Document:

EX-10.2

Exhibit 10.2

FAR EAST ENERGY CORPORATION

2005 STOCK INCENTIVE PLAN

1. Purpose of the Plan

The purpose of the Plan is to (i) aid the Company and its Subsidiaries and Affiliates in
attracting, securing and retaining employees of outstanding ability, (ii) attract members to the
Board, (iii) attract consultants to provide services to the Company and its Subsidiaries and
Affiliates, as needed, and (iv) motivate such persons to exert their best efforts on behalf of the
Company and its Affiliates by providing incentives through the granting of Awards. The Company
expects that it will benefit from the added interest, which such persons will have in the welfare
of the Company as a result of their proprietary interest in the Company’s success.

2. Definitions

The following capitalized terms used in the Plan have the respective meanings set forth in
this Section:

(a) Act: The Securities Exchange Act of 1934, as amended, or any successor thereto.

(b) Affiliate: Any entity (i) 20% or more of the voting equity of which is owned or
controlled directly or indirectly by the Company, or (ii) that had been a business, division or
subsidiary of the Company, the equity of which has been distributed to the Company’s stockholders,
even if the Company thereafter owns less than 20% of the voting equity.

(c) Award: An Option, Stock Appreciation Right or Other Stock-Based Award granted
pursuant to the Plan.

(d) Award Agreement: Any written agreement, contract, or other instrument or document
evidencing an Award.

(e) Beneficial Owner or Beneficially Owned: As such term is defined in Rule 13d-3
under the Act (or any successor rule thereto).

(f) Board: The Board of Directors of the Company.

(g) Change of Control: The occurrence of any of the following events:

(i) any Person becomes the Beneficial Owner, directly or indirectly, of more than forty
percent (40%) of the combined voting power of the then-outstanding voting securities of the
Company entitled to vote generally in the election of directors (the “Outstanding
Company Voting Securities”); provided, however, that the following
acquisitions shall not constitute a Change of Control: (A) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company or any corporation
controlled by the Company, or (B) any acquisition by an entity pursuant to a reorganization,
merger or consolidation, unless such reorganization, merger or consolidation constitutes a
Change of Control under clause (ii) of this Section 2(g);

(ii) the consummation of a reorganization, merger or consolidation, unless following
such reorganization, merger or consolidation sixty percent (60%) or more of the combined
voting power of the then-outstanding voting securities of the entity resulting from such
reorganization, merger or consolidation entitled to vote generally in the election of
directors is then Beneficially Owned, directly or indirectly, by all or substantially all of
the individuals and entities who were the Beneficial Owners, respectively, of the
Outstanding Company Voting Securities immediately prior to such reorganization, merger or
consolidation;

(iii) the (i) approval by the stockholders of the Company of a complete liquidation or
dissolution of the Company or (ii) sale or other disposition (in one transaction or a series
of related transactions) of all or substantially all of the assets of the Company and its
Subsidiaries, unless the successor entity existing immediately after such sale or
disposition is then Beneficially Owned, directly or indirectly, by all or substantially all
of the individuals and entities who were the Beneficial Owners, respectively, of the
Outstanding Company Voting Securities immediately prior to such sale or disposition;

(iv) during any period of twenty-four months (not including any period prior to the
Effective Date), individuals who at the beginning of such period constitute the Board, and
any new director (other than (A) a director nominated by a Person who has entered into an
agreement with the Company to effect a transaction described in Sections 2(g)(i), (ii) or
(iii) of the Plan, (B) a director whose initial assumption of office occurs as a result of
either an actual or threatened election contest subject to Rule 14a-11 of Regulation 14A
promulgated under the Act or other actual or threatened solicitation of proxies or consents
by or on behalf of a Person other than the Board or (C) a director designated by any Person
who is the Beneficial Owner, directly or indirectly, of securities of the Company
representing 10% or more of the Outstanding Company Voting Securities) whose election by the
Board or nomination for election by the Company’s stockholders was approved in advance by a
vote of at least two-thirds (2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute at least a majority thereof; or

(v) the Board adopts a resolution to the effect that, for purposes hereof, a Change of
Control has occurred.

Notwithstanding the foregoing, the definition of Change of Control for any Award under the Plan
that consists of deferred compensation subject to Section 409A of the Code shall be deemed modified
to the extent necessary to comply with Section 409A of the Code.

(h) Code: The Internal Revenue Code of 1986, as amended, or any successor thereto.

(i) Committee: The Compensation Committee of the Board, or any successor thereto or
other committee designated by the Board to assume the obligations of the Committee hereunder, or if
no such committee shall be designated or in office, the Board.

(j) Company: Far East Energy Corporation, a Nevada corporation.

(k) Covered Employee: An employee of the Company or its Subsidiaries who may be
deemed to be a covered employee within the meaning of Section 162(m) of the Code.

(l) Disability: Inability to engage in any substantial gainful activity by reason of
a medically determinable physical or mental impairment which can be expected to result in death, or
can be expected to last for a continuous period of not less than 12 months. The determination
whether a Participant has suffered a Disability shall be made by the Committee based upon such
evidence as it deems necessary and appropriate. A Participant shall not be considered disabled
unless he or she furnishes such medical or other evidence of the existence of the Disability as the
Committee, in its sole discretion, may require.

(m) Effective Date: The date on which the Plan takes effect, as defined pursuant to
Section 27 of the Plan.

(n) Fair Market Value: On a given date, the arithmetic mean of the high and low
prices of the Shares as reported on such date on the Composite Tape of the principal national
securities exchange on which such Shares are listed or admitted to trading, or, if no Composite
Tape exists for such national securities exchange on such date, then on the principal national
securities exchange on which such Shares are listed or admitted to trading, or, if the Shares are
not listed or admitted on a national securities exchange, the arithmetic mean of the per Share
closing bid price and per Share closing asked price on such date as quoted on the National
Association of Securities Dealers Automated Quotation System (or such market in which such prices
are regularly quoted), or, if there is no market on which the Shares are regularly quoted, the Fair
Market Value shall be the value established by the Committee in good faith. If no sale of Shares
shall have been reported on such Composite Tape or such national securities exchange on such date
or quoted on the National Association of Securities Dealers Automated Quotation System on such
date, then the immediately preceding date on which sales of the Shares have been so reported or
quoted shall be used.

(o) ISO: An Option that is also an incentive stock option granted pursuant to Section
7(d) of the Plan.

(p) LSAR: A limited stock appreciation right granted pursuant to Section 8(d) of the
Plan.

