--------------------------------------------------------------------------------

EXHIBIT 10.1
 
Amendment Letter

This amendment letter agreement (this “Letter”) is made this 21st day of May,
2012 among:

(i)
Far East Energy (Bermuda), Ltd., acting as Borrower (and any successors and
assigns in such capacity);

(ii)
Far East Energy Corporation, acting as Guarantor (and any successors and assigns
in such capacity); and

(iii)
Standard Chartered Bank, acting as Lender (and any successors and assigns in
such capacity).

We refer to the Facility Agreement dated as of 28 November 2011 (as amended, the
“Facility Agreement”), among Far East Energy (Bermuda), Ltd., Far East Energy
Corporation, acting as Guarantor and Standard Chartered Bank, acting as
Lender.  Capitalized terms used herein and not otherwise defined shall have the
meanings given to such terms in the Facility Agreement.

The parties hereto wish to execute this Letter in order to reflect their
agreement that, effective as of the Lender’s confirmation that the Lender’s
legal counsel has confirmed that all of the Guarantor’s and Borrower’s accounts
are subject to the Security (and the Account Charge Agreement has been amended
accordingly)):

A.
The Facility Agreement is amended as follows:

 
1.
effective on the delivery to the Lender by the Borrower or the Guarantor of: (x)
an extension notice and (y)(i) reasonable evidence of an offer in connection
with a potential strategic transaction involving the Guarantor, the proceeds of
which would be used to prepay in full the Loans; or (ii) a refinancing plan for
the Facility; in each case, in form and substance acceptable to the Lender
(acting in its sole discretion), and provided that, at the time of such
delivery, no Default is continuing, the Lender confirms that the requirements of
Section 6.2 (Extension option) shall have been met (such date on which all of
the terms and conditions of this Section A(1) are satisfied, the “Extension
Date”) and accordingly, the definition of “Termination Date”, as set forth in
Section 1.1 (Definitions) is amended and restated to read as follows:

“Termination Date” means the date which is 12 Months after the date of this
Agreement (except that, if the Termination Date would otherwise fall on a day
which is not a Business Day, it will instead be the immediately preceding
Business Day).”

 
2.
the Lender hereby waives its right of first refusal to lead arrange any long
term financing of the Project or any existing or future asset of the Guarantor
or the right to act as joint or sole lead manager or joint book-runner in
respect of any relisting or equity fundraising of the Guarantor, as set forth in
section 21.21 (Future Mandate) of the Facility Agreement (for the avoidance of
doubt, all parties recognize and reaffirm that any additional financial
indebtedness that is incurred or proceeds that are raised would, in accordance
with section 21.16(c) (Financial Indebtedness) of the Facility Agreement be used
to prepay in full the Loans);

 
 
 

--------------------------------------------------------------------------------

 
 
 
3.
the Lender hereby waives its rights under Section 22.18 (Ministry of Commerce
approval) until the Termination Date (then in-effect pursuant to paragraph A1
above); provided that, if the approval by the Ministry of Commerce, the
government of the PRC of the extension of the PSC as contemplated in the Fifth
Modification Agreement, is not received by June 30, 2012, the Borrower shall
procure that CUCBM provides the Lender with a written update by June 30, 2012
regarding the status of such approval, in form and substance acceptable to the
Lender (acting in its sole discretion), which shall include background as to:
(i) the reason for the delay in receiving such approval by such date; (ii)
CUCBM’s estimate of the date that such approval would be received; and (iii)
CUCBM’s view of the remaining steps that need to be taken for such approval to
be obtained.  The failure to provide an acceptable report shall result in an
immediate Default.

 
4.
Section 5.5 (Cancellation of Commitment) is hereby amended by adding at the end
of such section: “; provided, however, that if the Borrower has failed, within
nine months of the date of the first Utilisation under this Facility, to provide
to the Lender satisfactory evidence of approval by the Ministry of Commerce, the
government of the PRC of the extension of the PSC as contemplated in the Fifth
Modification Agreement, the Commitment which, at that time, is unutilised shall
be immediately cancelled.”.

 
5.
Clause (ii)(c) of Section 4.2(f) (Further conditions precedent) is hereby
amended by adding the following at the end of such clause:

“, the Borrower has provided to the Lender a written update regarding the status
of (x) any potential strategic transaction involving the Guarantor, the proceeds
of which would be used to prepay in full the Loans; and (y) the refinancing plan
for the Facility; in each case, in form and substance acceptable to the Lender
(acting in its sole discretion) and the Borrower may utilize the proceeds of
such draw to meet expenses only if at least 50% of such expenses are able to be
satisfied with funds from sources other than the drawdown proceeds.”

 
6.
Clause (h) of Section 19.3 (Information: miscellaneous) is hereby amended by
adding the following at the end of such clause:

“and an update on the status of the Borrower’s and the Guarantor’s cash
expenditures through to the Termination Date; provided, further, that as soon as
reasonably practicable, and, in any case, no later than May 30, 2012, the
Borrower and the Guarantor shall provide to the Lender a plan (acceptable in
form and substance to the Lender) for capital expenditure through to the
Termination Date”.

