IN THE COURT OF COMMON PLEAS CUYAHOGA COUNTY, OHIO …s1.q4cdn.com/345331386/files/doc_downloads/Settlement/... · 2016-04-29 · In addition, Plaintiffs’ Counsel has carefully

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IN THE COURT OF COMMON PLEAS CUYAHOGA COUNTY, OHIO

ROBERT BLACK, Derivatively on Behalf of CLIFFS NATURAL RESOURCES INC., Plaintiff, v. JOSEPH A. CARRABBA, et al., Defendants, -and- CLIFFS NATURAL RESOURCES INC., Nominal Defendant.

) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

Case No. CV-14-827803

Judge Richard J. McMonagle

IN THE COURT OF COMMON PLEAS

CUYAHOGA COUNTY, OHIO GEORGE ASMUSSEN and JEFF ASMUSSEN, Derivatively on Behalf of CLIFFS NATURAL RESOURCES INC., Plaintiffs, v. JOSEPH A. CARRABBA, et al., Defendants, -and- CLIFFS NATURAL RESOURCES INC., Nominal Defendant.

) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

Case No. CV-14-829259 Judge Richard J. McMonagle

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VICKI WILLIAMS and RAPHAEL ALEMAN, Derivatively on Behalf of CLIFFS NATURAL RESOURCES INC.,

Plaintiffs,

v.

JOSEPH A. CARRABBA, et al.,

Defendants, -and- CLIFFS NATURAL RESOURCES INC.,

Nominal Defendant.

) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

Case No. CV-14-829499


STIPULATION AND AGREEMENT OF SETTLEMENT

This Stipulation of Settlement dated April 20, 2016 is made and entered into by and

among the following Parties1 by and through their counsel: (i) Co-Lead Plaintiffs George

Asmussen and Jeff Asmussen, on behalf of themselves and Plaintiffs Robert Black, Vicki

Williams and Raphael Aleman and derivatively on behalf of Cliffs Natural Resources Inc.; (ii)

the Individual Defendants; and (iii) Nominal Defendant Cliffs. The Stipulation is intended by

the Parties to fully, finally and forever resolve, discharge and settle the Released Claims and

dismiss the Actions with prejudice, upon and subject to the terms and conditions hereof.

1 Where not defined parenthetically, capitalized terms are defined in Part IV(1) below.

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I. INTRODUCTION

A. Factual Background

During the period relevant to the Actions, Cliffs was an international mining and natural

resources company whose business focused on the production and sale of iron ore and coal. Its

business was divided into several segments, one of the most significant of which was “Eastern

Canadian Iron Ore,” principally composed of two mines: Bloom Lake, located in Quebec,

Canada, and Wabush, situated in Newfoundland and Labrador, Canada.

Cliffs obtained a 75% interest in the Bloom Lake mine when it acquired Consolidated

Thompson Iron Mines Limited for approximately $5 billion in May 2011. Consolidated

Thompson’s principal asset was its interest in Bloom Lake. Cliffs planned to substantially

increase production at the Bloom Lake mine through two phases of expansion—Phase 2, which

would double production capacity from 8.0 million metric tons to 16.0 million metric tons per

annum, and an exploratory Phase 3, which would further increase production capacity to 24.0

million metric tons per annum. In March 2012, Cliffs announced a 123% increase in its

quarterly dividend, largely to be supported by anticipated increased production at Bloom Lake.

When it announced the dividend increase, and periodically thereafter, Defendants made

statements to the effect that the increased dividend was sustainable and had been thoroughly

tested before implementation.

Plaintiffs alleged that the Individual Defendants were aware of, but failed to disclose, a

“raft” of systemic and persistent problems with Bloom Lake’s facilities and the expansion

project that caused massive cost overruns and serious production issues. Those issues, according

to the Plaintiffs, were due to the Individual Defendants’ mismanagement, failure of oversight,

and an absence of appropriate internal controls, and prevented Cliffs from producing iron ore

from Bloom Lake at low costs or in the expected volumes. Plaintiffs further alleged that the

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Individual Defendants repeatedly misled investors regarding the sustainability of the Company’s

increased dividend and the adequacy of its testing of that sustainability, and that the dividend

was in fact unsustainable due to the undisclosed problems at Bloom Lake.

In November 2012, the Company announced significant adjustments to its 2013 operating

plan, including suspension of key components of the Phase 2 expansion at Bloom Lake and a

delay of Phase 3. On February 12, 2013, less than a year after increasing its dividend, Cliffs

announced that it would cut its dividend by 76% to $0.15 per share. Cliffs eventually suspended

iron ore production at the Bloom Lake mine in December 2014 and placed its division that

included Bloom Lake into Canadian bankruptcy proceedings in January 2015.

In July and August 2013, arrangements were made under which three senior executives

of the Company -- the Chairman/President/CEO; the Executive Vice President/President of

Global Operations (previously the Chief Financial Officer); and the Senior Vice President, North

American Iron Ore Operations – would leave the Company pursuant to severance agreements

negotiated at the direction of the Board that provided for various payouts and other benefits.

Beginning early in 2014, the Company became the subject of public scrutiny by an

activist hedge fund shareholder that initiated a proxy fight culminating in its successfully

securing control of the Board.

B. Procedural Background

On June 4, 2014, Plaintiff Robert Black filed a shareholder derivative action captioned

Black v. Cliffs Natural Resources Inc., et al., Case No. CV-14-827803 (the “Black Action”), in

the Court of Common Pleas of Cuyahoga County. The Complaint alleged, inter alia, that the

Individual Defendants had breached their fiduciary duties in connection with management and

oversight of the Bloom Lake mine facility and the handling of the Company’s dividend,

(including allegedly false and misleading statements on these subjects during 2012 and 2013),

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and also in connection with pay practices upon the departure of certain executives during that

period. A second shareholder derivative action, Asmussen, et al, v. Cliffs Natural Resources Inc.,

et al., Case No. CV-14-829259 (the “Asmussen Action”), was filed on July 2, 2014, and included

allegations similar to those in the Black Action. A third shareholder derivative action, Williams

v. Cliffs Natural Resources, Inc., et al., Case No. CV-14-829499, (the “Williams Action”), was

filed on July 9, 2014, and asserted allegations similar to those in the Black and the Asmussen

Actions.

Pursuant to Court orders dated August 11, 2014, and September 12, 2014, the Asmussen

Action and the Williams Action were transferred for consolidation with the Black Action.

Pursuant to the Parties’ stipulations and subsequent court orders (the “Stipulated Orders”), the

Parties agreed to stay the Actions pending disposition of a motion to dismiss in one of the then-

pending federal securities law class actions (collectively, the “Securities Actions”): (i) The

Department of the Treasury of the State of New Jersey and its Division of Investment, et al. v.

Cliffs Natural Resources Inc. et al., No. 1:14-cv-01031, United States District Court for the

Northern District of Ohio (Judge Dan Aaron Polster) (the “New Jersey Action”); and (ii) Stuart

Rosenberg, et al. v. Cliffs Natural Resources Inc., et al., No. CV-14-828140, Court of Common

Pleas of Cuyahoga County, Ohio (Judge Shannon M. Gallagher) (the “Rosenberg Action”).

During the stay of the Actions and in accordance with the Stipulated Orders, the Parties

filed several joint status reports with the Court describing the status of the Securities Actions.

The Parties continued the stay of the Actions until the Rosenberg Action reached a settlement in

principle.

On December 17, 2015, the Court entered an order granting the unopposed motion to lift

the stay of the consolidated Actions for the limited purpose of appointing Co-Lead Plaintiffs and

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Co-Lead Plaintiffs’ selection of counsel. Pursuant to that order, Plaintiffs George Asmussen and

Jeff Asmussen were appointed Co-Lead Plaintiffs; The Shuman Law Firm was appointed as

Lead Counsel for Co-Lead Plaintiffs; and Weisman, Kennedy & Barris Co., L.P.A. was

appointed as Liaison Counsel for Co-Lead Plaintiffs.

C. Settlement Negotiations

In August 2015, the Parties began a dialogue regarding the possible resolution of the

Actions. On August 6, 2015, and December 11, 2015, counsel for Plaintiffs in the Black Action

and the Asmussen Action, respectively, sent settlement demands to Defendants’ Counsel. Key

components of the demands included a requirement that Cliffs adopt corporate governance

reforms and that any amounts that might be paid into a settlement fund for the New Jersey

Action be contributed only by non-company sources such as applicable insurance carriers up to

exhaustion of policy limits. The demands took into account Cliffs’ existing governance policies

and procedures and were specifically targeted to address and prevent a recurrence of the alleged

wrongdoing that is the subject of the Actions, and also to limit the financial impact of the New

Jersey Action on the Company.

Over the next several months, the two sides exchanged information and, through their

counsel, had numerous discussions presenting and arguing their respective positions as well as

prospects and terms for a possible settlement. These discussions eventually resulted in the

proposed agreement to settle the Actions on the terms and conditions set forth in this Stipulation.

The lengthy negotiations were conducted in good faith, at arm's-length and were hard-fought by

experienced counsel.

During the period of negotiation, the New Jersey Action was settled in principle, with the

payment into the settlement fund to be delivered solely by insurance carriers.

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As part of the settlement process, Plaintiffs secured discovery to confirm that the

proposed terms of the Settlement are fair, reasonable and adequate. In particular, Cliffs

produced to Plaintiffs substantial sets of documents, many of which were board-level

confidential materials, which were examined by Plaintiffs’ Counsel.

Plaintiffs, Plaintiffs’ Counsel, Cliffs and its counsel believe that the proposed Settlement

is in the best interests of Cliffs and its shareholders.

II. PLAINTIFFS’COUNSEL’S INVESTIGATION AND RESEARCH, PLAINTIFFS’ CLAIMS, AND THE BENEFITS OF THE SETTLEMENT

Plaintiffs’ Counsel conducted an extensive investigation relating to the claims and the

underlying events alleged in the Actions, including, but not limited to: (i) inspecting, reviewing

and analyzing the Company’s public filings with the U.S. Securities and Exchange Commission

(“SEC”), press releases, announcements, transcripts of investor conference calls, and news

articles; (ii) drafting and filing the derivative complaints in the Actions; (iii) researching the

applicable law with respect to the claims asserted in the Actions and the potential defenses

thereto; (iv) evaluating the proceedings and pleadings in the Securities Actions to assess the

nature and magnitude of the Company’s exposure in those actions and its implications for the

efficient management of the Actions; (v) researching and assessing a variety of corporate

governance issues, including in regard to executive severance matters; (vi) examining and

considering pertinent Board and committee materials obtained in discovery; (vii) considering and

assessing financial analysts reports and the Company’s current financial condition; and (viii)

participating in extensive settlement discussions and negotiations.

In addition, Plaintiffs’ Counsel has carefully studied the complaint in Joseph Mansour v.

Joseph Carrabba, et al., No. 1-16-cv-00390-DAP, (N.D.Ohio), filed in federal court on February

19,2016, several days after the announcement of the settlement in principle of the Actions. That

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examination has revealed that all substantive matters and claims set out in Mansour are

encompassed within the allegations of the Actions, and all have been considered in formulating

the approach to, and agreement on, the Settlement.

Plaintiffs’ and Plaintiffs’ Counsel believe that the claims asserted in the Actions have

merit and that their investigation supports the claims asserted. Without conceding the merit of

any of Defendants’ defenses or the lack of merit of any of their own allegations, and solely in

order to avoid the potentially protracted time, expense, and uncertainty associated with continued

litigation, including a potential trial and appeal, Plaintiffs and Plaintiffs’ Counsel concluded that

it is desirable that the Actions be fully and finally settled in the manner and upon the terms and

conditions set forth in this Stipulation. Plaintiffs and Plaintiffs’ Counsel recognize the

significant risk, expense, and length of continued proceedings necessary to prosecute the Actions

against the Individual Defendants through trial and possible appeal. Plaintiffs’ Counsel also

have taken into account the uncertain outcome and the risks of any litigation, especially in a

complex case such as the Actions (which are governed by Ohio law and are subject to the

protections that law provides for activities and judgments of corporate directors and officers), as

well as the difficulties and delays inherent in such complex litigation generally. Plaintiffs and

Plaintiffs’ Counsel are also mindful of the inherent problems of proof and possible defenses to

the claims asserted in the Actions. Plaintiffs and Plaintiffs’ Counsel believe that the Settlement

set forth in the Stipulation confers substantial benefits on the Company. Based on their

evaluation and expertise in the area of complex stockholder litigation, Plaintiffs and Plaintiffs’

Counsel have determined that the Settlement is fair, reasonable, and adequate and is in the best

interests of Cliffs and its shareholders, and have agreed to settle the Actions upon the terms and

subject to the conditions set forth herein.

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III. DEFENDANTS’ DENIAL OF WRONGDOING AND LIABILITY

Defendants have denied, and continue to deny, all allegations of wrongdoing, fault,

liability and/or damage to the Company. Defendants deny that they engaged or aided and

abetted in any wrongdoing or violation of the law; deny that they breached any fiduciary duty,

including the duty of care or duty of loyalty; deny that they engaged in any of the wrongful acts

alleged in the Actions: deny that they acted in bad faith or improperly in any way; and maintain

that they complied with all fiduciary and other legal duties. Defendants believe that all Plaintiffs

have failed to meet their burden of pleading with particularity that demand was excused.

Nonetheless, Defendants are agreeing to the terms and conditions set forth in this Stipulation

solely because they contend and believe the proposed Settlement would eliminate the burden,

risk, and expense of further litigation. Defendants have determined that it is desirable and

beneficial to them that the claims asserted in the Actions be fully and finally settled and

terminated in the manner and upon the terms and conditions set forth in this Stipulation.

Defendants have also taken into account the uncertainty, burden, expense, and risks inherent in

any litigation, especially in complex cases like the Actions, and are entering into this Stipulation

because the Settlement would eliminate the uncertainty, burden, expense and risk of further

litigation, and also, as to Nominal Defendant Cliffs, because the Settlement provides substantial

benefits to, and is in the best interests of, Cliffs and its shareholders.

IV. TERMS OF THE STIPULATION AND AGREEMENT OF SETTLEMENT

Co-Lead Plaintiffs (on behalf of themselves and derivatively on behalf of Cliffs), the

Individual Defendants, and Nominal Defendant Cliffs, by and through their counsel, hereby

stipulate and agree that, subject to the approval of the Court, the Released Claims shall be finally

and fully compromised, settled, and released, and the Actions shall be dismissed with prejudice,

as to all Parties, upon the terms and subject to the conditions set forth herein as follows:

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1. Definitions

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

1.0 “Actions” means the three consolidated shareholder derivative actions

pending in the Court of Common Pleas, Cuyahoga County, Ohio: (i) Black v. Cliffs Natural

Resources, Inc. et al., Case No. CV-14-827803; (ii) Asmussen, et al. v. Cliffs Natural Resources

Inc., et al., Case No. CV-14-829259; and (iii) Williams v. Cliffs Natural Resources Inc., et al.,

Case No. CV-14-829499.

