ex10_65.htm


    
      

    

    
      Exhibit 10.65

      


      


      FAR
EAST ENERGY CORPORATION

      


      SECOND
AMENDED AND RESTATED

      NONQUALIFIED
STOCK OPTION AGREEMENT

      


      Far East
Energy Corporation (the "Company") and Thomas Williams
("Optionee") hereby
agree to amend and restate the stock option agreement previously entered into
between the Company and Optionee on February 24, 2004, a copy of which is
attached hereto (the "2004
Option Agreement").  This amendment and restatement is made
solely with respect to those Options which vested on or prior to December 31,
2004 and the terms of that certain Third Amended and Restated Nonqualified Stock
Option Agreement entered into between the Company and the Optionee, as amended
from time to time, shall be in effect with respect to all Options that vested on
or after January 1, 2005.

       

      


      


      General
Information

      


      
        
          
            
              	 	
                      Name:

                    	
                      Thomas
      Williams

                    
	 	 
      	 
      
	 	
                      Award
      Date:

                    	
                      February
      24, 2004

                    
	 	 
      	 
      
	 	
                      Options
      Subject to this Agreement

                    	
                      100,000

                    
	 	 
      	 
      
	 	
                      Exercise
      Price for the Options:

                    	
                      $2.00

                    
	 	 
      	 
      
	 	
                      Expiration
      Date:

                    	
                      February
      24, 2014

                    


            

          

        

      


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      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 "Company"), and
Thomas Williams ("Optionee").

      


      WHEREAS,
the Company and Optionee previously entered into a Stock Option Agreement (the
"2004 Option Agreement")
dated as of February 24, 2004 setting forth the grant of options to purchase
400,000 shares of common stock of the Company, par value $0.001 per share (the
"Common
Stock");

      


      WHEREAS,
the Company and Optionee entered into an Amended and Restated Stock Option
Agreement (the "2007
Option Agreement") dated
December 27, 2007, solely with respect to 300,000 of the Option Shares, which
vested on or after January 1, 2005 (the "Affected Options"), in order
to bring such Affected Options into compliance with Section 409A of the U.S.
Internal Revenue Code of 1986, as amended;

      


      WHEREAS,
the Company and Optionee desire to extend expiration of the Exercise Period for
the Options to purchase 100,000 shares of Common Stock that are not Affected
Options (the "Original
Options") under the 2004 Option Agreement from February 24, 2009 to
February 24, 2014; and

      


      WHEREAS,
by executing this Agreement, the Company and Optionee desire to amend, replace
and supersede the 2004 Option Agreement.

      


      NOW,
THEREFORE, in consideration of the premises and the covenants contained herein,
and other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged, and intending to be legally bound, it is agreed as
follows:

      


      
        	
                 
      

              	
                1.

              	
                Non-Qualified Stock
      Option to Purchase Shares.

              


      

      


      (a)           Number of Option Shares and
Option Price.  The Company granted the Original Options to
Optionee under the 2004 Option Agreement as non-qualified stock options (the
"Option"), to purchase
the shares of the Company's Common Stock (the "Option Shares"), which have an
exercise price of $2.00  per share ("Option Price").

      


      (b)           Exercise
Period.  The Original Options shall be exercisable, in whole or
in part, subject to the vesting schedule and other terms set forth in this
Agreement, until February 24, 2014 (the "Exercise
Period").

      


      (c)           Vesting
Schedule.  As of the date of the Agreement, the Original
Options are fully (100%) vested.

      


      2.         
  Manner of
Exercise and Terms of Payment.  The 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 Shares 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.  Unless this
Option has expired, a new Option of like tenor and for such number of shares as
the holder of this Option shall direct, representing in the aggregate the right
to purchase a number of shares with respect to which this Option shall not have
been exercised, shall also be issued to the holder of this Option within such
time.


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      


      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 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
Original Options 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 Original Options granted
hereunder and the Option Shares underlying the Original Options may only be
assigned in compliance with Section 7 herein and applicable securities
laws.

      


      7.    
       Non-Transferability.  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 2004 Option Agreement and sets
forth the entire understanding of the parties hereto with respect to the
Original Options and Option Shares, and supercedes the 2004 Option Agreement and
all 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 Corporation

              


      

      363 N.
Sam Houston Parkway East

      Suite
280

      Houston,
TX 77060

      Attention:  Michael
R. McElwrath

      


      
        	
                 
      

              	
                With
      copies to:

              	
                Baker
      & McKenzie LLP

              


      

      2300
Trammell Crow Center

      2001 Ross
Avenue

      Dallas,
Texas 75201

      Attn: W.
Crews Lott


      
        
           


        

        
           


          
            

          

        

        
           


        

      

       

      
        	
                 
      

              	
                If
      to the Optionee:

              	
                Thomas
      Williams

              


      

      1030 West
25th Street

      Houston,
Texas 77008

      


      or to
such other addresses as the parties may specify in writing.

      


      (c)           Amendments and
Waivers.  The provisions of this Agreement may 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, (a) references to
the plural include the singular, the singular the plural, the part the whole,
(b) references to one gender include all genders, (c) "or" has the
inclusive meaning frequently identified with the phrase "and/or" and (d)
"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.

      


      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

                  	
                    OPTIONEE

                  
	 
      	 
      
	 
      	 
      
	 
      	 
      
	
                    By:
      /s/ Michael R.
      McElwrath

                  	
                    /s/ Thomas Williams

                  
	
                    Michael
      R. McElwrath

                  	
                    Thomas
      Williams

                  
	
                    Chief
      Executive Officer

                  	 
      


          

        

      


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      SCHEDULE
A

      


      Adjustment of Purchase Price
and Number of Shares

      


      1.            
Adjustment.  The
number and kind of securities purchasable upon the exercise of each Original
Option and the Option Price of such Original Options 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 an Original Option
remains outstanding and unexpired, in case of (i) any reclassification or change
of outstanding securities issuable upon exercise of such Original 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 such
Original 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 such Original 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 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 such Original Option) and to receive upon such exercise, in
lieu of each share of Common Stock theretofore issuable upon exercise of this
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 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 an Original 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 an Original 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 an Original 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 such Original 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 of such Original 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 an Original 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 of an Original
Option or the number of shares of Common Stock purchasable under the terms of
such Original 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 such Original Option.


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      NOTICE OF
EXERCISE

      


      (To be
signed only upon exercise of Option)

      


      TO: Far
East Energy Corporation

      


      The
undersigned, the owner of Option to purchase ___________ shares of common stock,
par value $0.001 per share, of Far East Energy Corporation, a Nevada corporation
(the "Company"), hereby irrevocably elects to exercise such Option and herewith
pays for the shares by giving the Company a personal check or wire transfer in
the amount of the Option Price as specified in the Option.  The
undersigned requests that the certificates for such shares be delivered to them
according to instructions indicated below.

      


      DATED
this ___ day of _____________ 20___.

      


      


      


      
        
          
            
              	 
      	
                      By:

                    	 
      
	 
      	 
      	 
      


            

          

        

      

      


      


      Instructions
for delivery: