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Exhibit 10.64
FAR EAST ENERGY CORPORATION

SECOND AMENDED AND RESTATED
NONQUALIFIED STOCK OPTION AGREEMENT

General Information

Name:
Michael R. McElwrath
   
Award Date:
January 29, 2002
   
Options:
60,000
   
Exercise Price for the Options:
$0.65
   
Expiration Date:
January 29, 2012

 
 

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FAR EAST ENERGY CORPORATION
SECOND AMENDED AND RESTATED
NONQUALIFIED STOCK OPTION AGREEMENT

THIS SECOND AMENDED AND RESTATED NONQUALIFIED STOCK OPTION AGREEMENT (this
"Agreement") is made and entered into as of this 14th day of January, 2009, by
and between Far East Energy Corporation, a Nevada corporation (the
"Corporation"), and Michael R. McElwrath ("Participant").

WHEREAS, the Corporation and the Participant previously entered into a Stock
Option Agreement (the "Original Option Agreement") dated as of January 29, 2002
(the "Award Date") setting forth the grant of options to purchase 100,000 shares
of common stock, par value $0.001 per share, of the Corporation (the "Common
Stock") at an exercise price per share of $0.65;

WHEREAS, the Corporation and the Participant subsequently entered into an
Amended and Restated Nonqualified Stock Option Agreement (the "2004 Option
Agreement") dated December 23, 2004, which amended, restated and superseded the
Original Option Agreement;

WHEREAS, the Participant has entered into an Amended and Restated Employment
Agreement (as amended, restated and modified from time to time, the "Employment
Agreement") dated December 23, 2004 with the Corporation;

WHEREAS, the Corporation and the Participant acknowledge that of the 100,000
options granted under the Original Option Agreement, 60,000 options vested on or
before December 31, 2004 (the "Options"), and that 40,000 options vested on or
after January 1, 2005;

WHEREAS, the Options remain subject to the 2004 Option Agreement and the
remaining 40,000 options, which vested on or after January 1, 2005, are subject
to that certain Second Amended and Restated Nonqualified Stock Option Agreement
dated December 27, 2007 between the Corporation and the Participant;

WHEREAS, the Corporation and Participant desire to extend expiration of the
Exercise Period for the Options subject to the 2004 Option Agreement from
January 29, 2009 to January 29, 2012; and

WHEREAS, by executing this Agreement, the Corporation and Participant desire to
amend, replace and supersede the 2004 Option Agreement with respect to the
Options.

NOW, THEREFORE, in consideration of the foregoing, of the mutual promises
hereinafter set forth and of such other good and valuable consideration, the
receipt, adequacy and sufficiency of which are hereby acknowledged, the parties
hereto, intending to be legally bound, do hereby agree as follows:

1.           Defined Terms.  Capitalized terms used herein without definition
shall have the meaning ascribed to such terms in the Employment Agreement.

 
 

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2.
Non-Qualified Stock Options to Purchase Shares.

 
(a)
Number of Option Shares and Option Prices.  The Corporation granted the Options
to the Participant, which are subject to the 2004 Option Agreement, as
non-qualified stock options, to purchase up to 60,000 shares of the
Corporation's Common Stock (the "Option Shares"), with an exercise price of
$0.65 per share ("Exercise Price").  The shares of Common Stock purchasable upon
exercise of the Option are hereinafter referred to as the "Shares." The Option
is intended by the parties hereto to be, and shall be treated as, a nonqualified
stock option (as such term is defined under Section 422 of the Internal Revenue
Code of 1986, as amended).

 
(b)
Exercise Period.  The Options are fully vested as of the date hereof and shall
be exercisable, in whole or in part, subject to the terms set forth in this
Agreement and the Employment Agreement (as may be adjusted in accordance with
Article 6 of this Agreement), from the date hereof until January 29, 2012 (the
"Exercise Period").

 
(c)
The Option shall be immediately vested and exercisable in accordance with the
terms and conditions of, and to the extent provided in, the Employment
Agreement.