1.1 “Board” means the Cliffs Board of Directors.

1.2 “Cliffs,” the “Company,” or “Nominal Defendant” means Cliffs Natural

Resources Inc. and its predecessors, successors, controlling shareholders, partners, joint ventures,

subsidiaries, affiliates, divisions and assigns.

1.3 “Court” refers to the Court of Common Pleas, Cuyahoga County, Ohio.

1.4 “Defendants” means, collectively, the Individual Defendants and Cliffs.

1.5 “Defendants’ Counsel” means: (i) Jones Day, North Point, 901 Lakeside

Avenue, Cleveland, OH 44114; (ii) Baker & Hostetler LLP, PNC Center, 1900 East 9th Street,

Suite 3200, Cleveland, OH 44114; (iii) Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street,

New York, NY 10019; and (iv) Benesch Friedlander Coplan & Aronoff LLP, 200 Public Square,

Suite 2300, Cleveland, OH 44114.

1.6 “Effective Date” means the first date by which all of the events and

conditions specified in ¶6.1 herein have been met or have occurred.

1.7 “Execution Date” means the date this Stipulation has been signed by all

the signatories through their respective counsel.

1.8 “Fee and Expense Amount” means the agreed-upon sum of $775,000,

detailed in ¶5.1, to be paid to Plaintiffs’ Lead Counsel, subject to Court approval, for distribution

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among Plaintiffs’ Counsel in recognition of the substantial benefits conferred upon Cliffs and its

shareholders by the initiation, prosecution and settlement of the Actions.

1.9 “Final” means the time when a Judgment that has not been reversed,

vacated, or modified in any way 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 any

of the following has occurred: (1) no appeal has been filed and the time has passed for any

notice of appeal to be timely filed in the Actions; or (2) the date of final affirmance on an

appeal of the Judgment, the expiration of the time for a petition for or a denial of a writ of

certiorari to review the Judgment and, if certiorari is granted, the date of final affirmance of

the Judgment following review pursuant to that grant; or (3) the date of final dismissal of any

appeal from the Judgment or the final dismissal of any proceeding on certiorari to review the

Judgment

1.10 “Judgment” means the final order and judgment to be rendered by the

Court, substantially in the form attached hereto as Exhibit C.

1.11 “Individual Defendants” means Joseph A. Carrabba, Laurie Brlas,

Terrance M. Paradie, David B. Blake, Gary B. Halverson, James F. Kirsch, Richard K. Riederer,

Susan M. Cunningham, Barry J. Eldridge, Susan M. Green, Janice K. Henry, Andrés R. Gluski,

Timothy W. Sullivan, Mark E. Gaumond, and Stephen M. Johnson.

1.12 “Lead Counsel” or “Plaintiffs’ Lead Counsel” means The Shuman Law

Firm.

1.13 “Co-Lead Plaintiffs” means George Asmussen and Jeff Asmussen.

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1.14 “Notice” means the Notice of Pendency and Proposed Settlement of

Shareholder Derivative Actions, substantially in the form attached hereto as Exhibit 1 to Exhibit

B.

1.15 “Parties” means, collectively, each of the Plaintiffs (on behalf of

themselves and derivatively on behalf of Cliffs), each of the Individual Defendants, and Nominal

Defendant Cliffs.

1.16 “Person” means an individual, corporation, limited liability corporation,

professional corporation, partnership, limited partnership, limited liability partnership,

association, joint stock company, estate, legal representative, trust, unincorporated association,

government or any political subdivision or agency thereof, and any business or legal entity and

their spouses, heirs, agents, executors, attorneys, administrators, predecessors, successors,

representatives, or assignees.

1.17 “Plaintiffs” means, collectively, Robert Black, George Asmussen, Jeff

Asmussen, Vicki Williams and Raphael Aleman.

1.18 “Plaintiffs’ Counsel” means, collectively: (i) Federman & Sherwood,

10205 North Pennsylvania Avenue, Oklahoma City, OK 73120; (ii) The Dickson Firm, LLC,

Enterprise Place, Suite 420, 3401 Enterprise Parkway, Beachwood, OH 44122; (iii) The Shuman

Law Firm, One Montgomery St., Suite 1800, San Francisco, CA 94104; (iv) Weisman, Kennedy

& Berris Co., L.P.A., 1600 Midland Building, 101 Prospect Ave., W., Cleveland, OH 44115; (v)

Koehler Neal LLC, 3330 Erieview Tower, 1301 East 9th Street, Cleveland, OH 44114; (vi) Law

Office of Alfred G. Yates, Jr., P.C., 519 Allegheny Building, 429 Forbes Avenue, Pittsburgh, PA

15219; (vii) and Law Offices of Curtis V. Trinko LLP, 16 West 46th Street, 7th Floor, New York,

NY 10036.

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1.19 “Preliminary Approval Order” means the Order to be entered by the Court,

substantially in the form attached hereto as Exhibit B, preliminarily approving the terms and

conditions of the Settlement as set forth in this Stipulation, directing that Notice be provided to

Cliffs shareholders, and scheduling a Settlement Hearing to consider whether the Settlement and

the Fee and Expense Amount should be granted final approval.

1.20 “Released Claims” means any and all claims for relief, suits, debts

demands, rights, liabilitites, damages, losses, obligations, judgments, fees, expenses, costs,

matters, issues and actions or causes of action of every nature and description whatesoever,

whether known or unknown (including Unknown Claims as defined in ¶1.26 of this Stipulation),

contingent or absolute, suspected or unsuspected, disclosed or undisclosed, matured or

unmatured, discoverable or undiscoverable, whether or not concealed or hidden, for damages,

injunctive relief, or any other remedy that have been, or could or might have been, or in the

future can or might be asserted by Plaintiffs, Cliffs, and/or any Cliffs shareholder derivatively on

behalf of Cliffs against any Released Persons that are based upon, refer to, arise out of, concern,

or are directly or indirectly related to (i) the claims and allegations contained in the Actions, (ii)

any of the facts, transactions, events, occurrences, acts, disclosures, statements, omissions or

failures to act that were alleged or that could have been alleged in the Actions; or (iii) the

settlement of the Actions, including the payment provided for in this Stipulation, and the

reasonable attorneys’ fees, costs, and expenses incurred in defense of the Actions.

Notwithstanding the foregoing, the Released Claims do not include (i) any claims based on any

conduct of the Released Persons after April 13, 2016; or (ii) any direct claims belonging to

Cliff’s shareholders, including without limitation, any claims arising under the federal securities

laws. Notwithstanding the foregoing, Released Claims shall not include claims to enforce the

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terms of this Stipulation or the Settlement. In addition, nothing set forth herein or in the

Judgment shall constitute a release by any Defendant of any insurer, reinsurer, or any other entity

contracted or otherwise obligated to provide insurance or indemnification to any of the Released

Persons of any claim arising out of the rights, remedies, duties or obligations provided for in any

insurance policy or agreement. Nothing set forth herein shall constitute a release by or among

the Company and the Individual Defendants or Released Persons of any rights or obligations

relating to indemnification or advancement of defense costs, whether arising from the

Company’s certificate of incorporation or code of regulations, Ohio law, or any agreement

pertaining to indemnification or advancement of defense costs.

1.21 “Released Persons” means each and all of the Individual Defendants, and

each and all the Individual Defendants’ respective present or former successors, heirs,

executives, employees, agents, insurers, reinsurers, attorneys, advisors, associates,

representatives, executors, personal representatives, estates, administrators, assigns, spouses and

other members of any Individual Defendant’s immediate family, any entity in which any

Individual Defendant or member of any Individual Defendant’s immediate family has or had a

controlling interest (directly or indirectly), and any trust of which any Individual Defendant is

the settlor or which is for the benefit of any Individual Defendant and/or member(s) of his or her

family.

1.22 “Settlement” means the resolution of the Actions as contemplated and

documented in this Stipulation.

1.23 “Settlement Hearing” means the hearing or hearings at which the Court

will review the adequacy, fairness, and reasonableness of the Settlement and whether the

agreement for payment of the Fee and Expense Award should be approved.

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1.24 “Stipulation” means this Stipulation and Agreement of Settlement and the

exhibits attached hereto and incorporated herein by reference.

1.25 “Summary Notice” means the Summary Notice of Pendency and Proposed

Settlement of Shareholder Derivative Actions, substantially in the form attached hereto as

Exhibit 2 to Exhibit B.

1.26 “Unknown Claims” means any or all claims that were alleged or that could

or might have been alleged in the Actions by the Plaintiffs, Cliffs, or any Cliffs shareholder

derivatively on behalf of Cliffs, which any Plaintiff, Cliffs, or Cliffs shareholder 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 Parties stipulate and

agree that, upon the Effective Date, Plaintiffs, Individual Defendants, and Cliffs shall expressly

waive and relinquish, and each of Cliffs’ shareholders shall be deemed to have, and by operation

of the Judgment shall have, expressly waived and relinquished, to the fullest extent permitted by

law, any and all provisions, rights, and benefits conferred by any law of the United States or of

any state or territory of the United States, or principle of common law, which governs or limits a

Person’s release of Unknown Claims, including 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.

and/or by any law of the United States or of any state or territory of the United States, or

principle of common law or of international or foreign law, that is similar, comparable, or

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equivalent in effect to California Civil Code §1542. It is understood that Plaintiffs, Cliffs, or any

of Cliffs’ shareholders may hereafter discover facts in addition to or different from those that he,

she, or it now knows or believes to be true with respect to the subject matter of the Released

Claims (including Unknown Claims), but Plaintiffs and Cliffs shall expressly fully, finally, and

forever discharge, settle, and release with prejudice, and each of Cliffs’ shareholders, upon the

Effective Date, shall be deemed to have, and by operation of the Judgment shall have fully,

finally, and forever discharged, settled and released with prejudice, any and all Released

Claims (including Unknown Claims), known or unknown, suspected or unsuspected,

contingent or noncontingent, whether or not concealed or hidden, that 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, grossly negligent, reckless,

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. Plaintiffs and Cliffs

acknowledge, and Cliffs’ shareholders 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. Terms of the Settlement

2.1 Cliffs, through its Board, shall adopt and implement the comprehensive set

of corporate governance measures (the “Reforms”) in substantially the form attached as Exhibit

A to this Stipulation, promptly after, and in any event no later than ninety (90) days after, the

Effective Date, to be maintained for a period of not less than three years from the day they are

implemented, unless (but only to the extent) otherwise required by law. The Board, acting by a

majority of its non-management members, may alter or amend its compliance with any of the

Reforms during the three year period, if it concludes that doing so is required by its fiduciary

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duties or that continued compliance would conflict with applicable law or amendments to the

corporate regulations approved by the shareholders. If such alteration or amendment is made,

the Company shall, within no more than 30 days after the alteration or amendment becomes

effective, advise Lead Plaintiffs’ Counsel thereof in writing, and state the reasons for the

alteration or amendment. Plaintiffs, Plaintiffs’ Counsel and Cliffs agree that the Reforms conferr

a substantial and material benefit on Cliffs and its shareholders, and the Parties acknowledge and

agree that the adoption and implementation of the Reforms is the result of the initiation,

prosecution, and settlement of the Actions. In addition, the nature of the settlement funding of

the New Jersey Action - - exclusively from applicable directors’ and officers’ (“D&O”) policies -

- is consistent with Cliffs’ stated position in the settlement negotiations in these Actions that it

would make all reasonable, good faith efforts to secure funding by applicable insurance carriers

for any such settlement, which in turn had been elicited by Plaintiffs’ demand in these Actions

on the funding issue.

2.2 The Board, exercising its independent business judgment, believes that the

Settlement and the Reforms are in the best interests of Cliffs and its shareholders.

3. Procedures for Implementing the Settlement

3.1 Within five (5) business days after the Execution Date, Co-Lead Plaintiffs

shall submit the Stipulation together with its exhibits to the Court and shall apply for entry of the

Preliminary Approval Order, substantially in the form of Exhibit B attached hereto, requesting,

inter alia: (i) preliminary approval of the Settlement; and (ii) approval of the form and manner of

the proposed notice of the Settlement to Cliffs shareholders; and (iii) a date for the Settlement

Hearing.

3.2 Cliffs shall undertake the administrative responsibility for giving notice to

Cliffs shareholders in the manner set forth in this paragraph and shall be solely responsible for

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paying the costs and expenses related to providing such notice to its shareholders and any other

notice ordered by the Court. Notice shall consist of the Notice and the Summary Notice. Within

ten calendar days after the entry of the Preliminary Approval Order, Cliffs shall cause the

Summary Notice to be published once in Investor’s Business Daily; (ii) The Shuman Law Firm

and Cliffs each shall post copies of the Notice and the Stipulation on their respective websites;

and (iii) Cliffs shall cause a copy of the Notice to be filed with the U.S. Securities and Exchange

Commission via a current report on Form 8-K. The Form 8-K shall also refer shareholders to the

website of Cliffs for more information, including a copy of the Stipulation. The Parties agree

that the content and manner of the Notice, as set forth in this paragraph, constitutes adequate and

reasonable notice to Cliffs shareholders pursuant to applicable law and due process. Prior to the

Settlement Hearing, Lead Counsel and Defendants’ Counsel shall each file with the Court, and

serve, an appropriate affidavit or declaration with respect to their respective obligations

concerning, filing, posting and publishing the Notice and Summary Notice.

3.3 Plaintiffs’ Lead Counsel shall request that no less than forty-five (45) days

after Notice is given, the Court hold the Settlement Hearing to consider and approve the Final

Order and Judgment substantially in the form of Exhibit C attached hereto.

3.4 Pending the Court’s determination as to final approval of the Settlement,

Plaintiffs and Cliffs shareholders shall be barred and enjoined from commencing, prosecuting,

instigating, or in any way participating in the commencement or prosecution of any action

asserting any Released Claim against any of the Released Persons.

3.5 If the Court approves the Settlement at the Settlement Hearing, the Parties

will jointly request entry of the Judgment by the Court: (i) approving finally the Settlement set

forth in the Stipulation as fair, adequate, reasonable, and in the best interests of Cliffs and its

NAI-1500918414v7 19

shareholders, and directing its consummation pursuant to its terms; (ii) finally approving the Fee

and Expense Award and any Service Awards; (iii) dismissing with prejudice the Actions and all

of the Released Claims against the Released Persons; (iv) permanently barring and enjoining the

institution and prosecution by Cliffs or any Cliffs shareholder on behalf of Cliffs of any lawsuit

or other proceeding asserting any of the Released Claims or any claims arising out of, relating to

or in connection with the institution, prosecution, defense, settlement, or resolution of the

Actions; and (v) containing such other and further provisions consistent with the terms of this

Stipulation to which the Parties hereto consent in writing.

