Exhibit


EXHIBIT 10.2


CALIFORNIA RESOURCES CORPORATION 
LONG-TERM INCENTIVE PLAN
PERFORMANCE STOCK UNIT AWARD  
TERMS AND CONDITIONS
		
	Date of Grant:
	August 5, 2015


		
	Performance Stock Units:
	See Morgan Stanley Stock Plan Connect “Restricted Stock/Performance Stock & Cash Units/Target”


		
	Vesting Date:
	August 4, 2018


		
	Performance Period:
	July 1, 2015 through June 30, 2018


The following Terms and Conditions (these “Terms and Conditions”) are set forth as of the Date of Grant between CALIFORNIA RESOURCES CORPORATION, a Delaware corporation (“CRC” and, with its subsidiaries, the “Company”), and the eligible employee receiving this award (the “Grantee”).
1.Grant of Performance Stock Units.  In accordance with these Terms and Conditions and the California Resources Corporation Long-Term Incentive Plan, as the same may be amended from time to time (the “Plan”), CRC grants, subject to Section 8, to the Grantee as of the Date of Grant, up to 200% of the number of Performance Stock Units (“PS Units”) set forth above, subject to adjustment under the Plan and Section 7 of these Terms and Conditions. Subject to the provisions of Section 5, a PS Unit is a bookkeeping entry that represents the right to receive upon achievement of the Performance Goal, as set forth in Section 4, one share of CRC Common Stock, $0.01 par value (the “Common Stock”). PS Units are not Common Stock and have no voting rights or, except as stated in Section 6, dividend rights.
2.    Restrictions on Transfer.  Neither these Terms and Conditions nor any right to receive Common Stock or cash pursuant to these Terms and Conditions may be transferred or assigned by the Grantee other than (i) to a beneficiary designated on a form approved by the Company (if enforceable under local law), by will or, if the Grantee dies without designating a beneficiary of a valid will, by the laws of descent and distribution, or (ii) pursuant to any applicable domestic relations order (if approved or ratified by the Committee).
3.    Performance Goal.  The Performance Goal is based 50% on Total Shareholder Return (defined as Total Stockholder Return in the Plan) of the Peer Companies listed below, as set forth on Exhibit 1 and 50% on Cumulative Value Creation Index, as set forth in Exhibit 2.  The Performance Payout Factor shall be the sum of (a) 50% times the TSR Performance Factor, determined as set forth on Exhibit 1, and (b) 50% times the VCI Performance Factor, determined as set forth in Exhibit 2. Total Shareholder Return shall be calculated for each Peer Company, assuming reinvestment of all dividends, using the average of its last reported sale price per share of common stock on the New York Stock Exchange - Composite Transactions for the trading days during the 30 calendar day period immediately preceding and excluding the first day of the Performance Period and the average of its last reported sale price per share of common stock on the New York Stock Exchange - Composite Transactions for the trading days during the 30 calendar day period ending with and including the last day of the applicable Performance Period.  In addition to CRC, the Peer Companies are: Cabot Oil and Gas Corporation, Cimarex Energy 

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Co., Concho Resources. Inc., Denbury Resources, Inc., Energen Corporation, Energy XXI, Ltd., EP Energy Corporation, Murphy Oil Corporation, Newfield Exploration Company, Noble Energy, Inc., Oasis Petroleum Inc., Parsley Energy, Inc., Pioneer Natural Resources Company, QEP Resources Inc., Range Resources Corporation, SM Energy Company, Whiting Petroleum Corporation, and WPX Energy Inc. (collectively, the “Peer Companies” and individually, a “Peer Company”); provided however, that consistent with Section 162(m), if at any time during the Performance Period, a Peer Company is acquired, then such company will be removed and treated as if it had never been a Peer Company and the achievement of the Performance Goal will be determined with respect to the remaining Peer Companies as set forth on Exhibit 1.
4.    Vesting and Forfeiture of Performance Stock Unit Award.  
(a)    If the Grantee fails to accept this award prior to October 1, 2015, then, notwithstanding any other provision of this award, the Grantee shall forfeit this award and all rights under this award and this award will become null and void. For purposes of these Terms and Conditions, acceptance of the award shall occur on the date the Grantee accepts this Performance Stock Unit Award through Morgan Stanley Stock Plan Connect or any replacement on-line system designated by the Company.
(b)    The Grantee must remain in the continuous employ of the Company through the Vesting Date to receive payment under this award. The continuous employment of the Grantee will not be deemed to have been interrupted by reason of the transfer of the Grantee’s employment among the Company and its affiliates or an approved leave of absence.  However, if the Grantee dies or becomes permanently disabled while in the employ of the Company and terminates employment as a result thereof, retires with the consent of the Company, or terminates employment without cause (as determined by the Company in its sole discretion) for the convenience of the Company (each of the foregoing, a “Forfeiture Event”), then the number of unvested PS Units will be reduced on a pro rata basis to the number obtained by multiplying the total number of PS Units granted by a fraction, the numerator of which is the number of days between and including the Date of Grant and the Forfeiture Event, and the denominator of which is the number of days between and including the Date of Grant and the Vesting Date. If the Forfeiture Event is death or permanent disability, such pro rata unvested PS Units shall vest as of the date (the “Unscheduled Vesting Date”) of the Forfeiture Event and, subject to Section 24 of these Terms and Conditions, become immediately payable, and all other PS Units shall be forfeited as of the date of the Forfeiture Event. If the Grantee terminates employment voluntarily or the Grantee’s employment is terminated for cause (as determined by the Company in its sole discretion), then the Grantee shall forfeit this award and all remaining rights hereunder and this award will become null and void.
(c)    Subject to satisfaction of these Terms and Conditions including Section 4(d), the Grantee shall have the right to receive payment of this award in an amount equal to the product of the PS Units multiplied by the Performance Payout Factor, rounded up to the nearest whole unit, which right shall be based on, and become nonforfeitable upon, the Committee’s certification of the attainment of the Performance Goal.
(d)    If a Change in Control occurs prior to the Vesting Date and the Grantee’s employment is terminated by the Company (or its successor) on or after the date of such event and as a result of such event (a “CIC Event”), then the Grantee shall have the right to receive payment of this award in an amount equal to the product of the PS Units 