(q) Other Stock-Based Awards: Awards granted pursuant to Section 9 of the Plan.

(r) Option: A stock option granted pursuant to Section 7 of the Plan.

(s) Option Price: The purchase price per Share of an Option, as determined pursuant
to Section 7(a) of the Plan.

(t) Participant: An individual who is selected by the Committee to participate in the
Plan pursuant to Section 5 of the Plan.

(u) Performance-Based Awards: Other Stock-Based Awards granted pursuant to Section
9(b) of the Plan.

(v) Person: As such term is used for purposes of Section 13(d)(3) or 14(d)(2) of the
Act (or any successor section thereto).

(w) Plan: The Far East Energy Corporation 2005 Stock Incentive Plan.

(x) Restricted Stock: Restricted stock granted pursuant to Section 9 of the Plan.

(y) Restricted Stock Unit: A restricted stock unit representing a right to acquire a
fixed number of Shares at a future date, granted pursuant to Section 9 of the Plan.

(z) Securities Act: The Securities Act of 1933, as amended, or any successor thereto.

(aa) Shares: Shares of common stock, par value $0.001 per Share, of the Company, as
adjusted pursuant to Section 10 of the Plan.

(bb) Stock Appreciation Right: A stock appreciation right granted pursuant to Section
8 of the Plan.

(cc) Subsidiary: A subsidiary corporation, as defined in Section 424(f) of the Code
(or any successor section thereto).

(dd) Termination of Service: A Participant’s termination of service with the Company,
its Subsidiaries and Affiliates. A Termination of Service of an employee of the Company or any
Subsidiary shall not be deemed to have occurred in the case of sick leave, military leave or any
other leave of absence, in each case approved by the Committee or in the case of transfers between
locations of the Company or its Subsidiaries. In the case of “specified employees” (as described
in Section 409A of the Code), distributions may not be made before the date which is six months
after the date of termination of service (or, if earlier, the date of death of the participant). A
specified employee is a “key employee” as defined in Section 416(i) of the Code without regard to
Paragraph (5), but only if the Company has any stock which is publicly traded on an established
securities market or otherwise.

3. Shares Subject to the Plan

The maximum number of Shares with respect to which Awards may be granted under the Plan shall
be 3,500,000 (subject to adjustment in accordance with the provisions of Section 10 hereof),
whether pursuant to ISOs or otherwise. Of that number, not more than 2,600,000 Shares (subject to
adjustment in accordance with the provisions of Section 10 hereof) will be available for grants
under the Plan of ISOs pursuant to Section 7(d) hereof, and not more than 900,000 Shares (subject
to adjustment in accordance with the provisions of Section 10 hereof) will be available for grants
under the Plan of unrestricted Shares, Restricted Stock, Restricted Stock Units or any Other
Stock-Based Awards pursuant to Section 9 hereof. The maximum number of Shares with respect to
which Awards of any and all types may be granted during a calendar year to any Participant shall be
limited, in the aggregate, to 1,500,000 (subject to adjustment in accordance with the provisions of
Section 10 hereof). The Shares may consist, in whole or in part, of authorized and unissued Shares
or treasury Shares, including Shares acquired by purchase in the open market or in private
transactions. If any Awards are forfeited, cancelled, terminated, exchanged or surrendered or such
Award is settled in cash or otherwise terminates without a distribution of Shares to the
Participant, any Shares counted against the number of Shares reserved and available under the Plan
with respect to such Award shall, to the extent of any such forfeiture, settlement, termination,
cancellation, exchange or surrender, again be available for Awards under the Plan.

4. Administration

(a) The Plan shall be administered by the Committee, which may delegate its duties and powers
in whole or in part to any subcommittee thereof. If necessary to satisfy the requirements of
Section 162(m) of the Code and/or Rule 16b-3 promulgated under the Securities Exchange Act of 1934,
the Committee shall consist solely of at least two individuals who are each “non-employee
directors” within the meaning of Rule 16b-3 under the Act (or any successor rule thereto), “outside
directors” within the meaning of Section 162(m) of the Code (or any successor section thereto) and
satisfy all applicable independence requirements set forth in any applicable stock exchange or
market or quotation system in which the Shares are then traded, listed or quoted. Any action
permitted to be taken by the Committee may be taken by the Board, in its discretion;
provided however that, to the extent required by any stock exchange or market or
quotation system on which the Shares are traded, listed or quoted, any Award approved by the Board
shall also have been approved by a majority of the Company’s independent directors (within the
meaning of such exchange or market or quotation system). The Committee may also delegate to a
committee consisting of employees of the Company the authority to authorize transfers, establish
terms and conditions upon which transfers may be made and establish classes of options eligible to
transfer options, as well as to make other determinations with respect to option transfers.

(b) The Committee is authorized to interpret the Plan, to establish, amend and rescind any
rules and regulations relating to the Plan, to make any other determinations that it deems
necessary or desirable for the administration of the Plan, and to take the following actions, in
each case subject to and consistent with the provisions of the Plan:

(i) to select Participants to whom Awards may be granted;

(ii) to determine the type or types of Awards to be granted to each Participant;

(iii) to determine the type and number of Awards to be granted, the number of Shares to
which an Award may relate, the terms and conditions of any Award granted under the Plan
(including, but not limited to, any exercise price, grant price, or purchase price, and any
bases for adjusting such exercise, grant or purchase price, any restriction or condition,
any schedule for lapse of restrictions or conditions relating to transferability or
forfeiture, exercisability, or settlement of an Award, and waiver or accelerations thereof,
and waivers of performance conditions relating to an Award, based in each case on such
considerations as the Committee shall determine), and all other matters to be determined in
connection with an Award;

(iv) to determine whether, to what extent, and under what circumstances an Award may be
settled, or the exercise price of an Award may be paid, in cash, Shares, other Awards, or
other property, or an Award may be cancelled, forfeited, exchanged, or surrendered;

(v) to prescribe the form of each Award Agreement, which need not be identical for each
Participant;

(vi) to correct any defect or supply any omission or reconcile any inconsistency in the
Plan and to construe and interpret the Plan and any Award, rules and regulations, Award
Agreement, or other instrument hereunder, in each case, in the manner and to the extent the
Committee deems necessary or desirable; and

(vii) to make all other decisions and determinations as may be required under the terms
of the Plan or as the Committee may deem necessary or advisable for the administration of
the Plan.

