           The Actions and
all claims contained therein, as well as all of the Released Claims, are dismissed with prejudice. As among Plaintiffs, the Settling
Defendants and Lumber Liquidators, the parties are to bear their own costs, except as otherwise provided in the Stipulation.


 


5.           The Court finds
that the terms of the Stipulation and Settlement are fair, reasonable and adequate as to each of the Settling Parties, and hereby
finally approves the Stipulation and Settlement in all respects, and orders the Settling Parties to perform its terms to the extent
the Settling Parties have not already done so.


 


6.           Upon the Effective
Date, Plaintiffs (acting on their own behalf and derivatively on behalf of Lumber Liquidators and its stockholders), Lumber Liquidators,
all other Securities Holders, and the Company, for good and sufficient consideration, the receipt and adequacy of which are hereby
acknowledged, shall be deemed to have, and by operation of law and of the Judgment shall have, fully, finally, and forever compromised,
settled, released, resolved, relinquished, waived and discharged and dismissed with prejudice each and every one of the Released
Claims against the Released Persons.


 


7.           Upon the Effective
Date, Plaintiffs (acting on their own behalf and derivatively on behalf of Lumber Liquidators and its stockholders), Lumber Liquidators
and any Person acting on behalf of Lumber Liquidators, all other Securities Holders, and the Company, for good and sufficient consideration,
the receipt and adequacy of which are hereby acknowledged, shall be forever barred and enjoined from commencing, instituting or
prosecuting any of the Released Claims against any of the Released Persons. Nothing herein shall in any way impair or restrict
the rights of any Settling Party to enforce the terms of the Stipulation.


 






    	 	2.	 



     


    

 


8.           Upon the Effective
Date, each of the Released Persons, for good and sufficient consideration, the receipt and adequacy of which are hereby acknowledged,
shall be deemed to have, and by operation of law and of the Judgment shall have, fully, finally, and forever compromised, settled,
released, resolved, relinquished, waived and discharged each and all of the Plaintiffs and Plaintiffs’ Counsel and all current
Lumber Liquidators stockholders (solely in their capacity as Lumber Liquidators stockholders) from all claims (including Unknown
Claims) arising out of, relating to, or in connection with the institution, prosecution, assertion, settlement or resolution of
the Actions or the Released Claims. Nothing herein shall in any way impair or restrict the rights of any Settling Party to enforce
the terms of the Stipulation.


 


9.           The Court hereby
approves the Fee and Expense Amount in accordance with the Stipulation and finds that such fee is fair and reasonable in light
of the substantial benefits conferred upon Lumber Liquidators by the Settlement.


 


10.           Neither the
Stipulation nor the Settlement, including the Exhibits attached thereto, nor any act performed or document executed pursuant to
or in furtherance of the Stipulation or the Settlement: (a) is or may be deemed to be or may be offered, attempt to be offered
or used in any way as a concession, admission, or evidence of the validity of any Released Claims or any fault, wrongdoing or liability
of the Released Persons or Lumber Liquidators; or (b) is or may be deemed to be or may be used as a presumption, admission, or
evidence of any liability, fault or omission of any of the Released Persons or Lumber Liquidators in any civil, criminal or administrative
or other proceeding in any court, administrative agency, tribunal or other forum. Neither the Stipulation nor the Settlement, nor
any act performed or document executed pursuant to or in furtherance of the Stipulation or the Settlement, shall be admissible
in any proceeding for any purpose, except to enforce the terms of the Settlement and Stipulation, and except that the Released
Persons may file or use the Stipulation, the District Court Approval Order and/or the Judgment in any action in order to support
a claim, defense or counterclaim based on principles of res judicata, collateral estoppel, full faith and credit, release,
standing, judgment bar or reduction or any other theory of claim preclusion or issue preclusion or similar claim defense or counterclaim.


 






    	 	3.	 



     


    

 


11.           During the course
of the Actions, the parties and their respective counsel at all times complied with the requirements of Federal Rule of Civil Procedure
11, and all other similar laws relating to the institution, prosecution, defense of, or settlement of the Actions.


 


12.           Without affecting
the finality of this District Court Approval Order and the Judgment in any way, this Court hereby retains continuing and exclusive
jurisdiction over the Actions and the parties to the Stipulation to enter any further orders as may be necessary to effectuate,
implement and enforce the Stipulation and the Settlement provided for therein and the provisions of this District Court Approval
Order.


 


13.           This District
Court Approval Order and the Judgment is a final and appealable resolution in the Actions as to all claims and the Court directs
immediate entry of the Judgment forthwith by the Clerk in accordance with Rule 58, Federal Rules of Civil Procedure, dismissing
the Actions with prejudice.


 


IT IS SO ORDERED.


 


 


 





	DATED:	 	 	 	 
	 	 	THE HONORABLE ARENDA WRIGHT ALLEN	 
	 	 	UNITED STATES DISTRICT JUDGE	 







 








    	 	4.	 



     


    




 


  


 


 


 


EXHIBIT C


 


 


 


 


 



     


     


    




 


UNITED STATES DISTRICT COURT FOR THE


 


EASTERN DISTRICT OF VIRGINIA


 


(Newport News Division)


 





	
        In re LUMBER LIQUIDATORS HOLDINGS, INC.
        SECURITIES LITIGATION,

         

 



         

        This Document Relates To:

         

        Lead Case No. 4:15cv16 and Consolidated

        Case Nos. 4:15cv25 and 4:15cv30

         
	
        )

        )

        )

        )

        )

        )

        )

        )

        )
	
        Master No. 4:13-cv-00157-AWA-DEM

        

        Hon. Arenda L. Wright Allen

         

         








 


[PROPOSED] JUDGMENT


 


EXHIBIT C


 


Plaintiffs, having moved
for final approval of the settlement set forth in the Stipulation of Settlement, dated July 18, 2016 and the matter having come
before the Honorable Arenda Wright Allen, United States District Judge, and the Court, on ___________, 2016, having issued its
Order Approving Derivative Settlement and Order of Dismissal with Prejudice, and having directed the Clerk of the Court to enter
judgment, it is


 






     

     


    

 


ORDERED, ADJUDGED AND
DECREED:


 


1.           This Judgment incorporates
by reference the Court’s Order Approving Derivative Settlement and Order of Dismissal with Prejudice dated _____________,
2016; and


 


2.           That for the reasons
stated in, and pursuant to the terms set forth in, the Court’s Order Approving Derivative Settlement and Order of Dismissal
with Prejudice dated _____________, 2016, Plaintiffs’ Motion for Final Approval of Derivative Settlement is granted; accordingly,
this case, and all related cases, are closed.


 





	Dated:	Norfolk, Virginia	 	BY:
	 	 	 	 
	 	___________________, 2016	 	 
	 	 	 	Clerk of Court