3.           Termination of Option.  The Option and all rights hereunder with
respect thereto, to the extent such rights shall not have been exercised, shall
terminate and become null and void after January 29, 2012 (the "Option
Termination Date").

4.
Exercise of Options.

A.            Participant may exercise the Options with respect to all or any
part of the number of Shares then exercisable hereunder by giving the Secretary
of the Corporation written notice of intent to exercise.  The notice of exercise
shall specify the number of Shares as to which Participant is exercising and the
date of exercise thereof, which date shall be not less than five (5) days after
the giving of such notice (unless an earlier time shall have been mutually
agreed upon in writing).  All or any portion of the vested portion of the Option
may be exercised by Participant during the Exercise Period.

B.            Notwithstanding anything contained in this Article 4 to the
contrary, each Option may be exercised only in compliance with all applicable
securities laws and only by (i) Participant’s completion, execution and delivery
to the Corporation of a notice of exercise and, if required by the Corporation,
an "investment letter" as supplied by the Corporation and (ii) the payment to
the Corporation, as provided in Article 4D hereof, of an amount equal to the
amount obtained by multiplying the Exercise Price of such Option by the number
of Shares being purchased pursuant to such exercise as shall be specified by
Participant in such notice of exercise.

C.            In the event of the death or Disability of Participant at such
time that Participant shall possess an Option pursuant to the terms of this
Agreement, within three years following Participant’s termination of employment,
Participant or Participant’s estate, executors or administrators, or personal or
legal representatives, as the case may be, shall be entitled to exercise any
Options  that are or become exercisable within three years following
Participant's termination of employment (but not beyond the Option Termination
Date) and all such Options not exercised within such period shall be
forfeited.  Any person, other than Participant, so desiring to exercise
Participant's Options shall be required, as a condition to the exercise of the
Options, to furnish to the Corporation such documentation as the Corporation
shall deem satisfactory to evidence the authority of such person to exercise the
Options on

 
 

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behalf of Participant.  In the event of the exercise of such Options by
Participant's estate, executors or administrators, or personal or legal
representatives, all references herein to Participant shall, to the extent
applicable, be deemed to refer to and include such estate, executors or
administrators, or personal or legal representatives, as the case may be.

D.            The Exercise Price shall be paid in full by Participant for the
Shares purchased on or before the exercise date specified in the notice of
exercise, at Participant's option, in one or a combination of the following
methods:  (i) in cash or by electronic funds transfer; (ii) by check payable to
the order of the Corporation; (iii) if authorized by the Board of Directors of
the Corporation (the "Board"), or the Compensation Committee of the Board (the
"Committee"), by a promissory note of the Participant; (iv) by notice and third
party payment in such manner as may be authorized by the Board or the Committee;
(v) by the delivery of shares of Common Stock of the Corporation already owned
by the Participant; or (vi) pursuant to a "cashless exercise" procedure (the
"Cashless Exercise Right") pursuant to which the Participant shall surrender to
the Corporation such Option and a notice of exercise, duly completed and
executed by the Participant to evidence the exercise of the Cashless Exercise
Right by authorizing the Corporation to withhold from issuance a number of
Shares issuable upon such exercise of such Option which, when multiplied by the
Fair Market Value (as defined below) of such Shares, is equal to the aggregate
Exercise Price of such Option (and such withheld Shares shall no longer be
issuable under such Option).  Shares of Common Stock used to satisfy the
Exercise Price of an Option shall be valued at their Fair Market Value on the
date of exercise.

 
E.
The "Fair Market Value" shall be determined as follows:

(a)  if the security at issue is listed on a national securities exchange or
admitted to unlisted trading privileges on such an exchange or quoted on either
the National Market System or the Small Cap Market of the automated quotation
service operated by The Nasdaq Stock Market, Inc., the Fair Market Value shall
be the last reported sale price of that security on such exchange or system on
the day for which the Fair Market Value is to be determined or, if no such sale
is made on such day, the average of the highest closing bid and lowest asked
price for such day on such exchange or system; or

(b)  if the security at issue is not so listed or quoted or admitted to unlisted
trading privileges, the Fair Market Value shall be the average of the last
reported highest bid and lowest asked prices quoted on the Electronic Bulletin
Board operated by The Nasdaq Stock Market, Inc., or, if not so quoted, then by
the National Quotation Bureau, Inc. on the last business day prior to the day
for which the Fair Market Value is to be determined; or

(c)  if the security at issue is not so listed or quoted or admitted to unlisted
trading privileges and bid and asked prices are not reported, the Fair Market
Value shall be determined in such reasonable manner as may be prescribed from
time to time by the Board.

F.            Upon the exercise of all or any portion of an Option by
Participant, or as soon thereafter as is practicable, the Corporation shall
issue and deliver to Participant (or to any broker or, if acceptable to the
Corporation, to any other person designated by Participant) a certificate or
certificates evidencing such number of Option Shares as Participant has elected
to purchase.  Such certificate or certificates shall be registered in the name
of Participant (or the designated broker or other person) and, if applicable,
shall bear an appropriate investment warranty legend, any legend required by an
applicable securities law, rule or regulation and, if applicable, a legend
referring to the restrictions provided hereunder and under the Employment
Agreement and any legend required by applicable law.  Upon the exercise of an
Option and the issuance and delivery of such certificate or certificates,
Participant (or the person to whom such stock

 
 

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certificates are registered) shall have all the rights of a stockholder with
respect to such Option Shares and to receive all dividends or other
distributions paid or made with respect thereto.  In the event that the capital
stock of the Corporation is converted in whole or in part into securities of any
other entity, a determination as to whether the securities of the other entity
so received (if any) shall be subject to the restrictions set forth in this
Agreement shall be made solely by the other entity.

5.           Rights Prior to Exercise.  Participant shall have no equity
interest in the Corporation or any voting, dividend, liquidation or dissolution
rights with respect to any capital stock of the Corporation solely by reason of
having an Option or having executed this Agreement.  Prior to the exercise of
all or a portion of the Options, as set forth in Article 4A hereof, and the
issuance and delivery of a certificate or certificates evidencing the Shares
purchased pursuant to the exercise of all or a portion of such Options,
Participant shall have no interest in, or any voting, dividend, liquidation or
dissolution rights with respect to, the Option Shares, except to the extent that
Participant has exercised all or a portion of such Options and has been issued
and received delivery of a certificate or certificates evidencing the Option
Shares purchased pursuant to such exercise.

6.
Adjustment of Purchase and Number of Shares.

A.            Adjustment.  The number and kind of securities purchasable upon
the exercise of an Option and the Exercise Price of such Option shall be subject
to adjustment from time to time upon the happening of certain events as follows:

(a)           Reclassification, Consolidation or Merger.  At any time while the
Option remains outstanding and unexpired, in case of (i) any reclassification or
change of outstanding securities issuable upon exercise of this Option (other
than a change in par value, or from par value to no par value per share, or from
no par value per share to par value or as a result of a subdivision or
combination of outstanding securities issuable upon the exercise of this
Option), (ii) any consolidation or merger of the Corporation with or into
another corporation (other than a merger with another corporation in which the
Corporation is a continuing corporation and which does not result in any
reclassification or change, other than a change in par value, or from par value
to no par value per share, or from no par value per share to par value, or as a
result of a subdivision or combination of outstanding securities issuable upon
the exercise of this Option), or (iii) any sale or transfer to another
corporation of the property of the Corporation as an entirety or substantially
as an entirety, the Corporation, or such successor or purchasing corporation, as
the case may be, shall without payment of any additional consideration
therefore, execute new Option providing that the holder of this Option shall
have the right to exercise such new Option (upon terms not less favorable to the
holder than those then applicable to the Option and to receive upon such
exercise, in lieu of each share of Common Stock theretofore issuable upon
exercise of the Option, the kind and amount of shares of stock, other
securities, money or property receivable upon such reclassification, change,
consolidation, merger, sale or transfer.  Such new Option shall provide for
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 6A.  The provisions of this Section
6A(a) shall similarly apply to successive reclassifications, changes,
consolidations, mergers, sales and transfers.