4. Releases

4.1 Upon the Effective Date, all Plaintiffs (acting on their own behalf and

derivatively on behalf of Cliffs), Cliffs, and each of Cliffs’ shareholders shall be deemed to have,

and by operation of the Judgment shall have, fully, finally, and forever settled, released,

relinquished, extinguished, dismissed with prejudice, and discharged all Released Claims

(including Unknown Claims) against the Released Persons and shall have covenanted not to sue

the Released Persons with respect to all such Released Claims, and shall be permanently barred

and enjoined from instituting, commencing, or prosecuting the Released Claims against the

Released Persons.

4.2 Upon the Effective Date, each of the Defendants shall be deemed to have,

and by operation of the Judgment shall have, fully, finally, and forever settled, released,

relinquished, extinguished, dismissed with prejudice, and discharged completely each and all of

the Plaintiffs and Plaintiffs' Counsel from all claims (including Unknown Claims) based upon or

arising out of the commencement, prosecution, assertion, settlement or resolution of the Actions

or the Released Claims, provided, however, that such release shall not include claims to enforce

the terms of the Stipulation, the Settlement and/or the Judgment entered pursuant thereto.

NAI-1500918414v7 20

4.3 Nothing herein shall in any way impair or restrict the rights of any Party to

enforce the terms of the Stipulation.

5. Plaintiffs’ Counsel’s Attorneys’ Fees and Expenses

5.1 After conclusion of negotiations for the material substantive terms of the

Settlement, counsel separately negotiated at arm’s length the amount of attorneys’ fees and

expenses to be awarded by the Court to Plaintiffs’ Counsel. In recognition of the substantial

benefits conferred upon Cliffs and Cliffs shareholders as a direct result of the initiation,

prosecution, pendency and settlement of the Actions, and subject to Court approval, the

Individual Defendants’ D&O insurers have agreed to pay Plaintiffs’ Lead Counsel the Fee and

Expense Amount of $775,000, pursuant to the timetable provided herein, to be distributed by

Plaintiffs’ Lead Counsel among Plaintiffs’ Counsel. Defendants shall bear no responsibility for

the allocation or distribution of the Fee and Expenses Amount among Plaintiffs’ Counsel. The

Parties mutually agree that the Fee and Expense Award is fair and reasonable in light of the

substantial benefits conferred upon Cliffs and Cliffs shareholders by this Settlement. Except to

the extent specifically provided in this paragraph, neither Cliffs, nor the Individual Defendants,

nor any of their insurers shall have any obligation to pay or cause to be paid, any fees, costs or

expenses to Plaintiffs or Plaintiffs’ Counsel.

5.2 Co-Lead Plaintiffs may apply for Court-approved service awards in the

amount of $3,500 each (the “Service Awards”). Each Service Award, to the extent that it is

applied for and approved in whole or part, shall be funded entirely and exclusively from the Fee

and Expense Award to Plaintiffs’ Counsel, and shall be paid and disbursed solely by Plaintiffs’

Counsel. Defendants shall take no position on the Service Awards and neither Cliffs, nor the

Individual Defendants, nor any of their insurers shall have any obligation to pay or cause to be

paid any Service Award or any portion thereof.

NAI-1500918414v7 21

5.3 The Fee and Expense Amount shall be paid by the Individual Defendants’

D&O insurers to The Shuman Law Firm within fifteen (15) business days after the latest of (i)

the Court’s entry of the Judgment granting final approval of the Settlement, (ii) the Court’s entry

of an order concerning the Fee and Expense Amount, or (iii) receipt by the D&O insurers of (a) a

copy of the Judgment and the Order concerning the Fee and Expenses Amount as entered by the

Court (which shall be transmitted to them no later than one business day following receipt), (b) a

W-9 for the Shuman Law Firm, and (c) wire or check mailing instructions for The Shuman Law

Firm.

5.4 In the event the Effective Date does not occur, or the Judgment is reversed

or modified, including by way of ruling by an appellate court having jurisdiction over the

Actions, or is subject to successful collateral attack, or the Stipulation is cancelled or terminated

for any other reason, or the Fee and Expense Award and/or Service Awards or any part thereof is

overturned, reduced or substantially modified, then Plaintiffs’ Counsel and their successors shall

have a joint and several obligation to repay the Fee and Expense Award and Service Awards, or

any applicable parts thereof, and shall repay the Fee and Expense Award and Service Awards in

whole or applicable part to the respective D&O insurers within fifteen (15) business days of

receiving notice of such triggering event from Defendants’ Counsel or from the Court.

5.5 The Fee and Expense Amount, or any portion thereof awarded by the

Court, shall constitute full and complete compensation for all of Plaintiffs’ Counsel’s services

and expenses incurred. Payment of the Fee and Expense Amount shall be the obligation of the

Individual Defendants’ D&O insurers only. It is expressly agreed that, in the event of a failure

of the D&O insurers to pay, neither Cliffs nor any of the Individual Defendants shall bear any

personal liability for all or any portion of the Fee and Expense Amount. An award of attorneys

NAI-1500918414v7 22

fees or expenses and any Service Awards are separate and apart from and are not conditions to

the Settlement embodied in this Stipulation or the Judgment. No order or proceeding concerning

any fee and expense application or award or any Service Awards, or any modification or

reversal on appeal of any fee and expense award or Service Awards, shall constitute grounds for

cancellation or termination of the Settlement by any Party or shall otherwise affect the validity

or effectiveness of the Settlement. Upon payment of the Fee and Expense Amount as described

above (or any lesser amount ordered by the Court or any appeals court), the Individual

Defendants’ D&O insurers shall be discharged from any further liability for payment of

Plaintiffs’ Counsel’s fees, costs or expenses in the Actions. Defendants further acknowledge

and warrant that they claim no interest in the Fee and Expense Amount once such funds are paid

to Lead Counsel, subject only to the specific terms of repayment set forth above.

6. Conditions of Settlement, Effect of Disapproval, Cancellation or Termination

6.1 The Effective Date of this Stipulation shall be conditioned on the

occurrence of all of the following events:

a. the Board has approved the Settlement and each of its terms as in

the best interest of Cliffs and its shareholders;

b. the Court has entered the Judgment;

c. the Judgment has become Final.

6.2 If any of the conditions specified in paragraph 6.1 is not met, then this

Stipulation shall be deemed canceled and terminated unless Plaintiffs’ Counsel and Defendants’

Counsel mutually agree in writing to proceed with this Settlement; except that any proceeding,

dispute, appeal, petition, order pertaining to the fee and expenses requested by or awarded to

Plaintiffs’ Counsel or pertaining to any Service Awards shall not operate to terminate, modify, or

NAI-1500918414v7 23

cancel this Stipulation, or affect or delay the Effective Date or the finality of the Judgment

approving this Stipulation and the Settlement of the Actions.

6.3 If for any reason the Effective Date does not occur, or if this Stipulation is

in any way canceled, terminated, or fails to become final in accordance with its terms: (i) the

Parties shall be restored to their respective positions as of the date immediately preceding the full

execution of this Stipulation; and (ii) the Stipulation and all negotiations, proceedings,

documents prepared, and statements made in connection herewith shall be without prejudice to

the Parties, shall not be deemed or construed to be an admission by any Party of any act, matter,

or proposition and shall not be used by anyone in any manner for any purpose in the Actions or

in any other action or proceedings (other than between one or more Defendants and any insurer,

reinsurer or other entity contracted or otherwise obligated to provide insurance or

indemnification to any Released Persons), or entitle any party to recover any costs or expenses

incurred in connection with this Stipulation or the Settlement. In such event, the terms and

provisions of this Stipulation, except ¶¶ 5.4, 6.3, 8.1, and 8.8, shall have no further force or

effect, and any Judgment or other order entered in accordance with the terms of the Stipulation

shall be treated as vacated, nunc pro tunc.

7. Bankruptcy

7.1 In the event any proceedings by or on behalf of Cliffs, whether voluntary

or involuntary, are initiated under any chapter of the U.S. Bankruptcy Code, including any act of

receivership, asset seizure, or similar federal or state law action (“Bankruptcy Proceedings”), the

Parties agree to use their reasonable best efforts to obtain all necessary orders, consents, releases,

and approvals for effectuation of this Stipulation in a timely and expeditious manner.

7.2 In the event of any Bankruptcy Proceedings by or on behalf of Cliffs, the

Parties agree that all dates and deadlines set forth herein will be extended for such periods of

NAI-1500918414v7 24

time as are necessary to obtain appropriate orders, consents, releases and approvals from the

Bankruptcy Court to carry out the terms and conditions of the Stipulation.

8. Miscellaneous Provisions

8.1 The Stipulation shall be null and void and of no force and effect if the

Court does not enter the Judgment. The Stipulation and the Settlement are not and shall not be

construed to be, or offered, attempted to be offered or used in any way by any Party as a

presumption, an admission, or evidence of the validity or invalidity of any claim or defense or of

any fault, liability or wrongdoing whatsoever on the part of the Released Persons. The

Stipulation, the Settlement and any matter relating to them may not be offered or received in

evidence or otherwise referred to in any civil, criminal, or administrative action or proceeding for

any purpose, except to enforce the terms of the Settlement, except that the Released Persons may

file this Stipulation 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, judgment bar or reduction or any other theory of

claim preclusion or issue preclusion or similar defense or counterclaim.

8.2 All proceedings in the Actions shall be stayed, except as provided in this

Stipulation. Other than seeking approval of the Settlement as provided herein, Plaintiffs and

Plaintiffs’ Counsel agree that they will not take any action, take any discovery, or make any

filings in the Actions other than those contemplated by this Stipulation.

8.3 The exhibits to this Stipulation are material and integral parts hereof and

are fully incorporated herein by this reference.

8.4 In the event there exists a conflict or inconsistency between the terms of

this Stipulation and the terms of any exhibit attached hereto, the terms of the Stipulation shall

prevail.

NAI-1500918414v7 25

8.5 Co-Lead Plaintiffs represent that they own shares of common stock of

Cliffs and have owned shares of Cliffs common stock continuously since the commencement of

the activities that underline the allegations of wrongdoing in the Actions.

8.6 The Parties represent and agree that the terms of the Settlement were

negotiated at arm’s-length and in good faith by the Parties, and reflect a settlement that was

reached voluntarily based upon adequate information and sufficient discovery and after

consultation with experienced legal counsel.

8.7 This Stipulation is being executed by counsel for the Parties, each of

whom represents and warrants that he or she has been granted full and complete authority from

his or her client or clients to enter into this Stipulation, which has full force and effect as a

binding obligation of such clients.

8.8 Nothing in this Stipulation or the negotiations or proceedings related

thereto is intended to or shall be deemed to constitute a waiver of any applicable privilege or

immunity, including, without limitation, attorney-client privilege, joint-defense privilege, or

work product immunity.

8.9 The Stipulation may be executed in any number of actual or electronically

transmitted counterparts and by each of the different Parties thereto on several counterparts, each

of which when so executed and delivered shall be an original. The executed signature page(s)

from each actual or electronically transmitted counterpart may be joined together and attached to

one such original and shall constitute one and the same instrument.

8.10 Each Party severally acknowledges that no promise, inducement or

agreement not expressed herein has been made to it or him or her, that this Stipulation contains

the entire agreement between or among the Parties concerning the matters described in this

NAI-1500918414v7 26

Stipulation, and, except as expressly provided herein, that there are no third-party beneficiaries to

this Stipulation.

8.11 This Stipulation may be modified or amended only by a writing signed by

all of the Parties hereto.

8.12 The waiver by any Party of any breach of this Stipulation by any other

Party shall not be deemed a waiver of any other prior or subsequent breach of this Stipulation.

8.13 This Stipulation shall bind and inure to the benefit of the Parties to the

Stipulation and their respective heirs, predecessors, successors and assigns and to any

corporation or other entity into which or with which any Party to this Stipulation may merge or

consolidate. Notwithstanding the foregoing, the corporate governance reforms referenced above

in paragraph 2.1 and set forth in Exhibit A hereto shall not bind any successor entity in the event

the Company merges with or is acquired by such entity, and the Company is not the surviving

entity post-merger or acquisition.

8.14 This Stipulation and the Settlement contemplated by it shall be governed

by and construed in accordance with the laws of the State of Ohio without regard to choice of

law or conflict of law principles. Any action arising out of or relating to this Stipulation shall be

brought exclusively in the Court.

8.15 To the extent permitted by law, all agreements made and orders entered

into during the course of the Actions relating to the confidentiality of documents or information

shall survive this Stipulation. Plaintiffs’ Counsel agrees to return, permanently delete, and/or

destroy (and certify in writing that they have done so) any documents produced by any

Defendant and any third party to the Actions, including any copies thereof, and any translations

of any such documents, within sixty (60) days of the Effective Date.

NAI-1500918414v7 27

8.16 The Parties acknowledge that it is their intent to consummate this

Stipulation and agree to cooperate fully with one another in seeking the Court’s approval of this

Stipulation and Settlement and to obtain entry of the Judgment.

8.17 Should any part of the Stipulation be rendered or declared invalid by a

court of competent jurisdiction, such invalidation of such part or portion of the Stipulation

should not invalidate the remaining portions thereof, and they shall remain in full force and

effect.

8.18 This Stipulation shall not be construed more strictly against one Party than

another merely because it, or any part of it, may have been prepared by counsel for one of the

Parties, it being recognized that it is the result of arm’s length negotiations between the Parties

and all Parties have contributed substantially and materially to the preparation of this Stipulation.

8.19 Except as expressly provided herein, each of the Parties shall bear his, her,

or its own fees and costs.

8.20 The Court shall retain jurisdiction with respect to the implementation and

enforcement of the terms of the Stipulation, and the Parties submit to the jurisdiction of the Court

for purposes of construing, implementing, enforcing and administering the Settlement embodied

in the Stipulation.

IN WITNESS WHEREOF, the Parties hereto have caused the Stipulation to be executed

by their duly authorized attorneys, dated as of Apri120, 2016.