(c) Any decision of the Committee in the interpretation and administration of the Plan, as
described herein, shall lie within its sole and absolute discretion and shall be final, conclusive
and binding on all parties concerned (including, but not limited to, Participants and their
beneficiaries or successors). Determinations made by the Committee under the Plan need not be
uniform and may be made selectively among Participants, whether or not such Participants are
similarly situated.

(d) The Committee shall require payment of any amount it may determine to be necessary to
withhold for federal, state, local or other taxes as a result of the grant, vesting or the exercise
of an Award. With the approval of the Committee, the Participant may elect to pay a portion or all
of such withholding taxes by (i) delivery of Shares or (ii) having Shares withheld by the Company
from any Shares that would have otherwise been received by the Participant. The number of Shares
so delivered or withheld shall have an aggregate Fair Market Value on the date of the exercise of
an Award sufficient to satisfy the applicable withholding taxes. In addition, with the approval of
the Committee, a Participant may satisfy any additional tax that the Participant elects to have the
Company withhold by delivering to the Company or its designated representative Shares already owned
by the Participant or, in the case of Shares acquired through an employee benefit plan sponsored by
the Company or its Subsidiaries, Shares held by the Participant for more than six months.

(e) If the chief executive officer of the Company is a member of the Board, the Board by
specific resolution may constitute such chief executive officer as a committee of one which shall
have the authority to grant Awards of up to an aggregate of 200,000 Shares (subject to adjustment
in accordance with the provisions of Section 10 hereof) in each calendar year to Participants who
are not subject to the rules promulgated under Section 16 of the Act (or any successor section
thereto) or Covered Employees; provided, however, that such chief executive officer
shall notify the Committee of any such grants made pursuant to this Section 4.

5. Eligibility

Employees of the Company, its Subsidiaries and Affiliates and members of the Board, who are
from time to time responsible for, or contributes to, the management, growth and protection of the
business of the Company and its Affiliates, and consultants to the Company and its Subsidiaries,
are eligible to be granted Awards under the Plan. Participants shall be selected from time to time
by the Committee, in its sole discretion, from among those eligible, and the Committee shall
determine, in its sole discretion, the number of Shares to be covered by the Awards granted to each
Participant. Notwithstanding any provisions of the Plan to the contrary, an Award may be granted
to an employee or consultant, in connection with his or her hiring or retention prior to the date
the employee or consultant first performs services for the Company or a Subsidiary;
provided, however, that any such Award shall not become vested prior to the date
the employee or consultant first performs such services.

6. Limitations

No Award may be granted under the Plan after the tenth anniversary of the Effective Date, but
Awards theretofore granted may extend beyond that date.

7. Terms and Conditions of Options

Options granted under the Plan shall be, as determined by the Committee, non-qualified,
incentive or other stock options for federal income tax purposes, as evidenced by the related Award
Agreements, and shall be subject to the foregoing and the following terms and conditions and to
such other terms and conditions, not inconsistent therewith, as the Committee shall determine:

(a) Option Price. The Option Price per Share shall be determined by the Committee,
but shall not be less than 100% of the Fair Market Value of the Shares on the date an Option is
granted.

(b) Exercisability. Options granted under the Plan shall be exercisable at such time
and upon such terms and conditions as may be determined by the Committee, but in no event shall an
Option be exercisable more than ten years after the date it is granted.

(c) Exercise of Options. Except as otherwise provided in the Plan or in an Award
Agreement, an Option may be exercised for all, or from time to time any part, of the Shares for
which it is then exercisable. For purposes of Section 7 of the Plan, the exercise date shall be
the date the Company receives a written notice of exercise in accordance with the terms of the
Award Agreement and full payment for the Shares with respect to which the Option is exercised,
together with (i) any other agreements required by the terms of the Plan and/or Award Agreement or
as required by the Committee, and (ii) payment by the Participant of all payroll, withholding or
income taxes incurred in connection with such Option exercise (or arrangements for the collection
or payment of such tax satisfactory to the Committee are made). The purchase price for the Shares
as to which an Option is exercised shall be paid to the Company in full at the time of exercise at
the election of the Participant (A) in cash, (B) in Shares having a Fair Market Value equal to the
aggregate Option Price for the Shares being purchased and satisfying such other requirements as may
be imposed by the Committee; provided, that, such Shares have been held by the
Participant for no less than six months, (C) partly in cash and partly in such Shares, (D) through
the delivery of irrevocable instructions to a broker to deliver promptly to the Company an amount
equal to the aggregate Option Price for the Shares being purchased, or (E) through such other means
as shall be prescribed in the Award Agreement.

(d) ISOs. The Committee may grant Options under the Plan that are intended to be
ISOs. Such ISOs shall comply with the requirements of Section 422 of the Code (or any successor
section thereto). Unless otherwise permitted under Section 422 of the Code (or any successor
section thereto), no ISO may be granted to any Participant who at the time of such grant, owns more
than 10% of the total combined voting power of all classes of stock of the Company or of any
Subsidiary, unless (i) the Option Price for such ISO is at least 110% of the Fair Market Value of a
Share on the date the ISO is granted and (ii) the date on which such ISO terminates is a date not
later than the day preceding the fifth anniversary of the date on which the ISO is granted. Any
Participant who disposes of Shares acquired upon the exercise of an ISO either (i) within two years
after the date of grant of such ISO or (ii) within one year after the transfer of such Shares to
the Participant, shall notify the Company of such disposition and of the amount realized upon such
disposition. Notwithstanding Section 5 of the Plan, ISOs may be granted solely to employees of the
Company and its Subsidiaries.

(e) Exercisability Upon Termination of Service by Death or Disability. Upon a
Termination of Service by reason of death or Disability, the Option may be exercised within 180
days (or such other period of time not exceeding one year as is determined by the Committee at the
time of granting the Option) following the date of death or Termination of Service due to
Disability (subject to any earlier termination of the Option as provided by its terms), by the
Participant in the case of Disability, or in the case of death, by the Participant’s estate or by a
person who acquired the right to exercise the Option by bequest or inheritance, but in any case
only to the extent the Participant was entitled to exercise the Option on the date of his or her
Termination of Service by death or Disability. To the extent that he or she was not entitled to
exercise such Option at the date of his or her Termination of Service by death or Disability, or if
he or she doe not exercise such Option (which he or she was entitled to exercise) within the time
specified herein, the Option shall terminate. Notwithstanding anything to the contrary herein, the
Committee may at any time and from time to time prior to the termination of an Option, with the
consent of the Participant, extend the period of time during which the Participant may exercise his
or her Option following the date of Termination of Service due to death or Disability;
provided, however, that the maximum period of time during which an Option shall be
exercisable following the date of Termination of Service due to death or Disability shall not
exceed the original term of such Option as set forth in the Award Agreement and that
notwithstanding any extension of time during which an Option may be exercised, such Option, unless
otherwise amended by the Committee, shall only be exercisable to the extent the Participant was
entitled to exercise the Option on the date of Termination of Service due to death or Disability.
Any such extension shall be designed to conform to the requirements of Section 409A of the Code so
as to avoid the imposition of the additional income tax.

