Exhibit
10.63
 
 FAR
EAST ENERGY CORPORATION
 
 AMENDED
AND RESTATED
 NONQUALIFIED
STOCK OPTION AGREEMENT
 
 Far East
Energy Corporation (the "Company") and Zhendong "Alex"
Yang ("Optionee") hereby
agree to amend and restate the stock option agreement previously entered into
between the Company and Optionee on December 1, 2003, a copy of which is
attached hereto (the "Original
Option Agreement").  This amendment and restatement is made
solely with respect to those Options which vested after December 31, 2004 and
the terms of the Original Option Agreement  shall remain in effect
with respect to all Options that vested prior to January 1, 2005.
  
 General
Information
 
 Name:
              Zhendong
      "Alex" YangAward
      Date:
              December
      1, 2003Affected
      Options
              480,000Expiration
      Date for the Affected Options:
              December
      31, 2008
 
 
  
   
  FAR EAST
ENERGY CORPORATION
 AMENDED
AND RESTATED
 NONQUALIFIED
STOCK OPTION AGREEMENT
 
 THIS
AMENDED AND RESTATED NONQUALIFIED STOCK OPTION AGREEMENT (this "Agreement") is made and
entered into as of this 27th day of
December, 2007, by and between FAR EAST ENERGY CORPORATION, a Nevada corporation
(the "Company"), and
Zhendong "Alex" Yang ("Optionee").
 
 WHEREAS,
the Company and the Optionee previously entered into a Stock Option Agreement
(the "Original Option Agreement") dated as of December 1, 2003 setting forth the grant of options to
purchase 800,000 shares of common stock of the Company, par value $0.001 per
share (the "Common
Stock") at an exercise price of per share of $0.65, in consideration of
Optionee's services to the Company beginning on September 15, 2002;
 
 WHEREAS,
the Optionee entered into an Employment Agreement (as hereinafter amended,
restated and modified from time to time, the "Employment Agreement") on
November 1, 2003 with the Company, and in connection therewith, entered into the
Original Option Agreement;
 
 WHEREAS,
the Original Option Agreement constitutes Exhibit A to the Employment Agreement
and is incorporated therein by reference;
 
 WHEREAS,
the Company and Optionee acknowledge that  320,000 shares subject to
this Option vested on or before December 31, 2004, and that 480,000 shares
subject to this Option vested on or after January 1, 2005 (the "Affected
Options");
 
 WHEREAS,
the terms of the 320,000 options that vested prior to December 31, 2004 shall
remain unmodified and are governed in their entirety by the Original Option
Agreement ;
 
 WHEREAS,
the Optionee understands that the 480,000 options that vested after December 31,
2004 are discounted Options subject to  Section 409A ("Section 409A") of the U.S.
Internal Revenue Service Code (the "Code") and that in order to
avoid the adverse tax consequences thereunder the Affected Options must be
brought into compliance with Section 409A;
 
 WHEREAS,
the Company and Optionee have elected to bring the Affected Options into
compliance by establishing a payment schedule that complies with Section 409A
such that the Affected Options will become exercisable January 2, 2008 and any
Affected Options which have not been exercised by December 31, 2008 shall
automatically forfeit;
 
 WHEREAS,
by executing this Agreement, the Company and Optionee desire to amend, replace
and supersede the Original Option Agreement with respect to the Affected
Options; and
 
 WHEREAS,
upon its execution, this Agreement shall hereafter constitute Exhibit B to the
Employment Agreement and is incorporated therein by reference.
 
 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.           Non-Qualified Stock Option
to Purchase Shares.
 
 (a)           Number of Affected Option
Shares and Option Price.  The Company has granted the Affected
Options as consideration for Optionee's past and future services to the Company
as a non-qualified stock option (the "Option"), to purchase shares
of the Company's Common Stock, par value $0.001 per share (the "Option Shares"), which are
subject to Section 409A of the Code and which have an exercise price of $0.65
per share ("Option
Price").
 
 (b)           Exercise
Date.  To comply with Section 409A the Affected Options shall
be exercisable on a fixed date, January 2, 2008 and any Affected Options that
are not exercised before January 1, 2009 shall automatically
forfeit.
 
 (c)           Vesting
Schedule.  The Affected Options are fully (100%)
vested.
 
 (d)           Optionee
hereby (i) releases and surrenders to the Company 480,000 shares of 800,000
shares of Common Stock subject to the Original Option Agreement and (ii)
acknowledges and agrees that the from and after the date hereof the Original
Option Agreement shall represent an option to purchase, subject to the terms and
conditions of the Original Option Agreement, 320,000 shares of Common Stock and
that Optionee.  Except as provided in this Section 1(d), the terms and
conditions of the Original Option Agreement shall remain in full force and
effect.
 