Kip B. Shum nE-mail: [email protected] E. GlennE-mail: rusty@shumanlaw~rm.comTHE SHUMAN LAW FIRMOne Montgomery St., Suite 1800San Francisco, CA 94104Telephone: (303) 861-3003Facsimile: (303) 536-7849Lead Plaintiffs' Counsel

t 1 .~"~,s

William B. Federman ,~~~ ~ ~ ~ ~'~ ~

E-mail: [email protected] & SHERWOOD10205 North Pennsylvania AvenueOklahoma City, OK 73120Telephone: (405) 235-1560Facsimile: (405) 239-2112

/~ ~~

Alfred G. YateGerald RutledgeLAW OFFICE OF ALFRED G. YATES, JR., P.C.519 Allegheny Building429 Forbes AvenuePittsburgh, PA 15219Telephone: (412) 391-5164Facsimile: (412) 471-1033E-mail: [email protected]

NAI-1500918414v7 2g

Exhibit A

CORPORATE GOVERNANCE REFORMS

I. Corporate Governance Guidelines and Director Policies

1. The Company will agree to maintain the provisions of the Corporate Governance Guidelines which require that when the CEO/President or another executive is designated as Chairman of the Board, the Nominating and Governance Committee recommends to the Board a director who will serve as the Lead Director.

2. The Corporate Governance Guidelines will be amended to provide that, when a Lead Director is appointed, the Lead Director must meet the independence requirements of, at least, the New York Stock Exchange.

3. The Company will agree to retain the provision in the Corporate Governance Guidelines providing that a “substantial majority” of the members of the Board must meet the independence requirements of, at least, the New York Stock Exchange.

4. The Company shall not allow any Board member to serve as the chair of more than one Board committee.

5. The Company’s General Counsel shall be required to meet with the Board at least quarterly and present a written report on material pending or threatened litigation and material compliance issues known to him or the Company’s legal office.

6. The Company’s General Counsel shall be required to approve all quarterly corporate press releases before issuance.

7. The Corporate Governance Guidelines will be amended to provide that at least one regularly-scheduled Board meeting each year will take place at an operating location of the Company.

8. The Company will agree to provide one in-house director training program per year using a third-party facilitator.

9. The Corporate Governance Guidelines will be amended to state that there is a presumptive 12-year term limit for outside directors. After 12 years, directors may continue as non-voting honorary Board members. The Board, however, shall retain discretion to waive the presumptive limit if, in its judgment, a Board member is performing at a high level and can continue to serve effectively. If the Board exercises its discretion to waive the presumptive term limit for outside

directors, it shall disclose this decision to stockholders in the Company’s Annual Proxy Statement.

10. The Company will agree to maintain the provisions in the Corporate Governance Guidelines prohibiting directors from serving on more than three other public-company boards, and requiring directors to inform the Chief Executive Officer/President and Chair of the Governance and Nominating Committee in advance of accepting an invitation to serve on the board of directors of another public company.

11. The Company will agree to maintain the provisions in the Corporate Governance Guidelines that provide that the Board and each committee will perform an annual self-evaluation of performance.

12. The Company recently amended its Directors & Officers Share Ownership Guidelines to add a restriction providing that an officer may not sell more than 50% of any shares he or she receives via equity awards from the Company until he or she achieves share ownership at 100% of the applicable guideline level. The Company acknowledges that the filing and prosecution of the lawsuit was a significant factor in adopting that amendment.

II. Audit Committee Charter

1. The Audit Committee shall be required to review and discuss with the independent auditors and senior financial executives key matters relating to internal controls, financial reporting and disclosures.

2. The Audit Committee shall be advised of and consider information regarding significant deficiencies or material weaknesses in the design or operation of internal control over financial reporting or fraud involving management or other employees with a significant role in internal controls.

3. The Audit Committee charter will be amended to provide that the committee members will review the Company’s annual operating and capital expenditure plan prior to its submission to the Board for approval.

4. The Audit Committee charter will be amended to provide that the committee will receive quarterly reports from the Chief Financial Officer on the Company’s cash position, capital structure and, if applicable, dividend policy.

5. The Audit Committee charter will be amended to provide that the committee will meet at least quarterly with the head of the Internal Audit department, who will

provide a report on significant internal audit activities during the preceding quarter.

6. The Audit Committee charter will be amended to provide that the Chief Legal Officer will report to the committee on a quarterly basis on alleged violations reported through the Company’s ethics hotline.

7. The Audit Committee charter will be amended to provide that the committee will report to the full Board at each regularly scheduled meeting of the Board.

8. The Audit Committee charter will be amended to provide that the committee will meet no fewer than four times per year.

9. The Audit Committee charter will be amended to provide that, not less than once every three years, the committee will consider whether it is in the Company’s interests to continue to engage its then-current independent auditors, taking into account, among any other factors deemed pertinent by the Committee, independence, quality, cost, and the nature and significance of institutional knowledge.

III. Compensation and Organization Committee

1. The Compensation and Organization Committee charter will be amended to provide that performance targets applicable to Named Executive Officer compensation decisions for a particular fiscal year will be determined during the first quarter of that year, with the assistance of a compensation consultant.

IV. Strategy Committee

1. The Company will adopt the following committee charter for the strategy committee and shall publish it on the Company’s website:

CLIFFS NATURAL RESOURCES INC. STRATEGY COMMITTEE CHARTER

Purpose

The purposes of the Strategy Committee (the “Committee”) of the Board of Directors (the “Board”) of Cliffs Natural Resources Inc. (“Cliffs”) are to (a) oversee Cliffs’ strategic plan and annual management objectives; (b) oversee, advise on and monitor opportunities and risks relating to Cliffs’ strategic plan, including among other things positioning to support realization of strategic opportunities, as well as consideration of risks pertaining to country operations,

minerals and major projects, and operational, safety and environmental risks; and (c) with management, identify and set strategic goals and expectations and review the merits and risks of potential acquisitions, joint ventures and strategic alliances.

Committee Membership

The Committee will consist of at least three members, with the actual number to be determined from time to time by the Board. At least a majority of the Committee members will meet the independence criteria of the New York Stock Exchange, Inc. Preferred qualifications for Committee members include experience in mergers and acquisitions, investment analysis of business opportunities, formulating corporate strategy, and knowledge of the mining and mineral business.

Duties and Responsibilities

The Committee’s responsibilities include:

Review and Oversee Strategic Opportunities and Projects

1. Assist and advise the Board regarding (a) Cliffs’ current strategy, including goals for future years and (b) the evaluation of evolving and emerging opportunities in existing and new markets (both minerals and geographic), including material acquisitions and dispositions, exploration and production activities and new ventures.

2. Review results of major projects and post-deal integration activities in the context of prior estimates.

3. Monitor the progress and implementation of the strategic plan, and present to the Board any significant issues, risks and opportunities facing Cliffs that are not included in the strategic plan.

4. Assist Cliffs’ Chief Executive Officer (“CEO”) and other senior executive officers in determining the resources necessary for implementation and execution of Cliffs’ strategic and financial plans.

Review Risk Exposures Related to the Strategic Plan

1. Review appropriateness of strategies for managing certain exposures to enterprise risks, including financial, economic, reputational or hazard risks, including: (a) hedging strategies relating to foreign currency, interest rate and commodity exposures; (b) existing insurance programs (and the adequacy thereof) for

property, casualty, fiduciary and political risks; and (c) key management systems including capital investment, environmental management, stakeholder engagement and others as appropriate.

2. Periodically assess Cliffs’ overall capital structure and capital allocation priorities, including Cliffs’ long-term cost of capital, debt-to-equity ratios, dividend payout ratios, share buy-backs, debt or equity financings, liquidity levels, credit rating and credit facilities.

3. Periodically assess developments in best practice frameworks and guidance as may be appropriate in the context of Cliffs’ then current mineral resource base, geographic footprint and overall business plans and objectives.

Other Responsibilities

1. Periodically, and in such manner and at such times as the Committee and the Board deem appropriate, report the Committee’s activities, findings and recommendations to the Board.

2. Annually evaluate the Committee’s performance and the Committee’s charter and review the results and any recommended changes with the Board.

Resources and Authority

To assist the Committee in carrying out its purpose, duties and responsibilities, the Committee will have:

1. The sole authority to retain and terminate independent consultants, independent counsel and other independent advisors.

2. Appropriate resources and authority to discharge its responsibilities and duties as required by law, including, without limitation, such funding as the Committee deems necessary to compensate any consultants and advisors retained by the Committee.

3. The authority, at its discretion, to delegate any of its responsibilities to a subcommittee.

[date] _________________________________ Secretary

V. Governance and Nominating Committee

1. The Governance and Nominating Committee charter will be amended to provide that the committee will consider, at least annually, whether the members of the Board need additional education or training not already provided through the Company to carry out their Board duties and, if it determines that additional education or training is needed, it will report that to the Board.

VI. Employee Compliance Policies

1. The Company shall ensure that every salaried employee and director is provided (either electronically via email or intranet access or by paper copy) a copy of the Company’s Code of Business Conduct and Ethics annually, or sooner if material changes are made during the course of the year.

2. The Company will undertake to obtain annual certifications from salaried employees that acknowledge the Company’s Code of Business Conduct and Ethics, and certify the employee’s compliance with the Code.

3. The Company will maintain an electronic or telephonic hotline that provides, through a third-party contractor, an ability for persons inside or outside the Company to report complaints or concerns regarding ethics and compliance matters.

4. The Company’s intranet and website will contain a statement that no employee may be discharged, demoted or retaliated against because of any reports of possible legal or ethical violations made in good faith to the ethics hotline or any member of Company management.

Exhibit B

NAI-1500870479v7


ROBERT BLACK, Derivatively on Behalf of CLIFFS NATURAL RESOURCES INC., Plaintiff, v. JOSEPH A. CARRABBA, et al., Defendants, -and- CLIFFS NATURAL RESOURCES INC., Nominal Defendant.

) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

Case No. CV-14-827803


IN THE COURT OF COMMON PLEAS

CUYAHOGA COUNTY, OHIO GEORGE ASMUSSEN and JEFF ASMUSSEN, Derivatively on Behalf of CLIFFS NATURAL RESOURCES INC., Plaintiffs, v. JOSEPH A. CARRABBA, et al., Defendants, -and- CLIFFS NATURAL RESOURCES INC., Nominal Defendant.

) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

Case No. CV-14-829259 Judge Richard J. McMonagle

NAI-1500870479v7 2


VICKI WILLIAMS and RAPHAEL ALEMAN, Derivatively on Behalf of CLIFFS NATURAL RESOURCES INC.,

Plaintiffs,

v.

JOSEPH A. CARRABBA, et al.,

Defendants, -and- CLIFFS NATURAL RESOURCES INC.,

Nominal Defendant.

) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

Case No. CV-14-829499


[PROPOSED] ORDER GRANTING PRELIMINARY APPROVAL OF SETTLEMENT

The Plaintiffs have presented an unopposed motion (“Motion”) for an order: (i)

preliminarily approving the Settlement1, in accordance with the Stipulation and Agreement of

Settlement (the “Stipulation”) dated April 20, 2016, which, together with the exhibits annexed

thereto, sets forth the terms and conditions for a proposed settlement of the Actions and for

dismissal of the Actions with prejudice and the release of the Released Claims; (ii) approving the

form, content and manner of dissemination of the Notice to be filed by Cliffs with the U.S.

Securities and Exchange Commission (“SEC”), and posted along with the Stipulation on Cliffs’

1 Unless otherwise defined, all capitalized terms herein have the same meaning as set forth in the Stipulation.

NAI-1500870479v7 3

website and on the website of Lead Plaintiffs’ Counsel, and the Summary Notice to be published

once in Investor’s Business Daily.

The Court has read and considered (i) the Stipulation and exhibits annexed thereto; and

(ii) the Unopposed Motion and accompanying memorandum supporting the Motion.

The Court finds, upon a preliminary evaluation, that the proposed Settlement falls within

the range of possible approval criteria, as it provides a beneficial result for Cliffs and its

shareholders and appears to be the product of good faith, informed, and non-collusive

negotiations between experienced and able counsel for the Parties;

The Court also finds, upon a preliminary evaluation, that Cliffs shareholders should be

apprised of the Settlement through the proposed form and manner of notice contained in the

Stipulation, allowed to file objections, if any, thereto, and appear at the Settlement Hearing.

All Parties to the Settlement having agreed to the entry of this Order,

IT IS HEREBY ORDERED:

1. The Court preliminarily approves, 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 the Court on

___________ __, 2016, at ____ _.m. Eastern time before the Honorable Richard J. McMonagle,

Cuyahoga County Court of Common Pleas, Old Courthouse, One W. Lakeside Ave., Courtroom

2A, Third Floor, Cleveland, Ohio 44113, for the purpose of determining: (i) whether the

Settlement of the Actions on the terms and conditions provided for in the Stipulation is fair,

reasonable, and adequate and in the best interests of Cliffs and its shareholders and should be

finally approved by the Court; (ii) whether a Judgment as provided in, and attached as Exhibit C

NAI-1500870479v7 4

to the Stipulation, dismissing the Actions on the merits and with prejudice, granting the releases

described more fully in the Stipulation, and permanently barring and enjoining Plaintiffs (acting

on their own behalf or derivatively on behalf of Cliffs), Cliffs, and each of Cliffs’ shareholders

from instituting, commencing, or prosecuting any of the Released Claims against the Released

Persons should be entered; (iii) whether the Fee and Expense Award and the Service Awards

should be approved; and (iv) such other matters as may be necessary or proper in the

circumstances.

3. The Court approves, as to form and content, the Notice attached hereto as Exhibit

1 and the Summary Notice attached hereto as Exhibit 2, and finds that the distribution of the

Notice and publication of the Summary Notice substantially in the manner and form set forth in

this Order constitutes due, adequate and reasonable notice to Cliffs shareholders pursuant to

applicable law and due process, complies with the rules governing this Court, and is the best

notice practicable under the circumstances to all Cliffs shareholders. Non-material changes to the

Notice and Summary Notice may be made without further approval of the Court.

4. The Court hereby re-captions the consolidated Actions with the following single

caption:


IN RE CLIFFS NATURAL RESOURCES INC. SHAREHOLDER DERIVATIVE LITIGATION

) ) ) ) ) ) )

Lead Case No. CV-14-827803

(Consolidated with Case No. CV-14-829259 and Case No. CV-14-829499)


NAI-1500870479v7 5

5. Within ten calendar days following the entry of this Order: (i) Cliffs shall cause

the Summary Notice to be published once in Investor’s Business Daily; (ii) The Shuman Law

Firm and Cliffs shall each post copies of the Notice and the Stipulation on their respective

websites; and iii) Cliffs shall cause a copy of the Notice to be filed with the U.S. Securities and

Exchange Commission via a current report on Form 8-K, which shall also refer shareholders to

the website of Cliffs for more information, including a copy of the Stipulation.