(f) Effect of Other Termination of Service. Upon a Termination of Service for any
reason (other than death or Disability), an unexercised Option may thereafter be exercised during
the period ending 90 days after the date of such Termination of Service, but only to the extent to
which such Option was vested and exercisable at the time of such Termination of Service.
Notwithstanding the foregoing, the Committee may, in its sole discretion, either by prior written
agreement with the Participant or upon the occurrence of a Termination of Service, accelerate the
vesting of unvested Options held by a Participant if such Participant’s Termination of Service is
without “cause” (as such term is defined by the Committee in its sole discretion) by the Company.

(g) Nontransferability of Stock Options. Except as otherwise provided in this Section
7(g), an Option shall not be transferable by the Participant otherwise than by will or by the laws
of descent and distribution, and during the lifetime of a Participant an Option shall be
exercisable only by the Participant. An Option exercisable after the death of a Participant or a
transferee pursuant to the following sentence may be exercised by the legatees, personal
representatives or distributees of the Participant or such transferee. The Committee may, in its
discretion, authorize all or a portion of the Options previously granted or to be granted to a
Participant, other than ISOs, to be on terms which permit irrevocable transfer for no consideration
by such Participant to any child, stepchild, grandchild, parent, stepparent, grandparent, spouse,
former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law or sister-in-law, including adoptive relationships, of the Participant, any trust in
which these persons have more than 50% of the beneficial interest, any foundation in which these
persons (or the Participant) control the management of assets, and any other entity in which these
persons (or the Participant) own more than 50% of the voting interests (“Eligible
Transferees”), provided that (i) the Award Agreement pursuant to which such
options are granted must be approved by the Committee, and must expressly provide for
transferability in a manner consistent with this Section 7(g) and (ii) subsequent transfers of
transferred Options shall be prohibited except those in accordance with the first sentence of this
Section 7(g). The Committee may, in its discretion, amend the definition of Eligible Transferees
to conform to the coverage rules of Form S-8 under the Securities Act (or any comparable or
successor registration statement) from time to time in effect. Following transfer, any such
Options shall continue to be subject to the same terms and conditions as were applicable
immediately prior to transfer. The events of Termination of Service of Sections 7(e) and 7(f)
hereof shall continue to be applied with respect to the original Participant, following which the
options shall be exercisable by the transferee only to the extent, and for the periods specified,
in Sections 7(e) and 7(f).

8. Terms and Conditions of Stock Appreciation Rights

(a) Grants. The Committee also may grant a Stock Appreciation Right, independent of
an Option, with respect to Shares that are traded or listed on an established stock exchange or
market or quotation system.

(b) Terms. The exercise price per Share of a Stock Appreciation Right shall be an
amount determined by the Committee but in no event shall such amount be less than the greater of
(i) the Fair Market Value of a Share on the date the Stock Appreciation Right is granted and (ii)
an amount permitted by applicable laws, rules, by-laws or policies of regulatory authorities or
stock exchanges or market or quotation systems. Each Stock Appreciation Right granted independent
of an Option shall entitle a Participant to exercise the Stock Appreciation Right in whole or in
part and, upon such exercise, to receive from the Company an amount equal to (i) the excess of (A)
the Fair Market Value on the exercise date of one Share over (B) the exercise price per Share,
times (ii) the number of Shares covered by the portion of the Stock Appreciation Right so
exercised. The date a notice of exercise is received by the Company shall be the exercise date.
Payment shall be made in Shares. Stock Appreciation Rights may be exercised from time to time upon
actual receipt by the Company of written notice of exercise stating the number of Shares with
respect to which the Stock Appreciation Right is being exercised.

(c) Limitations. The Committee may impose, in its discretion, such conditions upon
the exercisability or transferability of Stock Appreciation Rights as it may deem fit.

(d) Limited Stock Appreciation Rights. The Committee may grant LSARs that are
exercisable upon the occurrence of specified contingent events. Such LSARs may provide for a
different method of determining appreciation, may specify that payment will be made only in cash as
soon as practicable after the occurrence of the specified contingent event (but not later than
March 15 of the year following the year in which such contingent event occurs) and may provide that
any related Awards are not exercisable while such LSARs are exercisable. Unless the context
otherwise requires, whenever the term “Stock Appreciation Right” is used in the Plan, such term
shall include LSARs.

9. Other Stock-Based Awards

(a) Generally. The Committee, in its sole discretion, may grant Awards of
unrestricted Shares, Restricted Stock, Restricted Stock Units and other Awards that are valued in
whole or in part by reference to, or are otherwise based on the Fair Market Value of, Shares
(collectively, “Other Stock-Based Awards”). Such Other Stock-Based Awards shall be in such
form, and dependent on such conditions, as the Committee shall determine, including, without
limitation, the right to receive one or more Shares (or the equivalent cash value of such Shares)
upon the completion of a specified period of service, the occurrence of an event and/or the
attainment of performance objectives. Other Stock-Based Awards may be granted alone or in addition
to any other Awards granted under the Plan. Subject to the provisions of the Plan, the Committee
shall determine (i) to whom and when Other Stock-Based Awards will be made, (ii) the number of
Shares to be awarded under (or otherwise related to) such Other Stock-Based Awards, (iii) whether
such Other Stock-Based Awards shall be settled in cash, Shares or a combination of cash and Shares,
and (iv) all other terms and conditions of such Awards (including, without limitation, the vesting
provisions thereof).