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multiplied by the Performance Payout Factor (calculated using 100% for the VCI Performance Factor and actual performance through the termination date for the TSR Performance Factor), rounded up to the nearest whole unit, unless, prior to the occurrence of the CIC Event, the Committee, as provided in Section 7.1 of the Plan, decides in its sole discretion that such event will not accelerate vesting of any of these PS Units. Any such decision by the Committee is binding on the Grantee.  Any such vesting of PS Units due to a CIC Event shall be in lieu of payment of this award under Section 4(c).
5.    Payment of Awards.  Payment for vested PS Units, as adjusted pursuant to Sections 4 and 7 of these Terms and Conditions, will be made in the form of shares of Common Stock equal in number to the number of PS Units with respect to which payment is being made on the applicable date.  Payment will be made to the Grantee as promptly as practicable after the Committee’s certification of attainment of the Performance Goal, CIC Event, or Unscheduled Vesting Date, as the case may be, and in any event no later than the 15th day of the third month following the end of the first taxable year in which the award is no longer subject to a substantial risk of forfeiture. Notwithstanding the preceding provisions of this Section 5, payment for a vested PS Unit shall be made at the time provided above solely in cash (in lieu of in the form of shares of Common Stock as provided above) in an amount equal to the Plan Value if (a) such PS Unit becomes vested prior to the 2016 Annual Meeting (as herein defined) or (b) stockholder approval is not obtained at the 2016 Annual Meeting to make additional shares of Common Stock subject to the Plan in an amount sufficient so that all outstanding awards under the Plan as of the date of the 2016 Annual Meeting that may be paid in shares of Common Stock (including this award and other awards under the Plan that are similar to this award (to the extent outstanding as of such date)) may be so paid. As used herein: (i) “2016 Annual Meeting” means the annual meeting of CRC’s stockholders that occurs in calendar year 2016; and (ii) “Plan Value” means the last reported sale price of a share of Common Stock on the New York Stock Exchange Composite Transactions on the date of the Committee’s certification of attainment of the Performance Goal, CIC Event, or Unscheduled Vesting Date, as applicable.
6.    Crediting and Payment of Dividend Equivalents.  With respect to each PS Unit listed above, the Grantee will be credited on the books and records of CRC with an amount (the “Dividend Equivalent”) per PS Unit equal to the amount per share of any cash dividends declared by the Board on the outstanding Common Stock as and when declared during the period beginning on the Date of Grant and ending, with respect to such PS Unit, on the date on which the Grantee’s right to receive such portion becomes nonforfeitable, or, if earlier, the date on which the Grantee forfeits the right to receive such PS Unit. CRC will pay in cash to the Grantee an amount equal to the Dividend Equivalents credited to the Grantee, adjusted, if applicable, to reflect the same payment percentage that is used to determine the payout of the PS Units following certification of the attainment of the Performance Goal, the CIC Event, or Unscheduled Vesting Date, as the case may be,  as promptly as may be practicable following such certification, CIC Event, or Unscheduled Vesting Date but, in any event, no later than the 15th day of the third month following the end of the first taxable year in which the award is no longer subject to substantial risk of forfeiture.
7.    Adjustments.  The number of PS Units covered by these Terms and Conditions may be adjusted as the Committee determines, pursuant to Section 7.2 of the Plan, in order to prevent dilution or expansion of the Grantee’s rights under these Terms and Conditions as a result of events such as stock dividends, stock splits, or other change in the capital structure of CRC, or any merger, consolidation, spin-off, liquidation or other corporate transaction or event having 