6. No later than seven calendar days prior to the Settlement Hearing, Lead Counsel

and Defendants’ Counsel shall each file with the Court, and serve, an appropriate affidavit or

declaration with respect to their respective obligations concerning filing, posting and publishing

the Notice and Summary Notice.

7. No later than twenty-one calendar days prior to the Settlement Hearing, Plaintiffs’

Lead Counsel shall file: (i) their motion and memorandum in support of final approval of the

Settlement; and (ii) their application for an award of attorneys’ fees and reimbursement of

expenses to Plaintiffs’ Counsel and for approval of the Service Awards.

8. Any Cliffs shareholder may object and/or appear and show cause, if he, she, or it

has any concern, why the Settlement of the Actions should not be approved as fair, reasonable,

and adequate, why the Judgment should not be entered thereon, or why the Fee and Expense

Award or Service Awards should not be approved; provided, however, unless otherwise ordered

by the Court, no Cliffs shareholder shall be heard or entitled to contest the approval of the terms

and conditions of the Settlement, or, if approved, the Judgment to be entered thereon approving

the same, or the Fee and Expense Award or Service Awards unless that shareholder, at least

fourteen calendar days prior to the Settlement Hearing:

NAI-1500870479v7 6

(i) has filed with the Clerk of Courts a written notice of objection to the

Settlement, the Fee and Expense Award and/or the Service Awards setting forth: (a) the

shareholder’s name, address, and telephone number; (b) proof of current ownership of

Cliffs common stock, including the date of purchase; (c) the nature and grounds of the

shareholder’s objections as to any matters before the Court, and any supporting facts and

arguments; (d) all documents or writings the shareholder desires the Court to consider in

connection with the objection; and (e) a list of all cases in which the shareholder and/or

the shareholder’s counsel has filed an objection to a settlement of a shareholder class or

derivative action in the last three years, identifying the name of the case, jurisdiction and

docket number; and

(ii) if, in addition to filing a written objection, the shareholder intends to

appear in person and request to be heard at the Settlement Hearing, in addition to meeting

the requirements of (i) above for an objection, has filed with the Clerk of Courts, a

written statement setting forth: (a) the shareholder’s intention to appear; (b) the basis for

the appearance; and (c) the identities of any witnesses the shareholder intends to call at

the Settlement Hearing and a statement of the subjects of their testimony.

9. Any Cliffs shareholder that files a written objection and/or written notice of intent

to appear must also serve upon counsel for each of the Parties as set forth below (either by hand

delivery or by first class mail) copies of such notice, proof, statement, documentation and other

papers or briefs such shareholder files with the Court, for receipt by counsel at least fourteen

calendar days before the Settlement Hearing:

NAI-1500870479v7 7

Kip B. Shuman E-mail: [email protected] THE SHUMAN LAW FIRM One Montgomery St, Suite 1800 San Francisco, CA 94104 Telephone: (303) 861-3003 Facsimile: (303) 484-4886 Lead Counsel for Plaintiffs

John M. Newman, Jr. E-mail: [email protected] JONES DAY North Point 901 Lakeside Avenue Cleveland, Ohio 44114-2309 Telephone: (216) 586-3939 Facsimile: (216) 579-0212 Attorneys for Defendants Joseph A. Carrabba, Laurie M. Brlas, Terrance M. Paradie and David Blake

Joseph A. Castrodale E-mail: [email protected] BENESCH, FRIEDLANDER, COPLAN, & ARONOFF LLP 200 Public Square, Suite 2300 Cleveland, OH 44114-2378 Telephone: (216) 363-4500 Facsimile: (216) 363-4588 Attorneys for Nominal Defendant Cliffs Natural Resources Inc.

Rachelle Silverberg E-mail: [email protected] WACHTELL, LIPTON, ROSEN & KATZ 51 West 52nd Street New York, NY 10019 Telephone: (212) 403-1000 Facsimile: (212) 403-2000 Attorneys for Defendants Gary B. Halverson, Susan M. Cunningham, Janice K. Henry, Barry J. Eldridge, Mark E. Gaumond, Andres R. Gluski, Susan M. Green, James F. Kirsch, Stephen M. Johnson, Richard K. Riederer, and Timothy W. Sullivan

10. Any Cliffs shareholder who fails to object to the above-prescribed manner and

within the time prescribed to the Settlement and/or the Fee and Expense Awards shall be deemed

to have waived such objection or challenge (including the right to appeal) and shall be forever

barred and foreclosed from making any such objection or request to be heard in this or any other

action of proceeding, including any objection to the fairness, reasonableness, or adequacy of the

proposed Settlement as set forth in the Stipulation, but shall otherwise be bound by the Judgment

to be entered and the releases to be given.

NAI-1500870479v7 8

11. Lead Counsel shall file all objections with the Court. The Parties shall file and

serve their responses to any objections from Cliffs shareholders no later than seven calendar days

prior to the Settlement Hearing.

12. Except as necessarily undertaken in furtherance of the Settlement, all proceedings

in the Actions are hereby stayed and suspended until further order of this Court. Other than

seeking approval of the Settlement as provided herein, Plaintiffs and Plaintiffs’ Counsel agree

that they will not take any action, take any discovery, or make any filings in the Actions other

than those contemplated by the Stipulation.

13. Pending the Court’s determination as to final approval of the Settlement,

Plaintiffs and Cliffs shareholders are barred and enjoined from commencing, prosecuting,

instigating, or in any way participating in the commencement or prosecution of any action

asserting any Released Claim against any of the Released Persons.

14. The Stipulation shall be null and void and of no force and effect if, for any reason,

the Settlement is not approved or the Judgment is not entered. In such event: (i) the Parties shall

be restored to their respective positions as of the date immediately preceding the full execution

of this Stipulation; and (ii) the Stipulation and all negotiations, proceedings, documents prepared,

and statements made in connection herewith shall be without prejudice to the Parties, shall not be

deemed or construed to be an admission by any Party of any act, matter, or proposition, and shall

not be used by anyone in any manner for any purpose in the Actions or in any other action or

proceeding (other than between one or more Defendants and any insurer, reinsurer or other entity

contracted or otherwise obligated to provide insurance or indemnification to any Release

Persons), or entitle any Party to recover any costs or expenses incurred in connection with the

Stipulation or the Settlement. In such event, the terms and provisions of the Stipulation, except

NAI-1500870479v7 9

¶¶ 5.4, 6.3, 8.1 and 8.8, shall have no further force or effect, and any Judgment or other order

entered in accordance with the terms of the Stipulation shall be treated as vacated, nunc pro tunc.

15. The Stipulation is not and shall not be construed to be, or offered, attempted to be

offered or used in any way as, a presumption, an admission, or evidence of the validity or

invalidity of any claim or defense or of any fault, liability or wrongdoing whatsoever on the part

of the Released Persons, and neither the Stipulation nor any matter relating to it may be offered

or received in evidence or otherwise referred to in any civil, criminal, or administrative action or

proceeding for that purpose.

16. The Court reserves the right to approve the Stipulation with further modifications

as may be agreed to by counsel to the Parties to the Stipulation and without further notice to

Cliffs shareholders, and retains jurisdiction to consider all further applications arising out of or

connected with the proposed Settlement. The Court may also adjourn the Settlement Hearing

provided for herein without further notice other than to counsel for the Parties and by posting an

entry on the docket.

SO ORDERED in Cuyahoga County, Ohio on _________________, 2016.

__________________________________________ JUDGE RICHARD J. MCMONAGLE

Exhibit B-1

NAI-1500870526v7


IN RE CLIFFS NATURAL RESOURCES, INC. SHAREHOLDER DERIVATIVE LITIGATION

) ) ) ) ) ) )

Lead Case No. CV-14-827803

(Consolidated with Case No. CV-14-829259 and Case No. CV-14-829499)


NOTICE OF PROPOSED SETTLEMENT OF DERIVATIVE ACTIONS, HEARING THEREON, AND RIGHT TO APPEAR

TO: ALL HOLDERS AND ALL OWNERS, INCLUDING ALL RECORD HOLDERS AND/OR BENEFICIAL OWNERS, THEIR SUCCESSORS IN INTEREST AND TRANSFEREES, IMMEDIATE AND REMOTE, OF CLIFFS NATURAL RESOURCES, INC. (“CLIFFS” OR THE “COMPANY”) COMMON STOCK AS OF APRIL 20, 2016.

THIS NOTICE WAS SENT TO YOU BY ORDER OF THE COURT. PLEASE READ

THIS NOTICE CAREFULLY AND IN ITS ENTIRETY. THIS NOTICE RELATES TO A PROPOSED SETTLEMENT OF THESE DERIVATIVE ACTIONS. YOUR RIGHTS

MAY BE AFFECTED.

IF YOU HELD COMMON STOCK OF CLIFFS AS OF APRIL 20, 2016 FOR THE BENEFIT OF ANOTHER, PLEASE PROMPTLY TRANSMIT THIS DOCUMENT TO

THE BENEFICIAL OWNER.

YOU ARE HEREBY NOTIFIED that the Parties1 to the above-captioned consolidated

shareholder derivative actions (the “Actions”) have entered into a Stipulation and Agreement of

Settlement dated April __, 2016 (the “Stipulation”) to fully, finally, and forever settle the claims

raised in the Actions on behalf of and for the benefit of Cliffs Natural Resources Inc. (“Cliffs” or

the “Company”). If you are a Cliffs shareholder as of April 20, 2016, your rights to

1 Unless otherwise defined, the capitalized terms herein have the same definition as used

in the Stipulation and Agreement of Settlement.

NAI-1500870526v7 2

pursue certain derivative claims on behalf of Cliffs against its current and former directors and

officers and other Released Persons may be affected by the Settlement.

This Notice is not a lawsuit against you. You are not being sued. This Notice is provided

by order of the Court of Common Pleas, Cuyahoga County, Ohio (the “Court”). Please be

advised that pursuant to an Order of the Court, a hearing (the “Settlement Hearing”) will be held

on _____, 2016 at ____ __.m., before the Honorable Richard J. McMonagle, Cuyahoga

County Court of Common Pleas, Old Courthouse, One West Lakeside Ave., Cleveland, Ohio

44113, to determine: (i) whether the Settlement of the Actions on the terms and conditions

provided for in the Stipulation is fair, reasonable, and adequate and in the best interests of Cliffs

and its shareholders and should be finally approved by the Court; (ii) whether a Judgment as

provided in, and attached as Exhibit C to, the Stipulation, dismissing the Actions on the merits

with prejudice should be entered; (iii) whether the Fee and Expense Award and Service Awards

(as described below) should be approved; and (iv) such other matters as may be necessary or

proper in the circumstances.

The Settlement will fully resolve the Actions on the terms set forth in the Stipulation and

summarized in this Notice, including the dismissal of the Actions with prejudice. As detailed

below, the Plaintiffs, Plaintiffs’ Counsel and Cliffs believe that the proposed Settlement provides

substantial benefits to the Company, and is in the best interests of the Company and its

shareholders. For a more detailed statement of the matters involved in the Actions, the

Settlement, and the terms discussed in this Notice, the Stipulation may be viewed on Cliffs’

website via link at http://ir.cliffsnaturalresources.com and on Lead Plaintiffs’ Counsel’s firm

website at www.shumanlawfirm.com. If the Court approves the Settlement, the Parties will ask

the Court at the Settlement Hearing to enter a Judgment dismissing the Actions with prejudice on

NAI-1500870526v7 3

the merits as to all Defendants and releasing claims in accordance with the terms of the

Stipulation.

You may have the right to object to the Settlement, including the amount of attorneys'

fees and unreimbursed expenses that should be awarded to Plaintiffs' Counsel and the proposed

Service Awards, in the manner provided herein. If you fail to object in the manner provided

herein on or before fourteen calendar days before the Settlement Hearing, you will be deemed to

have waived your objections and will be bound by the Judgment to be entered and the release of

claims to be given, unless otherwise ordered by the Court.

The Court has reserved the right to approve the Settlement with such modifications as

may be agreed to by counsel to the Parties and without further notice to Cliffs shareholders.

This Notice is not intended to be and should not be construed as an expression of any

opinion by the Court with respect to the merits of the claims or defenses made in the Actions, but

is merely to advise you of the pendency of Settlement of the Actions and your rights as a Cliffs

shareholder.

Please note that there is no proof of claim form for shareholders to submit in connection

with this Settlement and shareholders are not required to take any action in response to this

Notice.

I. SUMMARY OF THE ACTIONS

On June 4, 2014, Plaintiff Robert Black filed a shareholder derivative action captioned

Black v. Cliffs Natural Resources Inc., et al., Case No. CV-14-827803 (the “Black Action”), in

the Court of Common Pleas of Cuyahoga County, Ohio. The Complaint alleged, among other

things, that the Individual Defendants had breached their fiduciary duties in connection with

management and oversight of the Bloom Lake mine facility and the handling of the Company’s

dividend, (including allegedly false and misleading statements on these subjects during 2012 and

NAI-1500870526v7 4

2013), and also in connection with pay practices upon the departure of certain executives during

that period. A second shareholder derivative action, Asmussen, et al. v. Cliffs Natural Resources

Inc., et al., Case No. CV-14-829259 (the “Asmussen Action”), was filed on July 2, 2014, and

included allegations similar to those in the Black Action. A third shareholder derivative action,

Williams v. Cliffs Natural Resources, Inc., et al., Case No. CV-14-829499, (the “Williams

Action”), was filed on July 9, 2014, and asserted allegations similar to those in the Black and the

Asmussen Actions.

Pursuant to Court orders dated August 11, 2014, and September 12, 2014, the Asmussen

Action and the Williams Action were transferred for consolidation with the Black Action.

Pursuant to the Parties’ stipulations and subsequent court orders (the “Stipulated Orders”), the

Parties agreed to stay the Actions pending disposition of a motion to dismiss in one of the then-

pending federal securities law class actions (collectively, the “Securities Actions”): (i) The

Department of the Treasury of the State of New Jersey and its Division of Investment, et al. v.

Cliffs Natural Resources Inc. et al., No. 1:14-cv-01031, United States District Court for the

Northern District of Ohio (Judge Dan Aaron Polster) (the “New Jersey Action”); and (ii) Stuart

Rosenberg, et al. v. Cliffs Natural Resources Inc., et al., No. CV-14-828140, Court of Common

Pleas of Cuyahoga County, Ohio (Judge Shannon M. Gallagher) (the “Rosenberg Action”).

During the stay of the Actions and in accordance with the Stipulated Orders, the Parties

filed several joint status reports with the Court describing the status of the Securities Actions.

The Parties continued the stay of the Actions until the Rosenberg Action reached a settlement in

principle.