(b) Performance-Based Awards. Notwithstanding anything to the contrary herein,
certain Other Stock-Based Awards granted under this Section 9 may be granted to Covered Employees
in a manner that will enable the Company to deduct any amount paid by the Company under Section
162(m) of the Code (or any successor section thereto) (“Performance-Based Awards”). A
Covered Employee’s Performance-Based Award shall be determined based on the attainment of one or
more pre-established, objective performance goals established in writing by the Committee, for a
performance period established by the Committee, (i) at a time when the outcome for that
performance period is substantially uncertain and (ii) not later than 90 days after the
commencement of the performance period to which the performance goal relates, but in no event after
25% of the relevant performance period has elapsed. The performance goals shall be based upon one
or more of the following criteria: (i) earnings before or after taxes (including earnings before
interest, taxes, depreciation and amortization); (ii) net income; (iii) operating income; (iv)
earnings per Share; (v) book value per Share; (vi) return on stockholders’ equity; (vii) expense
management; (viii) return on investment before or after the cost of capital; (ix) improvements in
capital structure; (x) profitability of an identifiable business unit or product; (xi) maintenance
or improvement of profit margins; (xii) stock price; (xiii) market share; (xiv) revenues or sales;
(xv) costs; (xvi) cash flow; (xvii) working capital; (xviii) changes in net assets (whether or not
multiplied by a constant percentage intended to represent the cost of capital); and (xix) return on
assets. The foregoing criteria may relate to the Company, one or more of its Affiliates,
Subsidiaries or one or more of its divisions, units, minority investments, partnerships, joint
ventures, product lines or products or any combination of the foregoing, and may be applied on an
absolute basis and/or be relative to one or more peer group companies or indices, or any
combination thereof, all as the Committee shall determine. In addition, to the degree consistent
with Section 162(m) of the Code (or any successor section thereto), the performance goals may be
calculated without regard to extraordinary items or accounting changes. The maximum amount of a
Performance-Based Award to any Covered Employee with respect to a fiscal year of the Company shall
be $1,000,000. The Committee shall determine whether, with respect to a performance period, the
applicable performance goals have been met with respect to a given Covered Employee and, if they
have, to so certify and ascertain the amount of the applicable Performance-Based Award. No
Performance-Based Awards will be paid for such performance period until such certification is made
by the Committee. The amount of the Performance-Based Award actually paid to a given Covered
Employee may be less than the amount determined by the applicable performance goal formula, at the
discretion of the Committee. The amount of the Performance-Based Award determined by the Committee
for a performance period shall be paid to the Covered Employee at such time as determined by the
Committee in its sole discretion after the end of such performance period; provided,
however, that a Covered Employee may, if and to the extent permitted by the Committee and
consistent with the provisions of Sections 162(m) and 409A of the Code, elect to defer payment of a
Performance-Based Award.

(c) Terms and Conditions of Restricted Stock and Restricted Stock Units.

(i) Grant. Each grant of Restricted Stock and Restricted Stock Units shall be
evidenced by an Award Agreement in form approved by the Committee. The vesting of a
Restricted Stock Award or Restricted Stock Unit granted under the Plan may be conditioned
upon the completion of a specified period of employment with the Company or a Subsidiary,
upon attainment of specified performance goals, and/or upon such other criteria as the
Committee may determine in its sole discretion.

(ii) Receipt of Restricted Stock. As soon as practicable after an Award of Restricted
Stock has been made to a Participant, there shall be registered in the name of such
Participant or of a nominee the number of Shares of Restricted Stock so awarded. Except as
provided in the applicable Award Agreement, no Shares of Restricted Stock may be assigned,
transferred or otherwise encumbered or disposed of by the Participant until such Shares have
vested in accordance with the terms of such Award Agreement. If and to the extent that the
applicable Award Agreement so provides, a Participant shall have the right to vote and
receive dividends on the Shares of Restricted Stock granted to him or her under the Plan.
Unless otherwise provided in the applicable Award Agreement, any Shares received as a
dividend on such Restricted Stock or in connection with a stock split of the Shares of
Restricted Stock shall be subject to the same restrictions as the Restricted Stock.

(iii) Payments Pursuant to Restricted Stock Units. Restricted Stock Units may not be
assigned, transferred or otherwise encumbered or disposed of by the Participant until such
Restricted Stock Units have vested in accordance with the terms of the applicable Award
Agreement. Upon the vesting of the Restricted Stock Unit, certificates for Shares shall be
delivered to the Participant or his legal representative on the last business day of the
calendar quarter in which such vesting event occurs or as soon thereafter as practicable
(but not later than March 15 of the calendar year following the year in which vesting
occurs), in a number equal to the Shares covered by the Restricted Stock Unit.

(iv) Effect of Termination of Service. Upon a Termination of Service for any reason,
the Participant shall only be entitled to the Restricted Stock or Restricted Stock Units
vested at the time of such Termination of Service, and the Participant’s unvested Restricted
Stock and Restricted Stock Units shall be forfeited. Notwithstanding the foregoing, the
Committee may, in its sole discretion, either by prior written agreement with the
Participant or upon the occurrence of a Termination of Service, accelerate the vesting of
unvested Restricted Stock or Restricted Stock Units held by the Participant if such
Participant’s Termination of Service is without “cause” (as such term is defined by the
Committee in its sole discretion) by the Company.

10. Adjustments Upon Certain Events

Notwithstanding any other provisions in the Plan to the contrary, the following provisions
shall apply to all Awards granted under the Plan:

(a) Generally. Subject to any required action by the stockholders of the Company, the
number and type of Shares covered by each outstanding Award, and the number and type of Shares
which have been authorized for issuance under the Plan but as to which no Awards have yet been
granted or which have been returned to the Plan upon cancellation, expiration or forfeiture of an
Award, as well as the exercise or purchase price per Share, as applicable, covered by outstanding
Awards, shall be proportionately adjusted for any increase or decrease in the number of issued
Shares resulting from a stock split, reverse stock split or combination or the payment of a stock
dividend (but only on the Company’s common stock) or reclassification of the Company’s common stock
or any other increase or decrease in the number of issued Shares effected without receipt of
consideration by the Company (other than increases pursuant to the issuance of Other Stock-Based
Awards under Section 9 of the Plan); provided, however, that the conversion of any
convertible securities of the Company shall not be deemed to have been effected without the receipt
of consideration. Any such adjustment shall be determined in good faith by the Committee to be
appropriate in order to prevent dilution or enlargement of the benefits or potential benefits
intended to be made available under the Plan, and the Committee’s determination in that respect
shall be final, binding and conclusive. Except as expressly provided herein, no issue by the
Company of shares of stock of any class, or securities convertible into shares of stock of any
class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number
or price of Shares subject to the Plan or an Award.