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a similar effect. If any such adjustment occurs, the Company will give the Grantee written notice of the adjustment containing an explanation of the nature of the adjustment.  In addition, the Committee may adjust the Performance Goal or other features of this award as permitted by Section 5.2.1 of the Plan.
8.    Compensation Recoupment.  The Grantee’s receipt of this award is expressly conditioned on the Grantee’s agreement to the terms and provisions of this Section, and the Grantee acknowledges that the Grantee would not have received this award in the absence of such agreement.  By accepting this award, the Grantee acknowledges and agrees that:
(a)    the compensation (or any portion thereof) payable pursuant to this award and any other award granted to the Grantee under the Plan (whether granted before, on or after the Date of Grant) shall be subject to recovery, revocation, recoupment or “clawback” by the Company or any of its Affiliates pursuant to (i) the provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Act”), (ii) any rules or regulations promulgated under the Act or by any stock exchange on which the Common Stock is listed (collectively, the “Rules”), or (iii) any compensation recoupment or clawback policies or procedures adopted by the Company or any of its Affiliates, in each case with respect to clauses (i), (ii) and (iii) above as such provisions, rules, regulations, policies and procedures may be adopted and amended from time to time (including with retroactive effect); and
(b)    any other compensation or benefit (or any portion thereof) payable to or on behalf of the Grantee from the Company or any of its Affiliates (whether payable before, on or after the Date of Grant, but excluding any compensation or benefit payable pursuant to an award granted under the Plan) shall be subject to recovery, revocation, recoupment or clawback by the Company or any of its Affiliates pursuant to the Act, the Rules or any compensation recoupment or clawback policies or procedures adopted by the Company or any of its Affiliates in accordance with the requirements of the Act and the Rules, in each case as the Act, the Rules and such policies and procedures may be adopted and amended from time to time (including with retroactive effect).
In addition, the Grantee hereby agrees (on behalf of the Grantee and any other individual, entity or other person claiming under or through the Grantee) that: (a) compensation payable pursuant to this award and any other compensation or benefit payable to or on behalf of the Grantee (whether under the Plan or otherwise) shall be subject to recovery, revocation, recoupment or clawback as provided in the preceding provisions of this Section; and (b) the Grantee (or any such individual, entity or other person) shall not seek indemnification or contribution from the Company or any of its Affiliates with respect to any amount so recovered, revoked, recouped or clawed back.


9.    No Employment Contract.  Nothing in these Terms and Conditions confers upon the Grantee any right with respect to continued employment by the Company, nor limits in any manner the right of the Company to terminate the employment or adjust the compensation of the Grantee. Unless otherwise agreed in a writing signed by the Grantee and an authorized representative of the Company, the Grantee’s employment with the Company is at will and may be terminated at any time by the Grantee or the Company.  For purposes of these Terms and Conditions, the Grantee shall be considered to be in the employment of the Company as long as the Grantee remains an employee of any of the Company, an Affiliate, or a corporation or other entity or a parent or subsidiary of such corporation or other entity assuming, or that provides a 

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new award in substitution for, this award.  Without limiting the scope of the preceding sentence, it is expressly provided that the Grantee shall be considered to have terminated employment with the Company at the time of the termination of the “Affiliate” status under the Plan of the entity or other organization that employs the Grantee.
10.    Taxes and Withholding.  Regardless of any action the Company takes with respect to any or all income tax (including U.S. federal, state and local tax and non-U.S. tax), social insurance, payroll tax, payment on account or other tax-related items related to the Grantee’s participation in the Plan and legally applicable to the Grantee (“Tax-Related Items”), the Grantee acknowledges that the ultimate liability for all Tax-Related Items is and remains the Grantee’s responsibility and may exceed the amount actually withheld by the Company. The Grantee further acknowledges that the Company (i) makes no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of this Performance Stock Unit Award, including the grant or vesting of the Performance Stock Unit Award and the receipt of Dividend Equivalents; and (ii) does not commit to and is under no obligation to structure the terms of the grant or any aspect of the Performance Stock Unit Award to reduce or eliminate the Grantee’s liability for Tax-Related Items or achieve any particular tax result. Further, if the Grantee has become subject to tax in more than one jurisdiction between the Date of Grant and the date of any relevant taxable event, the Grantee acknowledges that the Company may be required to withhold or account for Tax-Related Items in more than one jurisdiction.
Prior to the relevant taxable event, the Grantee shall pay or make adequate arrangements satisfactory to the Company to satisfy all Tax-Related Items. To facilitate compliance with this obligation, the Grantee authorizes the Company to, and, unless the Committee instructs the Company otherwise, the Company shall, withhold all applicable Tax-Related Items legally payable by the Grantee first from the shares of Common Stock or cash payable pursuant to this Performance Stock Unit Award (including Dividend Equivalents) and, if not sufficient, from the Grantee’s wages or other cash compensation. The Grantee shall pay to the Company any amount of Tax-Related Items that the Company may be required to withhold as a result of the Grantee’s receipt of this Performance Stock Unit Award that cannot be satisfied by the means previously described.
11.    Compliance with Law.  The Company will make reasonable efforts to comply with all federal, state and non-U.S. laws applicable to awards of this type. However, if it is not feasible for the Company to comply with these laws with respect to the grant or settlement of these awards, then the awards may be cancelled without any compensation or additional benefits provided to the Grantee as a result of the cancellation.
12.    Relation to Other Benefits.  The benefits received by the Grantee under these Terms and Conditions will not be taken into account in determining any benefits to which the Grantee may be entitled under any profit sharing, retirement or other benefit or compensation plan maintained by the Company, including the amount of any life insurance coverage available to any beneficiary of the Grantee under any life insurance plan covering employees of the Company. Additionally, this Performance Stock Unit Award is not part of normal or expected compensation or salary for any purposes, including, but not limited to calculation of any severance, resignation, termination, redundancy, end of service payments, bonuses or long-service awards. The grant of this Performance Stock Unit Award does not create any contractual or other right to receive future grants of Performance Stock Unit Awards or benefits in lieu of 