On December 17, 2015, the Court entered an order granting the unopposed motion to lift

the stay of the consolidated Actions for the limited purpose of appointing Co-Lead Plaintiffs and

NAI-1500870526v7 5

Co-Lead Plaintiffs’ selection of counsel. Pursuant to that order, Plaintiffs George Asmussen and

Jeff Asmussen were appointed Co-Lead Plaintiffs; The Shuman Law Firm was appointed Lead

Counsel for Co-Lead Plaintiffs; and Weisman, Kennedy & Barris Co., L.P.A. was appointed

Liaison Counsel for Co-Lead Plaintiffs.

In August 2015, the Parties began a dialogue regarding the possible resolution of the

Actions. On August 6, 2015, and December 11, 2015, counsel for Plaintiffs in the Black Action

and the Asmussen Action, respectively, sent settlement demands to Defendants’ Counsel. Key

components of the demands included a requirement that Cliffs adopt corporate governance

reforms and that any amounts that might be paid into a settlement fund for the New Jersey

Action be contributed only by non-Company sources such as applicable insurance carriers up to

exhaustion of policy limits. The demands took into account Cliffs’ existing governance policies

and procedures and were specifically targeted to address and prevent a recurrence of the alleged

wrongdoing that is the subject of the Actions, and also to limit the financial impact of the New

Jersey Action on the Company.

Over the next several months, the two sides exchanged information and, through their

counsel, had numerous discussions presenting and arguing their respective positions as well as

prospects and terms for a possible settlement. These discussions eventually resulted in the

agreement in principle to resolve, discharge, and settle the Actions, including without limitation

all claims raised in the Actions, on the terms and conditions set forth in the Stipulation. The

lengthy negotiations were conducted in good faith, at arm's-length and were hard-fought by

experienced counsel. During the negotiations, all Parties had a clear view of the strengths and

weaknesses of their respective claims and defenses. Entry into the Stipulation is not an

admission by any Party as to the merit or lack of merit of any claims or defenses.

NAI-1500870526v7 6

During the period of negotiation, the New Jersey Action was settled in principle, with the

payment into the settlement fund to be delivered solely by insurance carriers.

As part of the settlement negotiations, Plaintiffs undertook discovery to confirm that the

proposed terms of the Settlement are fair, reasonable and adequate. In particular, Cliffs

produced to Plaintiffs substantial sets of documents, many of which were board-level

confidential materials, which were examined by Plaintiffs’ Counsel.

Plaintiffs, Plaintiffs’ Counsel, Cliffs and its counsel believe that the proposed Settlement

is in the best interests of Cliffs and its shareholders

II. TERMS OF THE SETTLEMENT

The terms and conditions of the proposed Settlement are set forth in the Stipulation. The

following is a summary of its terms. The summary should be read in conjunction with, and is

qualified in its entirely by reference to, the text of the Stipulation, which has been filed with the

Court and is also available for viewing on Cliffs’ website via link at

http://ir.cliffsnaturalresources.com and on the website of Plaintiffs’ Lead Counsel at

www.shumanlawfirm.com.

As part of the Settlement of the Actions, Cliffs has agreed to adopt and implement

corporate certain governance measures (the “Reforms”) substantially as set forth in the

Stipulation within ninety days after the Effective Date of the Settlement, to be maintained for a

period of not less than three years from the day they are implemented, unless (but only to the

extent) otherwise required by law. The Board, acting by a majority of its non-management

members, may alter or amend its compliance with any of the Reforms during the three year

period, if it concludes that doing so is required by its fiduciary duties, or that continued

compliance would conflict with applicable law or amendments to the corporate regulations

approved by the shareholders. If such alteration or amendment is made, the Company must,

NAI-1500870526v7 7

within no more than 30 days after the alteration or amendment becomes effective, advise Lead

Plaintiffs’ Counsel thereof in writing, and state the reasons for the alteration or amendment.

Plaintiffs, Plaintiffs’ Counsel and Cliffs agree that the Reforms confer a substantial and material

benefit on Cliffs and its shareholders, and the Parties acknowledge and agree that the adoption

and implementation of the Reforms is the result of the initiation, prosecution, and settlement of

the Actions. In addition, the nature of the settlement funding of the New Jersey Action - -

exclusively from applicable directors’ and officers’ (“D&O”) policies - - is consistent with Cliffs’

stated position in the settlement negotiations in these Actions that it would make all reasonable,

good faith efforts to secure funding by applicable insurance carriers for any such settlement,

which in turn had been elicited by Plaintiffs’ demand in these Actions on the funding issue.

The Board, exercising its independent business judgment, believes that the Settlement

and the Reforms are in the best interests of Cliffs and its shareholders.

The Reforms are set out in an attachment at the end of this Notice.

III. DISMISSALS AND RELEASES

The Settlement is conditioned, among other things, upon entry of an order by the Court

approving the Settlement and dismissing the Actions on the merits with prejudice.

1. The Stipulation provides that, as of the date when the Court has entered the

Judgment, the Judgment has become Final, and the Cliffs Board has approved the Settlement and

each of its terms as in the best interest of Cliffs and its shareholders (the “Effective Date”), all

Plaintiffs (acting on their own behalf and derivatively on behalf of Cliffs), Cliffs, and each of

Cliffs’ shareholders (solely in their capacity as Cliffs Shareholders) shall be deemed to have, and

by operation of the Judgment shall have, fully, finally, and forever settled, released, relinquished,

extinguished, dismissed with prejudice, and discharged completely each and all of the Individual

Defendants, and each and all the Individual Defendants’ respective present or former successors,

NAI-1500870526v7 8

heirs, executives, employees, agents, insurers, reinsurers, attorneys, advisors, associates,

representatives, executors, personal representatives, estates, administrators, assigns, spouses and

other members of any Individual Defendant’s immediate family, any entity in which any

Individual Defendant or member of any Individual Defendant’s immediate family has or had a

controlling interest (directly or indirectly), and any trust of which any Individual Defendant is

the settlor or which is for the benefit of any Individual Defendant and/or member(s) of his or her

family (“Released Persons”) from any and all claims for relief, suits, debts, demands, rights,

actions or causes of action, liabilities, damages, losses, obligations, judgments, fees, expenses,

costs, matters, and issues and actions or causes of action of every nature and description

whatsoever, whether known or unknown (including Unknown Claims as defined in ¶ 1.26 of the

Stipulation), contingent or absolute, suspected or unsuspected, disclosed or undisclosed, matured

or unmatured, discoverable or undiscoverable, whether or not concealed or hidden, for damages,

injunctive relief, or any other remedy, that have been, or could or might have been, or in the

future can or might be asserted by Plaintiffs, Cliffs, and/or any Cliffs shareholder derivatively on

behalf of Cliffs against any Released Persons that are based upon, refer to, arise out of concern,

or are directly or indirectly related to (i) the claims and allegations contained in the Actions, (ii)

any of the facts, transactions, events, occurrences, acts, disclosures, statements, omissions or

failures to act that were alleged or that could have been alleged in the Actions; or (iii) the

settlement of the Actions, including the payment provided for in this Stipulation, and the

reasonable attorneys’ fees, costs, and expenses incurred in defense of the Actions (Released

Claims”). Notwithstanding the foregoing, the Released Claims do not include (i) any claims

based on any conduct of the Released Persons after April __, 2016 or (ii) and direct claims

belonging to Cliffs shareholders, including without limitation, any claims arising under the

NAI-1500870526v7 9

federal securities laws. Notwithstanding the foregoing, Released Claims shall not include claims

to enforce the terms of the Stipulation or the Settlement. In addition, nothing set forth in the

Stipulation or in the Judgment shall constitute a release by any Defendant of any insurer,

reinsurer, or any other entity contracted or otherwise obligated to provide insurance or

indemnification to any of the Released Persons of any claim arising out of the rights, remedies,

duties or obligations provided for in any insurance policy or agreement. Nothing set forth in the

Stipulation or the Judgment shall constitute a release by or among the Company and the

Individual Defendants or Released Persons of any rights or obligations relating to

indemnification or advancement of defense costs, whether arising from the Company’s

certificate of incorporation or code of regulations, Ohio law, or any agreement pertaining to

indemnification or advancement of defense costs. Co-Lead Plaintiffs (individually and

derivatively on behalf of Cliffs) and each of Cliffs’ shareholders (solely in their capacity as

Cliffs shareholders) shall be deemed to have, and by operation of the Judgment shall have,

covenanted not to sue the Released Persons with respect to the Released Claims, and shall be

permanently barred and enjoined from instituting, commencing, or prosecuting the Released

Claims against the Released Persons.

2. The releases granted shall be effective as a bar to any or all claims that were

alleged or that could or might have been alleged in the Actions by the Plaintiffs, Cliffs, or any

Cliffs shareholder derivatively on behalf of Cliffs, which any Plaintiff, Cliffs, or Cliffs

shareholder 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 (the “Unknown Claims”). With respect to any and

NAI-1500870526v7 10

all Released Claims, the Parties stipulate and agree that, upon the Effective Date, Plaintiffs, the

Individual Defendants, and Cliffs shall expressly waive and relinquish, and each of Cliffs’

shareholders shall be deemed to have, and by operation of the Judgment shall have, expressly

waived and relinquished, to the fullest extent permitted by law, any and all provisions, rights,

and benefits conferred by any law of the United States or of any state or territory of the United

States, or principle of common law, which governs or limits a Person’s release of Unknown

Claims, including the provisions, rights and benefits of California Civil Code §1542, which

provides:


and/or conferred by any law of the United States or of any state or territory of the United States,

or principle of common law or of international or foreign law, that is similar, comparable, or

equivalent in effect to California Civil Code §1542. It is understood that Plaintiffs, Cliffs, or any

of Cliffs’ shareholders may hereafter discover facts in addition to or different from those that he,

she, or it now knows or believes to be true with respect to the subject matter of the Released

Claims (including Unknown Claims), but Plaintiffs and Cliffs shall expressly fully, finally, and

forever discharge, settle, and release with prejudice, and each of Cliffs’ shareholders, upon the

Effective Date, shall be deemed to have, and by operation of the Judgment shall have fully,

finally, and forever discharged, settled and released with prejudice, any and all Released Claims

(including Unknown Claims), known or unknown, suspected or unsuspected, contingent or

noncontingent, whether or not concealed or hidden, that 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, grossly negligent, reckless, intentional, with or

NAI-1500870526v7 11

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. Plaintiffs and Cliffs acknowledge, and Cliffs’

shareholders 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.

Upon the Effective Date, each of the Defendants shall be deemed to have, and by

operation of the Judgment shall have, fully, finally, and forever settled, released, relinquished,

extinguished, dismissed with prejudice, and discharged completely, individually, and collectively

each and all of the Plaintiffs and Plaintiffs' Counsel from all claims (including Unknown Claims)

based upon or arising out of the prosecution, assertion, settlement or resolution of the Actions or

the Released Claims; provided, however, that such release shall not include claims to enforce the

terms of the Stipulation or the Settlement and/or the Judgment entered pursuant thereto.

By order of the Court (a) all proceedings in the Actions, other than those relating to the

settlement itself, have been stayed and suspended until further order of the Court; and (b)

pending the Court’s determination as to final approval of the Settlement, Plaintiffs and all other

Cliffs shareholders are barred and enjoined from commencing, prosecuting, instigating, or in any

way participating in the commencement or prosecution of any action asserting any Released

Claim against any Released Person.

IV. PLAINTIFFS’ CLAIMS AND BENEFITS OF THE SETTLEMENT

Plaintiffs and Plaintiffs’ Counsel believe that the claims asserted in the Actions have

merit and that their investigation supports the claims asserted. Without conceding the merit of

any of Defendants’ defenses or the lack of merit of any of their own allegations, and solely in

order to avoid the potentially protracted time, expense, and uncertainty associated with continued

litigation, including a potential trial and appeal, Plaintiffs and Plaintiffs’ Counsel concluded that

NAI-1500870526v7 12

it is desirable that the Actions be fully and finally settled in the manner and upon the terms and

conditions set forth in the Stipulation. Plaintiffs and Plaintiffs’ Counsel recognize the significant

risk, expense, and length of continued proceedings necessary to prosecute the Actions against the

Individual Defendants through trial and possible appeal. Plaintiffs’ Counsel also have taken into

account the uncertain outcome and the risks of any litigation, especially in complex cases such as

the Actions (which are governed by Ohio law and are subject to the protections that law provides

for activities and judgments of corporate directors and officers), as well as the difficulties and

delays inherent in such complex litigation generally. Plaintiffs and Plaintiffs’ Counsel are also

mindful of the inherent problems of proof and possible defenses to the claims asserted in the

Actions. Plaintiffs and Plaintiffs’ Counsel believe that the Settlement set forth in the Stipulation

confers substantial benefits on the Company. Based on their evaluation and expertise in the area

of complex stockholder litigation, Plaintiffs and Plaintiffs’ Counsel have determined that the

Settlement is fair, reasonable, and adequate and is in the best interests of Cliffs and its

shareholders, and have agreed to settle the Actions upon the terms and subject to the conditions

set forth in the Stipulation.

V. DEFENDANTS’ DENIAL OF WRONGDOING AND LIABILITY

Defendants have denied, and continue to deny, all allegations of wrongdoing, fault,

liability and/or damage to the Company. Defendants deny that they engaged in or aided and

abetted any wrongdoing or violation of the law; deny that they breached any fiduciary duty,

including the duty of care or duty of loyalty; deny that they engaged in any of the wrongful acts

alleged in the Actions; and deny that they acted in bad faith or improperly in any way.

Defendants maintain that they complied with all fiduciary and other legal duties. Defendants

believe that all Plaintiffs have failed to meet their burden of pleading with particularity that

demand was excused. Nonetheless, Defendants are agreeing to the terms and conditions set forth

NAI-1500870526v7 13

in the Stipulation solely because they contend and believe the proposed Settlement would

eliminate the burden, risk, and expense of further litigation. Defendants have determined that it

is desirable and beneficial to them that the claims asserted in the Actions be fully and finally

settled and terminated in the manner and upon the terms and conditions set forth in the

Stipulation. Defendants have also taken into account the uncertainty, burden, expense, and risks

inherent in any litigation, especially in complex cases like the Actions, and are entering into the

Stipulation because the Settlement would eliminate the uncertainty, burden, expense and risk of

further litigation, and as to Nominal Defendant Cliffs, because the Settlement provides

substantial benefits to, and is in the best interests of, Cliffs and its shareholders.