(b) Change of Control. In the event of a Change of Control, if the Committee makes no
provision for the assumption of outstanding Awards by the successor corporation, then the Award
Agreement shall provide whether (i) none, all or a portion of each Award shall vest, (ii) any
Option shall terminate as of a date fixed by the Committee which is at least 30 days after the
notice thereof to the Participant and shall give each Participant the right to exercise his or her
Option as to all or any part of the Shares, including Shares as to which the Option would not
otherwise be exercisable, or (iii) cause any Award outstanding as of the effective date of any such
event to be cancelled in consideration of a cash payment or grant of an alternative option or award
(whether by the Company or any entity that is a party to the transaction), or a combination
thereof, to the holder of the cancelled Award, provided that such payment and/or
grant are substantially equivalent in value to the fair market value of the cancelled Award as
determined by the Committee.

11. “Lockup” Agreement

The Committee may in its discretion specify upon granting an Award that upon request of the
Company or the underwriters managing any underwritten offering of the Company’s securities, the
Participant shall agree in writing that for a period of time (not to exceed 180 days) from the
effective date of any registration of securities of the Company, the Participant will not sell,
make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any
Shares issued pursuant to the exercise of such Award, without the prior written consent of the
Company or such underwriters, as the case may be.

12. Limitation of Liability

Each member of the Committee shall be entitled to, in good faith, rely or act upon any report
or other information furnished to him or her by any officer or other employee of the Company or any
Subsidiary or Affiliate, the Company’s independent certified public accountants, or other
professional retained by the Company to assist in the administration of the Plan. No member of the
Committee, nor any officer or employee of the Company acting on behalf of the Committee, shall be
personally liable for any action, determination, or interpretation taken or made in good faith with
respect to the Plan, and all members of the Committee and any officer or employee of the Company
acting on their behalf shall, to the extent permitted by law, be fully indemnified and protected by
the Company with respect to any such action, determination, or interpretation.

13. Amendments or Termination

(a) The Board or the Committee may terminate or discontinue the Plan at any time. The Board
or the Committee may amend, modify or alter the Plan at any time, but no amendment, modification or
alteration shall be made which, (a) without the approval of the stockholders of the Company, would
(except as is provided in Section 10 of the Plan), increase the total number of Shares reserved for
the purposes of the Plan, change the maximum number of Shares for which Awards may be granted to
any Participant or modify the Plan in any other way to the extent stockholder approval is required
by the rules of any stock exchange or market or quotation system on which the Shares are traded,
listed or quoted, or (b) without the consent of a Participant, would impair any of the rights or
obligations under any Award theretofore granted to such Participant under the Plan;
provided, however, that the Board or the Committee may amend or modify the Plan in
such manner as it deems necessary to permit the granting of Awards meeting the requirements of the
Code (including, but not limited to, Sections 162(m) to preserve the deductibility of Awards and
409A to comply with its requirements so as to ensure any amounts paid or payable hereunder are not
subject to the additional 20% income tax thereunder) or other applicable laws. Notwithstanding
anything to the contrary herein, neither the Committee nor the Board may amend, alter or
discontinue the provisions relating to Section 10(b) of the Plan after the occurrence of a Change
of Control.

(b) Except as provided in Section 10 of the Plan or expressly provided under the Plan, any
amendment, modification, termination or discontinuance of the Plan shall not affect Awards
previously granted, and such Awards shall remain in full force and effect as if the Plan had not
been amended, modified, terminated or discontinued, unless mutually agreed otherwise between the
Participant and the Company, which agreement shall be in writing and signed by the Participant and
the Company.

14. International Participants

The Committee may delegate to another committee, as it may appoint, the authority to take any
action consistent with the terms of the Plan, either before or after an Award has been granted,
which such other committee deems necessary or advisable to comply with any government laws or
regulatory requirements of a foreign country, including but not limited to, modifying or amending
the terms and conditions governing any Awards, or establishing any local country plans as sub-plans
to the Plan. In addition, under all circumstances, the Committee may make non-substantive
administrative changes to the Plan as to conform with or take advantage of governmental
requirements, statutes or regulations.

15. No Right to Continued Employment or Service

Neither the Plan nor the granting of an Award under the Plan shall impose any obligation on
the Company, a Subsidiary or any Affiliate to continue the employment or service of a Participant
or lessen or affect the Company’s, Subsidiary’s or Affiliate’s right to terminate the employment or
service of such Participant.

16. Not Compensation for Benefit Plans

No Award payable under the Plan shall be deemed salary or compensation for the purpose of
computing benefits under any benefit plan or other arrangement of the Company for the benefit of
its employees or directors unless the Company shall determine otherwise.

17. Unfunded Status of Awards

The Plan is intended to constitute an “unfunded” plan for incentive compensation. With
respect to any payments not yet made to a Participant pursuant to an Award, nothing contained in
the Plan or any Award shall give any such Participant any rights that are greater than those of a
general creditor of the Company; provided, however, that the Committee may
authorize the creation of trusts or make other arrangements to meet the Company’s obligations under
the Plan to deliver cash, Shares, other Awards, or other property pursuant to any Award, which
trusts or other arrangements shall be consistent with the “unfunded” status of the Plan unless the
Committee otherwise determines with the consent of each affected Participant.

18. Nonexclusivity of the Plan

Neither the adoption of the Plan by the Board nor its submission to the stockholders of the
Company for approval shall be construed as creating any limitations on the power of the Board to
adopt such other incentive arrangements as it may deem desirable, including, without limitation,
the granting of options and other awards otherwise than under the Plan, and such arrangements may
be either applicable generally or only in specific cases.

19. Successors and Assigns

The Plan shall be binding on all successors and assigns of the Company and a Participant,
including, without limitation, the estate of such Participant and the executor, administrator or
trustee of such estate, or any receiver or trustee in bankruptcy or representative of the
Participant’s creditors.

20. Nontransferability of Awards

Except as provided in Section 7(g) of the Plan, an Award shall not be transferable or
assignable by the Participant otherwise than by will or by the laws of descent and distribution.
During the lifetime of a Participant, an Award shall be exercisable only by such Participant. An
Award exercisable after the death of a Participant may be exercised by the legatees, personal
representatives or distributees of the Participant. Notwithstanding anything to the contrary
herein, the Committee, in its sole discretion, shall have the authority to waive this Section 20 or
any part thereof (except with respect to ISOs) to the extent that this Section 20 or any part
thereof is not required under the rules promulgated under any law, rule or regulation applicable to
the Company.

21. No Rights to Awards, No Stockholder Rights

No Participant or employee shall have any claim to be granted any Award under the Plan, and
there is no obligation for uniformity of treatment of Participants and employees. No Award shall
confer on any Participant any rights to dividends or other rights of a stockholder with respect to
Shares subject to an Award unless and until Shares are duly issued or transferred to the
Participant in accordance with the terms of the Award and, if applicable, the satisfaction of any
other conditions imposed by the Committee pursuant to the Plan.