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Performance Stock Unit Awards, even if the Grantee has a history of receiving Performance Stock Unit Awards or other cash or stock awards.
13.    Amendments.  The Plan may be modified, amended, suspended or terminated by the Board at any time, as provided in the Plan. Any amendment to the Plan will be deemed to be an amendment to these Terms and Conditions to the extent it is applicable to these Terms and Conditions; however, except to the extent necessary to comply with applicable law, no amendment will adversely affect the rights of the Grantee under these Terms and Conditions in any material respect without the Grantee’s consent.  Notwithstanding the foregoing, Attachment B may only be modified or revoked pursuant to the terms set forth in its Paragraph 14, and Attachment B shall survive the termination of Employee’s employment relationship with the Company, the termination of the Plan and the termination of the Terms and Conditions.
14.    Severability.  Subject to the provisions set forth in Paragraph 15 of Attachment B, if one or more of the provisions of these Terms and Conditions is invalidated for any reason by any tribunal, the invalidated provisions shall be deemed to be separable from the other provisions of these Terms and Conditions, and the remaining provisions of these Terms and Conditions will continue to be valid and fully enforceable.
15.    Entire Agreement; Relation to Plan; Interpretation.  Except as specifically provided in this Section, these Terms and Conditions and the Attachments incorporated in these Terms and Conditions constitute the entire agreement between the Company and the Grantee with respect to this Performance Stock Unit Award; provided, however, that the terms of these Terms and Conditions shall not modify and shall be subject to the terms and conditions of any employment and/or severance agreement between the Company (or an Affiliate) and the Grantee in effect as of the date a determination is to be made under these Terms and Conditions.  Without limiting the scope of the preceding sentence, except as provided therein, all prior understandings and agreements, if any, among the parties hereto relating to the subject matter hereof are hereby null and void and of no further force and effect.  These Terms and Conditions are subject to the terms and conditions of the Plan. In the event of any inconsistent provisions between these Terms and Conditions and the Plan, the provisions of the Plan control. Capitalized terms used in these Terms and Conditions without definitions have the meanings assigned to them in the Plan. References to Sections and Attachments are to Sections of, and Attachments incorporated in, these Terms and Conditions unless otherwise noted.
16.    Successors and Assigns.  Subject to Sections 2 and 4, the provisions of these Terms and Conditions shall be for the benefit of, and be binding upon, the successors, administrators, heirs, legal representatives and assigns of the Grantee, and the successors and assigns of the Company.
17.    Governing Law.  Except as provided by Paragraphs 10 and 11 of Attachment B, the laws of the State of Delaware govern the interpretation, performance, and enforcement of these Terms and Conditions.
18.    Notices.  Any notices or other communications provided for in these Terms and Conditions shall be sufficient if in writing.  In the case of the Grantee, such notices or communications shall be effectively delivered if hand delivered to the Grantee at the Grantee’s principal place of employment or if sent by certified mail, return receipt requested, to the Grantee at the last address the Grantee has filed with the Company.  In the case of the Company, such 

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notices or communications shall be effectively delivered if sent by certified mail, return receipt requested, to CRC at its principal executive offices.
19.    Privacy Rights.  By accepting this Performance Stock Unit Award, the Grantee explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of the Grantee’s Data (as defined below) by and among, as applicable, the Company and its affiliates for the exclusive purpose of implementing, administering and managing the Grantee’s participation in the Plan. The Grantee understands that the Company holds, or may receive from any agent designated by the Company, certain personal information about the Grantee, including, but not limited to, the Grantee’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company, details of this Performance Stock Unit Award or any other entitlement to cash or shares of stock awarded, canceled, exercised, vested, unvested or outstanding in the Grantee’s favor, for the purpose of implementing, administering and managing the Plan, including complying with applicable tax and securities laws (“Data”). Data may be transferred to any third parties assisting in the implementation, administration and management of the Plan. These recipients may be located in the Grantee’s country of residence or elsewhere, and may have different data privacy laws and protections than the Grantee’s country of residence. By accepting these Terms and Conditions, the Grantee authorizes the recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes described above. The Grantee may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting the Committee in writing. Refusing or withdrawing consent may affect the Grantee’s ability to participate in the Plan.
20.    Electronic Delivery and Acceptance.  The Company may, in its sole discretion, decide to deliver any documents related to this Performance Stock Unit Award granted under the Plan or future awards that may be granted under the Plan (if any) by electronic means or to request the Grantee’s consent to participate in the Plan by electronic means. The Grantee hereby consents to receive such documents by electronic delivery and, if requested, to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company.
21.    Grantee’s Representations and Releases.  By accepting this Performance Stock Unit Award, the Grantee acknowledges that the Grantee has read these Terms and Conditions and understands that (i) the grant of this Performance Stock Unit Award is made voluntarily by CRC in its discretion with no liability on the part of any of its direct or indirect subsidiaries and that, if the Grantee is not an employee of CRC, the Grantee is not, and will not be considered, an employee of CRC, but that the Grantee is a third party (i.e. an employee of a subsidiary) to whom this Performance Stock Unit Award is granted; (ii) all decisions with respect to future awards, if any, will be at the sole discretion of CRC; (iii) the Grantee’s participation in the Plan is voluntary; (iv) this Performance Stock Unit Award is an extraordinary item that does not constitute a regular and recurring item of base compensation; (v) the future amount of any payment pursuant to this Performance Stock Unit Award cannot be predicted and CRC does not assume liability in the event this Performance Stock Unit Award has no value; (vi) subject to the terms of any tax equalization agreement between the Grantee and the entity employing the Grantee, the Grantee will be solely responsible for the payment or nonpayment of taxes imposed or threatened to be imposed by any authority of any jurisdiction; and (vii) CRC is not providing 

