ex10_3.htm


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Exhibit
10.3

    


    THIRD
AMENDMENT TO

     

    AMENDED
AND RESTATED EMPLOYMENT AGREEMENT

     

    This Third Amendment to Amended and
Restated Employment Agreement (this "Amendment") is
entered this 7th day of
March, 2008 (the "Effective Date"), by
and between Far East Energy Corporation, a Nevada corporation (the "Company") and Michael
R. McElwrath (the "Executive").

     

     

    RECITALS

     

    WHEREAS, the Company and the Executive
entered into that certain Amended and Restated Employment Agreement dated
effective December 23, 2004 (as amended, the "Existing Agreement");
and

     

    WHEREAS, the Company and the Executive
desire to amend the Existing Agreement on the terms herein
provided.

     

    NOW, THEREFORE, in consideration of the
premises and mutual covenants and agreements of the parties herein contained,
the parties hereto agree as follows:

     

    ARTICLE
I

     

    Definitions

     

    Section
1.01. Capitalized
terms used in this Amendment that are not defined herein shall have the meanings
ascribed thereto by the Existing Agreement.

     

    ARTICLE
II

     

    Amendments

     

    Section
2.01. Section 5(d). Section
5(d) of the Existing Agreement is hereby amended and restated to read in its
entirety as follows:

     

    "(d)                      Good
Reason.  Executive may terminate his employment and the Term at
any time for Good Reason by giving written notice as provided in Section 5(e),
which shall set forth in reasonable detail the facts and circumstances
constituting Good Reason.  Notwithstanding the foregoing to the
contrary, for the termination of employment to be for Good Reason the
Executive's "Separation from
Service" (as defined in Section 409A of the Internal Revenue Code of
1986, as amended (the "Code"), and the Treasury Regulations promulgated
thereunder) must occur within two years following the initial existence of one
or more of the Good Reason conditions enumerated below.  "Good Reason" shall
mean the occurrence of any of the following during the Term without the
Executive's consent and without the same being corrected within thirty (30) days
after the Company being giving notice thereof:

    


    (i)    (A) the
Company materially reduces Executive's title, authority, duties or
responsibilities under Section 2, (B) Executive is not nominated and elected as
a member of the Board at any meeting of the stockholders called for the purpose
of electing directors of the Company or (C) Executive is removed as a member of
the Board by the action of the Board or the stockholders of the Company (in each
case, other than for Cause, death or Disability);

    


    (ii)    the Company
requires that the Executive report to a corporate officer or employee or any
other person or entity instead of reporting directly to the Board of
Directors;

    


    (iii)   the Company
materially reduces the Executive's authority over the budget over which the
Executive retains authority;

    


    (iv)   the Company fails
to pay any regular semi-monthly installment of Base Salary to
Executive;

    


    (v)    the Company
materially reduces Executive's Base Salary or the amount of any minimum Bonus
for which he is eligible pursuant to Section 3;

    


    (vi)   the Company
materially changes the geographic location of the performance of Executive's
duties;

    


    (vii)          the
Company breaches Section 11;

    


    (viii)         the
refusal to assume this Agreement by any successor or assign of the Company as
provided in Section 12; or

    


    (ix)    any other
action or inaction that constitutes a material breach by the Company of this
Agreement.”

    


    Section
2.02. Section 5(e). Section
5(e) of the Existing Agreement is hereby amended and restated to read in its
entirety as follows:

     

    "(e)           Notice of
Termination.  Any termination of this Agreement by the Company
(other than for Cause under Section 5(c)) or by Executive shall be communicated
in writing to the other party at least thirty (30) days before the date on which
such termination is proposed to take effect and any termination of this
Agreement by the Executive for Good Reason shall be communicated in writing to
the Company within ninety (90) days after the initial occurrence of the
applicable Good Reason condition or conditions.  Any termination of
this Agreement by the Company for Cause under Section 5(c) shall be communicated
in writing to the Executive and such termination shall be effective immediately
upon such notice.  With respect to any termination of this Agreement
by the Company for Cause or by the Executive for Good Reason, such notice shall
set forth in detail the facts and circumstances alleged to provide a basis for
such termination.  Notwithstanding the foregoing, if this Agreement is
being terminated by the Executive for Good Reason, the Company shall have thirty
(30) days during which it may remedy the Good Reason condition or conditions set
forth in the notice, and the date of the termination shall not be earlier than
the date ending on the thirtieth (30th) day of the "cure" period set forth in
Section 5(d) above, or, if sooner, the date the Company notifies the Executive
in writing that it will not make a correction."