VI. PLAINTIFFS’ COUNSEL’ S ATTORNEYS’ FEES AND REIMBURSEMENT OF EXPENSES

After completing negotiations of the material, substantive terms of the Settlement,

Counsel undertook arm’s-length negotiations regarding attorneys' fees and reimbursement of

expenses to be paid to Plaintiffs' Counsel for the benefits conferred upon the Company and its

shareholders as a part of the Settlement. As a result of those negotiations, the Individual

Defendants’ D&O insurers have agreed to pay to Plaintiffs’ Lead Counsel (who will, in turn,

allocate it among all Plaintiffs’ Counsel) a fee and expense award in the amount of $775,000,

subject to Court approval (the “Fee and Expense Award”). The Fee and Expense Award

includes fees and expenses incurred by Plaintiffs’ Counsel in connection with the initiation,

prosecution and settlement of the Actions. To date, Plaintiffs’ Counsel have not received any

payments for their efforts on behalf of Cliffs shareholders, nor have Plaintiffs’ Counsel been

reimbursed for their out-of-pocket litigation expenses. The Fee and Expense Award will

compensate Plaintiffs’ Counsel for the substantial benefits achieved in the Actions, and the risks

of undertaking the prosecution of the Actions on a contingent basis. Plaintiffs’ Counsel will also

NAI-1500870526v7 14

seek Court approval for the payment to Co-Lead Plaintiffs of a Service Award in the amount of

$3,500 each. Any Court–approved Service Award and Service Awards will be funded solely

from the Fee and Expense Award.

Any award of attorneys’ fees or expenses and any Service Awards are separate and apart

from and are not conditions to the Settlement embodied in the Stipulation or the Judgment. No

order or proceeding concerning any fee and expense application or award or any Service

Awards, or any modification or reversal on appeal of any fee and expense award or Service

Awards, shall constitute grounds for cancellation or termination of the Settlement by any Party

or shall otherwise affect the validity or effectiveness of the Settlement.

VII. THE SETTLEMENT HEARING

On ____ ___ 2016, at ____ __.m., the Court will hold the Settlement Hearing before the

Honorable Richard J. McMonagle, Cuyahoga County Court of Common Pleas, Old Courthouse,

One W. Lakeside Ave., Courtroom 2A, Third Floor, Cleveland, OH 44113. At the Settlement

Hearing, the Court will determine: (i) whether the Settlement of the Actions on the terms and

conditions provided for in the Stipulation is fair, reasonable, and adequate and in the best

interests of Cliffs and its shareholders and should be finally approved by the Court; (ii) whether a

Judgment as provided in, and attached as Exhibit C to, the Stipulation, dismissing the Actions on

the merits and with prejudice, granting the releases described more fully above, and permanently

barring and enjoining Plaintiffs (acting on their own behalf or derivatively on behalf of Cliffs),

Cliffs, and each of Cliffs’ shareholders from instituting, commencing, or prosecuting any of the

Released Claims against the Released Persons should be entered; (iii) whether the Fee and

Expense Award and the Service Awards should be approved; and (iv) such other matters as may

be necessary or proper in the circumstances. In the event that the Court does not enter the

Judgment approving the Settlement for any reason whatsoever, or if that Judgment is modified,

NAI-1500870526v7 15

vacated, or reversed on appeal, then the Settlement shall be null and void. The full and complete

description of the terms and conditions of the Settlement may be found in the Stipulation, which

is on file with the Court.

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

You have the right to object to any aspect of the Settlement, the Fee and Expense Award,

and/or the Service Awards. If you wish to object or otherwise contest the Settlement, you must

do so in writing, and you may also request to be heard at the Settlement Hearing. If you choose

to object, then you must file with the Clerk of Courts at least fourteen calendar days before the

Settlement Hearing a written notice of objection to the Settlement, the Fee and Expense Award,

and/or the Service Awards setting forth:

(a) your name, address and telephone number;

(b) proof of current ownership of Cliffs common stock, including the date of

purchase;

(c) the nature and grounds for your objections as to any matters before the

Court and any supporting facts and arguments;

(d) all documents or writings you desire the Court to consider in connection

with the objection; and

(e) a list of all cases in which you and/or your counsel has filed an objection

to a settlement of a shareholder class or derivative action in the last three

years, identifying the name of the case, jurisdiction, and docket number.

IX. RIGHT TO ATTEND THE SETTLEMENT HEARING AND RELATED PROCEDURES

If, in addition to submitting a written objection, you wish to appear in person and be

heard at the Settlement Hearing, you must, in addition to meeting the requirements above for an

NAI-1500870526v7 16

objection, file with the Clerk of Courts, at the same time you file the objection, a written

statement setting forth:

(a) your intention to appear;

(b) the basis for the appearance; and

(c) the identities of any witnesses you intend to call at the Settlement Hearing

and the subjects of their testimony.

If you file a written objection and/or written notice of intent to appear, you must also

serve upon counsel for each of the Parties as set forth below (either by hand delivery or by first

class mail) copies of such notice, proof, statements, documentation and any other papers or briefs

you file with the Court, for receipt by counsel at least fourteen calendar days before the

Settlement Hearing.

The addresses for filing objections and notices of appearance with the Court and service

on counsel are as follows:

Clerk of Courts Court of Common Pleas

The Justice Center 1200 Ontario Street

Cleveland, Ohio 44113

Kip B. Shuman E-mail: [email protected] THE SHUMAN LAW FIRM One Montgomery St., Suite 1800 San Francisco, CA 94104 Telephone: (303) 861-3003 Facsimile: (303) 484-4886 Lead Counsel for Plaintiffs

John M. Newman, Jr. E-mail: [email protected] JONES DAY North Point 901 Lakeside Avenue Cleveland, Ohio 44114-2309 Telephone: (216) 586-3939 Facsimile: (216) 579-0212 Attorneys for Defendants Joseph A. Carrabba, Laurie M. Brlas, Terrance M. Paradie and David Blake

NAI-1500870526v7 17



Any Cliffs shareholder who fails to object in the above-prescribed manner and within the

time prescribed to the Settlement and/or Fee and Expense Award and/or Service Awards shall be

deemed to have waived such objection or challenge (including any right to appeal) and shall

forever be foreclosed from making any such objection in this or any other action or proceeding,

including any objection to the fairness, reasonableness, or adequacy of the proposed Settlement

as set forth in the Stipulation, but shall otherwise be bound by the Judgment to be entered and the

releases to be given.

The Court has the right to change the hearing dates or times without further notice other

than to counsel for the Parties and by posting an entry on the docket. Thus, if you are planning

to attend the Settlement Hearing, you should confirm the date and time before going to the Court.

CLIFFS SHAREHOLDERS WHO HAVE NO OBJECTION TO THE SETTLEMENT OR FEE

AND EXPENSE AWARD OR SERVICE AWARDS DO NOT NEED TO APPEAR AT THE

SETTLEMENT HEARING OR TAKE ANY OTHER ACTION.

X. HOW TO OBTAIN ADDITIONAL INFORMATION

This Notice summarizes the Parties’ Stipulation. It is not a comprehensive statement of

the events of the Actions, the pleadings in the Action, the Stipulation, or other papers and

NAI-1500870526v7 18

proceedings. For the full details of the Actions, the claims that have been asserted, and the terms

and conditions of the Settlement, you may refer to the Stipulation and the other papers on file

with the Court in the Actions. You or your attorney may examine the Court’s files during

regular business hours each business day at the office of the Cuyahoga County Clerk of Courts,

1st Floor Justice Center, 1200 Ontario Street, Cleveland, OH 44113. Although the Parties

believe that the descriptions about the Settlement that are contained in this Notice are accurate in

all material respects, in the event of any inconsistencies between the descriptions in this Notice

and the Stipulation, the Stipulation will control. You may view the Stipulation On Cliffs’

website via link at http://ir.cliffsnaturalresources.com and on Lead Plaintiffs’ Counsel’s firm

website at www.shumanlawfirm.com.

PLEASE DO NOT CALL, WRITE, OR OTHERWISE DIRECT QUESTIONS TO

EITHER THE COURT, THE CLERK’S OFFICE, OR DEFENDANTS’ COUNSEL. Any

questions you have about matters in this Notice should be directed by telephone or in writing to

Plaintiffs’ Lead Counsel, Kip Shuman, at the address set forth above.

X. NOTICE TO PERSONS OR ENTITIES HOLDING OWNERSHIP ON BEHALF OF OTHERS

Brokerage firms, banks and/or other persons or entities who held shares of Cliffs

common stock for the benefit of others are requested to immediately send this Notice to all of

their respective beneficial owners. If Cliffs shareholders have questions or comments about

the Settlement, they should follow the procedures listed above.

Dated:

By Order of the Court of Common Pleas Cuyahoga County, Ohio

Exhibit B-2

NAI-1500870530v7


IN RE CLIFFS NATURAL RESOURCES INC. SHAREHOLDER DERIVATIVE LITIGATION

) ) ) ) ) ) )

Lead Case No. CV-14-827803 (Consolidated with Case No. CV-14-829259 and Case No. CV-14-829499) Judge Richard J. McMonagle

SUMMARY NOTICE OF PENDENCY AND PROPOSED SETTLEMENT OF

SHAREHOLDER DERIVATIVE ACTIONS

TO: ALL OWNERS OF CLIFFS NATURAL RESOURCES, INC. (“CLIFFS” OR THE “COMPANY) COMMON STOCK AS OF APRIL 20, 2016

YOU ARE HEREBY NOTIFIED that the Parties1 to the above-captioned consolidated

shareholder derivative actions (the “Actions”) have entered into a Stipulation and Agreement of

Settlement (the “Stipulation”) dated April 20, 2016 to fully, finally, and forever settle the claims

brought in the Actions on behalf of and for the benefit of Cliffs Natural Resources Inc. (“Cliffs”

or the “Company”). If you are a Cliffs Shareholder as of April __, 2016, your right to pursue

certain derivative claims on behalf of Cliffs against its current and former directors and officers

may be affected by the Settlement.

PLEASE BE FURTHER ADVISED that pursuant to an Order of the Court of Common

Pleas, Cuyahoga County, Ohio (the “Court”), a hearing will be held on ___________, 2016 at

__:__ _.m., Eastern time, before the Honorable Richard J. McMonagle, Cuyahoga County Court

of Common Pleas, Old Courthouse, One W. Lakeside Ave., Courtroom 2A, Third Floor,

Cleveland, Ohio 44113, for the purpose of determining: (i) whether the Settlement of the Actions

1 Unless otherwise defined, all capitalized terms herein have the same meaning as set

forth in the Stipulation.

NAI-1500870530v7 2

on the terms and conditions provided for in the Stipulation is fair, reasonable, and adequate and

in the best interests of Cliffs and its shareholders and should be finally approved by the Court;

(ii) whether a Judgment as provided in, and attached as Exhibit C to, the Stipulation, dismissing

the Actions on the merits with prejudice should be entered; (iii) whether the Fee and Expense

Award and Service Awards (as described below) should be approved; and (iv) such other matters

as may be necessary or proper in the circumstances (the “Settlement Hearing”).

The Actions and Settlement address claims alleging, among other things, that the

Individual Defendants breached their fiduciary duties in connection with management and

oversight of the Bloom Lake mine facility and the handling of the Company’s dividend

(including allegedly false and misleading statements on these subjects during 2012 and 2013),

and also in connection with pay practices upon the departure of certain executives during that

period.

As part of the Settlement, Cliffs has committed to maintain, or has made or agreed to

make changes to, certain corporate governance practices, policies and procedures that include,

among other things: (a) increased oversight responsibilities and other duties for the Audit

Committee, including with respect to the Company’s annual operating and capital expenditure

functions; (b) enhanced reporting responsibilities for both the Company’s Chief Financial

Officer and Chief Legal Officer to the Audit Committee; (c) limits and procedures on non-Cliffs

time commitments for current directors at other public companies; (d) annual director education;

(e) certain annual employee communications regarding the Company’s Code of Business

Conduct and Ethics; (f) presumptive 12-year term limits for “outside” directors; (g) limitations

on the ability of directors to sell Company stock in certain situations; and (h) the drafting,

adoption and website posting of a comprehensive charter for the Board’s Strategy Committee.

NAI-1500870530v7 3

Plaintiffs, Plaintiff’s Counsel and Cliffs acknowledge and agree that the Reforms confer a

substantial and material benefit on Cliffs and its shareholders, and the Parties acknowledge and

agree that the adoption and implementation of the Reforms is the result of the initiation,

prosecution, and settlement of the Actions. In addition, the Board, exercising its independent

business judgment, believes that the Settlement and the Reforms are in the best interests of Cliffs

and its shareholders.

After conclusion of negotiations for the material, substantive terms of the Settlement,

counsel separately negotiated at arm’s length the amount of attorneys’ fees and expenses to be

awarded by the Court to Plaintiffs’ Counsel. In recognition of the substantial benefits conferred

upon Cliffs and its shareholders, and subject to Court approval, the Individual Defendants’

directors’ and officers’ `insurers have agreed to pay to Plaintiffs’ Counsel an agreed-to fee and

expense award of $775,000 (the “Fee and Expense Award”). Lead Plaintiffs’ Counsel will also

apply for Service Awards in the amount of $3,500 to be paid to Co-Lead Plaintiffs out of the Fee

and Expense Award.

A detailed Notice describing in greater detail the Actions, the proposed Settlement, the

Fee and Expense Award and Service Awards and the rights of Cliffs shareholders with regard to

the Settlement, the Fee and Expense Award and the Service Awards has been filed with the

Court and may be viewed along with a copy of the Stipulation on Cliffs’ website via link at

http://ir.cliffsnaturalresources.com and on Lead Plaintiffs’ counsel’s firm website at

www.shumanlawfirm.com. In addition, a copy of the Notice and of the Stipulation has been

filed by Cliffs with the U.S. Securities & Exchange Commission via a Current Report on Form

8-K.

NAI-1500870530v7 4

Any Cliffs shareholder has the right to object to any aspect of the Settlement and/or Fee

and Expense Award and/or Service Awards. If you wish to object, you must do so in writing, and

you may also request to be heard at the Settlement Hearing. If you choose to object, then you

must file with the Clerk of Courts on or before fourteen calendar days before the Settlement

Hearing, a written objection to the Settlement and/or Fee and Expense Award and/or Service

Awards, setting forth:

(a) your name, address and telephone number;

(b) proof of current ownership of Cliffs common stock, including the date of

purchase;

(c) the nature and grounds for your objections as to any matters before the

Court and any supporting facts and arguments;

(d) all documents or writings you desire the Court to consider in connection

with your objection; and

(e) a list of all cases in which you and/or your counsel has filed an objection

to settlement of a shareholder class or derivative action in the last three

years, identifying the name of the case, jurisdiction, and docket number.