 2.           Manner of Exercise and Terms
of Payment.  The Affected Option may be exercised in whole or
in part, subject to the limitations set forth in this Agreement, upon delivery
to the Company of timely written notice of exercise, accompanied by full payment
of the Option Price for the Option Share with respect to which the Option is
exercised.  The Option Price may be paid by delivering a certified
check or wire transfer of immediately available funds to the order of the
Company.  The person entitled to the shares so purchased shall be
treated for all purposes as the holder of such shares as of the close of
business on the date of exercise and certificates for the shares of stock so
purchased shall be delivered to the person so entitled within a reasonable time,
not exceeding thirty (30) days, after such exercise.
 
 3.           Rights as
Stockholder.  Optionee or a permitted transferee of the Option
shall have no rights as a stockholder of the Company with respect to any shares
of common stock subject to such Option prior to his or her exercise of the
Option.
 
 4.           Adjustment of Purchase Price
and Number of Shares.  The number and kind of securities
purchasable upon the exercise of this Affected Option and the Option Price shall
be subject to adjustment from time to time, as provided in Schedule A attached
hereto.
 
 5.           Investment
Representation.  Optionee represents and warrants to the
Company that Optionee is acquiring this Option and the Option Shares for
Optionee's own account for the purpose of investment and not with a view toward
resale or other distribution thereof in violation of the Securities Act of 1933,
as amended ("1933
Act").  Optionee acknowledges that the effect of the
representations and warranties is that the economic risk of any investment in
the Option and Option Shares must be borne by the Optionee for an indefinite
period of time.  This representation and warranty shall be deemed to
be a continuing representation and warranty and shall be in full force and
effect upon such exercise of the Option granted hereby.
 
 6.           Exercisability.  The
Affected Option shall be exercisable only by Optionee, subject to the terms
herein, during his lifetime or by his assigns, heirs, executors or
administrators, as the case may be.  The Option granted hereunder and
the shares of Common Stock underlying the Affected Option may only be assigned
in compliance with Section 7 herein and applicable securities laws.
 
 7.           Non-Transferability.
 
 (a)           Optionee
shall not sell, transfer, assign, pledge for a loan, margin, hypothecate or
exchange the Affected Option or the Option Shares, except pursuant to the laws
of descent, for a period of two (2) years from the date of grant.
 
 (b)           Optionee
recognizes that the Option Shares received pursuant to this Agreement will be
subject to various restrictions on sale and/or transfer, including but not
limited to, the restrictions imposed by Rule 144 under the 1933
Act.  Notwithstanding any rights that Optionee may possess under the
1933 Act and any applicable state securities laws, Optionee hereby agrees that
he or she shall not be entitled, and the Company shall be under no obligation,
to remove the resale restriction from this Option.  Optionee
additionally agrees that the Company is under no obligation to remove the resale
restriction from any number of Option Shares exceeding ten percent (10%) of the
average weekly trading volume in the Company's securities during the ninety (90)
days preceding the intended sale.
 
 8.           Miscellaneous.
 
 (a)           Amendment and Restatement;
Termination of Other Agreements.  This Agreement constitutes an
amendment, modification and restatement of the Original Option
Agreement  and  sets forth the entire understanding of the
parties hereto with respect to the Affected Option and Option Shares, and
supersedes the Original Option Agreement  with  respect to
the Affected Options and all other prior arrangements or understandings among
the parties regarding such matters.
 
 (b)           Notices.  Any
notices required hereunder shall be deemed to be given upon the earlier of the
date when received at, or (i) the third business day after the date when sent by
certified or registered mail, (ii) the next business day after the date sent by
guaranteed overnight courier, or (iii) the date sent by telecopier or delivered
by hand, in each case, to the addresses set forth below:
  If to the
      Company:
                Far East Energy
      Corporation363 N. Sam Houston
      ParkwaySuite 380Houston, TX
      77060Attention:  Michael
      R. McElwrathWith
      copies to:
                Baker
      & McKenzie LLP2300 Trammell Crow
      Center2001 Ross
      AvenueDallas, Texas
      75201Attn:  W.
      Crews LottIf
      to the Optionee:
                Zhendong
      "Alex" Yang13634 Cabrera
      CourtHouston,
      Texas 77083
 or to
such other addresses as the parties may specify in writing.
 
 (c)           Amendments and
Waivers.  The provisions of this Agreement may not be amended
or terminated unless in a writing signed by the Optionee and the
Company.
 
 (d)           Binding
Effect.  This Agreement will bind and inure to the benefit of
the respective successors (including any successor resulting from a merger or
similar reorganization), assigns, heirs, and personal representatives of the
parties hereto.
 
 (e)           Governing
Law.  This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Texas.  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 parties hereto.
 