    


    Section
2.03. Section
6(c).  The  paragraph immediately following Section
6(c)(v) of the Existing Agreement is hereby amended and restated to read in its
entirety as follows:

     

    "The
payment of the lump sum amount under Section 6(c)(i) shall be made on the date
ending on the expiration of ten business days following the earlier of the date
of the Executive's Separation of Service or the death of the Executive; provided
that notwithstanding the foregoing, to the extent any payment under this Section
6 is "nonqualified deferred compensation" and the Executive is considered a "Key
Employee" of the Company within the meaning of Section 409A of the Code and the
Treasury Regulations promulgated thereunder, then such payment shall be made on
the earlier of the date of the Executive's death or the date ending on the
expiration of sixth months and one (1) day following the date of the Executive's
Separation from Service. For purposes of this Agreement a Key Employee means a
"specified employee" as described under Section 409A of the Code and as
determined under the policy adopted by the Company. Within three years following
Executive's termination of employment, Executive or Executive's estate, heirs,
executors, administrators, or personal or legal representatives, as the case may
be, shall be entitled to exercise all options granted to him that are vested and
exercisable pursuant to this Agreement or otherwise and all such options not
exercised within such three year period shall be forfeited.  All
options and restricted stock that are not vested and exercisable pursuant to
this Agreement or otherwise as of the date of, or as a result of, Executive's
termination of employment shall be forfeited.  In the event of the
death or Disability of the Executive, then any payment due under this Section
6(c) shall be made to Executive's estate, heirs, executors, administrators, or
personal or legal representatives, as the case may be."


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


    ARTICLE
III

     

    Miscellaneous

     

    Section
3.01. Ratifications.  The
terms and provisions set forth in this Amendment shall modify and supersede all
inconsistent terms and provisions set forth in the Existing
Agreement.  Except as expressly modified and superseded by this
Amendment, the Company and the Executive each hereby (a) ratifies and confirms
the Existing Agreement, (b) agrees that the same shall continue in full force
and effect, and (c) agrees that the same are the legal, valid and binding
obligations of the Company and the Executive, enforceable against the Company
and the Executive in accordance with its respective terms.

     

    Section
3.02. Severability.  If,
for any reason, any provision of this Amendment is held invalid, illegal or
unenforceable such invalidity, illegality or unenforceability shall not affect
any other provision of this Amendment not held so invalid, illegal or
unenforceable, and each such other provision shall, to the full extent
consistent with law, continue in full force and effect.  In addition,
if any provision of  this Amendment shall be held invalid, illegal or
unenforceable in part, such invalidity, illegality or unenforceability shall in
no way affect the rest of such provision not held so invalid, illegal or
unenforceable and the rest of such provision, together with all other provisions
of this Amendment, shall, to the full extent consistent with law, continue in
full force and effect.  If any provision or part thereof shall be held
invalid, illegal or unenforceable, to the fullest extent permitted by law, a
provision or part thereof shall be substituted therefor that is valid, legal and
enforceable.

     

    Section
3.03. Headings.  The
headings of Sections are included solely for convenience of reference and shall
not control the meaning or interpretation of any of the provisions of this
Amendment.

     

    Section
3.04. Governing
Law.  This Amendment has been executed and delivered in the
State of Texas, and its validity, interpretation, performance and enforcement
shall be governed by the laws of Texas, without giving effect to any principles
of conflicts of law.

     

    Section
3.05. Withholding.  All
amounts paid pursuant to the Existing Agreement and this Amendment shall be
subject to withholding for taxes (federal, state, local or otherwise) to the
extent required by applicable law.

     

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

     

    Section
3.07. Waiver.  No
term or condition of the Existing Agreement or this Amendment shall be deemed to
have been waived, nor shall there be any estoppel against the enforcement of any
provision of this Amendment or the Existing Agreement except by written
instrument of the party charged with such waiver or estoppel.  No such
written waiver shall be deemed a continuing waiver unless specifically stated
therein, and each such waiver shall operate only as to the specific term or
condition waived and shall not constitute a waiver of such term or condition for
the future or as to any act other than that specifically waived.

     

    Section
3.08. Entire
Agreement.  The Existing Agreement and this Amendment,
together, contain the entire understanding between the parties hereto regarding
this subject except that this Amendment shall not affect or operate to reduce
any benefit or compensation inuring to Executive of a kind elsewhere provided
and not expressly provided for in the Existing Agreement or this
Amendment.

     

    [Remainder of page
intentionally left blank; signature page follows]


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    IN
WITNESS WHEREOF, the Company has caused its duly authorized officer or director
to execute and attest to this Amendment, and Executive has placed this signature
hereon, effective as of the date below.

     

    FAR
EAST ENERGY CORPORATION

     

    


    


    


    By:  /s/ John
Mihm                                                                           Date:  March 7,
2008

    Name:
John
Mihm                                                                           

    Title:   Director and Chairman of
Compensation Committee                                                                           

     

    EXECUTIVE:

     

    


    


    


    /s/ Michael R.
McElwrath                                                                               
Date:  March 7, 2008

    Michael
R. McElwrath