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any tax, legal or financial advice with respect to this Performance Stock Unit Award or the Grantee’s participation in the Plan.
In consideration of the grant of this Performance Stock Unit Award, no claim or entitlement to compensation or damages shall arise from termination of this Performance Stock Unit Award or diminution in value of this Performance Stock Unit Award resulting from termination of the Grantee’s employment by the Company (for any reason whatsoever) and, to the extent permitted by law, the Grantee irrevocably releases the Company from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a tribunal to have arisen, then, by accepting this Performance Stock Unit Award, the Grantee shall be deemed irrevocably to have waived his or her entitlement to pursue such claim.
22.    Grantee’s Agreement to General Terms of Employment and Mutual Agreement to Arbitrate.  By accepting this Performance Stock Unit Award, the Grantee agrees, to the extent not contrary to applicable law, to the General Terms of Employment set out on Attachment 1 and to be bound by the Mutual Agreement to Arbitrate set out on Attachment 2, which, in each case, are incorporated in these Terms and Conditions by reference.
23.    Imposition of Other Requirements.  CRC reserves the right to impose other requirements on the Grantee’s participation in the Plan and on this Performance Stock Unit Award, to the extent CRC determines it is necessary or advisable in order to comply with local law or facilitate the administration of the Plan, and to require the Grantee to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.
24.    Compliance with Section 409A of the Code.  All amounts payable under these Terms and Conditions are intended to comply with the “short term deferral” exception from Section 409A of the U.S. Internal Revenue Code (“Section 409A”) specified in Treas. Reg. § 1.409A-1(b)(4) (or any successor provision) and shall be paid within the period necessary to qualify for such exception. Notwithstanding the foregoing, to the extent that it is determined that the Plan or this award is subject to Section 409A, these Terms and Conditions shall be interpreted and administered in such a way as to comply with the applicable provisions of Section 409A to the maximum extent possible. In addition, if this award is subject to Section 409A, then (i) if the Grantee must be treated as a “specified employee” within the meaning of Section 409A, any payment made on account of the Grantee’s separation from service (as defined for purposes of Section 409A) (other than by reason of death) will be made at the time specified above in these Terms and Conditions or, if later, on the date that is six (6) months and one (1) day following the date of the Grantee’s separation from service; (ii) any payment on a Change in Control event will be made only if the Change in Control also qualifies as a change of control event within the meaning of Section 409A; and (iii) any determination by the Committee not to accelerate the award on a Change in Control shall be made only to the extent such determination is consistent with Section 409A. To the extent that the Committee determines that the Plan or this award is subject to Section 409A and fails to comply with the requirements of Section 409A, the Committee reserves the right (without any obligation to do so) to amend or terminate the Plan and/or amend, restructure, terminate or replace this award in order to cause this award either to not be subject to Section 409A or to comply with the applicable provisions of such section.



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EXHIBIT 1
California Resources Corporation Long-Term Incentive Plan
Performance Stock Unit Award


TSR Performance Factor


	
		
	Relative TSR Percentile Rank (1)
	TSR Performance Factor (2) (3)

	90th or higher
	200%

	50th 
	100%

	25th 
	25%

	Less than 25th 
	0%






(1)  Relative TSR Percentile Rank shall be calculated based on the Total Shareholder Return for CRC as compared to the Peer Companies for the applicable Performance Period.  Total Shareholder Return shall be calculated for each Peer Company, assuming reinvestment of all dividends, using the average of its last reported sale price per share of common stock on the New York Stock Exchange - Composite Transactions for the trading days during the 30 calendar day period immediately preceding and excluding the first day of the Performance Period and the average of its last reported sale price per share of common stock on the New York Stock Exchange - Composite Transactions for the trading days during the 30 calendar day period ending with and including the last day of the applicable Performance Period.
(2)  TSR Performance Factor shall be linearly interpolated between indicated values for Relative TSR Percentile Rank between values indicated in table.
(3)  TSR Performance Factor shall not exceed 75%, regardless of the Relative TSR Percentile Rank, if CRC’s Total Shareholder Return for the applicable Performance Period is negative. 