22. No Fractional Shares

No fractional Shares shall be issued or delivered pursuant to the Plan or any Award, including
on account of any action under Section 10 of the Plan. In the case of Awards to Participants, the
Committee shall determine, in its discretion, whether cash, other Awards, scrip certificates (which
shall be in a form and have such terms and conditions as the Committee in its discretion shall
prescribe) or other property shall be issued or paid in lieu of such fractional Shares or whether
such fractional Shares or any rights thereto shall be forfeited or otherwise eliminated.

23. Compliance with Legal and Trading Requirements

The Plan, the granting and exercising of Awards thereunder, and the other obligations of the
Company under the Plan and any Award Agreement, shall be subject to all applicable federal, state
and foreign laws, rules and regulations, and to such approvals by any regulatory or governmental
agency as may be required. All certificates for Shares delivered under the Plan pursuant to any
Award shall be subject to such stock-transfer orders and other restrictions as the Committee may
deem advisable under the rules, regulations and other requirements of the Securities and Exchange
Commission, any stock exchange or market or quotation system upon which the Shares are then listed,
traded or quoted, and any applicable federal or state securities law, and the Committee may cause a
legend or legends to be put on any such certificates to make appropriate reference to such
restrictions. No Award granted hereunder shall be construed as an offer to sell securities of the
Company, and no such offer shall be outstanding, unless and until the Committee in its sole
discretion has determined that any such offer, if made, would comply with all applicable
requirements of the U.S. federal securities laws and any other laws to which such offer, if made,
would be subject. The Company, in its discretion, may postpone the issuance or delivery of Shares
under any Award until completion of such stock exchange or market or quotation system listing or
registration or qualification of such Shares or other required action under any state, federal or
foreign law, rule or regulation as the Company may consider appropriate, including the Securities
Act and the Act, and may require any Participant to make such representations and furnish such
information as it may consider appropriate in connection with the issuance or delivery of Shares in
compliance with applicable laws, rules and regulations. No provisions of the Plan shall be
interpreted or construed to obligate the Company to register any Shares under federal, state or
foreign law.

24. Severability

If any provision of the Plan is or becomes or is deemed invalid, illegal or unenforceable in
any jurisdiction, or would disqualify the Plan or any Award under any law deemed applicable by the
Committee, such provision shall be construed or deemed amended to conform to applicable laws or if
it cannot be construed or deemed amended without, in the determination of the Committee, materially
altering the intent of the Plan, it shall be stricken and the remainder of the Plan shall remain in
full force and effect.

25. Choice of Law

The Plan and all Award Agreements shall be governed by and construed in accordance with the
laws of the State of Texas applicable to contracts made and to be performed in the State of Texas
without regard to conflict of laws principles.

26. Conflict

To the extent the provisions of the Plan conflicts with the terms and conditions of any
written agreement between the Company and a Participant, the terms and conditions of such agreement
shall control.

27. Effectiveness of the Plan; Term

The Plan shall be effective upon its approval by the stockholders at the 2005 Annual Meeting
of stockholders of the Company. The Plan shall continue in effect for a term of ten (10) years
from the Effective Date unless sooner terminated under Section 13 of the Plan.EX-10.3

Exhibit 10.3

FAR EAST ENERGY CORPORATION

FORM OF NON-QUALIFIED STOCK OPTION AGREEMENT

FOR GOOD AND VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, Far East Energy
Corporation (the “Company”), a Nevada corporation, hereby grants to      (the
"Option Holder”), the option to purchase shares of the common stock, $0.001 par value per
share, of the Company (“Shares”), upon the terms set forth in this stock option agreement
(this “Agreement”):

WHEREAS, the Option Holder has been granted the following award in connection with his or her
retention to provide services to the Company, and the following terms reflect the Company’s 2005
Stock Incentive Plan (the “Plan”);

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

1. Defined Terms; Plan. Terms used but not defined herein shall have the same meaning
ascribed to such terms in the Plan. This Agreement and the grant herein is subject to the terms
and conditions herein and the terms and conditions of the applicable provisions of the Plan, the
terms of which are incorporated herein by reference.

2. Grant. The Option Holder is hereby granted an option (the “Option”) to
purchase      Shares (the “Option Shares”) pursuant to the Plan. The Option
is granted as of       (the “Date of Grant”). This Option shall not be treated
as an “incentive stock option” as defined in Section 422 of the Code.

3. Status of Option Shares. The Option Shares shall upon issue rank equally in all
respects with the other Shares.

4. Option Price. The purchase price for the Option Shares shall be, except as herein
provided, $      per Option Share, hereinafter sometimes referred to as the “Option
Price,” payable immediately in full upon the exercise of the Option.

5. Term of Option. The Option may be exercised only during the period (the
"Option Period”) set forth in Section 7 below and shall remain exercisable until the tenth
anniversary of the Date of Grant. Thereafter, the Option Holder shall cease to have any rights in
respect thereof.

6. Exercisability. Subject to the Option Holder’s continued service with the Company,
the Option will vest and become exercisable with respect to       % of the Option Shares on
each of the      ,      ,     ,      and      anniversaries of the Date of Grant, so
that the Option will be 100% vested and exercisable after the      anniversary of the Date of
Grant, as set forth in the following schedule:

	 	 	 	 	 	 	 	 	 
	Timeframe from Date of Grant

	 	

	 	

	 
	 	 	 	 	 	 	 	 
	(Vesting Date)

	 	Vesting
	 	Cumulative Vesting

	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	     , 20     (1 year)

	 	 	%	 	 	 	%	 
	 
	 	 	 	 	 	 	 	 
	     , 20     (2 years)

	 	 	%	 	 	 	%	 
	 
	 	 	 	 	 	 	 	 
	     , 20     (3 years)

	 	 	%	 	 	 	%	 
	 
	 	 	 	 	 	 	 	 
	     , 20     (4 years)

	 	 	%	 	 	 	%	 
	 
	 	 	 	 	 	 	 	 
	     , 20     (5 years)