 (f)           Counterparts.  This
Agreement may be executed in any number of counterparts, each of which shall be
considered to be an original instrument and to be effective as of the date first
written above.  Each such copy shall be deemed an original, and it
shall not be necessary in making proof of this Agreement to produce or account
for more than one such counterpart.
 
 (g)           Interpretation.  Unless
the context of this Agreement clearly requires otherwise, (i) references to
the plural include the singular, the singular the plural, the part the whole,
(ii) references to one gender include all genders, (iii) "or" has the
inclusive meaning frequently identified with the phrase "and/or" and (iv)
"including" has the inclusive meaning frequently identified with the phrase "but
not limited to."  The section and other headings contained in this
Agreement are for reference purposes only and shall not control or affect the
construction of the Agreement or the interpretation thereof in any
respect.
 
 
 [SIGNATURE
PAGE FOLLOWS]
 
  
  IN
WITNESS WHEREOF, the undersigned have executed, or have caused this Agreement to
be executed, as of the day and year first above written.
   FAR
      EAST ENERGY CORPORATION
              
              OPTIONEEBy:
              /s/Michael
      R. McElwrath
              
              /s/Zhengdong
      "Alex" YangMichael
      R. McElwrath
              
              Zhengdong
      "Alex" YangPresident
  [Signature
page to Amended and Restated Nonqualified Stock Option
Agreement]
  SCHEDULE
A
 
 Adjustment of Purchase Price
and Number of Shares
 
 1.           Adjustment.  The
number and kind of securities purchasable upon the exercise of this Affected
Option and the Option Price 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 this Affected
Option remains outstanding and unexpired, in case of (i) any reclassification or
change of outstanding securities issuable upon exercise of this Affected 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
Affected Option), (ii) any consolidation or merger of the Company with or into
another corporation (other than a merger with another corporation in which the
Company 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 Affected Option), or (iii) any sale or transfer to another
corporation of the property of the Company as an entirety or substantially as an
entirety, the Company, or such successor or purchasing corporation, as the case
may be, shall without payment of any additional consideration therefor, execute
a new Affected Option providing that the holder of this Affected Option shall
have the right to exercise such new Affected Option (upon terms not less
favorable to the holder than those then applicable to this Affected Option) and
to receive upon such exercise, in lieu of each share of Common Stock theretofore
issuable upon exercise of this Affected 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 Affected Option shall provide for adjustments
which shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Section 1 of Schedule A.  The provisions of this
subsection 1(a) shall similarly apply to successive reclassifications, changes,
consolidations, mergers, sales and transfers.
 
 (b)           Subdivision or Combination
of Shares.  If the Company at any time while this Affected
Option remains outstanding and unexpired, shall subdivide or combine its Capital
Stock, the Option Price shall be proportionately reduced, in case of subdivision
of such shares, as of the effective date of such subdivision, or, if the Company
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 the Company 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 Company at any time while this Affected
Option is outstanding and unexpired shall pay a dividend in shares of, or make
other distribution of shares of, its Capital Stock, then the Option Price shall
be adjusted, as of the date the Company 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 Option Price in
effect immediately prior to such payment or other distribution by a fraction (a)
the numerator of which shall be the total number of shares of Capital Stock
outstanding immediately prior to such dividend or distribution, and (b) 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 subsection 1(c) shall not apply under any of the
circumstances for which an adjustment is provided in subsection 1(a) or
1(b).
 
 (d)           Liquidating Dividends,
Etc.  If the Company at any time while this Affected 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 Company's assets (other
than under the circumstances provided for in the foregoing subsections (a)
through (c)), the holder of this Affected 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
Option Price, 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 this
Affected 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 of
Directors.
 
 2.           Notice of
Adjustments.  Whenever any of the Option Price or the number of
shares of Common Stock purchasable under the terms of this Affected Option at
that Option Price shall be adjusted pursuant to Section 1 hereof, the Company
shall promptly make a certificate signed by its 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 on which the Company's
Board of Directors made any determination hereunder), and the Option Price and
number of shares of Common Stock purchasable at that Option 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
this Affected Option.
  
  NOTICE OF
EXERCISE*
 
 (To be
signed only upon exercise of Affected Option)
 
 TO: Far
East Energy Corporation
 
 The
undersigned, the owner of Affected Option to purchase 480,000 shares of Common
Stock of Far East Energy Corporation, a Nevada corporation ("Far East"), hereby
irrevocably elects to exercise such Affected Option and herewith pays for the
shares by giving Far East a personal check or wire transfer in the amount of the
Option Price as specified in the Agreement.  The undersigned requests
that the certificates for such shares be delivered to them according to
instructions indicated below.
 
 DATED
this ___ day of _____________ 200__.
 
 
 By:Zhendong
      "Alex" Yang
 
 Instructions
for delivery:
  
 
 
 
 
 *No
Affected Option may be exercised prior to January 2, 2008 or after January 1,
2009.