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EXHIBIT 2
California Resources Corporation Long-Term Incentive Plan
Performance Stock Unit Award


VCI Performance Factor


	
		
	Cumulative Value Creation Index (1)
	VCI Performance Factor (2)

	1.4 or greater
	200%

	1.2
	100%

	1.0
	25%

	Less than 1.0
	0%






(1) Cumulative Value Creation Index shall be calculated as the weighted average of the Value Creation Index results for the full calendar years 2016 and 2017, weighted based on discounted capital invested for the plan year.  Value Creation Index is the present value added per discounted dollar of investment, calculated as A divided by B where “A” is the discounted expected future revenue from production of reserves added during the plan year net of production operating expenses and taxes other than income taxes, but before any general and administrative charges and income taxes, and “B” is the discounted capital invested for the plan year.  The future revenue calculations will be based on the five-year Brent strip (including impact of any hedges), with prices held stable after five years.  Discounting shall be at 10% (consistent with SEC requirements).  Except as otherwise stated, all values shall be determined consistently with SEC regulations.
(2)  VCI Performance Factor shall be linearly interpolated between indicated values for Cumulative Value Creation Index results between values indicated in table.












Attachment 1 
GENERAL TERMS OF EMPLOYMENT
A.    Except as otherwise required by law or legal process, the Grantee will not publish or divulge to any person, firm, corporation or institution and will not use to the detriment of CRC, or any of its subsidiaries or other affiliates, or any of their respective officers, directors, employees or stockholders (collectively, “CRC Parties”), at any time during or after the Grantee’s employment by any of them, any trade secrets or confidential information of any of them (whether generated by them or as a result of any of their business relationships), including such information as described in CRC’s ethics code and other corporate policies, without first obtaining the written permission of a CRC officer.
B.    At the time of terminating employment with the Company, the Grantee will deliver to the Company, and not keep or deliver to anyone else, any and all credit cards, drawings, blueprints, specifications, devices, notes, notebooks, memoranda, reports, studies, correspondence and other documents, and, in general, any and all materials relating to the CRC Parties (whether generated by them or as a result of their business relationships), including any copies (whether in paper or electronic form), that the Grantee has in the Grantee’s possession or control.
C.    The Grantee will, during the Grantee’s employment by the Company, comply with the provisions of CRC’s ethics code and other policies.
D.    Except as otherwise required by the Grantee’s job or permitted by law, the Grantee will not make statements about any CRC Parties (1) to the press, electronic media, to any part of the investment community, to the public, or to any person connected with, employed by or having a relationship with any of them without permission of a CRC officer or (2) that are derogatory, defamatory or negative. Nothing herein, however, shall prevent Grantee from making a good faith report or complaint to appropriate governmental authorities. To the fullest extent permitted by law, Grantee will not interfere with or disrupt any of the Company’s operations or otherwise take actions intended directly to harm any of the CRC Parties.
E.    All inventions, developments, designs, improvements, discoveries and ideas that the Grantee makes or conceives in the course of employment by the Company, whether or not during regular working hours, relating to any design, article of manufacture, machine, apparatus, process, method, composition of matter, product or any improvement or component thereof, that are manufactured, sold, leased, used or under development by, or pertain to the present or possible future business of the Company shall be works-for-hire and become and remain the property of CRC, its successors and assigns.
The provisions of this Section do not apply to an invention that qualifies fully under the provisions of Section 2870 of the California Labor Code, which provides in substance that provisions in an employment agreement providing that an employee shall assign or offer to assign rights in an invention to his or her employer do not apply to an invention for which no equipment, supplies, facilities, or trade secret information of the employer was used and which was developed entirely on the employee’s own time, except for those inventions that either (a) relate, at the time of conception or reduction to practice of the invention, (1) to the business of the employer or (2) to the employer’s actual or demonstrably anticipated research or development, or (b) result from any work performed by the employee for the employer.
F.    The foregoing General Terms of Employment are not intended to be an exclusive list of the employment terms and conditions that apply to the Grantee. The Company, in its sole discretion, may at any time amend or supplement the foregoing terms. The Grantee’s breach of the foregoing General Terms of Employment will entitle the Company to take appropriate disciplinary action, including, without limitation, reduction of the Performance Stock Unit Award granted pursuant to these Terms and Conditions and termination of employment.