B.
As soon as reasonably practicable, and, in any case, no later than 30 days after
the date of this Letter, the Account Charge Agreement shall be amended (or a new
account control agreement shall be entered into) to provide for the following
(the amendments documentation will be prepared and circulated under separate
cover):

 
 
 

--------------------------------------------------------------------------------

 
 
 
1.
provision at the beginning of each month of account balance updates for all
accounts of the Borrower and the Guarantor, together with (i) projected fees and
expenses to be paid over the following month and the provision of a
reconciliation report reconciling such projected expenses to the actual expenses
incurred for the applicable month, which reconciliation report shall be provided
to the Lender within ten (10) Business Days following the last day of the month
covered by the account balance and projected expense report;

 
2.
creation of security over the balances in all accounts of the Borrower and the
Guarantor (other than accounts to the extent that the funds held therein are
used for payroll, the payment of employment withholding and related Taxes or the
funding of an employee benefit plan and other accounts to the extent in which a
lien thereon is prohibited by operation of law or as agreed to by the Lender)
(in addition to the security already created over the accounts currently subject
to the Account Charge Agreement); provided, however, that the Borrower may
continue to temporarily invest the balances in such revenue generating
investments (such investments would be allowed pursuant to a “permitted
investments” regime); and

 
3.
prior to the payment of any expense by the Borrower or the Guarantor (as
applicable), the Lender shall have the right to approve such expenses (such
approval not to be unreasonably withheld or delayed), unless such expenses are
either: (a) incurred by the Borrower or the Guarantor (as applicable) in the
ordinary course  of business consistent with past practice and (i) are
reasonably necessary in the Borrower’s or the Guarantor’s respective business or
(ii) relate to a contractual obligation of the Borrower or the Guarantor in
existence on or prior to the date hereof or (b) incurred by the Borrower or the
Guarantor (as applicable) in connection with the due diligence, negotiation or
execution of any strategic transaction involving the Borrower or the Guarantor
or any financing or equity fund raising of the Borrower or the Guarantor and
such expenses are reasonably determined to be in the best interests of the
Borrower or the Guarantor; provided that from and after the date hereof, without
the approval of the Lender (such approval not to be unreasonably withheld or
delayed) such expenses incurred under this subclause 3(b) shall not exceed the
greater of U.S.$ 250,000 each calendar month and an average of U.S.$ 250,000
during any three calendar month period; provided further that, notwithstanding
the foregoing, the Borrower or the Guarantor (as applicable) may pay such
expenses if the Borrower shall provide to the Lender a report that is accepted
by the Lender (acting reasonably) reflecting that the Group has sufficient
liquidity to meet its reasonably expected expenses through the earlier of the
Termination Date and the date of the consummation of any strategic transaction.

C.
Subject to terms and conditions of this Section C, the parties hereby agree that
in consideration of the amendments above, a one-time amendment fee of U.S.$
800,000 (the “Amendment Fee”). The Amendment Fee will be due on the date hereof
and will be payable as follows:

 
 
1.
U.S.$ 300,000  of the Amendment Fee will be payable within 10 days of the date
hereof and;

 
2.
the remainder of the Amendment Fee will be payable on the the later of (i) the
Extension Date and (ii) the earlier of:

 
a.
August 30, 2012;

 
b.
the date that any additional amount is drawn under the Facility Agreement other
than the payment described in paragraph C(1) above, with the proceeds of such
draw; and

 
c.
the date that amounts are drawn under any third party financing pursuant to
section 21.16(c) (Financial Indebtedness) of the Facility Agreement, with the
proceeds of the first draw of such financing; and

 
 

--------------------------------------------------------------------------------

 

 
3.
the Borrower or Guarantor may make such payments as cash payments via wire
transfer to the Lender; provided, however, to the extent that the Amendment Fee
is not paid on the relevant due date by the Borrower or Guarantor through a cash
payment, such amount due will be deemed drawn from the then remaining
un-cancelled, undrawn Commitment available; provided, further, that, to the
extent that any relevant condition precedent to make such payment has not been
met, the Parties agree to waive such condition to make such drawing.

This Letter may be executed in counterparts, all of which together shall
constitute a single instrument.  Additionally, any party hereto may execute this
Letter by facsimile or other electronic means, and any counterpart so executed
shall be treated for all purposes as the original signature of the relevant
party.

The Facility Agreement and the other Finance Documents shall remain in full
force and effect and are hereby ratified and confirmed in all respects.

This Letter shall be governed by and construed in accordance with the laws of
the State of New York, and the other provisions of Section 12 (Governing Law and
Enforcement) of the Facility Agreement are hereby incorporated herein as if set
forth in this Letter.
 
 
 

--------------------------------------------------------------------------------

 
 

/s/ Michael R. McElwrath  
for and on behalf of Far East Energy (Bermuda), Ltd., acting as Borrower
 
Name:
Michael R. McElwrath
 
Title:
Chairman
        /s/ Michael R. McElwrath  
for and on behalf of Far East Energy Corporation, acting as Guarantor
 
Name:
Michael R. McElwrath
 
Title:
Chief Executive Officer and President
        /s/ Olivier Mussat  
for and on behalf of Standard Chartered Bank, acting as Lender
 
Name:
Olivier Mussat
 
Title:
Acting Co-Head, Director Oil & Gas project Finance
 

 
 

--------------------------------------------------------------------------------