(b)           Subdivision or Combination of Shares. If the Corporation at any
time while the Option remains outstanding and unexpired, shall subdivide or
combine its capital stock, the Exercise Price of such Option shall be
proportionately reduced, in case of subdivision of such shares as of the
effective date of such subdivision, or, if the Corporation shall take a record
of holders of its capital stock for the purpose of so subdividing, as of such
record date, whichever is earlier, or shall be proportionately increased, in the
case of combination of such shares, as of the effective date of such
combination, or, if

 
 

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the Corporation shall take a record of holders of its capital stock for the
purpose of so combining, as of such record date,  whichever is earlier.

(c)           Stock Dividends.  If the Corporation at any time which the Option
is outstanding and unexpired shall pay a dividend in shares of, or make other
distribution of shares of, its capital stock, then the Exercise Price of the
Option shall be adjusted, as of the date the Corporation shall take a record of
the holders of its capital stock for the purpose of receiving such dividend or
other distribution (or if no such record is taken, as at the date of such
payment or other distribution), to that price determined by multiplying the
Exercise Price of the Option in effect immediately prior to such payment or
other distribution by a fraction (i) the numerator of which shall be the total
number of shares of capital stock outstanding immediately prior to such dividend
or distribution, and (ii) the denominator of which shall be the total number of
shares of capital stock outstanding immediately after such dividend or
distribution.  The provisions of this Section 6A(c) shall not apply under any of
the circumstances for which an adjustment is provided in Section 6A(a) or 6A(b).

(d)           Liquidating Dividends, Etc.  If the Corporation at any time while
the Option is outstanding and unexpired makes a distribution of its assets to
the holders of its capital stock as a dividend in liquidation or by way of
return of capital or other than as a dividend payable out of earnings or surplus
legally available for dividends under applicable law or any distribution to such
holders made in respect of the sale of all or substantially all of the
Corporation’s assets (other than under the circumstances provided for in the
Sections 6A(a) through (c)), the holder of such Option shall be entitled to
receive upon the exercise hereof, in addition to the shares of Common Stock
receivable upon such exercise, and without payment of any consideration other
than the Exercise Price of such Option, an amount in cash equal to the value of
such distribution per share of Common Stock multiplied by the number of shares
of Common Stock which, on the record date for such distribution, are issuable
upon exercise of the Option (with no further adjustment being made following any
event which causes a subsequent adjustment in the number of shares of Common
Stock issuable upon the exercise hereof ), and an appropriate provision therefor
should be made a part of any such distribution.  The value of a distribution
which is paid in other than cash shall be determined in good faith by the Board.

B.            Notice of Adjustments.  Whenever any of the Exercise Price of an
Option or the number of shares of Common Stock purchasable under the terms of
such Option at that Exercise Price shall be adjusted pursuant to Section 6A
hereof, the Corporation shall promptly make a certificate signed by its Chief
Executive Officer, President or a Vice President and by its Treasurer or
Assistant Treasurer or its Secretary or Assistant Secretary, setting forth in
reasonable detail the event requiring the adjustment, the amount of the
adjustment, the method by which such adjustment was calculated (including a
description of the basis upon which the Board or the Committee made any
determination hereunder), and the Exercise Price and number of shares of Common
Stock purchasable at that Exercise Price after giving effect to such adjustment,
and shall promptly cause copies of such certificate to be mailed (by First Class
and Postage Prepaid) to the registered holder of such Option.