Attachment 2    
MUTUAL AGREEMENT TO ARBITRATE
The Grantee under the Terms and Conditions (“Employee”) and California Resources Corporation (“Company”) hereby enter into this Mutual Agreement to Arbitrate (“Agreement”).  
In recognition of the fact that differences may arise out of or relating to certain aspects of Employee’s employment relationship or the termination of that relationship, and in recognition of the fact that resolution of any differences in the courts is rarely timely or cost effective for either party, Employee and Company have entered into this Agreement in order to establish and gain the benefits of a speedy, impartial and cost-effective dispute resolution procedure. 
1.    Claims Subject to Arbitration.  Except as expressly set forth in Paragraph 2 below, both Company and Employee mutually consent to resolve by final and binding arbitration any and all disputes, claims or controversies of any kind or nature, including but not limited to such matters arising from, related to or in connection with Employee seeking employment with, Employee’s employment relationship by or the termination of Employee’s employment with any one or more of the Company, its predecessors and each of their respective past and present parents, affiliates and subsidiaries (collectively referred to herein as “Company Group”) that either Employee may have against one or more Company Group entity (and/or each of their respective past and present employees, independent contractors, owners, agents, officers, directors, board members, shareholders, successors, assigns, benefit plans and sponsors, fiduciaries, administrators or insurers) or that any Company Group entity may have against Employee (collectively, “Claims”).  The term Company Group includes, but is not limited to, Occidental Petroleum Corporation and its past and present affiliates and subsidiaries.  The Claims subject to arbitration include, without limitation, (a) any Claims by Employee arising from, related to or in connection with: (i) any federal, state or local law or regulation prohibiting discrimination, harassment or retaliation based on race, color, religion, national origin, sex, age, disability or any other condition or characteristic protected by law; (ii) any alleged breach of contract or covenant, whether express or implied, including but not limited to a breach of the Terms and Conditions; (iii) any alleged violation of any federal, state, local, or other constitution, statute, ordinance, regulation, common law, or public policy; (iv) any dispute regarding wages, hours, bonuses or other compensation or payment; and/or (v) any personal, emotional, physical, economic, property or any other injury, loss or harm; and (b) any Claims that a Company Group entity may have against Employee, including, without limitation, any alleged trade secret violations.
2.    Claims Not Subject to Arbitration.  This Agreement does not apply to any Claims by Employee: (a) for state Workers’ Compensation benefits; (b) for unemployment insurance benefits filed with the appropriate government entity;  (c) arising under a benefit plan where the plan expressly specifies a separate arbitration procedure; (d) arising under the National Labor Relations Act and filed through a charge with the National Labor Relations Board; or (e) which are otherwise expressly prohibited by law from being subject to arbitration under this Agreement, provided such prohibition is not preempted under the Federal Arbitration Act or any other federal law.  This Agreement does not preclude filing an administrative charge or complaint with the appropriate government entity if such filing is protected or required by law.  However, to the full extent permitted by law, any Claims seeking monetary relief must be asserted in arbitration pursuant to this Agreement.
3.    Class, Collective and Representative Action Waivers.  To the fullest extent permitted by law, and notwithstanding anything else in this Agreement, Employee and Company agree that any Claims brought by a Company Group entity, by Employee or on Employee’s behalf shall be decided by the arbitrator on an individual basis and not on a class, collective or representative basis.  Accordingly, class, collective and representative actions are not permitted under this Agreement.  The arbitrator shall not have the authority or jurisdiction to hear the arbitration as a class, collective or representative action or to join or consolidate causes of action of different parties into one proceeding.  To the fullest extent permitted by law, Company Group and Employee agree that they have waived, to the maximum extent possible, any of their rights to bring or participate in class, collective or representative actions with respect to any Claims.  Notwithstanding the foregoing, if and to the extent applicable law precludes Employee and/or any Company Group entity from waiving any right to bring California Private Attorney General Act (“PAGA”) class, collective or representative claims, and provided that the applicable law is not preempted by the Federal Arbitration Act or other federal law, then the Parties agree that such PAGA class, collective or representative claims shall not be subject to the terms of this Agreement and shall be heard by a court of competent jurisdiction.
4.    Procedure.  Any arbitration will be filed with and conducted by JAMS.  The arbitration shall be held at the closest office of JAMS to where Employee does/did report to work or at a location mutually agreed to by the parties, pursuant to the JAMS Employment Arbitration Rules and Procedures (“Rules”) in effect at the time the demand for arbitration is filed, except as modified by this Agreement (including, without limitation, as modified in Paragraph 12).  Employee understands that he or she may obtain a copy of the most current Rules by visiting JAMS’ website, currently located at http://www.jamsadr.com/rules-employment-arbitration/, or by contacting Human Resources at crchumanresources@crc.com.  A copy of the Rules currently in effect is attached to this agreement as Exhibit A.  If JAMS is unable or unwilling to accept the matter for any reason, the parties will submit the matter to a comparable arbitration service, which will apply the then-current Rules unless otherwise agreed to by the parties to the arbitration and as modified by this Agreement.  Arbitration shall be initiated and all Claims shall be decided by a single, neutral arbitrator.
5.    Discovery and Motions.  The parties to the arbitration shall be entitled to conduct reasonable discovery and the arbitrator shall have the authority to determine what constitutes reasonable discovery.  The arbitrator will have the authority to hear and grant motions, including but not limited to motions for summary judgment and summary adjudication.
6.    Remedies.  The arbitrator may award any form of remedy or relief (including injunctive relief) that would otherwise be available in court and any such form of remedy or relief awarded must comply with applicable state and federal law.