	 	 	%	 	 	 	%	 

7. Exercise of Option. The Option may be exercised for all, or from time to time
any part, of the Option Shares for which it is then exercisable. The exercise date shall be the
date the Company receives a written notice of exercise signed by the Option Holder, specifying the
whole number of Option Shares in respect of which the Option is being exercised, accompanied by (a)
full payment for the Option Shares with respect to which the Option is exercised, in a manner
acceptable to the Company (which, at the discretion of the Company, shall include a broker assisted
exercise arrangement), of the Option Price for the Option Shares for which the Option is being
exercised and (b) payment by the Option Holder of all payroll, withholding or income taxes incurred
in connection with the Option exercise (or arrangements for the collection or payment of such tax
satisfactory to the Committee are made). The purchase price for the Shares as to which the Option
is exercised shall be paid to the Company in full at the time of exercise at the election of the
Option Holder (i) in cash, (ii) in Shares having a Fair Market Value equal to the aggregate Option
Price for the Shares being purchased and satisfying such other requirements as may be imposed by
the Committee; provided, that, such Shares have been held by the Option Holder for
no less than six months, (iii) partly in cash and partly in such Shares, or (iv) through the
delivery of irrevocable instructions to a broker to deliver promptly to the Company an amount equal
to the aggregate Option Price for the Shares being purchased. Anything to the contrary herein
notwithstanding, the Company shall not be obligated to issue any Option Shares hereunder if the
issuance of the Option Shares would violate the provision of any applicable law, in which event the
Company shall, as soon as practicable, take whatever action it reasonably can so that the Option
Shares may be issued without resulting in such violations of law.

8. Exercisability Upon Termination of Service by Death or Disability. Upon a
Termination of Service by reason of death or Disability, the Option may be exercised within 180
days following the date of death or Termination of Service due to Disability (subject to any
earlier termination of the Option as provided herein), by the Option Holder in the case of
Disability, or in the case of death, by the Option Holder’s estate or by a person who acquired the
right to exercise the Option by bequest or inheritance, but in any case only to the extent the
Option Holder was entitled to exercise the Option on the date of his or her Termination of Service
by death or Disability. To the extent that the Option Holder was not entitled to exercise the
Option at the date of his or her Termination of Service by death or Disability, or if he or she doe
not exercise the Option (which he or she was entitled to exercise) within the time specified
herein, the Option shall terminate. Notwithstanding anything to the contrary herein, the Committee
may at any time and from time to time prior to the termination of the Option, with the consent of
the Option Holder, extend the period of time during which the Option Holder may exercise his or her
Option following the date of Termination of Service due to death or Disability; provided,
however, that the maximum period of time during which the Option shall be exercisable
following the date of Termination of Service due to death or Disability shall not exceed the
original term of the Option and that notwithstanding any extension of time during which the Option
may be exercised, the Option, unless otherwise amended by the Committee, shall only be exercisable
to the extent the Option Holder was entitled to exercise the Option on the date of Termination of
Service due to death or Disability. Any such extension shall be designed to conform to the
requirements of Section 409A of the Code so as to avoid the imposition of the additional income
tax.

9. Effect of Other Termination of Service. Upon a Termination of Service for any
reason (other than death or Disability), the unexercised Option may thereafter be exercised during
the period ending 90 days after the date of such Termination of Service, but only to the extent to
which the Option was vested and exercisable at the time of such Termination of Service.
Notwithstanding the foregoing, the Committee may, in its sole discretion, either by prior written
agreement with the Option Holder or upon the occurrence of a Termination of Service, accelerate the
vesting of unvested Options held by the Option Holder if the Option Holder’s Termination of Service
is without “cause” (as such term is defined by the Committee in its sole discretion) by the
Company.

10. Lock Up Agreement. The Option Holder agrees that upon request of the Company or
the underwriters managing any underwritten offering of the Company’s securities, the Option Holder
shall agree in writing that for a period of time (not to exceed 180 days) from the effective date
of any registration of securities of the Company, the Option Holder will not sell, make any short
sale of, loan, grant any option for the purchase of, or otherwise dispose of any Option Shares
issued pursuant to the exercise of the Option, without the prior written consent of the Company or
such underwriters, as the case may be.

11. Transfer of Shares. The Option, the Option Shares, or any interest in either, may
be sold, assigned, pledged, hypothecated, encumbered, or transferred or disposed of in any other
manner, in whole or in part, only in compliance with the terms, conditions and restrictions as set
forth in the governing instruments of the Company, applicable United States federal and state
securities laws and the terms and conditions this Agreement and the Plan.

12. Expenses of Issuance of Option Shares. The issuance of stock certificates upon
the exercise of the Option in whole or in part, shall be without charge to the Option Holder. The
Company shall pay, and indemnify the Option Holder from and against any issuance, stamp or
documentary taxes (other than transfer taxes) or charges imposed by any governmental body, agency
or official (other than income taxes) by reason of the exercise of the Option in whole or in part
or the resulting issuance of the Option Shares.

13. Withholding. No later than the date of transfer of the Shares pursuant to the
exercise of the Option granted hereunder (and in any event no later than three days after Option
exercise), the Option Holder shall pay to the Company or make arrangements satisfactory to the
Committee regarding payment of any federal, state or local taxes of any kind required by law to be
withheld upon the exercise of the Option and the Company shall, to the extent permitted or required
by law, have the right to deduct from any payment of any kind otherwise due to the Option Holder,
federal, state and local taxes of any kind required by law to be withheld upon the exercise of the
Option.

14. References. References herein to rights and obligations of the Option Holder
shall apply, where appropriate, to the Option Holder’s legal representative or estate without
regard to whether specific reference to such legal representative or estate is contained in a
particular provision of this Option.

15. Notices. Any notice required or permitted to be given under this Agreement shall
be in writing and shall be deemed to have been given when delivered personally or by courier, or
sent by certified or registered mail, postage prepaid, return receipt requested, duly addressed to
the party concerned at the address indicated below or to such changed address as such party may
subsequently by similar process give notice of:

If to the Company:

Far East Energy Corporation

	 
	 

	     

	 

	     

Attn.: Secretary

If to the Option Holder:

	 
	 

	     

	 

	     

	 

	     

16. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas applicable to contracts made and to be performed in
the State of Texas without regard to conflict of laws principles.

17. Entire Agreement. This Agreement and the Plan constitute the entire agreement
among the parties relating to the subject matter hereof, and any previous agreement or
understanding among the parties with respect thereto is superseded by this Agreement and the Plan.

18. Counterparts. This Agreement may be executed in two counterparts, each of which
shall constitute one and the same instrument.

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the Date of Grant.

	 
	 

	FAR EAST ENERGY CORPORATION

	 

	     

	 

	By:      

	 

	Name:      

	 

	Title:      

	 

	[NAME]

	 

	     

	 

	[name]

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