7.           Headings.  The headings and other captions contained in this
Agreement are for convenience of reference only, and shall not be used in
interpreting, construing or enforcing any of the provisions of this Agreement.

8.           Entire Agreement.  This Agreement, together with the Employment
Agreement, sets forth all of the promises, agreements, conditions,
understandings, warranties and representations between the parties hereto with
respect to the Options, and there are no promises, agreements, conditions,
understandings, warranties or representations, oral or written, express or
implied, between them with respect to the

 
 

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Options other than as set forth herein and in the Employment Agreement.  Any and
all prior agreements between the parties hereto with respect to any stock
acquisition rights regarding the Options are hereby revoked.  This Agreement,
together with the Employment Agreement, is, and is intended by the parties to
be, an integration of any and all prior agreements or understandings, oral or
written, with respect to the Options and the Shares.

9.           Notices.  Any and all notices provided for herein shall be
sufficient if in writing, and sent by hand delivery, by an overnight delivery
service that produces a signed receipt evidencing delivery or by certified or
registered mail (return receipt requested and first class postage prepaid), in
the case of the Corporation, to its principal office, and in the case of
Participant, to Participant's address as shown on the Corporation's records.

10.           Invalid or Unenforceable Provisions.  The provisions of this
Agreement shall be deemed severable, and the invalidity or unenforceability of
any one or more of the provisions hereof shall not affect the validity and
enforceability of the other provisions hereof.  Participant agrees that the
breach or alleged breach by the Corporation of (a) any covenant contained in
another agreement (if any) between the Corporation and Participant or (b) any
obligation owed to Participant by the Corporation, shall not affect the validity
or enforceability of the covenants and agreements of Participant set forth
herein.

11.           Modifications.  No change or modification of this Agreement shall
be valid unless the same is in writing and signed by the parties hereto;
provided, however, that Participant hereby covenants and agrees to execute any
amendment to this Agreement which shall be required or desirable (in the opinion
of the Corporation or its counsel) in order to comply with any rule or
regulation promulgated or proposed under the Code by the Internal Revenue
Service.

12.           Incorporation of Employment Agreement by Reference.  The Option is
granted pursuant to the terms of the Employment Agreement, the terms of which
are incorporated herein by reference, and the Option shall in all respects be
interpreted in accordance with the Employment Agreement.  To the extent that any
conflict may exist between any term or provision of this Agreement and any term
or provision of the Employment Agreement (other than with respect to matters
that, pursuant to the Employment Agreement, may be altered in this Agreement),
such term or provision of the Employment Agreement shall control.

13.           Governing Law.  The validity, construction, interpretation and
effect of this Agreement shall exclusively be governed by and determined in
accordance with the laws of Texas (other than the conflicts-of-law or
choice-of-law rules thereof), except to the extent preempted by federal law,
which solely to the extent of such preemption shall govern.  Venue shall lie
only in the State and Federal Courts in and for the County of Harris, Texas, as
to all disputes arising under this Agreement, and such venue is hereby consented
to by the Corporation and Participant.

14.           Counterparts.  This Agreement may be executed in counterparts,
each of which, when taken together, shall constitute one original agreement.

15.           Amendment and Restatement.  This Agreement constitutes an
amendment, modification and restatement of the 2004 Option Agreement and sets
forth the entire understanding of the parties hereto with respect to the
Options, and supersedes the 2004 Option Agreement and all other prior
arrangements or understandings among the parties regarding such matters.

[SIGNATURE PAGE FOLLOWS]

 
 

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IN WITNESS WHEREOF, the Corporation has caused its duly authorized officer to
execute and attest to this Agreement, and to apply the corporate seal hereto,
and Participant has placed his or her signature hereon, effective as of the date
first written above.

 
CORPORATION:
       
FAR EAST ENERGY CORPORATION
             
By:
/s/ Andrew Lai
   
Andrew Lai, Chief Financial Officer
                   
PARTICIPANT:
       
By:
/s/ Michael R. McElwrath

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