7.    Decision.  The arbitrator shall issue a written and signed decision within thirty (30) days of the deadline for submission of post-hearing briefs.  The arbitrator’s award shall be final and binding and shall contain the essential findings of fact and conclusions of law on which the decision is based.  Judgment upon the award may be entered, and enforcement may be sought, only in a California state court of competent jurisdiction.
8.    Right of Appeal.  The arbitrator shall not have the power to commit errors of law or legal reasoning.  The arbitrator’s final award is subject to review for legal error, confirmation, correction or vacatur only in a California state court of competent jurisdiction.  Solely in the event that a court should find that it does not have legal authority, or otherwise refuses, to review the arbitrator’s decision for legal error, then any party to the arbitration shall have a right to appeal the arbitrator’s final award pursuant to the rules and procedures set forth in the JAMS Optional Arbitration Appeal Procedure ("Appeal Rules") in effect at the time the appeal is served, except as modified by this Agreement.  Employee understands that he or she may obtain a copy of the most current Appeal Rules by visiting JAMS' website, currently located at http://www.jamsadr.com/appeal/, or by contacting Human Resources at crchumanresources@crc.com.  A copy of the Appeal Rules currently in effect is attached to this Agreement as Exhibit B.  The appeal must be filed with JAMS within thirty (30) days of the court’s decision to not review the arbitrator’s final award for legal error, provided that the deadline shall be tolled in the event a party seeks appellate review of the court’s decision.
9.    Arbitration Fees and Costs.  To the extent required by law, Company shall bear all reasonable and necessary fees and costs of the arbitration forum that Employee would not otherwise be required to bear if the Claims were brought in court.  In all other circumstances, Company and Employee will each pay fifty percent (50%) of the fees and costs of the arbitration forum.  The parties shall be responsible for their own attorneys’ fees and costs, except that the arbitrator shall have the authority to award attorneys’ fees and costs to the prevailing party in accordance with the substantive law governing the Claims.  Any controversy regarding the payment of fees and costs under this Agreement shall be decided by the arbitrator.
10.    Law Governing Claims.  Except for Claims relating to or arising out of the interpretation, performance and/or enforcement of the Terms and Conditions to which this Agreement is attached, which shall be governed by Section 16 of the Terms and Conditions, the arbitrator shall apply California and federal law, as applicable, to any Claims and defenses asserted by the parties.
11.    Law Governing This Agreement.  Notwithstanding any other provision of this Agreement, the Federal Arbitration Act shall govern the interpretation and enforcement of this Agreement, the procedures for the arbitration, and the substantive governing law for review for legal error, confirmation, correction or vacatur of the arbitrator’s final award, with the sole exception that the California Arbitration Act shall apply for purposes of permitting review of the final arbitration award for legal error.
12.    Determination of Arbitrability.  A California state court with jurisdiction over a party’s Claims, and not the arbitrator, shall have the exclusive authority and jurisdiction to resolve any issue relating to the formation or enforceability of this Agreement, or any issue relating to whether a Claim is subject to arbitration under this Agreement.  Employee and Company agree that they are subject to the jurisdiction of California state courts for these purposes.
13.    At-Will Employment.  This Agreement is not, and shall not be construed to create, any contract of employment, express or implied.  This Agreement shall not be construed in any way to change Employee’s employment status from at-will or to modify, nullify or otherwise affect the at-will agreement between Employee and Company.
14.    Revocation and Modification.  This Agreement shall survive the termination of Employee’s employment relationship, the termination of the California Resources Corporation Long-Term Incentive Plan, and the termination of the Terms and Conditions to which this Agreement is attached.  The Agreement shall apply to any Claims whether they arise or are asserted during or after termination of that relationship.  This Agreement can be modified or revoked only by a writing signed by Employee and an executive of the Company that references this Agreement and specifically states an intent to modify or revoke this Agreement.
15.    Reformation and Severability.  If any clause or provision of this Agreement is declared void or unenforceable by any tribunal, then such clause or provision shall be modified or, if modification is not possible, stricken to the extent necessary to allow enforcement of this Agreement, and the remaining provisions shall remain in full force and effect.  However, in no event shall the arbitrator hear any Claims as class, collective or representative actions, even if Paragraph 3 of this Agreement, or any clause or provision contained therein, is adjudged void or is otherwise unenforceable.  In other words, if one or more of the class, collective and/or representative action waivers in Paragraph 3 are found to be unenforceable, the specific type of waiver(s) found to be unenforceable shall be stricken from the Agreement and the respective action(s) that were the subject of the stricken waiver(s) shall be heard and determined through an appropriate court proceeding, and not in arbitration.  All remaining Claims shall proceed in individual arbitration.
16.    Entire Agreement.  This Agreement constitutes the entire understanding between the parties with respect to the subject matter hereof, and it revokes and supersedes all prior or contemporaneous oral or written agreements or understandings on the subject of arbitration of the Claims; however, it does not supersede any arbitration agreement in connection with Company’s benefit plans, if any.  Neither party is relying or shall rely on any representations (whether oral or written) on the subject of the effect, enforceability or meaning of this Agreement, except as specifically set forth in this Agreement.  A scanned, copied or facsimile version of signatures on this Agreement is to be effective as original signatures.
PLEASE READ THIS AGREEMENT CAREFULLY.  By entering into this Agreement, you agree to final and binding arbitration of any and all disputes between you and any Company Group entity including, without limitation, disputes related to your employment relationship and the termination thereof, and claims of discrimination and harassment.  You also are agreeing to waive your right to a jury trial and to bring a claim on a class, collective or representative basis.  
You also acknowledge that you have read this Agreement, understand its terms and have been given the opportunity to discuss this Agreement with an advisor of your choice, including your own legal counsel, and have taken advantage of that opportunity to the extent you wish to do so.



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EXHIBIT A

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EXHIBIT B

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