If, in addition to submitting a written objection, you wish to appear in person and

be heard at the Settlement Hearing, you must, in addition to meeting the requirements

above for an objection, file with the Clerk of Courts, at the same time you file the

objection, a written statement setting forth:

(a) your intention to appear;

(b) the basis for the appearance; and

NAI-1500870530v7 5

(c) the identities of any witnesses you intend to call at the Settlement Hearing

and the subjects of their testimony.

If you file a written objection and/or written notice of intent to appear, must also serve

upon counsel for each of the Parties (either by hand delivery or by first class mail) copies of such

notice, proof, statement, documentation and any other papers or briefs that you file with the

Court, for receipt by counsel at least fourteen calendar days before the Settlement Hearing.

The addresses for filing objections and notices of appearance with the Court and service

on counsel are as follows:

Clerk of Courts Court of Common Pleas

The Justice Center 1200 Ontario Street

Cleveland, Ohio 44113

Kip B. Shuman E-mail: [email protected] THE SHUMAN LAW FIRM One Montgomery St., Suite 1800 San Francisco, CA 94101 Telephone: (303) 861-3003 Facsimile: (303) 484-4886 Lead Counsel for Plaintiffs

John M. Newman, Jr E-mail: [email protected] JONES DAY North Point 901 Lakeside Avenue Cleveland, Ohio 44114-2309 Telephone: (216) 586-3939 Facsimile: (216) 579-0212 Attorneys for Defendants Joseph A. Carrabba, Laurie M. Brlas, Terrance M. Paradie and David Blake

NAI-1500870530v7 6



Any Cliffs shareholder who does not timely submit his, her, or its objection to the

Settlement and/or Fee and Expense Award and/or the Service Awards 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 or any aspect of it, and shall otherwise be bound

by the Judgment to be entered and the releases given.

PLEASE DO NOT TELEPHONE THE COURT, CLIFFS OR ANY DEFENDANT’S COUNSEL REGARDING THIS NOTICE.

Exhibit C

NAI-1500870532v6


IN RE CLIFFS NATURAL RESOURCES, INC. SHAREHOLDER DERIVATIVE LITIGATION

) ) ) ) ) ) )

Lead Case No. CV-14-827803 (Consolidated with Case No. CV-14-829259 and Case No. CV-14-829499) Judge Richard J. McMonagle

[PROPOSED] FINAL JUDGMENT AND ORDER OF DISMISSAL WITH PREJUDICE

1. Pursuant to the Preliminary Approval Order entered on _______ ___, 2016, this

Court scheduled a Settlement Hearing for _______ ___, 2016, at _____ _.m. to determine, inter

alia: (i) whether the Settlement of the Actions on the terms and conditions provided for in the

Stipulation is fair, reasonable, and adequate and in the best interests of Cliffs and its

shareholders and should be finally approved by the Court; (ii) whether a Judgment as provided

in the Stipulation dismissing the Actions with prejudice should be entered; (iii) whether the Fee

and Expense Award and the Service Awards should be approved; and (iv) such other matters as

may be necessary or proper in the circumstances.

2. The Court has received affidavit(s) and/or declaration(s) attesting to compliance

with the terms of the Preliminary Approval Order, including the Company’s filing of a copy of

the Notice with the U.S. Securities and Exchange Commission via a current report on Form 8-

K and its posting of the Notice and Stipulation to the Company’s website; the Shuman Law

Firm’s posting of the Notice and Stipulation to its website; and the Company’s publishing of

the Summary Notice once in Investor’s Business Daily.

3. Due to adequate notice having been given to Cliffs shareholders as required by

the Preliminary Approval Order, and the Court having held a Settlement Hearing on ____ __,

NAI-1500870532v6 2

2016, and the Court having considered all papers filed and proceedings held in the Actions and

otherwise being fully informed of the matters herein and good cause appearing.

NOW THEREFORE, IT IS HEREBY ORDERED, ADJUDGED, AND

DECREED:

1. The provisions of the Stipulation, including definitions of the terms used

therein, are hereby incorporated by reference as though fully set forth herein. All capitalized

terms used herein have the meanings set forth in the Stipulation.

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

Plaintiffs, Cliffs shareholders, Cliffs and the Individual Defendants.

3. This Court finds that the posting and filing of the Notice and publishing of the

Summary Notice, which was implemented in accordance with the terms of the Stipulation and

the Court’s Preliminary Approval Order:

(a) Constituted the best practicable notice to Cliffs shareholders under the

circumstances of the Actions;

(b) Was reasonably calculated, under the circumstances, to apprise Cliffs

shareholders of: (i) the Settlement of the Actions and the terms of the Settlement; (ii)

the Fee and Expense Award to Plaintiffs’ Counsel; (iii) the Service Awards to Co-Lead

Plaintiffs; (iv) the right of Cliffs shareholders to object and the procedures to object to

any aspect of the Settlement, including the Fee and Expense Award and/or the Service

Awards; (iv) the shareholders’ right to appear at the Settlement Hearing; and (v) the

binding effect of the proceedings, rulings, orders, and judgments in the Actions,

whether favorable or unfavorable; and

NAI-1500870532v6 3

(c) Was reasonable and constituted due, adequate, and sufficient notice to all

persons entitled to be provided with notice and fully satisfied applicable law, and the

requirements of due process and complied with the rules governing this Court,

including Ohio Rule of Civil Procedure 23.1.

4. The terms and provisions of the Stipulation were negotiated by the parties at

arm’s length and were entered into by the Parties in good faith.

5. The Court finds that the Settlement set forth in the Stipulation provides

substantial benefits to Cliffs and is fair, reasonable, adequate, and in the best interests of Cliffs

and its shareholders, taking into account, inter alia, the benefits to Cliffs and Cliffs

shareholders; the complexity, expense, and possible duration of further litigation; the risks of

establishing liability and damages; and the costs of continued litigation. The Settlement set

forth in the Stipulation is hereby finally approved in all respects, in accordance with the terms

and provisions therein, and all Parties are hereby bound by the terms of the Settlement as set

forth in the Stipulation and ordered to carry out its terms.

6. Upon the Effective Date, all Plaintiffs (acting on their own behalf and

derivatively on behalf of Cliffs), Cliffs, and each of Cliffs’ shareholders shall be deemed to

have, and by operation of the Judgment shall have, fully, finally, and forever settled, released,

relinquished, extinguished, dismissed with prejudice, and discharged the Individual

Defendants, and each and all the Individual Defendants’ respective present or former

successors, heirs, executives, employees, agents, insurers, reinsurers, attorneys, advisors,

associates, representatives, executors, personal representatives, estates, administrators, assigns,

spouses and other members of any Individual Defendant’s immediate family, any entity in

which any Individual Defendant or member of any Individual Defendant’s immediate family

NAI-1500870532v6 4

has or had a controlling interest (directly or indirectly), and any trust of which any Individual

Defendant is the settlor or which is for the benefit of any Individual Defendant and/or

member(s) of his or her family (“Released Persons”) from any and all claims for relief, suits,

debts, demands, rights, liabilities, damages, losses, obligations, judgments, fees, expenses,

costs, matters, issues and actions or causes of action of every nature and description

whatsoever, whether known or unknown (including Unknown Claims as defined in ¶ 1.26 of

the Stipulation), contingent or absolute, suspected or unsuspected, disclosed or undisclosed,

matured or unmatured, discoverable or undiscoverable, whether or not concealed or hidden, for

damages, injunctive relief, or any other remedy, that have been, or could or might have been, or

in the future can or might be asserted by Plaintiffs, Cliffs, and/or any Cliffs shareholder

derivatively on behalf of Cliffs against any Released Persons that are based upon, refer to, arise

out of concern, or are directly or indirectly related to (i) the claims and allegations contained in

the Actions, (ii) any of the facts, transactions, events, occurrences, acts, disclosures, statements,

omissions or failures to act that were alleged or that could have been alleged in the Actions; or

(iii) the settlement of the Actions, including the payment provided for in this Stipulation, and

the reasonable attorneys’ fees, costs, and expenses incurred in defense of the Actions

(“Released Claims”) and shall have covenanted not to sue the Released Persons with respect to

any such Released Claims, and shall be permanently barred and enjoined from instituting,

commencing, or prosecuting the Released Claims against the Released Persons.

Notwithstanding the foregoing, the Released Claims do not include (i) any claims based on any

conduct of the Released Persons after April 20, 2016; or (ii) any direct claims belonging to

Cliffs shareholders, including without limitation, any claims arising under the federal securities

laws. Notwithstanding the foregoing, Released Claims shall not include claims to enforce the

NAI-1500870532v6 5

terms of the Stipulation or the Settlement. In addition, nothing set forth herein shall constitute

a release by any Defendant of any insurer, reinsurer, or any other entity contracted or otherwise

obligated to provide insurance or indemnification to any of the Released Persons of any claim

arising out of the rights, remedies, duties or obligations provided for in any insurance policy or

agreement. Nothing set forth herein shall constitute a release by or among the Company and

the Individual Defendants or Released Persons of any rights or obligations relating to

indemnification or advancement of defense costs, whether arising from the Company’s

certificate of incorporation or code of regulations, Ohio law, or any agreement pertaining to

indemnification or advancement of defense costs.

7. The releases granted herein shall be effective as a bar to any or all claims that

were alleged or that could or might have been alleged in the Actions by the Plaintiffs, Cliffs, or

any Cliffs shareholder derivatively on behalf of Cliffs, which any Plaintiff, Cliffs, or Cliffs

shareholder 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 Parties stipulate and agree that, upon the Effective Date, Plaintiffs,

Individual Defendants, and Cliffs shall expressly waive and relinquish, and each of Cliffs’

shareholders shall be deemed to have, and by operation of the Judgment shall have, expressly

waived and relinquished, to the fullest extent permitted by law, any and all provisions, rights,

and benefits conferred by any law of the United States or of any state or territory of the United

States, or principle of common law, which governs or limits a Person’s release of Unknown

Claims, including the provisions, rights and benefits of California Civil Code §1542, which

NAI-1500870532v6 6

provides:


and/or by any law of the United States or of any state or territory of the United States, or

principle of common law or of international or foreign law, that is similar, comparable, or

equivalent in effect to California Civil Code §1542. It is understood that Plaintiffs, Cliffs, or

any of Cliffs’ shareholders may hereafter discover facts in addition to or different from those

that he, she, or it now knows or believes to be true with respect to the subject matter of the

Released Claims (including Unknown Claims), but Plaintiffs and Cliffs shall expressly fully,

finally, and forever discharge, settle, and release with prejudice, and each of Cliffs’

shareholders, upon the Effective Date, shall be deemed to have, and by operation of the

Judgment shall have fully, finally, and forever discharged, settled and released with prejudice,

any and all Released Claims (including Unknown Claims), known or unknown, suspected or

unsuspected, contingent or noncontingent, whether or not concealed or hidden, that 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, grossly

negligent, reckless, 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.

Plaintiffs and Cliffs acknowledge, and Cliffs’ shareholders 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.

8. Upon the Effective Date, each of the Defendants shall be deemed to have, and

by operation of the Judgment shall have, fully, finally, and forever settled, released,

NAI-1500870532v6 7

relinquished, extinguished, dismissed with prejudice, and discharged each and all of the

Plaintiffs and Plaintiffs' Counsel from all claims (including Unknown Claims) based upon,

arising out of, relating to, or in connection with, the commencement, prosecution, assertion,

settlement or resolution of the Actions or the Released Claims.

9. The Stipulation (including the exhibits attached to it) and the Settlement are not

and shall not be construed to be, or offered, attempted to be offered or used in any way by any

Party as a presumption, an admission, or evidence of the validity or invalidity of any claim or

defense or of any fault, liability or wrongdoing whatsoever on the part of the Released Persons.

The Stipulation, the Settlement and any matter relating to them may not be offered or received

in evidence or otherwise referred to in any civil, criminal, or administrative action or

proceeding for any purpose, except to enforce the terms of the Settlement, and except that the

Released Persons may file this Stipulation 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, judgment bar or

reduction or any other theory of claim preclusion or issue preclusion or similar defense or

counterclaim.

10. If for any reason the Effective Date does not occur, or if the Stipulation is in any

way canceled, terminated, or fails to become final in accordance with its terms: (i) the Parties

shall be restored to their respective positions as of the date immediately preceding the full

execution of the Stipulation; and (ii) the Stipulation and all negotiations, proceedings,

documents prepared, and statements made in connection herewith shall be without prejudice to

the Parties, shall not be deemed or construed to be an admission by any Party of any act,

matter, or proposition, and shall not be used by anyone in any manner for any purpose in the

NAI-1500870532v6 8

Actions or in any other action or proceeding (other than between one or more Defendants and

any insurer, reinsurer or other entity contracted or otherwise obligated to provide insurance or

indemnification to any Released Persons), or entitle any Party to recover any costs or expenses

incurred in connection with the Stipulation or the Settlement. In such event, the terms and

provisions of the Stipulation, except ¶¶ 5.4, 6.3, 8.1 and 8.8, shall have no further force or

effect, and this Judgment and any other order entered in accordance with the terms of the

Stipulation shall be treated as vacated, nunc pro tunc.

11. The Court finds that during the course of the Actions, all Parties, Plaintiffs’

Counsel, and counsel to the Defendants at all times complied with all rules of professional

conduct.

12. Plaintiffs’ Counsel are awarded attorneys’ fees and reimbursement of expenses

in the amount of $775,000 to be paid by the Individual Defendants’ D&O insurers.

13. Plaintiffs’ Counsel are authorized to pay Co-Lead Plaintiffs Service Awards in

the amount of $3,500 each, as to which neither Defendants nor any of their insurers shall have

any liability or responsibility.

14. The Actions and all Released Claims are dismissed as against all Defendants on

the merits and with prejudice, with no fees or costs assessed against any Party except as

expressly provided in the Stipulation and this Judgment.

NAI-1500870532v6 9

15. Without affecting the finality of this Judgment in any way, this Court hereby

retains continuing jurisdiction over: (i) implementation and enforcement of the Settlement; and

(ii) the Parties for the purpose of construing, implementing, enforcing, and administering the

Stipulation and the Settlement.

16. The provisions of this Judgment constitute a full and complete adjudication of

the matters considered and adjudged herein, and the Court determines that there is no just

reason for delay in the entry of this Judgment. The Clerk is hereby directed to immediately

enter this Judgment.

SO ORDERED in Cuyahoga County, Ohio on _________________, 2016.

__________________________________________

JUDGE RICHARD J. MCMONAGLE

Documents

IN THE COURT OF COMMON PLEAS CUYAHOGA COUNTY, OHIO …s1.q4cdn.com/345331386/files/doc_downloads/Settlement/... · 2016-04-29 · In addition, Plaintiffs’ Counsel has carefully